Poydras Gaming Finance Corp. Announces 2015 Third Quarter Financial Results
— Q3 Revenue Increases 237% over Q2 2015 and 464% over Q3 2014 —
— Company Announces a New Strategic Financing Relationship with PDS Gaming —
VANCOUVER, Nov. 27, 2015POYDRAS GAMING FINANCE CORP. (TSXV: PYD) ("Poydras," "PGFC," or the "Company") today announces financial results for the third quarter ended September 30, 2015 and the entering into of a new strategic financing relationship with PDS Gaming (all amounts stated in U.S. dollars unless otherwise indicated).
Third Quarter 2015 Highlights & Financial Results
- Revenue grew to $3,067,616, representing an increase of 464% compared to Q3 2014 and an increase of 237% compared to Q2 2015.
- Adjusted EBITDA of $1,570,625, representing an increase of $1,713,455 compared to Q2 2015.
- Net income of $1,103,411 compared to a net loss of ($1,302,155) in Q3 2014.
- Completed the acquisition of the Integrity Companies, a leading provider of gaming equipment to Native American-owned casinos, on July 20, 2015.
- Revenue- and interestgenerating machines in operation at quarter end were approximately 2,300, compared to 717 at the end of Q2 2015.
New Strategic Financing Relationship with PDS Gaming
Subsequent to quarter end, the Company entered into a new strategic financing relationship with PDS Gaming Corp. ("PDS"), a leading provider of customized financing of gaming equipment in the U.S. and internationally with a recently announced $150 milliondedicated equipment financing facility. The initial funding for Poydras will consist of:
- A loan package of approximately $1.0 million over 4 years, directly financing machines owned by the Company and the Company's joint venture with A&W Enterprises;
- A $3.5 million loan over 4 years, including a one year interest-only period, secured by the Company's contract with the Tonkawa Tribe of Indians of Oklahoma. Proceeds will be used to fund new machine deployments, working capital requirements, and additional growth initiatives in the coming year.
The direct machine financing loans were closed November 16th and the $3.5 million facility is expected to close in early December. As part of the agreement, PDS will also supply 42 of the 600 machines under contract with the Tonkawa Tribe of Indians ofOklahoma.
Other Highlights Subsequent to Quarter End
- The Company installed 114 machines at the Lucky Star Casino in Hammon, Oklahoma, a newly opened facility owned and operated by the Cheyenne & Arapaho Tribes of Oklahoma, a long-standing customer of the Company, with an additional 36 machines to be installed within the next 60 days. Lucky Star Hammon is the Oklahoma casino located closest to the Texaspanhandle and is expected to draw heavily from the north Texas market.
- With the completion of the Company's renovation project undertaken with the Tonkawa Tribe of Indians of Oklahoma, Poydras is entitled to contractual minimum payments for all Class III machines placed with the tribe starting October 1, 2015 and as additional machines are deployed
"Our third quarter results reflect the promise and momentum of our business moving forward, with significant growth in revenue and adjusted EBITDA," said Peter Macy, CEO of Poydras Gaming. "This trajectory will be supported in part through the new funding facilities with PDS Gaming, which mark the next step in a long-standing relationship between our respective management teams. We are delighted to gain a flexible and non-dilutive capital partner in PDS, enabling us to accelerate our growth and rapidly expand our footprint in both our core market and in new markets."
"Given our historical relationship with Poydras' senior management team, we are excited to be establishing a more formal agreement that matches our deep capital base and traditional equipment financing expertise both with Poydras' strengths in this area, as well as their deep relationships and service capabilities," said Johan Finley, founder, CEO and Chairman of PDS Gaming. "We believe that Poydras is very well positioned to capture opportunities in their target markets, and we are pleased to be a partner in funding their continued growth and success."
Fiscal Q3 2015 Financial Results
Increases in revenue and adjusted EBITDA as described below are mainly due to the significant increase in leasing revenue from the acquisition of the Integrity Companies on July 20, 2015, the addition of $527,068 in bingo revenue, and the placement of additional machines at the Tonkawa casinos.
For the third quarter ended September 30, 2015, the Company's revenue increased to $3,067,616, representing growth of 237% compared to Q2 2015 and 464% compared to Q3 2014.
The Company's leasing revenue grew to $2,540,548 in Q3 2015, a 179% increase over Q2 2015 and a 367% increase over Q3 2014. The increase in leasing revenue from Q2 2015 to Q3 2015 is due to generating revenue from an average of 1,982 gaming machines in Q3 2015 as compared to 581 gaming machines in Q2 2015.
The Company's Adjusted EBITDA increased by $1,713,455 from negative ($142,830) in Q2 2015 to $1,570,625 in Q3 2015. Q3 2015 Adjusted EBITDA was negatively impacted by approximately $96,000 of legal, audit and consulting costs incurred in connection with the acquisition of the Integrity Companies.
The third quarter results include the consolidated accounts of PGFC, Platform 9 Corporation, Poydras Gaming LLC, Windy Hill Capital LLC and Poydras Street Finance II LLC for the full quarter, as well as the accounts of U.S. subsidiaries Aurora Gaming, Integrity Gaming, and Kansas from their date of acquisition of July 20, 2015.
Restricted Share Unit Grants
On August 25, 2015, the Board of Directors of the Company approved the grant of 10,000,000 restricted share units to certain directors, officers, and employees of the Company, subject to the meeting of certain vesting and performance conditions. The restricted share units were granted in accordance with the Company's Fixed Restricted Share Unit Plan.
Machine Deployments
Since the completion of its reverse takeover ("RTO") transaction on May 9, 2014, Poydras has increased the number of its revenue and interestgenerating gaming machines from 217 to approximately 2,300 as at September 30, 2015 and over 2,400 as of today.
Conference Call
The Company will hold a conference call to discuss the results for its third quarter ended September 30, 2015. The call will be hosted by Peter Macy, CEO, and Adam Kniec, CFO on Tuesday, December 1, 2015 at 8:00 a.m. PST (11:00 a.m. EST), and followed by a question and answer period. All interested parties are invited to participate.
The Company will report its financial results for the third quarter on or before November 30, 2015.
Conference Call Details:
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DATE:
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Tuesday, December 1, 2015
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TIME:
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8:00 a.m. Pacific Time / 11:00 a.m. Eastern Time
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DIAL IN NUMBER:
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North America Toll-Free Dial-In Number: 1 (888) 231-8191
For Toronto: (647) 427-7450
For Vancouver: (778) 371-9827
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CONFERENCE ID:
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80600188
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TAPED REPLAY:
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1 (855) 859-2056
Available until 12:00 midnight (EST) Tuesday, December 8, 2015
Reference number: 80600188
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About PDS Gaming Corp.:
PDS Gaming is a finance and leasing company that specializes in customized financing solutions, including equipment leasing, project and corporate financing and manufacturing vendor financing programs for the gaming industry. PDS Gaming is licensed in most of the major U.S. and Native American jurisdictions.
About Poydras Gaming Finance Corp.:
Poydras Gaming is focused on leasing and financing gaming machines (such as slot machines) and related capital expenditures for existing casinos, new casino developments and gaming machine suppliers in the United States. It owns and finances slot machines including short- and long-term lease contracts across 25 casinos in Oklahoma and Texas. Additional information about the Company can be found on the SEDAR website at www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding ForwardLooking Statements
Certain information in this news release is considered forwardlooking within the meaning of certain securities laws and is subject to important risks, uncertainties and assumptions. This forwardlooking information includes, among other things, information with respect to the Company's beliefs, plans, expectations, anticipations, estimates and intentions. The words "may", "could", "should", "would", "suspect", "outlook", "believe", "anticipate", "estimate", "expect", "intend", "plan", "target" and similar words and expressions are used to identify forwardlooking information. The forwardlooking information in this news release, including those statements relating to expected EBITDA, and the placement of additional machines by the Company, describes the Company's expectations as of the date of this news release.
The results or events anticipated or predicted in such forwardlooking information may differ materially from actual results or events. Material factors which could cause actual results or events to differ materially from such forward looking information include, among others, risks arising from general economic conditions and adverse industry events.
The Company cautions that the foregoing list of material factors is not exhaustive. When relying on the Company's forwardlooking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forwardlooking information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
THE FORWARDLOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARDLOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME.
NonIFRS Measures – Poydras Gaming Finance Corp.
Adjusted EBITDA is a financial measure that does not have a standardized meaning under IFRS. Adjusted EBITDA is defined as earnings before financing costs, income taxes, depreciation, amortization, stock based compensation, unrealized foreign exchange, impairment of loans receivable, gain/loss on settlement of loans payable, gain/loss on disposal of assets, finance lease receivable reduction and non-recurring costs. In addition, to arrive at the Adjusted EBITDA, the Company is adjusting its earnings for its 50% share of the above mentioned income/expense and gain/loss categories that are included in the Company's income from equity accounted investees.
During the current quarter the Company modified its definition of Adjusted EBITDA by adjusting its earnings by (i) gain/loss on settlement of loans payable and (ii) its 50% share of the above mentioned income/expense and gain/loss categories that are included in the Company's income from equity accounted investees. During the current quarter Poydras acquired Integrity Companies which had new income/expense and gain/loss categories. The Company believes that to measure the Company's core business performance and liquidity, and to measure its ability to purchase additional machines, it is important to include these adjustments in determination of Adjusted EBITDA.
Adjusted EBITDA and reconciliation to net income (loss) is as follows:
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Q3 2015
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Q2 2015
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Q1 2015
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Q4 2014
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Q3 2014
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($)
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($)
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($)
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($)
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($)
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Net Income (loss)
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1,103,411
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(1,530,182)
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(1,504,323)
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(1,394,003)
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(1,302,155)
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Adjustments:
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Depreciation of equipment
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646,155
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217,264
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217,262
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242,260
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194,439
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Amortization of placement fees
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335,878
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190,661
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72,355
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37,968
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73,801
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Amortization of intangible assets
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227,384
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73,533
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73,533
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73,533
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73,533
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Income tax expense (recovery)
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(2,302,033)
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-
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-
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-
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-
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Finance lease receivable reduction
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170,572
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185,350
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49,624
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-
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-
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Financing costs
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771,334
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444,342
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386,643
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363,026
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370,253
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Foreign exchange (gain) loss
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504,594
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(84,444)
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660,554
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275,816
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376,287
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Impairment of loan receivable
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-
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250,000
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-
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-
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-
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Loss (gain) on settlement of loan
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(261,407)
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-
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-
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-
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-
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Loss on valuation of convertible debentures
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-
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-
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-
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-
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-
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Loss of disposal of assets
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-
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-
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-
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56,882
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-
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Reverse takeover public listing
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-
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-
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-
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-
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-
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Stock based compensation
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169,711
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110,646
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98,773
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179,779
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243,646
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A&W JV EBITDA adjustments at 50% interest:
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Depreciation of equipment
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180,317
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-
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-
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-
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-
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Amortization of placement fees
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8,417
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-
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-
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-
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-
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Interest expense
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16,292
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-
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-
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-
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-
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Adjusted EBITDA
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1,570,625
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(142,830)
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54,421
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(164,739)
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29,804
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Adjusted EBITDA includes:
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RTO costs
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-
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-
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-
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24,000
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38,000
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Integrity acquisition costs
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96,000
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30,000
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161,000
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154,000
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107,000
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Total normalization adjustments
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96,000
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30,000
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161,000
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178,000
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145,000
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1,666,625
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(112,830)
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215,421
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13,261
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174,804
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As there is no standardized method of calculating Adjusted EBITDA, it may not be directly comparable with similarly titled measures used by other companies. The Company considers Adjusted EBITDA to be a relevant indicator for measuring trends in performance and its ability to generate funds to service its debt and to meet its future working capital and capital expenditure requirements. Adjusted EBITDA is not a generally accepted earnings measure and should not be considered in isolation or as an alternative to net income (loss), cash flows or other measures of performance prepared in accordance with IFRS.
SOURCE Poydras Gaming Finance Corp. 
For further information: Keith Richards, Investor Relations, NATIONAL Equicom, T: (416) 848-1599, E: krichards@nationalequicom.ca; Peter Macy, CEO, Poydras Gaming Finance Corp., T: (604) 683-8393,E: info@poydrasgaming.com