Exhibit 99.1
Global Cash Access Announces Fourth Quarter and Full Year 2005
Financial Results; Revenue of $115.4 Million and Adjusted
Diluted Cash EPS of $0.14 in Q4 2005
LAS VEGAS--(BUSINESS WIRE)--Feb. 9, 2006--Global Cash Access
Holdings, Inc.(NYSE:GCA)("GCA" or the "Company") today announced
financial results for the quarter and fiscal year ended December 31,
2005. Results discussed in this release are unaudited, and changes may
occur as a result of the annual audit of financial statements which is
presently ongoing.
Operating results in the periods discussed in this press release
were affected by items that the Company considers to be unusual in
nature. In order to enhance investor understanding of the underlying
trends in our business and to provide for better comparability between
periods in different years, the Company is providing adjusted results
on a supplemental basis. In addition, the Company uses certain
non-GAAP financial measures of financial performance. Reconciliations
between GAAP measures and non-GAAP measures and between actual results
and adjusted results are provided at the end of this press release.
For the quarter ended December 31, 2005, revenues were $115.4
million, an increase of 13.4% over the $101.8 million in revenues
recorded in the same quarter last year. Adjusted net income was $7.2
million in Q4 2005, an increase of 18.3% over adjusted net income of
$6.1 million in Q4 2004. Adjusted cash earnings, which reflect the
amortization of the acquired goodwill realized in the Company's 2004
recapitalization transactions, were $11.1 million in Q4 2005 as
compared to $10.4 million in Q4 2004, an increase of 6.7%. Adjusted
cash earnings per diluted share were $0.14 in Q4 2005 as compared to
$0.15 in Q4 2004. EBITDA was $23.8 million, an increase of 5.1% over
the fourth quarter of last year.
For the three month periods ended December 31, 2005 and 2004, the
following items are excluded from adjusted net income.
-- In the fourth quarter of 2005, the Company incurred $9.5
million ($6.1 million net of tax) of expenses in connection
with the early retirement of $82.3 million of its outstanding
senior subordinated notes. Of the $9.5 million, $7.2 million
is the premium paid in connection with the redemption and the
balance is the write-off of the portion of deferred financing
costs that is applicable to the redeemed notes. The adjusted
net income and adjusted earnings per share figures for Q4 2005
exclude these expenses.
-- In the fourth quarters of both 2005 and 2004, the Company
recognized an income tax benefit due to an adjustment to the
deferred tax asset of $3.0 million and $13.2 million,
respectively. The adjusted net income and adjusted earnings
per share figures for the fourth quarter of both years exclude
the benefit that resulted from these adjustments.
In addition to these adjustments, investors should note that the
weighted average diluted shares outstanding in the fourth quarter of
2004 do not reflect the issuance of 10.1 million shares in connection
with the Company's initial public offering ("IPO") in September 2005.
If the Q4 2005 diluted share count were used in both periods, Adjusted
Cash EPS would be $0.14 and $0.13 for the quarters ended December 31,
2005 and December 31, 2004, respectively.
"We are very pleased with operating results in the fourth quarter
of 2005," commented Kirk Sanford, President and Chief Executive
Officer of GCA. "We saw a rapid and sustained improvement in business
volumes after the two hurricanes in September. We saw very good
increases in same store surcharge revenue, with unusually strong
growth in credit card cash advance revenue. We look forward to 2006,
when we believe that our business will reflect the significant new
business coming on with MGM MIRAGE and others."
Highlights of the Quarter
-- Recorded revenue of $115.4 million, the highest total ever
recorded by the Company in a fourth quarter.
-- Posted EBITDA of $23.8 million, also a fourth quarter high.
-- Significant increases in key metrics:
-- Same store surcharge revenue up 13.8%
-- Cash advance dollar volume up 14.8%
-- ATM transaction volume up 13.1%.
-- Signed definitive contracts with MGM MIRAGE, with
installations commencing in December.
-- 3-in-1 Enabled QuickJack(TM) Plus Redemption Kiosk
installations reached 75 as of year-end and 99 as of the end
of January 2006.
-- Continued international expansion with the commencement of
operations in Switzerland and the commencement of operations
at the Grand Casino Brussels in Belgium.
-- Closed on the sale of an additional 1,053,568 shares of common
stock through the IPO over-allotment option, resulting in
$13.7 million of additional proceeds.
-- Redeemed $82.3 million in face amount of senior subordinated
notes.
-- Prepaid $35.0 million of term loan indebtedness.
With respect to the company's balance sheet, Harry Hagerty, GCA's
Chief Financial Officer, stated, "We raised more than $130 million in
the IPO, and these funds, together with our free cash flow, have
allowed us to dramatically reduce our financial leverage. Since the
LBO in March 2004, we have paid back almost $175 million in debt.
Total debt at December 31, 2005, was $321.4 million and our ratio of
total debt to LTM EBITDA stood at 3.4x. Largely as a result of this
debt reduction, Moody's Investors Service raised our debt ratings in
January 2006, which will result in a reduction in our credit spreads
in 2006."
GAAP Results
For the fourth quarter of 2005, total revenues were $115.4
million, an increase of 13.4% over the fourth quarter of 2004.
Operating Income in the 2005 quarter was $21.3 million, an increase of
9.9% from the same period in 2004. Net Income in the 2005 quarter was
$4.1 million, down from $19.3 million in the fourth quarter of 2004.
Diluted earnings per share was $0.05 in the fourth quarter of 2005 as
compared to $0.27 in the fourth quarter of 2004.
For the year ended December 31, 2005, total revenues were $454.1
million, an increase of 12.7% over the year ended December 31, 2004.
Operating Income in the 2005 year was $82.3 million, an increase of
11.2% over the 2004 year. Net Income in 2005 was $22.6 million as
compared to $254.6 million in 2004. Diluted earnings per share were
$0.30 for 2005, compared to $3.56 in 2004.
Fourth Quarter Results of Operations
Total revenues increased 13.4% from $101.8 million in the fourth
quarter of 2004 to $115.4 million in the fourth quarter of 2005. Same
store revenues for Cash Advance and ATM surcharge revenue increased
13.8%.
The following is a comparison of selected revenue components for
the fourth quarter of 2005 to the same period in 2004:
-- Cash advance revenues were up 12.5%, from $53.4 million to
$60.0 million. Cash disbursed increased 13.3%, from $1.06
billion to $1.20 billion. The number of transactions increased
4.8%, from 2.2 million to 2.3 million. The average transaction
amount increased from $484.92 to $524.40. The average fee
declined from 5.03% to 5.00%. Average revenue per transaction
increased 7.4% from $24.41 to $26.22.
-- ATM revenues increased 17.3%, from $39.8 million to $46.7
million. The number of transactions increased 13.1% from 13.2
million to 14.9 million. Cash disbursed was $2.57 billion
compared to $2.13 billion, an increase of 20.7%. Average
revenue per transaction increased 3.6% from $3.02 to $3.13.
-- Check services revenues were $6.2 million, an increase of
8.2%. The face amount of checks warranted increased by 21.2%,
from $239.1 million to $289.7 million. The number of check
warranty transactions grew 6.0%, from 1.08 million to 1.14
million. The average face amount per check warranted grew from
$222.38 to $254.23, an increase of 14.3%. The average check
warranty fee declined from 2.30% to 2.01%. Average check
warranty revenue per transaction fell 0.2% from $5.12 to
$5.11.
-- Central Credit and other revenues declined 16.3%, from $2.8
million to $2.3 million. The decrease is principally related
to a decline in Central Credit and QuikMarketing(SM) revenues.
Cost of revenues increased 15.9% in the quarter to $79.0 million
from $68.2 million in the fourth quarter of 2004. Commissions, the
largest component of cost of revenues, increased 12.6%. Interchange
increased 18.9%, driven by the increase in cash advance volumes as
well as higher interchange rates in 2005 compared to the same period
in 2004.
Gross margin was 31.5% in the fourth quarter of 2005 as compared
to 33.0% in the fourth quarter of 2004.
Operating expenses increased 15.1% from $10.9 million in the
fourth quarter of 2004 to $12.5 million in the current quarter.
Operating expenses for all of 2005 reflect additions in staffing and
programs in order to meet the Company's requirements as a publicly
reporting entity, including costs associated with Section 404 of
Sarbanes-Oxley.
EBITDA margin was 20.7% in the fourth quarter of 2005 as compared
to 22.3% in the same period of 2004.
Depreciation and amortization expense declined 23.0% from $3.3
million in the fourth quarter of 2004 to $2.6 million in the fourth
quarter of 2005.
Interest income was $814 thousand in Q4 2005, an increase of
135.9% from the comparable 2004 period. Cash balances were unusually
high in October 2005 as the Company held the net IPO proceeds for
several weeks during the mandatory notice period prior to redeeming
$82.3 million of the senior subordinated notes.
Interest expense in the fourth quarter of 2005 was $10.8 million
as compared to $10.5 million in the fourth quarter of 2004. Interest
expense on the Company's borrowings declined $1.2 million due to the
lower level of outstanding indebtedness in the fourth quarter of 2005.
Interest expense on the Company's ATM funds increased 90.9% from $1.7
million in Q4 2005 to $3.2 million in Q4 2005, due primarily to
increases in the LIBOR rate on which those funds are priced. Also
included within interest expense, net in the 2005 quarter is $9.5
million of expenses incurred in connection with the early retirement
of $82.3 million of the Company's senior subordinated notes.
Income tax benefit in the fourth quarter of 2005 was $2.2 million
as compared to income tax benefit of $10.0 million in the comparable
quarter of 2004. As discussed previously, the benefits in both periods
result principally from increases in the initial starting balance of
the Company's deferred tax asset. These increases were required as a
result of new information received by the Company in the respective
quarters about the gains reported by the sellers in the two
recapitalization transactions in 2004.
Balance Sheet
At December 31, 2005, the Company had cash and cash equivalents of
$35.1 million. Settlement receivables were $60.2 million and
settlement liabilities were $59.8 million.
Total borrowings at December 31, 2005, were $321.4 million,
consisting of $168.6 million of borrowings under the Company's senior
secured credit facilities and $152.8 million face amount of 8 3/4%
senior subordinated notes. During the fourth quarter of 2005, the
Company made a $2.5 million mandatory repayment and voluntary
prepayments totaling $35.0 million on the term loan component of its
senior secured credit facilities. The Company believes that these
voluntary prepayments in Q4 2005 will satisfy most or all of the
Company's 2005 excess cash flow sweep obligations under the term
loans.
The Company made investments of $2.8 million and $1.9 million
during the three months ended December 31, 2005 and 2004,
respectively. Investments in the 2005 period include ATM and other
casino floor equipment as well as purchases of computer and
communications hardware and software. Investments were $17.9 million
and $4.9 million for the fiscal years ended December 31, 2005 and
2004, respectively. The full-year 2005 figure includes $10.0 million
for the purchase of the "3-in-1 Rollover" patent that took place late
in Q3 2005.
Financial Guidance
The Company currently believes that the following trends will
characterize its long-term financial performance, excluding unusual
items.
-- Annual revenue growth of 10% - 14%.
-- Gross margins in the 31% - 32% range.
-- Operating expenses increasing at approximately 5% per year
after 2005.
-- Interest expense declining with paydown of debt.
-- Book tax expense of 36%.
-- Annual amortization of acquired goodwill for tax purposes
resulting in annual cash taxes being $16.5 million lower than
book tax expense every year through mid-year 2019.
For fiscal 2006, the Company currently expects revenues in a range
of $510 million to $520 million, EBITDA in a range of $106 million to
$108 million, and Adjusted Diluted Cash Earnings per Share in a range
of $0.63 to $0.65. Key assumptions affecting this guidance are:
-- Gross margins of 31%.
-- Full year operating expenses in a range of $52 million to $53
million.
-- Full year depreciation and amortization expense of $12
million.
-- Full year net interest expense of approximately $39 million
based on
-- 4% interest income rate
-- 5% LIBOR
-- $7.5 million per quarter of voluntary term loan
prepayments.
-- Book tax rate of 36%.
-- Tax benefit from amortization of step-ups related to the
recapitalization transactions, after all adjustments through
December 31, 2005, of $16.5 million on an annual basis and
$4.1 million on a quarterly basis.
-- Diluted shares outstanding of 82.7 million.
Using the same assumptions outlined above, the Company currently
expects Q1 2006 revenue to be in a range of $123 million to $127
million, EBITDA in range of $25 million to $26 million and Adjusted
Diluted Cash Earnings per Share in a range of $0.14 to $0.15.
Excluded from the 2006 EBITDA and Adjusted Diluted Cash Earnings
per Share figures presented above are the anticipated FAS 123(R)
expenses of $8.5 million for the full year and $2.0 million for the
first quarter.
This financial guidance is given as of the date hereof and is
based on factors and circumstances known to the Company at this time.
Such factors and circumstances may change, and such changes may have
an impact on the Company's financial outlook. The Company is under no
obligation to update its financial guidance.
Non-GAAP Financial Information
None of EBITDA, Adjusted Net Income or Cash Earnings is a measure
of financial performance under United States generally accepted
accounting principles ("GAAP"). Accordingly, none of them should be
considered a substitute for net income, operating income or other
income or cash flow data prepared in accordance with GAAP. The Company
believes that EBITDA, Adjusted Net Income and Cash Earnings are
widely-referenced financial measures in the financial markets. In
addition, the Company has identified certain potential adjustments to
its financial results that address income or expenses that the Company
believes are unusual or non-recurring in nature. The Company believes
that referencing EBITDA, Adjusted Net Income and Cash Earnings and
identifying unusual or non-recurring items is helpful to investors.
Reconciliations between GAAP and non-GAAP measures and between actual
and adjusted financial results are presented elsewhere in this press
release.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
"safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. All statements included in this press release, other than
statements that are purely historical, are forward-looking statements.
Words such as "going forward," "believes," "intends," "expects,"
"forecasts," "anticipate," "plan," "seek," "estimate" and similar
expressions also identify forward-looking statements. Forward-looking
statements in this press release include, without limitation:
-- our belief that certain expenses identified as unusual or
non-recurring will not recur;
-- our belief that we will see significant new business from MGM
MIRAGE and others in 2006;
-- our belief that our credit spreads will be reduced in 2006;
-- our belief that voluntary prepayments on our term loan
indebtedness will satisfy all or most of our excess cash flow
sweep requirements;
-- all of the assumptions and forecasts given in the section of
this release entitled "Financial Guidance."
Our beliefs, expectations, forecasts, objectives, anticipations,
intentions and strategies regarding the future, including without
limitation those concerning expected operating results, revenues and
earnings are not guarantees of future performance and are subject to
risks and uncertainties that could cause actual results to differ
materially from results contemplated by the forward-looking
statements, including but not limited to:
-- the unexpected recurrence of certain expenses that we
considered to be non-recurring in nature;
-- the failure of expected new business from MGM MIRAGE and
others to materialize as anticipated;
-- changes in credit markets or changes in the terms of our
credit facilities which may not allow us to realize
anticipated reductions in our credit spreads;
-- our failure to correctly anticipate or calculate the current
excess cash flow sweep requirements, or changes in the terms
of our credit facilities which may increase the excess cash
flow sweep requirements;
-- our failure to correctly predict increases in revenue due to
inaccuracies in our assumptions, our inability to execute on
business opportunities or other reasons;
-- our failure to correctly predict future gross margins and
operating expenses due to inaccuracies in our assumptions, our
inability to control expenses or other reasons;
-- our failure to correctly anticipate our capital spending in
2006, which would affect the level of depreciation expense and
the level of cash available for debt repayment;
-- our failure to anticipate other uses of our cash which could
prevent us from repaying debt as anticipated;
-- our inability to correctly predict the future levels of
interest rates;
-- changes in income tax rates in the jurisdictions in which we
operate;
-- challenges by the Internal Revenue Service to the tax step-ups
that contribute to the bulk of our deferred tax asset;
-- and unanticipated changes in the amount of our diluted common
shares outstanding.
The forward-looking statements in this press release are subject
to additional risks and uncertainties set forth under the heading
"Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in our filings with the
Securities and Exchange Commission, including, without limitation, our
registration statement on Form S-1 (No. 333-123514) and our quarterly
reports on Form 10-Q, and are based on information available to us on
the date hereof. We do not intend, and assume no obligation, to update
any forward-looking statements. Readers are cautioned not to place
undue reliance on forward-looking statements, which speak only as of
the date of this press release.
About Global Cash Access Holdings, Inc.
Las Vegas-based Global Cash Access Holdings, Inc. is a holding
company whose principal asset is the stock of Global Cash Access, Inc.
("GCA"). GCA is a leading provider of cash access systems and related
marketing services to the gaming industry. For more information,
please visit the Company's Web site at www.globalcashaccess.com.
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share)
(unaudited)
- ----------------------------------------------------------------------
Three Months Ended Years Ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
REVENUES:
Cash advance $ 60,047 $ 53,357 $235,055 $209,962
ATM 46,730 39,833 182,291 158,433
Check services 6,245 5,771 26,376 23,768
Central Credit and other
revenues 2,337 2,791 10,358 10,840
--------- --------- --------- ---------
Total revenues 115,359 101,752 454,080 403,003
COST OF REVENUES 78,989 68,177 309,002 270,112
--------- --------- --------- ---------
GROSS PROFIT 36,370 33,575 145,078 132,891
Operating expenses (12,524) (10,885) (50,686) (45,322)
Amortization (1,368) (1,397) (5,295) (5,672)
Depreciation (1,195) (1,931) (6,814) (7,876)
--------- --------- --------- ---------
OPERATING INCOME 21,283 19,362 82,283 74,021
--------- --------- --------- ---------
INTEREST INCOME (EXPENSE), NET
Interest income 814 345 1,815 1,318
Interest expense (10,755) (10,493) (44,165) (33,343)
Loss on early extinguishment
of debt (9,529) 0 (9,529) 0
--------- --------- --------- ---------
Total interest income
(expense), net (19,470) (10,148) (51,879) (32,025)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAX
(PROVISION) BENEFIT AND
MINORITY OWNERSHIP LOSS 1,813 9,214 30,404 41,996
INCOME TAX (PROVISION) BENEFIT 2,245 10,026 (8,032) 212,346
--------- --------- --------- ---------
INCOME BEFORE MINORITY
OWNERSHIP LOSS 4,058 19,240 22,372 254,342
MINORITY OWNERSHIP LOSS 62 55 218 213
--------- --------- --------- ---------
NET INCOME $ 4,120 $ 19,295 $ 22,590 $254,555
========= ========= ========= =========
Earnings per share
Basic $ 0.05 $ 0.60 $ 0.49 $ 7.91
========= ========= ========= =========
Diluted $ 0.05 $ 0.27 $ 0.30 $ 3.56
========= ========= ========= =========
Weighted average number of
common shares outstanding
Basic 81,405 32,175 45,643 32,175
Diluted 81,705 71,500 74,486 71,500
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Adjusted Cash Earnings, Adjusted Net Income and
EBITDA to Net Income
(amounts in thousands, except per share)
(unaudited)
- ----------------------------------------------------------------------
Three Months Ended Years Ended
December 31, December 31,
----------------- -----------------
2005 2004 2005 2004
----------------- -------------------
EBITDA $ 23,846 $ 22,690 $ 94,392 $ 87,569
Minus:
Depreciation (1,195) (1,931) (6,814) (7,876)
Amortization (1,368) (1,397) (5,295) (5,672)
Interest expense (10,755) (10,493) (44,165) (33,343)
Loss on early
extinguishment of debt (9,529) - (9,529) -
Income tax (provision)
benefit 2,245 10,026 (8,032) 212,346
Plus:
Interest income 814 345 1,815 1,318
Minority ownership loss 62 55 218 213
------------------ -------------------
Net Income $ 4,120 $ 19,295 $ 22,590 $ 254,555
================== ===================
Minus:
Deferred tax asset
adjustment (3,047) (13,234) (3,047) (219,776)
Plus:
Loss on early
extinguishment of
debt, net of tax 6,099 - 6,099 -
------------------ -------------------
Adjusted Net Income $ 7,172 $ 6,061 $ 25,642 $ 34,779
================== ===================
Plus:
Deferred tax amortization
related to acquired
goodwill 3,972 4,380 15,888 10,660
------------------ -------------------
Adjusted Cash Earnings $ 11,144 $ 10,441 $ 41,530 $ 45,439
================== ===================
Weighted Average Shares
- Diluted 81,705 71,500 74,486 71,500
Adjusted Cash Earnings per Share
- Diluted $ 0.14 $ 0.15 $ 0.56 $ 0.64
================== ===================
CONTACT: Global Cash Access Holdings, Inc.
Harry Hagerty, 702-262-5003 (Investor Contact)
or
Katcher Vaughn & Bailey Communications
Kristi Gooden, 615-248-8202 (Media Contact)