LAS VEGAS, Nevada -- (PRESS RELEASE) -- Global Cash Access Holdings, Inc. (NYSE:GCA) ("GCA" or the "Company") today announced unaudited financial results for the quarter ended June 30, 2007.
Summary Non-GAAP Results
For the quarter ended June 30, 2007, revenues were $151.5 million, an increase of 13.4% over the $133.6 million in revenues recorded in the same quarter last year. Adjusted Cash Earnings, which exclude stock-based compensation and other items that typically do not occur on a recurring basis, were $14.3 million in Q2 2007, an increase of 11.2% over Q2 2006. Adjusted Cash Earnings per diluted share were $0.17 in Q2 2007 as compared to $0.16 in Q2 2006. Cash Earnings, which include stock-based compensation, were $12.9 million in Q2 2007 as compared to $10.6 million in Q2 2006, an increase of 21.8%. Cash Earnings per diluted share were $0.16 in Q2 2007 as compared to $0.13 in Q2 2006. EBITDA (which excludes stock-based compensation) was $28.7 million in Q2 2007, an increase of 14.7% from Q2 2006.
"In the second quarter of 2007, we continued to see growth in our core business with double-digit revenue growth in our Cash Advance and ATM business," commented Kirk Sanford, President and Chief Executive Officer of GCA. "While we continue to expect solid growth in our core business, we are experiencing greater than expected delays in the timing of new business that have tempered our expectations for the second half of the year. With our recent Venetian Macao agreement and continued progress made with several other notable prospects, our business in Macau and other international markets continues to build strong momentum."
-- Recorded revenue of $151.5 million, the highest quarterly total
ever recorded by the Company.
-- Significant increases in key metrics versus the same quarter in the
-- Same store surcharge revenue up 9.8%
-- Cash advance dollars disbursed up 16.9%
-- ATM transaction volume up 8.9%.
-- 3-in-1 enabled Redemption Kiosk installations reached 506 as of
June 30, 2007
-- Arriva Card account growth continued (statistics as of June 30,
-- 7,306 accounts
-- $30.2 million in Arriva Card transaction volume since the launch
of the Arriva Card, with $8.4 million in volume in Q2 2007
-- Charge-offs to date of $1.0 million
-- Q2 average cash advance transaction amount of $791 vs. $571 on
-- Repurchased $5.6 million of common stock under our $50 million
common stock repurchase authorization through July 31, 2007
For the second quarter of 2007, total revenues were $151.5 million, an increase of 13.4% over the second quarter of 2006. Operating Income in the second quarter of 2007 was $22.5 million, an increase of 11.4% from the same period in 2006. Net income in the second quarter of 2007 was $8.6 million, up 36.5% from the second quarter of 2006. Diluted earnings per share were $0.10 in the second quarter of 2007 as compared to $0.08 in the second quarter of 2006.
For the first half of 2007, total revenues were $300.3 million, an increase of 14.0% over the first half of 2006. Operating Income in the first half of 2007 was $43.9 million, an increase of 7.4% from the same period in 2006. Net income in the first half of 2007 was $16.5 million, up 24.4% from the first half of 2006. Diluted earnings per share were $0.20 in the first half of 2007 as compared to $0.16 in the same period of 2006.
Second Quarter Results of Operations
Total revenues in the second quarter of 2007 were $151.5 million, an increase of 13.4% from revenues of $133.6 million in the second quarter of 2006. Same store revenues for cash advance and ATM surcharge increased 9.8% in the second quarter of 2007.
The following is a comparison of selected revenue components for the second quarter of 2007 to the same period in 2006:
* Cash advance revenues were up 15.3%, from $69.1 million to $79.7 million. Cash disbursed increased 16.9%, from $1.4 billion to $1.6 billion. The number of transactions increased 14.8%, from 2.5 million to 2.9 million. The average transaction amount increased from $540.94 to $550.73. The average fee decreased from 5.03% to 4.96%. Average revenue per transaction increased 0.4% from $27.18 to $27.29.
* ATM revenues increased 11.9% to $61.1 million. The number of transactions increased 8.9%, from 17.0 million to 18.5 million. Cash disbursed was $3.4 billion compared to $3.0 billion, an increase of 14.5%. Average revenue per transaction increased 2.8% from $3.22 to $3.31.
* Check services revenues were $7.5 million, an increase of 0.4%. The face amount of checks warranted increased by 2.6%, from 339.0 million to 347.9 million. The number of check warranty transactions grew 3.3%, from 1.29 million to 1.33 million. The average face amount per check warranted decreased from $263.51 to $261.82. The average check warranty fee decreased from 2.01% to 1.94%. Average check warranty revenue per transaction decreased from $5.29 to $5.07.
* Central Credit and other revenues increased 35.8%, from $2.4 million to $3.2 million. Most of the increase is attributable to $0.7 million of interest and fee revenue from the Arriva Card in Q2 2007 vs. $0 in the comparable 2006 quarter.
Cost of revenues (exclusive of depreciation and amortization) increased 15.7% in the second quarter of 2007 to $109.1 million from $94.3 million in the second quarter of 2006. Commissions, the largest component of cost of revenues, increased 17.0%. Interchange increased 15.4%, driven largely by the increase in cash advance volumes.
Operating expenses in the second quarter of 2007 were $17.1 million, an increase of 2.6% over the same period in 2006. Operating expenses, excluding non-cash compensation expense and other items that do not occur on a recurring basis, were $14.8 million in the current quarter, an increase of 10.5% from the comparable total of $13.4 million in the second quarter of 2006. This increase is principally related to additional payroll and related benefit costs and higher system maintenance expenses.
Depreciation and amortization expense was $2.9 million in the second quarter of 2007, an increase of 18.3% from $2.4 million in the second quarter of 2006.
Interest income was $1.0 million in the second quarter of 2007, an increase of 17.6% from the comparable 2006 period.
Interest expense in the second quarter of 2007 was $9.7 million as compared to $10.7 million in the second quarter of 2006. Interest expense on the Company's borrowings declined $1.1 million due to the lower level of outstanding indebtedness and lower interest rates on the floating rate portion of that indebtedness in the second quarter of 2007. Interest expense on the Company's ATM funds increased $0.1 million from $4.0 million in Q2 2006 to $4.1 million in Q2 2007, primarily as a result of increases in the LIBOR rate on which those funds are priced and offset by a reduction in the average ATM funds outstanding from $296.0 million in Q2 2006 to $290.5 million in Q2 2007.
Income tax expense in the second quarter of 2007 was $5.3 million. The Company's provision in the second quarter of 2007 is based on an expected full year effective rate of 38.1%.
Revenues from the Arriva Card in the second quarter of 2007 were $0.7 million. Cost of revenues (exclusive of depreciation and amortization) in the second quarter of 2007 were $1.2 million and operating expenses for Arriva in the quarter were $0.6 million. Operating loss from Arriva operations was $1.2 million.
Receivables held by the Company's financing partner were $2.3 million at June 30, 2007. Total receivables at June 30, 2007 were $13.8 million, of which $11.5 million were held by Arriva.
At June 30, 2007, the Company had unrestricted cash and cash equivalents of $61.7 million, settlement receivables of $73.4 million and settlement liabilities of $80.6 million.
Total borrowings at June 30, 2007, were $264.0 million, consisting of $111.2 million of borrowings under the Company's senior secured credit facilities and $152.8 million face amount of 8 ¾% senior subordinated notes.
The Company made investments in property, equipment and intangible assets of $1.5 million during the three months ended June 30, 2007, which include ATM and other casino floor equipment as well as purchases of computer and communications hardware and software.
During the quarter ended June 30, 2007, the Company repurchased 0.1 million shares of common stock at an average price per share of $16.05 for a total investment of $3.6 million. As of July 31, 2007, repurchases stood at 0.4 million shares at an average price of $15.37 and a total investment of $5.6 million.
Several factors have contributed to the Company's decision to lower second half and full year expectations. The Company's existing contract with Mandalay Resorts Group, which expired in May and hereafter falls under the current MGM agreement, will have a greater than expected adverse impact on gross margins. In addition our revenues will be impacted by an unanticipated third quarter loss of a significant customer along with greater than expected delays of previously anticipated new business. We currently expect 2007 revenues in a range of $630 million to $639 million, diluted Adjusted Cash Earnings in a range of $0.70 to $0.72 per share, and diluted Cash Earnings (including stock compensation expense) in a range of $0.58 to $0.60 per share.
For the third quarter of fiscal 2007, the Company currently expects revenues in a range of $160 to $165 million and adjusted diluted cash EPS of approximately $0.17 and Cash Earnings (including stock compensation expense) of approximately $0.12.
This financial guidance is given as of the date hereof and is based on factors and circumstances known to the Company at this time. Such factors and circumstances may change, and such changes may have an impact on the Company's financial outlook.
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 adjusted results on a supplemental basis. Adjusted results in the second quarter of 2007 and 2006 exclude $3.3 million and $2.4 million, respectively, of stock-based compensation expense. Adjusted results in the first half of 2007 and 2006 exclude $6.2 million and $4.3 million, respectively, of stock-based compensation expense. In addition, the Company uses certain non-GAAP measures of financial performance. Reconciliations between GAAP measures and non-GAAP measures and between actual results and adjusted results are provided at the end of this press release.