Global Cash Access Reports Third Quarter 2012 Results, Raises 2012 Guidance and Announces the Authorization of a New $40.0 Million Share Repurchase Program Business Wire LAS VEGAS -- November 07, 2012 Global Cash Access Holdings, Inc. (the "Company") (NYSE:GCA) announced today financial results for the third quarter ended September 30, 2012, raised its 2012 earnings guidance and announced a new $40.0 million share repurchase program. Third Quarter 2012 Highlights *Operating income increased 92% year-over-year to $14.6 million *EBITDA increased 67% year-over-year to $19.0 million *Net income per share, on a diluted basis, increased 233% year-over-year to $0.10 *Cash EPS increased 109% year-over-year to $0.23 “We are extremely pleased with the Company’s performance in the third quarter with Adjusted EBITDA up 56% and Cash EPS up 109% year over year. We continue to remain focused on enhancing our product pipeline, continuously improving execution and sales focus in all facets of our business, building the foundation for international growth and find, foster and execute technology partnerships and acquisitions to grow and expand the company,” said Scott Betts, CEO of Global Cash Access. “We are also pleased to announce today the authorization of a share repurchase program of $40.0 million over the next two years. Over the past few quarters we have been very focused on strengthening our balance sheet and believe share repurchases provide another lever to drive long-term shareholder value.” Third Quarter 2012 Results Revenues were $149.8 million for the third quarter 2012, as compared to revenues of $136.9 million for the same period in 2011. The overall increase in revenues was primarily due to the MCA asset acquisition. Operating income was $14.6 million for the third quarter 2012, an increase of 92%, as compared to $7.6 million for the same period in 2011. Earnings before interest, taxes, depreciation and amortization ("EBITDA") (see Non-GAAP Financial Information below) were $19.0 million for the third quarter 2012, an increase of 67%, as compared to $11.4 million for the same period in 2011. The increase in EBITDA for the third quarter 2012 was primarily a result of both the October 1, 2011 enactment of the Durbin Amendment and its impact on the interchange rates paid by the Company on its debit card transactions, as well as the MCA asset purchase. Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") (see Non-GAAP Financial Information below) were $20.8 million for the third quarter 2012, an increase of 56%, as compared to $13.3 million for the same period in 2011. Income before income tax provision was $11.1 million for the third quarter 2012, an increase of 247%, as compared to $3.2 million for the same period in 2011. Diluted earnings per share from continuing operations were $0.10 for the third quarter 2012 (on 67.6 million diluted shares), as compared to $0.03 for the same period in 2011 (on 64.8 million diluted shares). Cash EPS (see Non-GAAP Financial Information below) was $0.23 for the third quarter 2012, an increase of 109%, from the $0.11 for the same period in 2011. 2012 Outlook The Company increases its prior outlook for the fiscal year ending December 31, 2012, as Cash EPS is expected to be between approximately $0.81 and $0.84 (on diluted shares of approximately 67.5 million), up from its previous guidance of between $0.76 and $0.82, and Adjusted EBITDA is expected to be between approximately $77.0 million and $80.0 million, up from its previous guidance of between $73.0 million and $77.0 million. The Company’s estimate for expected capital expenditures remains unchanged at between $9.0 million and $12.0 million. Share Repurchase Program The Board of Directors has authorized and approved a new share repurchase program granting the Company the authority to repurchase up to $40.0 million of outstanding Company common stock over a two year period, which is expected to commence in the first quarter of 2013. The Company intends to finance the share repurchases with cash on hand. The repurchase program authorizes the Company to buy its common stock from time to time through open market, privately negotiated or other transactions, including pursuant to trading plans established in accordance with Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended, or by a combination of such methods. The share repurchase program is subject to prevailing market conditions and other considerations and may be suspended or discontinued at any time, and supersedes all other outstanding share repurchase programs of the Company. Investor Conference Call and Webcast The Company will host an investor conference call to discuss its results for the three and nine months ended September 30, 2012 today at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (877) 941-4774 or for international callers by dialing (480) 629-9760. A replay will be available at 8:00 p.m. ET and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the PIN is 4570843. The replay will be available until November 14, 2012. The call will be webcast live from the Company’s website at www.gcainc.com under the Investor Relations section. 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 EBITDA, Adjusted EBITDA, Cash Earnings and Cash EPS on a supplemental basis. Reconciliations between GAAP measures and Non-GAAP measures and between actual results and adjusted results are provided at the end of this press release. EBITDA, Adjusted EBITDA, Cash Earnings and Cash EPS are not measures of financial performance under United States Generally Accepted Accounting Principles ("GAAP"). Accordingly, they should not be considered a substitute for net income, operating income, basic or diluted earnings per share or cash flow data prepared in accordance with GAAP. 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: (a) our estimates of 2012 Cash EPS, diluted shares and Adjusted EBITDA and the assumptions upon which they are based; (b) our assumption that there will continue to be a modest improvement in the gaming industry for remainder of 2012; (c) our assumption for 2012 that cash outlays for capital expenditures are expected to be between approximately $9.0 million to $12.0 million; and (d) our belief that EBITDA, Adjusted EBITDA and Cash EPS are widely-referenced financial measures in the financial markets and our belief that references to the foregoing are helpful to investors. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or assumed, including but not limited to the following: the timing and the extent of a recovery in the gaming industry, if any; our ability to enter into a definitive and binding agreement with Live Gamer on commercially reasonable terms, or at all; gaming establishment and patron preferences; national and international economic conditions; changes in gaming regulatory, card association and statutory requirements; regulatory and licensing difficulties; competitive pressures; operational limitations; gaming market contraction; changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; inaccuracies in underlying operating assumptions; unanticipated expenses or capital needs; technological obsolescence; and employee turnover. If any of these assumptions prove to be incorrect, the results contemplated by the forward-looking statements regarding our future results of operations are unlikely to be realized. 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 Annual Report filed on Form 10-K on March 12, 2012, 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, Inc. ("GCA"), a wholly owned subsidiary of Global Cash Access Holdings, Inc., is a leading provider of cash access products and related services to over 1,000 casinos and other gaming properties in the United States, Europe, Canada, the Caribbean, Central America and Asia. GCA's products and services provide gaming patrons access to cash through a variety of methods, including ATM cash withdrawals, point-of-sale debit card transactions, credit card transactions, check verification and warranty services, and Western Union money transfers. Through Western Money Systems, a wholly owned subsidiary, GCA is a leading manufacturer and distributor of cash handling devices and related software. GCA also provides products and services that improve credit decision-making, automate cashier operations and enhance patron marketing activities for gaming establishments. With its proprietary database of gaming patron credit history and transaction data on millions of gaming patrons worldwide, GCA is recognized for successfully developing and deploying technological innovations that increase client profitability, operational efficiency and customer loyalty. More information is available at GCA's website at www.gcainc.com. GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands, except par value) (unaudited) September 30, December 31, 2012 2011 ASSETS Cash and cash equivalents $ 46,940 $ 55,535 Restricted cash and cash equivalents 200 455 Settlement receivables 113,989 80,246 Other receivables, net 10,076 16,885 Inventory 7,266 7,087 Prepaid expenses and other assets 16,564 15,406 Property, equipment and leasehold 14,357 15,577 improvements, net Goodwill, net 180,152 180,122 Other intangible assets, net 33,327 38,216 Deferred income taxes, net 106,484 119,538 Total assets $ 529,355 $ 529,067 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Settlement liabilities $ 158,438 $ 141,827 Accounts payable 34,809 32,223 Accrued expenses 18,608 21,159 Borrowings 126,500 174,000 Total liabilities 338,355 369,209 COMMITMENTS AND CONTINGENCIES Stockholders' Equity: Common stock, $0.001 par value, 500,000 shares authorized and 87,375 and 85,651 87 86 shares issued at September 30, 2012 and December 31, 2011, respectively Convertible preferred stock, $0.001 par value, 50,000 shares authorized and 0 - - shares outstanding at September 30, 2012 and December 31, 2011, respectively Additional paid-in capital 214,612 204,735 Retained earnings 119,216 97,925 Accumulated other comprehensive income 2,504 2,340 Treasury stock, at cost, 20,714 and 20,686 shares at September 30, 2012 and December (145,419 ) (145,228 ) 31, 2011, respectively Total stockholders' equity 191,000 159,858 Total liabilities and stockholders' equity $ 529,355 $ 529,067 GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (amounts in thousands, except per share) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2012 2011 2012 2011 Revenues Cash advance $ 57,520 $ 50,913 $ 172,557 $ 152,036 ATM 76,411 71,044 233,361 213,450 Check services 6,611 6,479 19,731 19,813 Other revenues 9,282 8,452 22,705 21,031 Total revenues 149,824 136,888 448,354 406,330 Cost of 111,373 106,953 333,566 317,900 revenues Operating 19,463 18,529 55,910 51,922 expenses Amortization 2,650 1,929 7,317 6,250 Depreciation 1,695 1,867 5,260 6,201 Operating 14,643 7,610 46,301 24,057 income Interest expense, net of 3,586 4,414 12,133 14,167 interest income Loss on early extinguishment - - - 943 of debt Interest 3,586 4,414 12,133 15,110 expense, net Income before income tax 11,057 3,196 34,168 8,947 provision Income tax 3,977 1,356 12,878 4,356 provision Net income 7,080 1,840 21,290 4,591 Foreign currency 236 (218 ) 164 (191 ) translation Comprehensive $ 7,316 $ 1,622 $ 21,454 $ 4,400 income Basic earnings per share: Net income per $ 0.11 $ 0.03 $ 0.32 $ 0.07 share - basic Diluted earnings per share: Net income per $ 0.10 $ 0.03 $ 0.32 $ 0.07 share - diluted Weighted average number of common shares outstanding: Basic 66,108 64,712 65,673 64,597 Diluted 67,601 64,751 67,031 64,708 GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (amounts in thousands) (unaudited) Nine Months Ended September 30, 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 21,290 $ 4,591 Adjustments to reconcile net income to cash provided by operating activities: Amortization of financing costs 1,081 988 Amortization of intangibles 7,317 6,250 Depreciation 5,260 6,201 Loss on sale or disposal of assets 112 216 Provision for bad debts 2,586 4,016 Loss on early extinguishment of debt - 943 Stock-based compensation 3,951 5,238 Changes in operating assets and liabilities: Settlement receivables (33,676 ) 10,266 Other receivables, net 5,682 (829 ) Inventory (6 ) (2,575 ) Prepaid and other assets (1,329 ) (3,477 ) Deferred income taxes 12,556 4,092 Settlement liabilities 16,509 (12,221 ) Accounts payable 2,582 505 Accrued expenses (2,496 ) (4,030 ) Net cash provided by operating activities 41,419 20,174 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, equipment, leasehold (7,353 ) (6,227 ) improvements and other intangibles Proceeds from sale of fixed assets 448 - Changes in restricted cash and cash 255 (14 ) equivalents Net cash used in investing activities (6,650 ) (6,241 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repayments against old credit facility - (208,750 ) Securing of new credit facility - 214,000 Issuance costs of new credit facility (676 ) (7,099 ) Repayments against new credit facility (47,500 ) (35,000 ) Proceeds from exercise of stock options 5,946 591 Purchase of treasury stock (191 ) (156 ) Net cash used in financing activities (42,421 ) (36,414 ) NET EFFECT OF EXCHANGE RATE CHANGES ON (943 ) 191 CASH AND CASH EQUIVALENTS NET DECREASE IN CASH AND CASH EQUIVALENTS (8,595 ) (22,290 ) CASH AND CASH EQUIVALENTS - Beginning of 55,535 60,636 Period CASH AND CASH EQUIVALENTS - End of Period $ 46,940 $ 38,346 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 11,402 $ 15,202 Cash paid for taxes, net of refunds $ 267 $ 336 GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO CASH EARNINGS AND OPERATING INCOME TO EBITDA AND ADJUSTED EBITDA (unaudited) Three months ended Nine months ended September 30, September 30, 2012 2011 2012 2011 Reconciliation of net income to cash earnings (amounts in thousands, except earnings per share amounts) Net income $ 7,080 $ 1,840 $ 21,290 $ 4,591 Equity compensation 1,842 1,902 3,951 5,238 expense Deferred income tax 3,878 1,337 12,556 4,092 Amortization 2,650 1,929 7,317 6,250 Cash earnings $ 15,450 $ 7,008 $ 45,114 $ 20,171 Diluted weighted average number of 67,601 64,751 67,031 64,708 common shares outstanding Diluted cash earnings per share ("Cash $ 0.23 $ 0.11 $ 0.67 $ 0.31 EPS")^1 Reconciliation of operating income to EBITDA and Adjusted EBITDA Operating income $ 14,643 $ 7,610 $ 46,301 $ 24,057 Plus: depreciation and 4,345 3,796 12,577 12,451 amortization EBITDA $ 18,988 $ 11,406 $ 58,878 $ 36,508 Equity compensation 1,842 1,902 3,951 5,238 expense Adjusted EBITDA $ 20,830 $ 13,308 $ 62,829 $ 41,746 Notes: 1. For the nine months ended September 30, 2011, there were approximately $4.2 million of non-recurring expenses that impacted Cash EPS by approximately $0.06. GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES SELECTED SEGMENT INFORMATION AND OTHER DATA (unaudited) (amounts in thousands, unless otherwise noted) Cash Check Advance ATM Services Other Corporate Total Three Months Ended September 30, 2012 Revenues $ 57,520 $ 76,411 $ 6,611 $ 9,282 $ - $ 149,824 Operating 15,785 7,951 3,822 4,673 (17,588 ) 14,643 income Three Months Ended September 30, 2011 Revenues $ 50,913 $ 71,044 $ 6,479 $ 8,452 $ - $ 136,888 Operating 7,789 8,659 3,579 4,393 (16,810 ) 7,610 income Nine Months Ended September 30, 2012 Revenues $ 172,557 $ 233,361 $ 19,731 $ 22,705 $ - $ 448,354 Operating 48,388 25,620 11,017 11,563 (50,287 ) 46,301 income Nine Months Ended September 30, 2011 Revenues $ 152,036 $ 213,450 $ 19,813 $ 21,031 $ - $ 406,330 Operating 23,375 27,157 11,168 10,029 (47,672 ) 24,057 income Three Months Ended Nine Months Ended September 30, September 30, September September 2012 2011 30, 2012 30, 2011 $ $ $ $ Other data (unaudited): Aggregate dollar amount processed (in billions): Cash advance $ 1.2 $ 1.1 $ 3.6 $ 3.2 ATM $ 3.4 $ 3.0 $ 10.5 $ 9.2 Check warranty $ 0.3 $ 0.3 $ 0.9 $ 0.9 Number of transactions completed (in millions): Cash advance 2.3 2.1 6.9 6.3 ATM 18.1 17.0 56.0 52.0 Check warranty 1.1 1.1 3.3 3.3 Contact: ICR Investor Relations Don Duffy, 203-682-8215 IR@gcamail.com or Media Relations Liz Brady, 646-277-1226 firstname.lastname@example.org
Global Cash Access Reports Third Quarter 2012 Results, Raises 2012 Guidance and Announces the Authorization of a New $40.0
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