Exhibit 99.1
Global Cash Access Announces Third Quarter 2006 Financial Results
Revenue of $142.9 million and Adjusted Diluted Cash EPS of $0.17
LAS VEGAS--(BUSINESS WIRE)--Nov. 2, 2006--Global Cash Access
Holdings, Inc. ("GCA" or the "Company") (NYSE:GCA) today announced
financial results for the quarter and nine months ended September 30,
2006.
Summary Non-GAAP Results
For the quarter ended September 30, 2006, revenues were $142.9
million, an increase of 21.3% over the $117.8 million in adjusted
revenues recorded in the same quarter last year. Adjusted Cash
Earnings were $13.6 million in Q3 2006 as compared to $11.0 million in
Q3 2005, an increase of 23.7%. Adjusted Cash Earnings per diluted
share were $0.17 in Q3 2006 (on 82.2 million shares) as compared to
$0.15 in Q3 2005 (on 72.5 million shares). Adjusted EBITDA was $27.0
million in Q3 2006, an increase of 7.3% from Adjusted EBITDA of $25.1
million in the same period in 2005.
"The third quarter of 2006 was a terrific quarter from both a
financial and a strategic perspective," commented Kirk Sanford,
President and Chief Executive Officer of GCA. "On the financial side,
we had record revenues, better-than-expected earnings, and significant
cash generation. At the same time, our strategic initiatives gained
clear momentum. Redemption kiosk deployments are growing rapidly, our
EDITH platform was installed in a Native American casino, and the
launch of the Arriva Card has surpassed our expectations. More
recently, we signed our Sponsorship Agreement with Banco Weng Hang,
allowing us to pursue the many attractive opportunities we see in
Macau."
Recent Highlights
-- Recorded revenue of $142.9 million, the highest quarterly
total ever recorded by the Company.
-- Significant increases in key metrics:
-- Same store surcharge revenue up 13.3%
-- Cash advance dollars disbursed up 28.2%
-- ATM transaction volume up 20.0%.
-- 3-in-1 Enabled QuickJack(TM) Plus Redemption Kiosk
installations reached 325 as of October 29, 2006.
-- Installed seven EDITH kiosks at Casino Pauma.
-- Signed Sponsorship Agreement with Banco Weng Hang for cash
access service in Asia/Pacific markets including Macau.
-- Launched Arriva Card to customers, with very good acceptance
and utilization:
-- 1,551 accounts as of October 29, 2006
-- $5.8 million in Arriva Card transaction volume through October
29, 2006
-- Average cash advance transaction amount of $1,006 (vs. $629 on
non-Arriva cards)
-- $4.7 million in customer receivables held by our financing
partner at October 29, 2006, with only $45 thousand more than
30 days past due
-- Signed an agreement with First Data Merchant Services ("FDMS")
to offer its services to GCA customers and prospects.
-- Entered into new senior secured credit facilities in order to
reduce interest costs, relax financial covenants and provide
ability for share repurchases and dividends.
GAAP and Nine Month Results
For the third quarter of 2006, total revenues were $142.9 million,
an increase of 22.5% over the third quarter of 2005. Operating Income
(including non-cash compensation expense) in the third quarter of 2006
was $22.2 million, an increase of 22.0% from the same period in 2005.
Net income in the third quarter of 2006 was $7.8 million, up 74.2%
from $4.5 million in the third quarter of 2005. Diluted earnings per
share were $0.10 in the third quarter of 2006 (on 82.2 million shares)
as compared to $0.06 in the third quarter of 2005 (on 72.5 million
shares).
For the first nine months of 2006, total revenues were $406.3
million, an increase of 19.9% over the first nine months of 2005.
Operating Income (including non-cash compensation expense) in the 2006
nine months was $63.0 million, an increase of 3.3% from the same
period in 2005. Net income in the first nine months of 2006 was $21.1
million, up 14.0% from $18.5 million in the first nine months of 2005.
Diluted earnings per share were $0.26 in the first nine months of 2006
(on 82.1 million shares) as compared to $0.26 in the first nine months
of 2005 (on 72.0 million shares).
Third Quarter Results of Operations
Total revenues in the third quarter of 2006 were $142.9 million,
an increase of 21.3% from adjusted revenues of $117.8 million in the
third quarter of 2005. Same store revenues for Cash Advance and ATM
surcharge increased 13.3% in the third quarter of 2006.
The following is a comparison of selected revenue components for
the third quarter of 2006 to the same period in 2005 (2005 figures are
not adjusted except where noted):
-- Cash advance revenues were up 25.8%, from $60.3 million to
$75.9 million. Cash disbursed increased 28.2%, from $1.18
billion to $1.51 billion. The number of transactions increased
21.9%, from 2.2 million to 2.7 million. The average
transaction amount increased from $524.15 to $551.18. The
average fee declined from 5.13% to 5.03%. Average revenue per
transaction increased 3.2% from $26.86 to $27.72.
-- ATM revenues increased 23.5%, from $46.6 million to $57.5
million. The number of transactions increased 20.0% from 14.9
million to 17.9 million. Cash disbursed was $3.20 billion
compared to $2.54 billion, an increase of 26.0%. Average
revenue per transaction increased 2.9% from $3.12 to $3.21.
-- Check services revenues were $7.2 million, an increase of
1.2%. The face amount of checks warranted increased by 12.5%,
from $302.8 million to $340.6 million. The number of check
warranty transactions grew 5.4%, from 1.22 million to 1.29
million. The average face amount per check warranted grew from
$247.62 to $264.18, an increase of 6.7%. The average check
warranty fee declined from 2.19% to 2.01%. Average check
warranty revenue per transaction declined from $5.42 to $5.31.
-- Central Credit and other revenues declined 12.7%, from $2.6
million to $2.3 million.
Cost of revenues increased 26.5% in the third quarter of 2006 to
$102.8 million from $81.3 million in the third quarter of 2005.
Commissions, the largest component of cost of revenues, increased
25.8%. Interchange increased 31.1%, driven largely by the increase in
cash advance volumes.
Operating expenses in the third quarter of 2006 were $15.4
million. Operating expenses, excluding non-cash compensation expense,
were $13.0 million in the current quarter, an increase of 7.0% from
adjusted operating expenses of $12.2 million in the third quarter of
2005.
Depreciation and amortization expense declined 17.6% from $3.0
million in the third quarter of 2005 to $2.5 million in the third
quarter of 2006.
Interest income was $1.2 million in the third quarter of 2006, an
increase of 213.9% from the comparable 2005 period.
Interest expense in the third quarter of 2006 was $10.9 million as
compared to $11.7 million in the third quarter of 2005. Interest
expense on the Company's borrowings declined $1.7 million due to the
lower level of outstanding indebtedness in the third 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
44.4% from $2.8 million in Q3 2005 to $4.1 million in Q3 2006, due
primarily to increases in the LIBOR rate on which those funds are
priced.
Income tax expense in the third quarter of 2006 was $4.7 million
as compared to adjusted income tax expense of $3.9 million in the
comparable quarter of 2005. The Company's provision in the third
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 earlier estimates is principally a result of the
non-deductibility of the secondary offering expenses incurred in the
second quarter of 2006.
Arriva Card
Arriva Card revenues in the third quarter of 2006 were $62
thousand. Cost of revenues and operating expenses for Arriva Card in
the quarter were $634 thousand. Operating loss from Arriva operations
was $572 thousand.
Receivables held by the Company's financing partner were $3.3
million at September 30, 2006. No receivables had been sold by the
financing partner to the Company's Arriva Card subsidiary as of that
date.
Balance Sheet
At September 30, 2006, the Company had cash and cash equivalents
of $69.2 million. Settlement receivables were $60.6 million and
settlement liabilities were $60.5 million.
Total borrowings at September 30, 2006 were $314.5 million,
consisting of $161.7 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 third 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 intangible
assets of $2.2 million during the three months ended September 30,
2006, which include ATM and other casino floor equipment as well as
purchases of computer and communications hardware and software. The
Company made investments in property, equipment and intangible assets
of $11.9 million during the three months ended September 30, 2005,
which include the $10 million purchase of the "3-in-1 Rollover"
patent, as well as purchases of equipment, computer and communications
hardware and software.
Financial Guidance
The Company currently expects fourth quarter 2006 revenue to be in
a range of $138 million to $142 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 $2.4 million for the fourth quarter. Also excluded is any loss on
early retirement of indebtedness caused by the write-off of deferred
financing costs associated with the refinancing of the Company's
senior secured credit facilities in the fourth quarter of 2006.
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
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 third quarter of 2006
exclude $2.4 million of stock-based compensation expense. Adjusted
results in last year's third quarter include $1.2 million of estimated
revenue and $0.8 million in related cost of revenues that were lost
due to Hurricanes Katrina and Rita, and exclude $1.6 million of
non-recurring commission expense and $2.0 million of casualty loss
expenses and other non-recurring receivable write-off expenses. 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.
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;
-- unanticipated changes in the amount of our diluted common
shares outstanding; and
-- unanticipated expenses or other contingencies incurred in
connection with our compliance with Section 404 of the
Sarbanes-Oxley Act of 2002.
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 Nine Months Ended
September 30, September 30,
-------------------- ---------------------
2006 2005 2006 2005
---------- --------- ---------- ----------
REVENUES:
Cash advance $ 75,877 $ 60,298 $ 212,075 $ 175,009
ATM 57,498 46,572 165,243 135,561
Check services 7,174 7,088 21,878 20,131
Central Credit and other
revenues 2,303 2,637 7,067 8,020
---------- --------- ---------- ----------
Total revenues 142,852 116,595 406,263 338,721
Cost of revenues (102,830) (81,305) (288,473) (230,014)
Operating expenses (15,384) (14,118) (47,310) (38,162)
Amortization (1,297) (1,267) (4,183) (3,926)
Depreciation (1,178) (1,735) (3,292) (5,619)
---------- --------- ---------- ----------
OPERATING INCOME 22,163 18,170 63,005 61,000
---------- --------- ---------- ----------
INTEREST INCOME (EXPENSE),
NET
Interest income 1,155 368 2,579 1,001
Interest expense (10,914) (11,651) (31,863) (33,411)
---------- --------- ---------- ----------
Total interest
income
(expense), net (9,759) (11,283) (29,284) (32,410)
---------- --------- ---------- ----------
INCOME BEFORE INCOME TAX
PROVISION AND MINORITY
OWNERSHIP LOSS 12,404 6,887 33,721 28,590
INCOME TAX PROVISION (4,643) (2,464) (12,791) (10,277)
---------- --------- ---------- ----------
INCOME BEFORE MINORITY
OWNERSHIP LOSS 7,761 4,423 20,930 18,313
MINORITY OWNERSHIP LOSS, net
of tax 54 63 128 156
---------- --------- ---------- ----------
NET INCOME $ 7,815 $ 4,486 $ 21,058 $ 18,469
========== ========= ========== ==========
Earnings per share
Basic $ 0.10 $ 0.12 $ 0.26 $ 0.55
========== ========= ========== ==========
Diluted $ 0.10 $ 0.06 $ 0.26 $ 0.26
========== ========= ========== ==========
Weighted average number of
common shares outstanding
Basic 81,690 36,377 81,622 33,591
Diluted 82,212 72,500 82,061 71,980
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 Nine Months Ended
September 30, September 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Adjusted EBITDA $ 26,981 $ 25,136 $ 78,037 $ 75,231
Minus:
Estimated revenue lost
from hurricanes - (1,198) - (1,198)
Additional commissions
paid to customers - (1,621) - (1,621)
Write-off of check
services receivable - (1,100) - (1,100)
Legal expense associated
with patent infringement
litigation - (815) - (1,537)
Casualty loss from
hurricanes - (45) - (45)
Non-cash compensation
expense (2,373) - (6,697) -
Secondary offering costs 30 - (660) -
Litigation settlement
costs - - (200) -
Plus:
Estimated cost of revenues
associated with lost
revenue from hurricanes - 815 - 815
--------- --------- --------- ---------
EBITDA $ 24,638 $ 21,172 $ 70,480 $ 70,545
========= ========= ========= =========
Minus:
Depreciation (1,178) (1,735) (3,292) (5,619)
Amortization (1,297) (1,267) (4,183) (3,926)
Interest expense (10,914) (11,651) (31,863) (33,411)
Income tax provision (4,643) (2,464) (12,791) (10,277)
Plus:
Interest income 1,155 368 2,579 1,001
Minority ownership loss,
net of tax 54 63 128 156
--------- --------- --------- ---------
Net Income $ 7,815 $ 4,486 $ 21,058 $ 18,469
========= ========= ========= =========
Plus:
Non-cash compensation
expense, net of tax 1,473 - 4,157 -
Secondary offering costs,
net of tax (30) - 660 -
Litigation settlement
costs, net of tax - - 124 -
--------- --------- --------- ---------
Adjusted Net Income $ 9,258 $ 4,486 $ 25,999 $ 18,469
========= ========= ========= =========
Plus:
Deferred tax amortization
related to acquired
goodwill 4,336 3,970 13,008 11,910
--------- --------- --------- ---------
Adjusted Cash Earnings $ 13,594 $ 8,456 $ 39,007 $ 30,379
========= ========= ========= =========
Weighted average number of
common shares outstanding
Basic 81,690 36,377 81,622 33,591
Diluted 82,212 72,500 82,061 71,980
Adjusted Cash Earnings per
Share
Diluted 0.17 0.12 0.48 0.42
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Actual to Adjusted Income Statement Items
(amounts in thousands, except per share)
(unaudited)
- ----------------------------------------------------------------------
Three Months Ended September 30,
2006
-----------------------------------
Actual Adjustment Adjusted Notes
-----------------------------------
REVENUES:
Cash advance $ 75,877 $ 0 $ 75,877
ATM 57,498 0 57,498
Check services 7,174 0 7,174
Central Credit and
other revenues 2,303 0 2,303
------------------------------
Total
revenues 142,852 0 142,852
Cost of revenues (102,830) 0 (102,830)
Operating expenses (15,384) 0 (15,384)
Amortization (1,297) 0 (1,297)
Depreciation (1,178) 0 (1,178)
------------------------------
OPERATING INCOME 22,163 0 22,163
------------------------------
INTEREST INCOME
(EXPENSE), NET
Interest income 1,155 0 1,155
Interest expense (10,914) 0 (10,914)
------------------------------
Total
interest
income
(expense),
net (9,759) 0 (9,759)
------------------------------
INCOME BEFORE INCOME
TAX PROVISION AND
MINORITY OWNERSHIP
LOSS 12,404 0 12,404
INCOME TAX PROVISION (4,643) 0 (4,643)
------------------------------
INCOME BEFORE MINORITY
OWNERSHIP LOSS 7,761 0 7,761
MINORITY OWNERSHIP
LOSS 54 0 54
------------------------------
NET INCOME 7,815 0 7,815
Secondary offering
expenses (30) 0 (30) (e)
Non-cash compensation
costs 1,473 0 1,473 (f)
Deferred tax
amortization 4,336 0 4,336
------------------------------
ADJUSTED CASH EARNINGS$ 13,594 $ 0 $ 13,594
==============================
Diluted Earnings per
Share $ 0.10 $ 0.10
========== ==========
Diluted Cash Earnings
per Share $ 0.17 $ 0.17
========== ==========
Weighted average
number of common
shares outstanding -
Diluted 82,212 82,212
Three Months Ended September 30,
2005
------------------------------------
Actual Adjustment Adjusted Notes
------------------------------------
REVENUES:
Cash advance $ 60,298 $ 774 $ 61,072 (a)
ATM 46,572 266 46,838 (a)
Check services 7,088 138 7,226 (a)
Central Credit and
other revenues 2,637 20 2,657 (a)
-----------------------------
Total
revenues 116,595 1,198 117,793
Cost of revenues (81,305) 806 (80,499)(b)(c)
Operating expenses (14,118) 1,960 (12,158) (d)
Amortization (1,267) 0 (1,267)
Depreciation (1,735) 0 (1,735)
-----------------------------
OPERATING INCOME 18,170 3,964 22,134
-----------------------------
INTEREST INCOME
(EXPENSE), NET
Interest income 368 0 368
Interest expense (11,651) 0 (11,651)
-----------------------------
Total
interest
income
(expense),
net (11,283) 0 (11,283)
-----------------------------
INCOME BEFORE INCOME
TAX PROVISION AND
MINORITY OWNERSHIP
LOSS 6,887 3,964 10,851
INCOME TAX PROVISION (2,464) (1,427) (3,891)
-----------------------------
INCOME BEFORE MINORITY
OWNERSHIP LOSS 4,423 2,537 6,960
MINORITY OWNERSHIP
LOSS 63 0 63
-----------------------------
NET INCOME 4,486 2,537 7,023
Secondary offering
expenses 0 0 0
Non-cash compensation
costs 0 0 0
Deferred tax
amortization 3,970 0 3,970
-----------------------------
ADJUSTED CASH EARNINGS $ 8,456 $ 2,537 $ 10,993
=============================
Diluted Earnings per
Share $ 0.06 $ 0.10
========= ==========
Diluted Cash Earnings
per Share $ 0.12 $ 0.15
========= ==========
Weighted average
number of common
shares outstanding -
Diluted 72,500 72,500
- -------------------------------------------------------------
(a) Estimated revenue loss from hurricanes (total $1,198)
(b) Estimated increased cost of revenue associated with hurricane
loss ($815)
(c) Additional commission payments ($1,621)
(d) Write-off of check services receivable ($1,100), legal expenses
($815) and hurricane casualty loss ($45)
(e) Secondary offering costs paid by Company ($30), non-deductible for
tax purposes
(f) Non-cash stock based compensation expense ($2,373), net of tax
CONTACT: Global Cash Access Holdings, Inc.
Harry Hagerty, CFO, 702-262-5003 (Investor Contact)
or
Katcher Vaughn & Bailey Communications
Eric Davis, 615-248-8202 (Media Contact)