Global Cash Access Reports Second Quarter 2013 Results

LAS VEGAS, Aug. 6, 2013 (GLOBE NEWSWIRE) -- Global Cash Access Holdings, Inc. (the "Company") (NYSE:GCA) announced today financial results for the second quarter ended June 30, 2013.

Key Highlights
  • Other Revenue increased 75% due to Kiosk Sales and Service Revenues, which increased 111% year-over-year
  • Cash Advance Revenue increased 1% primarily due to stronger international revenues year-over-year
  • GCA to provide Scientific Games a Digital Wallet for iLottery

"The second quarter was exciting on many fronts as we continued to execute on our plans to become the leading kiosk provider, to deliver excellent customer service and to become the most complete provider of cash management and payment solutions available to land-based and online gaming operators. Results were in line with expectations and we are pleased to remain on target to meet our full year 2013 guidance expectations. We are especially proud of our recently announced agreement with Scientific Games to provide cash access and wallet services for their iLottery customers," said David Lopez, President and CEO of GCA.

Fiscal Second Quarter 2013 Results

Revenues were $149.1 million for the second quarter 2013, as compared to $147.5 million for the same period in 2012. Operating income was $13.6 million for the second quarter 2013, as compared to $16.0 million for the same period in 2012. Adjusted earnings before interest, taxes, depreciation and amortization and non-cash compensation expense ("Adjusted EBITDA") (see Non-GAAP Financial Information below) were $19.1 million for the second quarter 2013, as compared to $21.4 million for the same period in 2012. The decreases in operating income and Adjusted EBITDA were primarily due to lower operating income in our ATM segment and higher payroll and related expenses and occupancy related expenses, partially offset by higher kiosk sales in the second quarter 2013, as compared to the same period in 2012.

Income from operations before income tax provision was $10.9 million for the second quarter 2013, as compared to $11.9 million for the same period in 2012. Diluted earnings per share from continuing operations were $0.10 for the second quarter 2013 (on 67.0 million diluted shares), as compared to $0.11 for the same period in 2012 (on 67.4 million diluted shares). Diluted shares outstanding for the quarter ended June 30, 2013 include the impact of our stock repurchase program. We repurchased approximately 1.0 million shares and 1.7 million shares of common stock for cash of $7.0 million and $11.7 million, respectively, during the three and six months ended June 30, 2013. Cash earnings per share ("Cash EPS") (see Non-GAAP Financial Information below) were $0.21 for the second quarter 2013, as compared to $0.23 for the same period in 2012.

2013 Outlook

The Company reaffirms its estimates that for the fiscal year ending December 31, 2013, Cash EPS will be between approximately $0.74 and $0.83 (on diluted shares of approximately 67.2 million) and Adjusted EBITDA will be between $70 million and $74 million. This estimated outlook is based primarily upon the combination of the following assumptions: (a) the anticipated impact of less favorable pricing terms associated with several customer contract renewals in 2013; (b) the anticipated impact of certain large customers not renewing their contracts; (c) flat to low growth in the domestic gaming industry; (d) limited new casino openings in 2013; (e) an increase in our kiosk sales and services business in 2013; and (f) continued investment with respect to the Company's technology infrastructure and personnel.

Investor Conference Call and Webcast

The Company will host an investor conference call to discuss its second quarter 2013 results today at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (877) 941-8410 or for international callers by dialing (480) 629-9856. 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 4631205. The replay will be available until August 13, 2013 at 11:59pm ET. 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 2013 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; our ability to replace revenue associated with terminated contracts; our ability to introduce new products and services; 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, 2013, 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 products and related services to approximately 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. 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 STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except earnings per share amounts)
(Unaudited)
         
   Three Months Ended June 30,   Six Months Ended June 30, 
  2013 2012 2013 2012
         
Revenues  $ 149,066  $ 147,465  $ 295,887  $ 298,530
         
Costs and expenses        
Cost of revenues (exclusive of depreciation and amortization)  111,724  108,378  222,822  222,193
Operating expenses  19,479  18,958  38,463  36,446
Depreciation  1,945  1,820  3,513  3,564
Amortization  2,285  2,346  4,555  4,667
Total costs and expenses  135,433  131,502  269,353  266,870
         
Operating income  13,633  15,963  26,534  31,660
         
Other expenses        
Interest expense, net of interest income  2,733  4,063  5,896  8,547
Total other expenses  2,733  4,063  5,896  8,547
         
Income from operations before tax  10,900  11,900  20,638  23,113
         
Income tax provision  4,124  4,816  7,726  8,901
         
Net income  6,776  7,084  12,912  14,212
         
Foreign currency translation  (97)  (217)  (512)  (72)
         
Comprehensive income  $ 6,679  $ 6,867  $ 12,400  $ 14,140
         
Earnings per share        
Basic  $ 0.10  $ 0.11  $ 0.19  $ 0.22
Diluted  $ 0.10  $ 0.11  $ 0.19  $ 0.21
         
Weighted average common shares outstanding        
Basic  66,116  65,774  66,401  65,470
Diluted  66,993  67,383  67,425  66,786
 
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
(Unaudited)
     
     
  At June 30, At December 31,
  2013 2012
ASSETS    
     
Cash and cash equivalents  $ 65,448  $ 153,020
Restricted cash and cash equivalents  200  200
Settlement receivables  123,283  29,484
Other receivables, net of allowances for doubtful accounts of $5.1 million and $6.9 million, respectively  14,102  11,571
Inventory  7,567  7,126
Prepaid expenses and other assets  19,157  18,254
Property, equipment and leasehold improvements, net  19,491  15,441
Goodwill  180,097  180,141
Other intangible assets, net  31,821  33,994
Deferred income taxes, net  97,453  104,664
Total assets  $ 558,619  $ 553,895
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Liabilities    
Settlement liabilities  $ 186,557  $ 182,446
Accounts payable and accrued expenses  55,870  51,190
Borrowings  112,000  121,500
Total liabilities  354,427  355,136
     
     
     
Stockholders' Equity    
Common stock, $0.001 par value, 500,000 shares authorized and 88,561 and 87,545 shares issued at June 30, 2013 and December 31, 2012, respectively  88  87
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and 0 shares outstanding at June 30, 2013 and December 31, 2012, respectively  --  --
Additional paid-in capital  222,797  217,990
Retained earnings  136,526  123,614
Accumulated other comprehensive income  2,046  2,558
Treasury stock, at cost, 22,425 and 20,724 shares at June 30, 2013 and December 31, 2012, respectively  (157,265)  (145,490)
Total stockholders' equity  204,192  198,759
Total liabilities and stockholders' equity  $ 558,619  $ 553,895
 
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
   
   Six Months Ended June 30, 
  2013 2012
     
Cash flows from operating activities    
Net income  $ 12,912  $ 14,212
Adjustments to reconcile net income to cash (used in)/provided by operating activities:    
Depreciation  3,513  3,564
Amortization of intangibles  4,555  4,667
Amortization of financing costs  852  710
Loss on sale or disposal of assets  115  177
Provision for bad debts  3,971  2,027
Stock-based compensation  2,455  2,109
Changes in operating assets and liabilities:    
Settlement receivables  (93,902)  12,838
Other receivables, net  (6,286)  3,150
Inventory  (441)  (837)
Prepaid and other assets  (1,238)  (1,445)
Deferred income taxes  7,211  8,678
Settlement liabilities  4,396  (25,198)
Accounts payable and accrued expenses  1,665  1,117
     
Net cash (used in)/provided by operating activities  (60,222)  25,769
     
Cash flows from investing activities    
Capital expenditures  (7,194)  (5,001)
Proceeds from sale of fixed assets  35  -- 
Changes in restricted cash and cash equivalents  --   255
     
Net cash used in investing activities  (7,159)  (4,746)
     
Cash flows from financing activities    
Issuance costs of amended credit facility  (764)  -- 
Repayments against credit facility  (9,500)  (40,000)
Proceeds from exercise of stock options  2,382  3,602
Purchase of treasury stock  (11,654)  (123)
     
Net cash used in financing activities  (19,536)  (36,521)
     
Effect of exchange rates on cash  (655)  (76)
     
Cash and cash equivalents    
Net decrease for the period  (87,572)  (15,574)
Balance, beginning of the period  153,020  55,535
     
Balance, end of the period  $ 65,448  $ 39,961
     
Supplemental cash flow disclosures    
Cash paid for interest  $ 5,184  $ 5,821
Cash paid for income tax, net of refunds  $ 181  $ 201
Non-cash tenant improvements paid by landlord  $ 2,930  $ -- 
 
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 June 30, Six months ended June 30,
  2013 2012 2013 2012
Reconciliation of net income to cash earnings (amounts in thousands, except earnings per share amounts)        
Net income  $ 6,776  $ 7,084  $ 12,912  $ 14,212
Equity compensation expense  1,284  1,266  2,455  2,109
Deferred income tax  3,812  4,743  7,211  8,678
Amortization  2,285  2,346  4,555  4,667
         
Cash earnings  $ 14,157  $ 15,439  $ 27,133  $ 29,666
         
Diluted weighted average number of common shares outstanding  66,993  67,383  67,425  66,786
         
Diluted cash earnings per share ("Cash EPS")  $ 0.21  $ 0.23  $ 0.40  $ 0.44
         
Reconciliation of operating income to EBITDA and Adjusted EBITDA        
Operating income  $ 13,633  $ 15,963  $ 26,534  $ 31,660
Plus: depreciation and amortization   4,230  4,166  8,068  8,231
         
EBITDA  $ 17,863  $ 20,129  $ 34,602  $ 39,891
         
Equity compensation expense  1,284  1,266  2,455  2,109
         
Adjusted EBITDA  $ 19,147  $ 21,395  $ 37,057  $ 42,000
 
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 PROJECTED YEAR ENDING DECEMBER 31, 2013
(Unaudited)
     
  2013 Guidance Range1
  Low High
Reconciliation of projected net income to projected cash earnings (amounts in thousands, except earnings per share amounts)    
Projected net income  $ 23,000  $ 27,000
Projected equity compensation expense  5,000  5,000
Projected deferred income tax  13,000  15,000
Projected amortization  9,000  9,000
     
Projected cash earnings  $ 50,000  $ 56,000
     
Projected diluted weighted average number of common shares outstanding  67,200  67,200
     
Projected diluted cash earnings per share ("Cash EPS")  $ 0.74  $ 0.83
     
Reconciliation of projected operating income to projected EBITDA and projected Adjusted EBITDA    
Projected operating income  $ 48,000  $ 52,000
Plus: projected depreciation and projected amortization   17,000  17,000
     
Projected EBITDA  $ 65,000  $ 69,000
     
Projected equity compensation expense  5,000  5,000
     
Projected Adjusted EBITDA  $ 70,000  $ 74,000
     
Note:    
1. All figures presented are estimates for the year ending December 31, 2013.    
 
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
SELECTED SEGMENT INFORMATION AND OTHER DATA
(Amounts in thousands, unless otherwise noted) 
(Unaudited)
         
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2013 2012 2013 2012
         
Revenues        
Cash advance  $ 57,292  $ 56,675  $ 115,987  $ 115,036
ATM  72,972  76,603  148,247  156,950
Check services  5,530  6,605  11,401  13,121
Other  13,272  7,582  20,252  13,423
Corporate  --  --  --  --
Total revenues  $ 149,066  $ 147,465  $ 295,887  $ 298,530
         
Operating income        
Cash advance  $ 15,568  $ 16,755  $ 31,313  $ 32,602
ATM  6,230  8,715  13,211  17,669
Check services  3,403  3,781  6,799  7,196
Other  6,350  3,778  9,796  6,890
Corporate  (17,918)  (17,066)  (34,585)  (32,697)
Total operating income  $ 13,633  $ 15,963  $ 26,534  $ 31,660
         
  Three Months Ended June 30, Six Months Ended June 30,
  2013 2012 2013 2012
         
Other data        
Aggregate dollar amount processed (in billions)        
Cash advance  $ 1.2  $ 1.2  $ 2.4  $ 2.4
ATM  $ 3.3  $ 3.5  $ 6.7  $ 7.0
Check warranty  $ 0.3  $ 0.3  $ 0.6  $ 0.6
         
Number of transactions completed (in millions)        
Cash advance  2.2  2.3  4.5  4.6
ATM  16.8  18.6  34.3  37.9
Check warranty  1.0  1.1  1.9  2.2
CONTACT: Investor Relations         702-855-3006         ir@gcamail.com