Entertainment Gaming Asia Inc. (NYSE Amex:EGT) (“Entertainment Gaming Asia” or “the Company”), a leading provider of electronic gaming machines (EGMs) on a participation basis to the Pan-Asian gaming industry, today reported operating results for the first quarter ended March 31, 2011 and reviewed recent corporate progress.
- Net income was $692,000 or $0.01 per share for the first quarter of 2011 compared to a net loss of $1.7 million or a $0.01 loss per share for the first quarter of 2010.
- Consolidated adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and non-cash charges) was $3.0 million for the first quarter of 2011 compared to $1.3 million for the first quarter of 2010.
- Total net revenue from EGMs on participation for the first quarter of 2011 was a record high $4.2 million, an increase of 47% from the first quarter of 2010.
- Average consolidated win per unit per day (WUD) for the first quarter of 2011 was a record high of $134, an increase of 25% from the first quarter of 2010.
- As of May 1, 2011, total installed EGM seats in operation were 1,515 in seven venues, comprised of five venues in the Philippines with a total of 792 seats and two venues in Cambodia with a total of 723 seats.
- On April 30, 2011, one under-performing venue in the Philippines with 121 EGM seats was closed providing the Company the opportunity to redeploy these assets to higher-performing venues.
- Cash selling, general and administrative (SG&A) expense was $1.1 million for the first quarter of 2011, a decrease of 22% from the first quarter of 2010.
- Cash balance of $12.5 million as of March 31, 2011.
- The Company is making progress on the development of its casino project in the Kampot province of Cambodia near the Vietnam border with construction to begin in June 2011 with expected completion of the initial phase by the end of 2011.
Q1 2011 Financial ReviewBeginning in the fiscal year 2011, the Company reclassified its reporting segments to include: “gaming”, which consists of its gaming machine participation and future casino operations; and “other products,” which consolidates the previously reported “table game products” and “non-gaming products” segments. All new reporting segment information has been applied retrospectively to all periods presented. Entertainment Gaming Asia’s first quarter of 2011 consolidated revenue was $6.2 million, an increase of 43% compared to $4.4 million in the first quarter of 2010 due to strong improvement in the Company’s gaming participation operations and increasing sales in the Company’s other products division. Revenue from EGMs on participation was $4.2 million in the first quarter of 2011, an increase of 47% compared to $2.8 million in the first quarter of 2010. The increase reflected improved consolidated average WUD and higher installed base of EGMs.
|EGM Seats in Operation|
|* WUD figures exclude EGMs operating under a new venue’s soft launch or when a venue’s revenue is collected on a cash rather than accrual basis. As a result, 166 EGMS seats were excluded from the above first quarter of 2011 WUD calculation. Were these seats included in the first quarter of 2011 WUD calculation, WUD for this period would have been $209 for Cambodia, $55 for Philippines, and $124 for the consolidated average.|
Based on the Company’s solid revenue performance and strict cost controls, Entertainment Gaming Asia reported adjusted EBITDA of $3.0 million for the first quarter of 2011, up 128% from $1.3 million for the first quarter of 2010.Entertainment Gaming Asia reported net income of $692,000, or $0.01 per share, on a weighted average diluted share count of approximately 119 million shares for the first quarter of 2011. This compared to a net loss of $1.7 million, or a $0.01 loss per share, on a weighted average diluted share count of approximately 115.0 million shares for the first quarter of 2010. Kampot Project Update On March 8, 2011, the Company announced its plans to develop and operate a casino in the Kampot province of Cambodia strategically located near the Vietnam border. The casino, which will be named Dreamworld Casino Kampot, is initially intended to include up to 14 table games and 25 EGM seats. The Company has received the gaming license and subject to the remaining government approval, the initial phase is expected to begin construction in June of this year and be completed by the end of 2011. Clarence Chung, Chairman and Chief Executive Officer of Entertainment Gaming Asia, concluded, “We are making progress in executing our strategic growth initiatives to develop and operate regional casinos under our “Dreamworld” brand in the Indo-China region. We believe our Kampot project is a strategic step in achieving this objective as it provides the potential for near-term earnings and long-term growth while further establishing our footprint and the “Dreamworld” brand in our target markets." “Based on our current cash flow generation, growing cash position, and ability to pace project development in phases, we believe we are well positioned to pursue additional casino development projects. We remain in active negotiations on potential new projects in the region to selectively build a solid pipeline of opportunities to achieve our goal of becoming a leading regional casino operator in the growing markets of Indo China.”
Entertainment Gaming Asia is hosting a conference call and simultaneous webcast at 8:30 a.m. ET today, May 16, 2011, both of which are open to the general public. The conference call number is 800/909-4804 or 212/231-2903. Questions and answers will be reserved for call-in analysts and investors. Interested parties may also access the live call on the Internet at www.EGT-Group.com. Please allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the call can be accessed for thirty days on the Internet at www.EGT-Group.comAbout Entertainment Gaming Asia Inc. Entertainment Gaming Asia Inc. (NYSE Amex: EGT) is a leading provider of electronic gaming machines on a participation basis to the Pan-Asian gaming industry. The Company secures long-term contracts to provide electronic gaming machines and related systems to premier hotels and other well-located gaming venues in Asia. The Company retains ownership of the gaming machines and systems and receives recurring daily or monthly fees based on an agreed upon percentage of the net gaming win per machine and provides on-site maintenance. Entertainment Gaming Asia Inc. is also engaged in the development of casinos in Indo China where intends to own and operate casino resorts under the “Dreamworld” brand. For more information please visit www.EGT-Group.com. Forward Looking Statements This press release contains forward-looking statements concerning Entertainment Gaming Asia within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those forward-looking statements include statements regarding expectations for the expansion of the Company’s participation business model, the timeline and working capital requirements for the Kampot casino project, the near-term earnings of the Kampot casino project, growth of the gaming industry in the Indo-China region and the Company’s ability to secure new casino projects and fund those projects as well. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to differences include, but are not limited to, risks related to Entertainment Gaming Asia’s ability to place gaming machines at significant levels and generate the expected amount of net win from the gaming machines placed, obtain the gaming license and building permits for the casino projects on a timely basis or at all, identify, procure successfully develop additional casino projects in the Indo-China region, acquire additional capital as and when needed and those other risks set forth in Entertainment Gaming Asia’s annual report on Form 10-K for the year ended December 31, 2010 filed with the SEC on March 30, 2011 and subsequently filed quarterly reports on Form 10-Q. Entertainment Gaming Asia cautions readers not to place undue reliance on any forward-looking statements. Entertainment Gaming Asia does not undertake, and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.
- financial tables follow -
|Entertainment Gaming Asia Inc. Consolidated Statements of Operations (Unaudited)|
|Three-Month Period Ended March 31,|
|(amounts in thousands, except per share data)||2011||2010|
|Operating costs and expenses:|
|Cost of gaming:|
|Casino contract amortization||619||—|
|Other operating costs||282||226|
|Cost of other products||1,764||1,491|
|Selling, general and administrative||1,188||1,422|
|Stock-based compensation expense||223||294|
|Impairment of assets||—||116|
|Product development expenses||80||85|
|Depreciation and amortization||30||229|
|Total operating costs and expenses||5,386||5,786|
|Income/(loss) from operations||849||(1,418||)|
|Interest expense and finance fees||(94||)||(122||)|
|Foreign currency (losses)/gains||(7||)||9|
|Total other expense||(18||)||(10||)|
|Income/(loss) before income tax||831||(1,428||)|
|Income tax expense||(139||)||(235||)|
|Basic and diluted earnings/(loss) per share||$||0.01||$||(0.01||)|
|Weighted average common shares outstanding|
|Entertainment Gaming Asia Inc. Consolidated Balance Sheets|
|March 31, 2011||December 31, 2010|
|(amounts in thousands, except per share data)||(Unaudited)|
|Cash and cash equivalents||$||12,462||$||10,217|
|Accounts receivable, net||2,247||2,854|
|Assets held for sale||423||422|
|Prepaid expenses and other current assets||673||1,051|
|Total current assets||17,980||15,709|
|Electronic gaming machines and systems, net||11,483||12,360|
|Property and equipment, net||2,081||1,941|
|Intangible assets, net||134||140|
|Contract amendment fees||531||558|
|Prepaids, deposits, and other assets||572||561|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Amount due to a related party||15||14|
|Notes payable to a related party, current portion||4,515||2,991|
|Capital lease obligations, current portion||167||164|
|Customer deposits and other current liabilities||295||251|
|Total current liabilities||8,012||6,707|
|Notes payable to a related party, net of current portion||4,687||6,211|
|Capital lease obligations, net of current portion||269||307|
|Deferred tax liability||175||71|
|Common stock, $.001 par value, 300,000,000 shares authorized; 116,739,393 and 116,189,394 shares issued and outstanding||117||116|
|Accumulated other comprehensive income||671||568|
|Retained earnings since January 1, 2011 ($386.1 million accumulated deficit eliminated)||692||—|
|Total EGT stockholders’ equity||31,351||30,322|
|Total stockholders’ equity||31,352||30,322|
|Total liabilities and stockholders’ equity||$||44,952||$||44,059|
|Entertainment Gaming Asia Inc. Adjusted EBITDA (Unaudited)|
|Three-Month Periods Ended March 31,|
|(amounts in thousands)||2011||2010|
|Net income/(loss) – GAAP basis||$||692||$||(1,663||)|
|Income tax expense||139||235|
|Depreciation and amortization||1,889||2,231|
|Stock-based compensation expense||223||294|
|Impairment of assets||—||116|
|EBITDA, as adjusted||$||3,014||$||1,323|
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