Exhibit 99.1
Global Cash Access Announces Fourth Quarter and Full-Year 2006 Financial Results
Revenue of $141.9 million and Adjusted Diluted Cash EPS of $0.17
in Q4
Revenue of $548.1 million and Adjusted Diluted Cash EPS of $0.64
in 2006
LAS VEGAS--(BUSINESS WIRE)--Feb. 8, 2007--Global Cash Access
Holdings, Inc. ("GCA" or the "Company") (NYSE:GCA) today announced
preliminary, unaudited financial results for the quarter and year
ended December 31, 2006.
Summary Non-GAAP Results
For the quarter ended December 31, 2006, revenues were $141.9
million, an increase of 23.0% over the $115.4 million in revenues
recorded in the same quarter last year. Adjusted Cash Earnings were
$13.6 million in Q4 2006 as compared to $11.1 million in Q4 2005, an
increase of 21.8%. Adjusted Cash Earnings per diluted share were $0.17
in Q4 2006 (on 82.0 million diluted shares) as compared to $0.14 in Q4
2005 (on 81.7 million diluted shares). Adjusted EBITDA was $27.1
million in Q4 2006, an increase of 13.4% from Adjusted EBITDA of $23.8
million in the same period in 2005.
"The fourth quarter of 2006 was a strong finish to a great year in
which we met the financial, product and new market targets we set for
ourselves," commented Kirk Sanford, President and Chief Executive
Officer of GCA. "From a financial perspective, we delivered adjusted
cash EPS that was right in line with the guidance we gave at the
outset of the year. From a product perspective, we doubled the
penetration of 3-in-1 enabled redemption kiosks; received approval for
EDITH enabling us to serve much of the large Native American gaming
market; and launched the Arriva Card with great customer acceptance
and utilization. From a new market perspective, we have positioned
ourselves to participate in Macau and Pennsylvania in 2007, and we
anticipate announcing entry into other new markets in the first half
of 2007."
"In 2006, GCA generated significant free cash flow even in the
face of capital expenditures that doubled," said Harry Hagerty, GCA's
Chief Financial Officer. "We used much of that free cash flow to pay
off nearly $47 million in debt, bringing leverage to 2.6x at year-end.
In addition, we refinanced our remaining bank debt at lower rates and
with improved flexibility."
Recent Highlights
- -- Recorded revenue of $141.9 million, the highest quarterly total
ever recorded by the Company.
- -- Significant increases in key metrics:
-- Same store surcharge revenue up 11.4%
-- Cash advance dollars disbursed up 21.4%
-- ATM transaction volume up 17.9%.
- -- Renewed contract with Foxwoods Resort Casino
- -- Extended contract with Harrah's Entertainment
- -- 3-in-1 Enabled QuickJack(TM) Plus Redemption Kiosk installations
reached 423 as of December 31, 2006.
- -- Installed seven EDITH kiosks at Casino Pauma.
- -- Signed agreement with Galaxy StarWorld, our first customer in
Macau.
- -- Arriva Card rollout continued (statistics as of January 31, 2007):
-- 3,594 accounts
-- $15.4 million in Arriva Card transaction volume
-- Average cash advance transaction amount of $978 vs. $628 on
non-Arriva cards.
GAAP Quarterly and Year End Results
For the fourth quarter of 2006, total revenues were $141.9
million, an increase of 23.0% over the fourth quarter of 2005.
Operating Income (including non-cash compensation expense) in the
fourth quarter of 2006 was $22.2 million, an increase of 4.3% from the
same period in 2005. Net income in the fourth quarter of 2006 was $5.6
million, up 34.7% from $4.1 million in the fourth quarter of 2005.
Diluted earnings per share were $0.07 in the fourth quarter of 2006
(on 82.0 million diluted shares) as compared to $0.05 in the fourth
quarter of 2005 (on 81.7 million diluted shares). Included within
interest expense in the fourth quarter is the write-off of $3.4
million of deferred financing costs associated with the Company's
senior secured credit facilities. The write-off was triggered by the
refinancing entered into in November 2006.
For the year ended December 31, 2006, total revenues were $548.1
million, an increase of 20.7% over 2005. Operating Income (including
non-cash compensation expense) in 2006 was $85.2 million, an increase
of 3.5% from the same period in 2005. Net income in 2006 was $26.6
million, up 17.8% from $22.6 million in 2005. Diluted earnings per
share were $0.32 for 2006 (on 81.9 million diluted shares) as compared
to $0.30 for 2005 (on 74.5 million diluted shares).
Fourth Quarter Results of Operations
Total revenues in the fourth quarter of 2006 were $141.9 million,
an increase of 23.0% from revenues of $115.4 million in the fourth
quarter of 2005. Same store revenues for Cash Advance and ATM
surcharge increased 11.4% in the fourth quarter of 2006.
The following is a comparison of selected revenue components for
the fourth quarter of 2006 to the same period in 2005:
-- Cash advance revenues were up 24.9%, from $60.0 million to
$75.0 million. Cash disbursed increased 21.4%, from $1.20
billion to $1.46 billion. The number of transactions increased
14.8%, from 2.3 million to 2.6 million. The average
transaction amount increased from $524.40 to $554.37. The
average fee increase from 5.00% to 5.14%. Average revenue per
transaction increased 8.8% from $26.22 to $28.52.
-- ATM revenues increased 20.9%, from $46.7 million to $56.5
million. The number of transactions increased 17.9% from 14.9
million to 17.6 million. Cash disbursed was $3.16 billion
compared to $2.57 billion, an increase of 22.8%. Average
revenue per transaction increased 2.6% from $3.13 to $3.21.
-- Check services revenues were $7.3 million, an increase of
16.7%. The face amount of checks warranted increased by 13.4%,
from $289.7 million to $328.4 million. The number of check
warranty transactions grew 7.9%, from 1.14 million to 1.23
million. The average face amount per check warranted grew from
$254.23 to $267.08, an increase of 5.1%. The average check
warranty fee increased from 2.01% to 2.12%. Average check
warranty revenue per transaction increased from $5.11 to
$5.67.
-- Central Credit and other revenues increased 34.2%, from $2.3
million to $3.1 million.
Cost of revenues increased 27.8% in the fourth quarter of 2006 to
$100.8 million from $78.9 million in the fourth quarter of 2005.
Commissions, the largest component of cost of revenues, increased
29.3%. Interchange increased 25.3%, driven largely by the increase in
cash advance volumes.
Operating expenses in the fourth quarter of 2006 were $16.5
million. Operating expenses, excluding non-cash compensation expense,
were $14.1 million in the current quarter, an increase of 11.1% from
operating expenses of $12.7 million in the fourth quarter of 2005.
Depreciation and amortization expense declined 5.8% from $2.6
million in the fourth quarter of 2005 to $2.4 million in the fourth
quarter of 2006.
Interest income was $0.9 million in the fourth quarter of 2006, an
increase of 11.1% from the comparable 2005 period.
Interest expense in the fourth quarter of 2006 was $10.2 million
as compared to $10.8 million in the fourth quarter of 2005. Interest
expense on the Company's borrowings declined $1.4 million due to the
lower level of outstanding indebtedness in the fourth 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
27.9% from $3.2 million in Q4 2005 to $4.1 million in Q4 2006, due
primarily to increases in the LIBOR rate on which those funds are
priced. In the fourth quarter of 2006, we incurred $3.4 million of
write-off of deferred financing costs in connection with the
refinancing of our senior secured credit facility. In the 2005
quarter, we incurred $9.5 million of such expenses in connection with
the early retirement of $82.3 million of the Company's senior
subordinated notes.
Income tax expense in the fourth quarter of 2006 was $3.9 million.
The Company's provision in the fourth quarter of 2006 is based on an
expected effective rate for all of 2006 of 38.8%. The increase in the
expected effective rate for the year resulted from the write-off of
the deferred financing costs in the fourth quarter.
Arriva Card
Arriva Card revenues in the fourth quarter of 2006 were $312
thousand. Cost of revenues and operating expenses for Arriva Card in
the quarter were $1.7 million. Operating loss from Arriva operations
was $1.3 million.
Receivables held by the Company's financing partner were $9.9
million at December 31, 2006. No receivables had been sold by the
financing partner to the Company's Arriva Card subsidiary as of that
date.
Balance Sheet
At December 31, 2006, the Company had cash and cash equivalents of
$41.5 million. Settlement receivables were $137.0 million and
settlement liabilities were $136.1 million.
Total borrowings at December 31, 2006 were $274.5 million,
consisting of $121.7 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 fourth quarter of 2006, the
Company completed a refinancing of the senior secured credit facility
and made a $40.0 million net repayment on the term loan component of
its senior secured credit facilities.
The Company made investments in property, equipment and intangible
assets of $3.1 million during the three months ended December 31,
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 $2.8 million during the three months ended December 31, 2005, which
include purchases of equipment, computer and communications hardware
and software.
Financial Guidance
For the full year of fiscal 2007, the Company currently expects
revenues in a range of $641 million to $652 million and adjusted
diluted cash EPS in a range of $0.75 to $0.77 per share. This
expectation is based on assumed same-store surcharge growth in the
range of 9.0% for the year. While recent trends in same store
surcharges have been higher, the Company believes it is prudent to
forecast the year at levels closer to longer-term historical trends.
Also impacting 2007 expectations is an increase in stock-based
compensation expense of approximately $0.02 per share and a forecasted
loss from Arriva operations of $0.02 per share. The Company expects
revenue and earnings to be higher in the second half of the year than
in the first, as new business commencement - particularly in
Pennsylvania and Macau, will be weighted to the second half of the
year.
For the first quarter of fiscal 2007, the Company currently
expects revenues in a range of $145 million to $147 million and
adjusted diluted cash EPS of approximately $0.17.
Full year and first quarter figures are based on an assumption of
83.0 million diluted shares outstanding. The forecast assumes no share
repurchases in 2007.
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.
Audit of Financial Statements
The audit of the financial statements for the full year 2006 has
not been completed. Adjustments to the financial statements presented
herein may occur as a result of the audit process. As a result,
financial statements included in the Company's Form 10-K for the
fiscal year ended December 31, 2006, may differ from those presented
herein.
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 fourth quarter of
2006 exclude $2.4 million of stock-based compensation expense. 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
2007, 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 Twelve Months Ended
December 31, December 31,
------------------ -------------------
2006 2005 2006 2005
--------- -------- --------- ---------
REVENUES:
Cash advance $74,978 $60,047 $287,053 $235,055
ATM 56,484 46,730 221,727 182,291
Check services 7,289 6,245 29,166 26,376
Central Credit and other
revenues 3,136 2,337 10,202 10,358
--------- -------- --------- ---------
Total revenues 141,887 115,359 548,148 454,080
Cost of revenues (100,778) (78,861) (389,251) (309,002)
Operating expenses (16,503) (12,652) (63,812) (50,685)
Amortization (1,337) (1,368) (5,520) (5,295)
Depreciation (1,077) (1,195) (4,369) (6,814)
--------- -------- --------- ---------
OPERATING INCOME 22,192 21,283 85,196 82,284
--------- -------- --------- ---------
INTEREST INCOME (EXPENSE), NET
Interest income 904 814 3,484 1,815
Interest expense (10,235) (10,755) (42,098) (44,165)
Loss on early extinguishment
of debt (3,417) (9,529) (3,417) (9,529)
--------- -------- --------- ---------
Total interest income
(expense), net (12,748) (19,470) (42,031) (51,879)
--------- -------- --------- ---------
INCOME BEFORE INCOME TAX
(PROVISION) BENEFIT AND
MINORITY OWNERSHIP LOSS 9,444 1,813 43,165 30,405
INCOME TAX (PROVISION) BENEFIT (3,948) 2,268 (16,739) (8,032)
--------- -------- --------- ---------
INCOME BEFORE MINORITY OWNERSHIP
LOSS 5,496 4,081 26,426 22,373
MINORITY OWNERSHIP LOSS, net of
tax 55 39 183 218
--------- -------- --------- ---------
NET INCOME $5,551 $4,120 $26,609 $22,591
========= ======== ========= =========
Earnings per share
Basic $0.07 $0.05 $0.33 $0.49
========= ======== ========= =========
Diluted $0.07 $0.05 $0.32 $0.30
========= ======== ========= =========
Weighted average number of
common shares outstanding
Basic 81,699 81,405 81,641 45,643
Diluted 82,036 81,705 81,921 74,486
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 Twelve Months
Ended Ended
December 31, December 31,
----------------- ------------------
2006 2005 2006 2005
-------- -------- --------- --------
Adjusted EBITDA $27,050 $23,846 $105,086 $94,393
Minus:
Non-cash compensation
expense (2,444) - (9,141) -
Secondary offering costs - - (660) -
Litigation settlement
costs - - (200) -
-------- -------- --------- --------
EBITDA $24,606 $23,846 $95,085 $94,393
======== ======== ========= ========
Minus:
Depreciation (1,077) (1,195) (4,369) (6,814)
Amortization (1,337) (1,368) (5,520) (5,295)
Interest expense (10,235) (10,755) (42,098) (44,165)
Loss on early
extinguishment of debt (3,417) (9,529) (3,417) (9,529)
Income tax provision (3,948) - (16,739) (8,032)
Plus:
Interest income 904 814 3,484 1,815
Minority ownership loss,
net of tax 55 39 183 218
Income tax benefit - 2,268 - -
-------- -------- --------- --------
Net Income $5,551 $4,120 $26,609 $22,591
======== ======== ========= ========
Minus:
Deferred tax asset
adjustment - (3,047) - (3,047)
Plus:
Non-cash compensation
expense, net of tax 1,496 - 5,598 -
Loss on early
extinguishment of debt,
net of tax 2,093 6,099 2,093 6,099
Secondary offering
costs, net of tax - - 660 -
Litigation settlement
costs, net of tax - - 122 -
-------- -------- --------- --------
Adjusted Net Income $9,140 $7,172 $35,082 $25,643
======== ======== ========= ========
Plus:
Deferred tax
amortization related to
acquired goodwill 4,432 3,972 17,728 15,888
-------- -------- --------- --------
Adjusted Cash Earnings $13,572 $11,144 $52,810 $41,531
======== ======== ========= ========
Weighted average number of common
shares outstanding
Basic 81,699 81,405 81,641 45,643
Diluted 82,036 81,705 81,921 74,486
Adjusted Cash Earnings per share
Diluted 0.17 0.14 0.64 0.56
CONTACT: Global Cash Access Holdings, Inc.
Harry Hagerty, CFO, 702-262-5003 (Investor Contact)
or
Katcher Vaughn & Bailey Communications
Stephen A. Horton, 615-248-8202 (Media Contact)