Exhibit 99.1
Global Cash Access Announces Second Quarter 2006 Financial Results;
Revenue of $133.6 Million and Adjusted Diluted Cash EPS of $0.16
LAS VEGAS--(BUSINESS WIRE)--Aug. 3, 2006--Global Cash Access
Holdings, Inc. (NYSE:GCA) ("GCA" or the "Company") today announced
financial results for the quarter ended June 30, 2006.
Statement about Accounting Terms
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. Adjusted results in the second quarter of
2006 exclude:
-- $2.4 million of stock-based compensation expense;
-- $0.7 million of expenses associated with the secondary
offering of common stock completed in May 2006; and
-- $0.2 million in settlement of a lawsuit with a former
customer.
In addition, the Company uses certain non-GAAP 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.
Summary Non-GAAP Results
For the quarter ended June 30, 2006, revenues were $133.6 million,
an increase of 18.8% over the $112.5 million in revenues recorded in
the same quarter last year. Adjusted Net Income was $8.6 million in Q2
2006, an increase of 28.8% over net income of $6.6 million in Q2 2005.
Adjusted Cash Earnings, which reflect the amortization of the acquired
goodwill realized in the Company's 2004 recapitalization transactions,
were $12.9 million in Q2 2006 as compared to $10.6 million in Q2 2005,
an increase of 21.5%. Adjusted Cash Earnings per diluted share were
$0.16 in Q2 2006 as compared to $0.15 in Q2 2005. Adjusted EBITDA was
$25.9 million in Q2 2006, an increase of 7.1% from EBITDA of $24.2
million in the same period in 2005. Adjusted figures in Q2 2006
exclude $2.4 million of non-cash compensation expense ($1.5 million
after taxes), $0.7 million of secondary offering expenses ($0.7
million after taxes) and $0.2 million of lawsuit settlement expenses
($0.1 million after taxes).
"The second quarter of 2006 showed growth that was even better
than we saw in the first quarter," commented Kirk Sanford, President
and Chief Executive Officer of GCA. "At the same time, we made
significant progress on our new initiatives. Our redemption kiosk
platform is getting good traction, our EDITH kiosk was approved by
GLI, and we launched our exciting new Arriva Card program. All these
initiatives should continue to distinguish GCA as the product leader
in cash access for gaming enterprises."
Recent Highlights
-- Recorded revenue of $133.6 million, the highest quarterly
total ever recorded by the Company.
-- Significant increases in key metrics:
-- Same store surcharge revenue up 12.4%
-- Cash advance dollars disbursed up 19.9%
-- ATM transaction volume up 15.4%.
-- 3-in-1 Enabled QuickJack(TM) Plus Redemption Kiosk
installations reached 154 as of June 30, 2006.
-- Signed contracts with major new customers Sycuan Resort and
Casino and Thunder Valley Casino.
-- Received approval for EDITH from Gaming Laboratories
International ("GLI").
-- Put $9.3 billion in cash into the hands of gaming patrons in
the first half of 2006.
GAAP Results
For the second quarter of 2006, total revenues were $133.6
million, an increase of 18.8% over the second quarter of 2005.
Operating Income (including non-cash compensation expense) in the 2006
quarter was $20.2 million, a decrease of 3.5% from the same period in
2005. Net income in the 2006 quarter was $6.3 million, down from $6.6
million in the second quarter of 2005. Diluted earnings per share were
$0.08 in the second quarter of 2006 as compared to $0.09 in the second
quarter of 2005.
For the first half of 2006, total revenues were $263.4 million, an
increase of 18.6% over the first half of 2005. Operating Income
(including non-cash compensation expense) in the 2006 first half was
$40.8 million, a decrease of 4.6% from the same period in 2005. Net
income in the first half of 2006 was $13.2 million, down from $14.0
million in the first half of 2005. Diluted earnings per share were
$0.16 in the first half of 2006 as compared to $0.20 in the first half
of 2005.
Second Quarter Results of Operations
Total revenues increased 18.8% from $112.5 million in the second
quarter of 2005 to $133.6 million in the second quarter of 2006. Same
store revenues for Cash Advance and ATM surcharge increased 12.4%.
The following is a comparison of selected revenue components for
the second quarter of 2006 to the same period in 2005:
-- Cash advance revenues were up 19.3%, from $57.9 million to
$69.1 million. Cash disbursed increased 19.9%, from $1.15
billion to $1.38 billion. The number of transactions increased
11.7%, from 2.3 million to 2.5 million. The average
transaction amount increased from $503.85 to $540.94. The
average fee declined from 5.05% to 5.03%. Average revenue per
transaction increased 6.9% from $25.43 to $27.18.
-- ATM revenues increased 20.7%, from $45.2 million to $54.6
million. The number of transactions increased 15.4% from 14.7
million to 17.0 million. Cash disbursed was $3.01 billion
compared to $2.45 billion, an increase of 22.7%. Average
revenue per transaction increased 4.9% from $3.07 to $3.22.
-- Check services revenues were $7.5 million, an increase of
10.8%. The face amount of checks warranted increased by 21.0%,
from $280.1 million to $339.0 million. The number of check
warranty transactions grew 8.2%, from 1.19 million to 1.29
million. The average face amount per check warranted grew from
$235.65 to $263.51, an increase of 11.8%. The average check
warranty fee declined from 2.27% to 2.11%. Average check
warranty revenue per transaction increased 3.9% from $5.35 to
$5.56.
-- Central Credit and other revenues declined 7.3%, from $2.6
million to $2.4 million.
Cost of revenues increased 24.1% in the quarter to $94.3 million
from $76.0 million in the second quarter of 2005. Commissions, the
largest component of cost of revenues, increased 26.2%. Interchange
increased 20.9%, driven by the increase in cash advance volumes.
Gross margin (excluding depreciation and amortization) was 29.4%
in the second quarter of 2006 as compared to 32.4% in the second
quarter of 2005 and 29.6% in the first quarter of 2006.
Operating expenses increased 35.4% from $12.3 million in the
second quarter of 2005 to $16.6 million in the current quarter.
Operating expenses excluding non-cash compensation expense, secondary
offering expenses and settlement expenses were $13.4 million in the
current quarter, an increase of 8.9%. Operating expenses (excluding
the items just listed, where applicable) were essentially unchanged
from the first quarter of 2006. Operating expenses in Q2 2006 included
approximately $0.5 million in start-up expenses related to Arriva.
Depreciation and amortization expense declined 24.6% from $3.2
million in the second quarter of 2005 to $2.4 million in the second
quarter of 2006.
Interest income was $868 thousand in Q2 2006, an increase of
379.6% from the comparable 2005 period.
Interest expense in the second quarter of 2006 was $10.7 million
as compared to $10.8 million in the second quarter of 2005. Interest
expense on the Company's borrowings declined $1.9 million due to the
lower level of outstanding indebtedness in the second quarter of 2006,
offset by higher interest rates on the floating rate portion of that
indebtedness. Interest expense on the Company's ATM funds increased
78.3% from $2.2 million in Q2 2005 to $4.0 million in Q2 2006, due
primarily to increases in the LIBOR rate on which those funds are
priced.
Income tax expense in the second quarter of 2006 was $4.2 million
as compared to $3.7 million in the comparable quarter of 2005. The
Company's provision in the second quarter of 2006 is based on an
expected effective rate for all of 2006 of 37.9%. The increase in
expected effective tax rate for the year from the prior quarter
estimate is principally a result of the non-deductibility of the
secondary offering expenses.
Balance Sheet
At June 30, 2006, the Company had cash and cash equivalents of
$58.6 million. Settlement receivables were $24.9 million and
settlement liabilities were $26.8 million.
Total borrowings at June 30, 2006 were $316.8 million, consisting
of $164.0 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 second quarter of 2006, the Company
made a $2.3 million mandatory repayment on the term loan component of
its senior secured credit facilities.
The Company made investments in property, equipment and software
of $8.0 million and $0.7 million during the three months ended June
30, 2006 and 2005, respectively. Investments in the 2006 period
include ATM and other casino floor equipment as well as purchases of
computer and communications hardware and software.
Financial Guidance
For fiscal 2006, the Company currently expects revenues in a range
of $530 million to $540 million and Adjusted Diluted Cash Earnings per
Share in a range of $0.62 to $0.64. Revisions from the previously
issued guidance of $0.64 - $0.66 are due to 1) anticipated losses from
the launch of the Arriva Card ($0.01 per share) and 2) a revision in
the forecast of gross margin (excluding depreciation and amortization)
for the second half of the year from 30.0% to 29.5% ($0.01 per share).
The Company currently expects Q3 2006 revenue to be in a range of $137
million to $139 million and Adjusted Diluted Cash Earnings per Share
in a range of $0.15 to $0.16.
Excluded from the Adjusted Diluted Cash Earnings per Share figures
presented above are anticipated non-cash stock compensation expenses
of $9.0 million for the full year and $2.3 million for the third
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 EBITDA, Adjusted Net Income or Adjusted
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
EBITDA, Adjusted Net Income and Adjusted Cash Earnings are
widely-referenced financial measures in the financial markets. In
addition, the Company has identified certain 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 EBITDA, Adjusted Net Income and
Adjusted 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 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:
-- 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. 333-133996), our Annual Report
filed on Form 10-K (No. 001-32622) 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., 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 Six Months Ended
June 30, June 30,
------------------ --------------------
2006 2005 2006 2005
-------- -------- --------- ---------
REVENUES:
Cash advance $ 69,143 $ 57,933 $ 136,198 $ 114,710
ATM 54,586 45,217 107,746 88,989
Check services 7,459 6,734 14,703 13,043
Central Credit and other
revenues 2,388 2,576 4,764 5,383
-------- -------- --------- ---------
Total revenues 133,576 112,460 263,411 222,125
Cost of revenues (94,292) (75,987) (185,643) (148,452)
Operating expenses (16,636) (12,288) (31,926) (24,301)
Amortization (1,384) (1,295) (2,886) (2,659)
Depreciation (1,050) (1,932) (2,115) (3,884)
-------- -------- --------- ---------
OPERATING INCOME 20,214 20,958 40,841 42,829
-------- -------- --------- ---------
INTEREST INCOME (EXPENSE), NET
Interest income 868 181 1,424 633
Interest expense (10,701) (10,828) (20,949) (21,760)
-------- -------- --------- ---------
Total interest income
(expense), net (9,833) (10,647) (19,525) (21,127)
-------- -------- --------- ---------
INCOME BEFORE INCOME TAX
PROVISION AND MINORITY
OWNERSHIP LOSS 10,381 10,311 21,316 21,702
INCOME TAX PROVISION (4,140) (3,712) (8,147) (7,813)
-------- -------- --------- ---------
INCOME BEFORE MINORITY
OWNERSHIP LOSS 6,241 6,599 13,169 13,889
MINORITY OWNERSHIP LOSS, net
of tax 38 44 74 94
-------- -------- --------- ---------
NET INCOME $ 6,279 $ 6,643 $ 13,243 $ 13,983
======== ======== ========= =========
Earnings per share
Basic $ 0.08 $ 0.21 $ 0.16 $ 0.43
======== ======== ========= =========
Diluted $ 0.08 $ 0.09 $ 0.16 $ 0.20
======== ======== ========= =========
Weighted average number of
common shares outstanding
Basic 81,619 32,175 81,588 32,175
Diluted 82,230 71,699 81,965 71,699
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Adjusted Cash Earnings and Adjusted Net Income
to Net Income, and Adjusted EBITDA and EBITDA to Net Income
(amounts in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2006 2005 2006 2005
-------- -------- -------- --------
Adjusted EBITDA $ 25,900 $ 24,185 $ 50,165 $ 49,372
Minus:
Non-cash compensation
expense (2,362) - (4,323) -
Secondary offering costs (690) - (690) -
Litigation settlement costs (200) - (200) -
-------- -------- ------- --------
EBITDA $ 22,648 $ 24,185 $ 45,842 $ 49,372
======== ======== ======== ========
Minus:
Depreciation (1,384) (1,295) (2,886) (2,659)
Amortization (1,050) (1,932) (2,115) (3,884)
Interest expense (10,701) (10,828) (20,949) (21,760)
Income tax provision (4,140) (3,712) (8,147) (7,813)
Plus:
Interest income 868 181 1,424 633
Minority ownership loss, net
of tax 38 44 74 94
-------- -------- -------- --------
Net Income $ 6,279 $ 6,643 $ 13,243 $ 13,983
======== ======== ======== ========
Plus:
Non-cash compensation
expense, net of tax 1,466 - 2,684 -
Secondary offering costs,
net of tax 690 690
Litigation settlement costs,
net of tax 124 124
-------- -------- -------- --------
Adjusted Net Income $ 8,559 $ 6,643 $ 16,741 $ 13,983
======== ======== ======== ========
Plus:
Deferred tax amortization
related to acquired
goodwill 4,336 3,972 8,672 3,972
-------- -------- -------- --------
Adjusted Cash Earnings $ 12,895 $ 10,615 $ 25,413 $ 17,955
======== ======== ======== ========
Weighted average number of
common shares outstanding
Basic 81,619 32,175 81,588 32,175
Diluted 82,230 71,699 81,965 71,699
Adjusted Cash Earnings per Share
Diluted 0.16 0.15 0.31 0.25
CONTACT: Global Cash Access Holdings, Inc.
Harry Hagerty, 702-262-5003 (Investor Contact)
or
Katcher Vaughn & Bailey Communications
Mary Beth Davis, 615-248-8202 (Media Contact)