COQUITLAM, BC, May 6, 2019
COQUITLAM, BC, May 6, 2019 /CNW/ - Great Canadian Gaming Corporation [TSX:GC] ("Great Canadian," or "the Company") today announced its financial results for the three month period ended March 31, 2019 (the "first quarter").
FIRST QUARTER 2019 HIGHLIGHTS
- Revenues of $312.1 million in the first quarter, an increase of 35% when compared to the same period in the prior year.
- Adjusted EBITDA(1)(2) of $111.6 million in the first quarter, which included a $20.8 million positive impact from IFRS 16 adoption. Adjusted EBITDA of $88.9 million in the same prior year period.
- Shareholders' net earnings(2) of $32.6 million or $0.55 per common share in the first quarter, which had a $2.2 million or $0.04 per common share negative impact from IFRS 16 adoption. Shareholders' net earnings of $29.2 million or $0.48 per common share in the same prior year period.
- On April 24, 2019, Great Canadian announced that it has completed agreements with the Ontario Lottery and Gaming Corporation ("OLG") and the owners of Ajax Downs racetrack to continue operations at Casino Ajax beyond the opening of the Company's new casino resort property currently under development in Pickering, Ontario.
- On April 26, 2019, the Company announced an agreement to sell its subsidiary Great American Gaming Corporation ("Great American") for proceeds of US$56.0 million.
- On January 23, 2019, Great Blue Heron Casino opened its new building addition to expand the gaming floor, which introduced over 200 new slot machines and a new food and beverage option.
- During the first quarter of 2019, Elements Casino Mohawk and Elements Casino Grand River added approximately 290 slot machines and 190 slot machines, respectively.
- During the first quarter of 2019, the Company purchased for cancellation 136,810 common shares at a weighted average price of $48.49 per share. The Company has purchased a total of 3,582,462 common shares under the current normal course issuer bid which expires on July 2, 2019.
"With a successful 2018 behind us, the Company remains focused on the execution of its operational and development plans for 2019 and beyond," stated Rod Baker, the Company's Chief Executive Officer. "This includes the upcoming launch of the new world-class casino resort in Pickering, Ontario as well as several exciting facility and operational upgrades to our recently acquired properties in Ontario. We also worked diligently with OLG to extend operations at Ajax Downs beyond the opening of Pickering, allowing this gaming and horse racing facility - that was previously expected to close - to continue making economic contributions to the community it serves. Despite the strong progress made to grow the business, our first quarter in 2019 experienced challenges from the extreme weather conditions, which negatively impacted guest visitation at our Ontario gaming facilities."
Adjusted EBITDA is a non-IFRS measure as described in the disclaimer section of this press release.
2019 financial results reflect the adoption of IFRS 16, Leases as described in the Financial Review section of this press release. Comparative information has not been adjusted for IFRS 16
Revenues increased during the first quarter of 2019, when compared to the same period in the prior year, primarily attributable to a full quarter of operations from the West GTA Gaming Bundle, 22 additional operating days from the GTA Gaming Bundle, and new revenues from the introduction of table games at Woodbine. Revenues also increased from the East Gaming Bundle due to the additional revenues from Shorelines Casino Peterborough, which opened on October 15, 2018 and Shorelines Slots at Kawartha Downs, which re-opened under agreed terms on December 19, 2018. These increases were partially offset by the previously mentioned extreme weather conditions in the first quarter of 2019.
Adjusted EBITDA increased during the first quarter, when compared to the same period in the prior year, mainly due to the accounting impact of IFRS 16, the new lease accounting standard adopted on January 1, 2019. Readers are cautioned that the financial results for the comparative period in 2018 have not been adjusted for IFRS 16.
Implementation of IFRS 16:
IFRS 16 specifies how to recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all material leases.
The following are the key changes in the first quarter due to adoption of IFRS 16:
- On January 1, 2019, the Company recognized right-of-use assets and lease liabilities of $996.0 million and $947.3 million, respectively.
- Adjusted EBITDA was increased by $20.8 million due to certain lease payments, previously recognized as "property, marketing and administration" expense, being recorded against lease liabilities.
- Amortization expense was increased by $14.2 due to amortization of right-of-use assets, and interest and financing costs, net, was increased by $12.4 due to interest accretion on lease liabilities.
- Net earnings was decreased by $5.0 million and Shareholders' Net earnings was decreased by $2.2 million.
See Great Canadian's Condensed Interim Consolidated Financial Statements and Management's Discussion & Analysis for the three months ended March 31, 2019 for further information.
"We continue to execute on our comprehensive development plans in the GTA and West GTA Gaming Bundles, with construction underway at several gaming facilities," said Mr. Baker. "Development plans for the gaming facilities in these bundles will expand gaming offerings and introduce an exciting mix of hospitality and entertainment features at the properties that will deliver exceptional guest experiences within our respective markets. Construction of the new world-class casino resort in the Durham region located in Pickering, Ontario is well underway. Elements Casino Mohawk is expected to launch expanded gaming in the second quarter of 2019, and will feature approximately 1,500 slot machines and 60 table games once renovations are complete."
"Great Canadian's enhanced capital structure after its corporate refinancing in the fourth quarter of 2018 has given the Company additional financial flexibility to invest in our business as well as pursue other opportunities to enhance value. In the fourth quarter of 2018, we utilized $40.0 million of capacity on our revolving credit facility to repurchase shares under the normal course issuer bid which was fully repaid in the first quarter of 2019, demonstrating our disciplined approach to use of capital that has allowed us to maintain our strong financial position. Great Canadian continues to make meaningful investments and explore opportunities that will drive its business forward and provide added value to our shareholders and guests, as evidenced by the recent divestiture of Great American," concluded Mr. Baker.
Great Canadian will host a conference call for investors and analysts today, May 6, 2019, at 8:00 AM Pacific Time in order to review the financial results for the quarter ended March 31, 2019. To participate in the conference call, please dial 416-764-8688, 778-383-7413, or toll free at 1-888-390-0546. Questions will be reserved for analysts and institutional investors. Interested parties may also access the call via the Investor Relations section of the Company's website, www.gcgaming.com. Investors using the website should allow 15 minutes for the registration and installation of any necessary software. A replay of the call will also be available at www.gcgaming.com.
ABOUT GREAT CANADIAN GAMING CORPORATION
Founded in 1982, Great Canadian Gaming Corporation is a BC based company that operates 28 gaming, entertainment and hospitality facilities in Ontario, British Columbia, New Brunswick, Nova Scotia, and Washington State. Fundamental to the Company's culture is its commitment to social responsibility. "PROUD of our people, our business, our community" is Great Canadian's brand that unifies the Company's community, volunteering and social responsibility efforts. Under the PROUD program, Great Canadian annually supports hundreds of non-profits, community groups, and in 2018, Great Canadian team members spent over 15,000 hours volunteering for various charitable and community initiatives. In each Canadian gaming jurisdiction, a significant portion of gross gaming revenue from gaming facilities is retained by our Crown partners on behalf of their provincial government for the purpose of supporting programs like healthcare, education and social services.
Please refer to the Condensed Interim Consolidated Financial Statements and Management's Discussion and Analysis at www.gcgaming.com or www.sedar.com (available on May 6, 2019) for detailed financial information and analysis.
The financial results on the following page are unaudited and prepared by management. Expressed in millions of Canadian dollars, except for per share information.
GREAT CANADIAN GAMING CORPORATION
(Unaudited - Expressed in millions of Canadian dollars, except for per share information)
Three months ended March 31,
Property, marketing and administration
Share of profit of equity investment(4)
Adjusted EBITDA as a % of Revenues
Interest and financing costs, net
Business acquisition, restructuring and other(4)
Gain on sale of land
Foreign exchange gain
Net earnings attributable to:
Shareholders of the company
Shareholders' net earnings per common share
Weighted average number of common shares (in thousands)
Cash and cash equivalents
2019 financial results reflect the adoption of IFRS 16 as described in the Financial Review section of this press release. Comparative information has not been adjusted for IFRS 16.
In calculating Adjusted EBITDA for the three months ended March 31, 2018, "share of profit of equity investment" does not include the loss of $0.6 relating to the Company's share of Ontario Gaming West GTA Limited Partnership's ("OGWGLP") transition costs incurred for the West GTA Gaming Bundle prior to the acquisition on May 1, 2018, in which OGWGLP was accounted for as an equity method investee. The loss of $0.6 has been classified under "business acquisition, restructuring and other" instead.
This press release contains certain "forward-looking information" or statements within the meaning of applicable securities legislation. Forward-looking information is based on the Company's current expectations, estimates, projections and assumptions that were made by the Company in light of historical trends and other factors. Forward-looking statements are frequently but not always identified by words such as "expects", "anticipates", "believes", "intends", "estimates", "potential", "targeted", "planned", "possible" or similar expressions or statements that events, conditions or results "will", "may", "could" or "should" occur or be achieved. All information or statements, other than statements of historical fact, are forward-looking information, including statements that address expectations, estimates or projections about the future, the Company's strategy for growth and objectives, expected future expenditures, costs, operating and financial results, expected impact of future commitments, the impact of conditions imposed on certain VIP players, the impact of unionization activities and labour organization, the Company's position on its claim against the British Columbia Lottery Corporation ("BCLC") with respect to the collection of marketing contributions, the Company's beliefs about the outcome of its notices of objection and subsequent appeals challenging the Canada Revenue Agency's reassessments and its tax position on its facility development commission prevailing, the Company's expected facility investment commission amounts and the Company's projected future investments to obtain facility investment commission, the terms and expected benefits of the normal course issuer bid, the Company's expected share of BC horse racing industry revenue in future years, the Company and its affiliates meeting threshold revenue growth amounts in the Ontario gaming industry in future years, the Company's projected timeline for future development, and expectations and implications of changes in legislation and government policies, volatile gaming holds, the effects of competition in the market and potential difficulties in employee retention and recruitment. Such forward-looking information is not a guarantee of future performance and may involve a number of risks and uncertainties.
Although forward-looking information is based on information and assumptions that the Company believes are current, reasonable and complete, they are subject to unknown risks, uncertainties, and a number of factors that could cause actual results to vary materially from those expressed or implied by such forward-looking information. Such factors may include, but are not limited to: compliance with the terms of new operational services agreements with lottery corporations; changes to gaming laws and regulations that may impact the operational services agreements; pending, proposed or unanticipated regulatory or policy changes (including those related to anti-money laundering legislation or policy that may impact VIP play), volatile gaming holds, the effects of competition in the market; the development of properties in Ontario and transitioning of operations to the Company and affiliates; the Company's ability to obtain and renew required business licenses, leases, and operational services agreements; unanticipated fines, sanctions and suspensions imposed on the Company by its regulators; impact of global liquidity and credit availability; actual and possible reassessments of the Company's prior tax filings by tax authorities; the results of the Company's notices of objection and subsequent appeals challenging reassessments received by the Canada Revenue Agency; the Company's tax position on its facility development commission prevailing; the results of the Company's litigation with BCLC; adverse tourism trends and further decreases in levels of travel, leisure and consumer spending; competition from established competitors and new entrants in the gaming business; dependence on key personnel; the timing and results of collective bargaining negotiations and potential labour disruption; adverse changes in the Company's labour relations; the Company's ability to manage its capital projects and its expanding operations in jurisdictions where it operates; the risk that systems, procedures and controls may not be adequate to meet regulatory requirements or to support current and expanding operations; potential undisclosed liabilities and capital expenditures associated with acquisitions; negative connotations linked to the gaming industry; the risk associated with partnership relationships; First Nations rights with respect to some land on which the Company conducts operations; future or current legal proceedings; construction disruptions; financial covenants associated with credit facilities and long-term debt; credit, liquidity and market risks associated with our financial instruments; interest and exchange rate fluctuations; demand for new products and services; fluctuations in operating results; economic uncertainty and financial market volatility; technology dependence; privacy breaches or data theft; integration of acquired properties in Ontario; and changes to anti-money laundering procedures and protocols including additional requirements for determining source of funds. The Company cautions that this list of factors is not exhaustive. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. These factors and other risks and uncertainties are discussed in the Company's continuous disclosure documents filed with the Canadian securities regulatory authorities from time to time, including in the "Risk Factors" section of the Company's Annual Information Form for fiscal 2017, and as identified in the Company's disclosure record on SEDAR at www.sedar.com.
The forward-looking information in documents incorporated by reference speaks only as of the date of those documents. The Company believes that the expectations reflected in forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct. Readers are cautioned not to place undue reliance on the forward-looking information. The Company undertakes no obligation to revise forward-looking information to reflect subsequent events or circumstances except as required by law. The forward-looking information contained herein is made as of the date hereof, is subject to change after such date, and is expressly qualified in its entirety by cautionary statements in this press release.
The Company has included non-International Financial Reporting Standards ("non-IFRS") measures in this press release. Adjusted EBITDA, as defined by the Company, means earnings before interest and financing costs (net of interest income), income taxes, depreciation and amortization, share-based compensation, business acquisition, restructuring and other, gain on sale of land, and foreign exchange gain. Adjusted EBITDA is derived from the Condensed Interim Consolidated Statements of Earnings and Other Comprehensive Income, and can be computed as revenues plus share of profit of operating equity investees less human resources expenses, and property, marketing and administration expenses. The Company believes Adjusted EBITDA is a useful measure because it provides information to management about the operating and financial performance of the Company and its ability to generate operating cash flow to fund future working capital needs, service outstanding debt, and fund future capital expenditures. Adjusted EBITDA is also used by investors and analysts for the purpose of valuing the Company. Items of note may vary from time to time and in this press release include pre-opening costs, restructuring severance costs, impairment reversal of long-lived assets, facility development commission revenues previously deferred at Casino Nanaimo, other and the related income taxes thereon.
Readers are cautioned that these non-IFRS definitions are not recognized measures under International Financial Reporting Standards ("IFRS"), do not have standardized meanings prescribed by IFRS, and should not be construed to be alternatives to net earnings determined in accordance with IFRS or as indicators of performance or liquidity or cash flows. The Company's method of calculating these measures may differ from methods used by other entities and accordingly our measures may not be comparable to similarly titled measures used by other entities or in other jurisdictions. The Company uses these measures because it believes they provide useful information to both management and investors with respect to the operating and financial performance of the Company.
ON BEHALF OF
GREAT CANADIAN GAMING CORPORATION
"Original Signed By Rod N. Baker"
Rod N. Baker
Chief Executive Officer
GREAT CANADIAN GAMING CORPORATION [TSX:GC]
95 Schooner Street
SOURCE Great Canadian Gaming Corporation
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