It may come as a shock to you, but Las Vegas, long considered America’s mecca of gambling only accounts for about 10% of the U.S. casino gaming sector which brought in $66.30 billion in revenues for 2013. What may be more surprising is Native American casino gaming comprises 43% of the gaming space growing from almost nothing to a $27.0 billion dollar industry in just 20 years.
Poydras Gaming Finance (
TSX: V.PYD,
Stock Forum) has hooked into this highly specialized and lucrative section of the gaming space and is inking key agreements with certain Native American tribes while completing strategic acquisitions such as the recent acquisition of Integrity Companies, a leading third-party provider of slot machines to Native American casinos.
I sat down with Peter Macy, CEO of Poydras, to get an inside look at the company, its present state and future potential.
For the uninitiated, give us a brief description of Poydras Gaming Finance and what services it provides.
“Poydras Gaming Finance owns and finances gaming machines from almost all of the major manufacturers within the gaming industry. Essentially our business is geared toward the leasing and financing of gaming machines for regional gaming partners, specifically Tribal Casinos and Route Operations within the US.”
2014 was a productive year for Poydras Gaming Finance, what would you consider to be the major milestones that investors should be aware of?
“Well, we made a lot of headway during the year, but I think that some points of interest investors should know about is our commencement of trading on the TSX Venture Exchange, the acquisition of Windy Hill’s operations back in May, establishing a joint venture in Louisiana to acquire video poker machines in bars, restaurants and truck stops across Louisiana, and, of course, the transformative acquisition we began with Integrity Companies back in September.”
That’s quite a lot of activity, how would you describe Poydras Gaming’s position as of 2015 in regards to investment opportunity?
“I would say we were undervalued. It seems we have shaken off the day traders and now have a solid core of longs. As of September 30, we had about $4.0 million in the till with a market cap of approximately $11.0 million. Our Q3 numbers were great with a 40% jump in revenue to a little over a half million. Look at it this way, our adjusted EBITDA was around $29,000 from a loss of about $50,000 a year ago and that was with about $160,000 in legal costs and consulting fees added in. We’re definitely on our way to a cash positive position and as the Integrity acquisition will add revenue from approximately 1,500 incremental machine installations across 23 casinos, we’re going to see a real boost in growth and profitability by the first half of 2015. I think it’s a perfect time for investors to get in on the ground floor of a unique opportunity in the gaming sector.”
Speaking of 2015, what do you envision as milestones for the coming year?
“Well we’ve already hit some major milestones with the recent 600 gaming machine placement agreement we signed with the Tonkawa Tribe. As of March 31, 191 machines were already online and revenue producing. The remaining machines will be acquired to delivered and installed over the next 30-60 days. Fully installed we expect the contract to generate at least $6.0 million in revenue annually. With this punch in placement combined with the Integrity acquisition, we expect to have $10-$12.0 million in run-rate EBITDA by the end of fiscal 2015 generated from a base of approximately 2700 machines.”
So where do you see Poydras Gaming Finance in five years?
“I see us establishing a major market share in the participation leasing segment, with agreements across a broad range of regional gaming jurisdictions across the United States. Our operations could definitely reach 10,000 machines, which would provide stable long-term growth and returns for both the company and its investors. In some ways, the sky’s the limit and Poydras has the ability to soar in this space. I think we’re in for an exciting and profitable ride.”
FULL DISCLOSURE: Poydras Gaming Finance is a Stockhouse Publishing client.