Global Cash Access Reports Fourth Quarter and Full Year 2013 Results

Global Cash Access, Inc. Logo

LAS VEGAS, March 11, 2014 (GLOBE NEWSWIRE) -- Global Cash Access Holdings, Inc. (the "Company") (NYSE:GCA) announced today financial results for the fourth quarter and year ended December 31, 2013.

Fourth Quarter 2013 Highlights

  • Revenues increased 3% to $140.5 million
  • Operating income increased 15% to $11.2 million
  • Diluted EPS increased 33% to $0.08
  • Adjusted EBITDA increased 4% to $17.1 million
  • Cash EPS increased 12% to $0.19

Fourth Quarter 2013 Results

Revenues increased by $4.4 million, or 3%, to $140.5 million for the fourth quarter 2013, as compared to the same period last year. Operating income increased by $1.5 million, or 15%, to $11.2 million for the fourth quarter 2013, as compared to the same period last year. Adjusted earnings before interest, taxes, depreciation and amortization and non-cash compensation expense ("Adjusted EBITDA") (see Non-GAAP Financial Information below) increased by $0.7 million, or 4%, to $17.1 million for the fourth quarter 2013, as compared to the same period last year. These increases were primarily due to higher kiosk sales in the fourth quarter 2013, as compared to the same period last year.

Income from operations before income tax provision increased by $2.8 million, or 44%, to $9.1 million for the fourth quarter 2013, as compared to the same period last year. Diluted earnings per share from continuing operations increased by $0.02, or 33%, to $0.08 for the fourth quarter 2013 (on 67.4 million diluted shares), as compared to the same period last year. Cash earnings per share ("Cash EPS"), (see Non-GAAP Financial Information below) increased by $0.02, or 12%, to $0.19 for the fourth quarter 2013, as compared to the same period last year.

Full Year 2013 Results

Revenues decreased by $2.0 million, or less than 1%, to $582.4 million for the full year 2013, as compared to the same period last year. Operating income decreased by $6.8 million, or 12%, to $49.2 million for the full year 2013, as compared to the same period last year. Adjusted EBITDA decreased by $8.1 million, or 10%, to $71.2 million for the full year 2013, as compared to the same period last year. The decreases in operating income and Adjusted EBITDA were primarily due to lower results in our core cash access segments, partially offset by the growth in kiosk sales.

Income from operations before income tax provision decreased by $1.6 million, or 4%, to $38.9 million for the full year 2013, as compared to the same period last year. Diluted earnings per share from continuing operations decreased by $0.02, or 5%, to $0.36 for the full year 2013 (on 67.2 million diluted shares), as compared to the same period last year. Cash EPS decreased by $0.06, or 7%, to $0.78 for the full year 2013, as compared to the same period last year.

2014 Outlook

For the full year ending December 31, 2014, the Company estimates that Cash EPS will be between approximately $0.82 and $0.87 (on diluted shares of approximately 67.1 million) and Adjusted EBITDA will be between $73.0 million and $76.0 million. This outlook is based primarily upon the combination of the following assumptions: (a) growth in our kiosk sales and services business in 2014; (b) flat to low growth in the domestic gaming industry; (c) the anticipated impact of less favorable pricing terms associated with several customer contract renewals in 2013 and 2014; and (d) the reduced interest rates paid on our credit facility.

Investor Conference Call and Webcast

The Company will host an investor conference call to discuss its fourth quarter and full year 2013 results today at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (877) 941-2068 or for international callers by dialing (480) 629-9712. 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 number is 4671370. The replay will be available until March 18, 2014. 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. We present Adjusted EBITDA and Cash EPS as we consider these measures to be supplemental to our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA; and our credit facility requires us to comply with covenants that include performance metrics substantially similar to Adjusted EBITDA. 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 2014 cash earnings per share and Adjusted EBITDA and the assumptions and factors upon which they are based; and (b) our belief that cash earnings per share and Adjusted EBITDA are widely-referenced financial measures in the financial markets and 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 replace revenue associated with terminated contracts; margin degradation from contract renewals; our ability to introduce new products and services; our ability to execute on mergers, acquisitions and/or strategic alliances; 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 11, 2014, and subsequent periodic reports 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 services and related equipment and services to the gaming industry. GCA's products and services: (a) provide gaming establishment patrons access to cash through a variety of methods, including Automated Teller Machine ("ATM") cash withdrawals, credit card cash access transactions, point-of-sale ("POS") debit card transactions, check verification and warranty services and money transfers; (b) provide cash access devices and related services, such as slot machine ticket redemption and jackpot kiosks to the gaming industry; (c) provide products and services that improve credit decision making, automate cashier operations and enhance patron marketing activities for gaming establishments; and (d) provide online payment processing solutions for gaming operators in States that offer intra-state, Internet-based gaming and lottery activities. More information is available at GCA's website at www.gcainc.com.

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except earnings per share amounts)
Year Ended December 31,
2013 2012 2011
Revenues $ 582,444 $ 584,486 $ 544,063
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization) 439,794 436,059 419,606
Operating expenses 76,562 75,806 69,517
Depreciation 7,350 6,843 7,971
Amortization 9,588 9,796 8,673
Total costs and expenses 533,294 528,504 505,767
Operating income 49,150 55,982 38,296
Other expenses
Interest expense, net of interest income 10,265 15,519 18,638
Loss on early extinguishment of debt -- -- 943
Total other expenses 10,265 15,519 19,581
Income from operations before tax 38,885 40,463 18,715
Income tax provision 14,487 14,774 9,586
Net income 24,398 25,689 9,129
Foreign currency translation 269 218 (247)
Comprehensive income $ 24,667 $ 25,907 $ 8,882
Earnings per share
Basic $ 0.37 $ 0.39 $ 0.14
Diluted $ 0.36 $ 0.38 $ 0.14
Weighted average common shares outstanding
Basic 66,014 65,933 64,673
Diluted 67,205 67,337 64,859
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
At December 31,
2013 2012
ASSETS
Cash and cash equivalents $ 114,254 $ 153,020
Restricted cash and cash equivalents 290 200
Settlement receivables 38,265 29,484
Other receivables, net of allowances for doubtful accounts of $2.8 million and $6.9 million, respectively 16,962 11,571
Inventory 9,413 7,126
Prepaid expenses and other assets 26,770 18,254
Property, equipment and leasehold improvements, net 18,710 15,441
Goodwill 180,084 180,141
Other intangible assets, net 31,535 33,994
Deferred income taxes, net 91,044 104,664
Total assets $ 527,327 $ 553,895
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Settlement liabilities $ 145,022 $ 182,446
Accounts payable and accrued expenses 60,701 51,190
Borrowings 103,000 121,500
Total liabilities 308,723 355,136
Stockholders' Equity
Common stock, $0.001 par value, 500,000 shares authorized and 89,233 and 87,545 shares issued at December 31, 2013 and December 31, 2012, respectively 89 87
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and 0 shares outstanding at December 31, 2013 and December 31, 2012, respectively -- --
Additional paid-in capital 231,516 217,990
Retained earnings 148,012 123,614
Accumulated other comprehensive income 2,827 2,558
Treasury stock, at cost, 23,303 and 20,724 shares at December 31, 2013 and December 31, 2012, respectively (163,840) (145,490)
Total stockholders' equity 218,604 198,759
Total liabilities and stockholders' equity $ 527,327 $ 553,895
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2013 2012 2011
Cash flows from operating activities
Net income $ 24,398 $ 25,689 $ 9,129
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation 7,350 6,843 7,971
Amortization of intangibles 9,588 9,796 8,673
Amortization of financing costs 1,793 1,485 1,343
Loss on sale or disposal of assets 178 95 991
Provision for bad debts 7,874 5,182 5,959
Loss on early extinguishment of debt -- -- 943
Stock-based compensation 5,078 6,655 6,809
Changes in operating assets and liabilities:
Settlement receivables (8,793) 50,823 (69,881)
Other receivables, net (13,335) 1,196 (8,125)
Inventory (2,286) 134 (3,146)
Prepaid and other assets (9,482) (3,425) (2,323)
Deferred income taxes 13,643 14,376 9,252
Settlement liabilities (37,200) 40,530 82,125
Accounts payable and accrued expenses 5,528 (1,891) 4,532
Net cash provided by operating activities 4,334 157,488 54,252
Cash flows from investing activities
Acquisitions, net of cash acquired -- -- (10,763)
Capital expenditures (13,986) (13,654) (7,420)
Proceeds from sale of fixed assets 86 868 --
Changes in restricted cash and cash equivalents (90) 255 --
Net cash used in investing activities (13,990) (12,531) (18,183)
Cash flows from financing activities
Repayments against prior credit facility -- -- (208,750)
Securing of credit facility -- -- 214,000
Issuance costs of amended credit facility (764) (676) (7,099)
Repayments against credit facility (18,500) (52,500) (40,000)
Proceeds from exercise of stock options 8,431 6,655 812
Purchase of treasury stock (18,350) (262) (190)
Net cash used in financing activities (29,183) (46,783) (41,227)
Effect of exchange rates on cash 73 (689) 57
Cash and cash equivalents
Net (decrease)/increase for the period (38,766) 97,485 (5,101)
Balance, beginning of the period 153,020 55,535 60,636
Balance, end of the period $ 114,254 $ 153,020 $ 55,535
Supplemental cash flow disclosures
Cash paid for interest $ 8,634 $ 15,494 $ 19,166
Cash paid for income tax, net of refunds $ 711 $ 665 $ 366
Non-cash tenant improvements paid by landlord $ 2,930 $ -- $ --
Accrued and unpaid capital expenditures $ 1,073 $ -- $ --
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 December 31, Twelve months ended December 31,
2013 2012 2013 2012
Reconciliation of net income to cash earnings (amounts in thousands, except earnings per share amounts)
Net income $ 5,704 $ 4,399 $ 24,398 $ 25,689
Equity compensation expense 1,376 2,704 5,078 6,655
Deferred income tax 3,308 1,820 13,643 14,376
Amortization 2,614 2,479 9,588 9,796
Cash earnings $ 13,002 $ 11,402 $ 52,707 $ 56,516
Diluted weighted average number of common shares outstanding 67,394 67,996 67,205 67,337
Diluted cash earnings per share ("Cash EPS") $ 0.19 $ 0.17 $ 0.78 $ 0.84
Reconciliation of operating income to EBITDA and Adjusted EBITDA
Operating income $ 11,196 $ 9,681 $ 49,150 $ 55,982
Plus: depreciation and amortization 4,543 4,062 16,938 16,639
EBITDA $ 15,739 $ 13,743 $ 66,088 $ 72,621
Equity compensation expense 1,376 2,704 5,078 6,655
Adjusted EBITDA $ 17,115 $ 16,447 $ 71,166 $ 79,276
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF PROJECTED NET INCOME TO PROJECTED CASH EARNINGS
AND PROJECTED OPERATING INCOME TO PROJECTED EBITDA AND PROJECTED ADJUSTED EBITDA
FOR THE YEAR ENDING DECEMBER 31, 2014
2014 Guidance Range1
Low High
Reconciliation of projected net income to projected cash earnings (amounts in thousands, except earnings per share amounts)
Projected net income $ 24,700 $ 26,600
Projected equity compensation expense 5,800 5,800
Projected deferred income tax 14,000 15,100
Projected amortization 10,600 10,600
Projected cash earnings $ 55,100 $ 58,100
Projected diluted weighted average number of common shares outstanding 67,100 67,100
Projected diluted cash earnings per share ("Cash EPS") $ 0.82 $ 0.87
Reconciliation of projected operating income to projected EBITDA and projected Adjusted EBITDA
Projected operating income $ 48,100 $ 51,100
Plus: projected depreciation and projected amortization 19,100 19,100
Projected EBITDA $ 67,200 $ 70,200
Projected equity compensation expense 5,800 5,800
Projected Adjusted EBITDA $ 73,000 $ 76,000
Note:
1. All figures presented are projected estimates for the year ending December 31, 2014.
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
OTHER INFORMATION AND DATA
(unaudited)
(amounts in thousands, unless otherwise noted)
For and At the Year Ended December 31,
2013 2012 2011
Revenues
Cash advance $ 231,134 $ 227,517 $ 203,869
ATM 286,049 303,159 283,727
Check services 21,611 25,401 26,269
Other 43,650 28,409 30,198
Corporate -- -- --
Total revenues $ 582,444 $ 584,486 $ 544,063
Operating income
Cash advance $ 60,977 $ 63,785 $ 38,468
ATM 25,347 32,333 34,832
Check services 12,365 13,930 14,197
Other 19,631 14,457 14,808
Corporate (69,170) (68,523) (64,009)
Total operating income $ 49,150 $ 55,982 $ 38,296
For the Year Ended December 31,
2013 2012 2011
Other data
Aggregate dollar amount processed (in billions)
Cash advance $ 4.9 $ 4.8 $ 4.3
ATM $ 12.9 $ 13.6 $ 12.2
Check warranty $ 1.1 $ 1.2 $ 1.1
Number of transactions completed (in millions)
Cash advance 8.8 9.0 8.4
ATM 66.2 72.3 68.8
Check warranty 3.7 4.3 4.4

CONTACT: Investor Relations Don Duffy, ICR (203) 682-8215 ir@gcamail.com Investor Relations William Maina, ICR (646) 277-1236 ir@gcamail.com Media Relations Phil Denning, ICR (646) 277-1258 ir@gcamail.com

Source:Global Cash Access, Inc.