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Galaxy Gaming Reports Record Q-1 Results(May 15, 2014)
LAS VEGAS, May 15, 2014 (GLOBE NEWSWIRE) -- Galaxy Gaming, Inc. (OTC:GLXZ), the world's largest independent producer of casino table games and enhanced systems, announced today its financial results for the quarter ending March 31, 2014. Highlights include:
Q-1 2014 vs. Q-1 2013
Revenue of $2,264K increased 19% or $368K from $1,896K.
EBITDAS of $979K increased 21% or $167K from $812K.
Pre-tax profit of $244K increased 61% or $92K from $152K.
Net income of $151K increased 45% or $47K from $104K.
Q-1 2014 vs. Q-4 2013
Revenue of $2,264K increased 1% or $22K from $2,242K.
EBITDAS of $979K decreased 6% or $57K from $1,036K.
Pre-tax profit of $244K decreased $130K or 35% from $374K.
Net income of $151K decreased $244K or 62% from $395K.
"The results we posted for 2014's first quarter represent our best start ever for the new year," said Galaxy Gaming CEO Robert Saucier. "Revenues, EBITDAS and profits reached an all-time high compared to all prior first quarters. Once again, we are on a solid course to have another record-breaking year. Having just finished tallying our April results, we now believe that our second quarter could also be a record-breaker. And we continue to focus on increasing our revenues, boosting our profits through the expansion of our product lines and our distribution channels. For Galaxy, there's no limit to where we will go next."
Galaxy executives made specific mention of several qualitative "wins" for the first quarter, including a high-profile expansion of its board of directors and the hiring of a well-regarded strategic consultant to aid the Company in its next-stage objectives. Finally, the Company noted that continued consolidation in the industry is a material benefit for Galaxy, as it gained recognition as the world's largest independent table game provider.
"2013 was more than another record-breaking year for our company – it was a validation of our core business principles and carefully constructed strategic plans," said Gary A. Vecchiarelli, Galaxy's CFO. "As we have said before, we have crossed the point where our business model starts to show how attractive it really is."
Continuing, Vecchiarelli said, "The combination of our high-margin recurring revenue business model and our planning and execution is translating into an extremely profitable financial performance across the board. Of particular note is the direct contribution of increased revenue to EBITDAS. For example, for every dollar of added revenue in 2013, almost 60 cents went directly to EBITDAS. These are signs of strength and substance and exactly what our company set out to do."
Looking toward 2014, Mr. Saucier continued, "We hope our supporters will recognize the significance or increasing revenues and EBITDAS approximately 20% each and increasing our pre-tax and post-tax profits by 60% and 45%, respectively. Beyond the financial improvements from last year, we have made significant operational improvements. For example, we just completed the move into our new world headquarters in Las Vegas and now have the infrastructure to grow at an even faster rate. We also successfully resolved all but one of the distractions and diversions of the last two years and expect to likewise be behind us in 2014. I can confidently predict that 2014 should be another record year."
Company Conference Call
In line with its updated strategic plan, Galaxy Gaming is instituting a semi-annual conference call schedule to allow team leaders to put increased focus and time into Company operations, product development and continued national/international expansion. The Company also reasserted that it remains completely dedicated to timely, accurate and transparent SEC reporting.
Revenue. Total revenue for the first quarter 2014 increased slightly 1%, to $2,260,809. Historically, the first quarter has been the Company's slowest growth period quarter over quarter. However, the Company continues to see growth in all product lines. As of March 31, 2014, the annual recurring revenue run-rate is approximately $9,043,236.
Operating expenses. Operating expenses for the first three months 2014 increased 7.9%. The primary driver of the increase relates to an increase in selling, general & administrative expenses of 15%, and a decrease of 40% in the costs of ancillary products and assembled components. The SG&A increase is generally due to higher sales commission based on increased sales and an increase in overall employee headcount. The Company has also recognized increased professional and compliance expenses related to intellectual property maintenance fees and entrance into new jurisdictions. Additionally, the Company had $53,688 of stock compensation for the first three months 2014, which is included in SG&A expenses. Costs of ancillary products and assembled components decreased $12,905 due to less tangible goods being shipped to clients.
Net income. Net income for the first quarter 2014 decreased 62% to $151,165. The decrease was due to increased operating expenses, interest expense and tax provision for the first three months 2014.
EBITDAS. EBITDAS, a non-GAAP financial measure (described below), decreased 5.5% to $979,498. The primary reason for the decrease relates to higher stock compensation expense for the first three months 2013.
Balance Sheet and Cash Flow Information
Cash provided by operations was $652,943 for the three months ended March 31, 2014 compared to $469,455 for the three months ended March 31, 2013. The improvement in cash provided by operating activities was primarily due to improved operating results, with a significant contribution to the increase in total revenues.
Cash used in financing activities was $722,572 for the three months ended March 310, 2014 compared to $571,048 for the three months ended March 31, 2013. The increase in cash used in financing activities was due to the increase in contractual principal payments due on notes payable.
As of March 31, 2014, the Company's cash and cash equivalents totaled $362,900.
Use of Non-GAAP Measures
Galaxy Gaming, Inc. prepares its consolidated financial statements in accordance with United States generally accepted accounting principles ("GAAP"). In addition to disclosing financial results prepared in accordance with GAAP, the Company discloses information regarding EBITDAS, which differs from the term EBITDA as it is commonly used. In addition to adjusting net income (loss) from continuing operations to exclude taxes, interest, and depreciation and amortization, EBITDAS also excludes noncash charges, certain non-recurring charges and share-based compensation expense. EBITDA and EBITDAS are not measures of performance defined in accordance with GAAP. However, EBITDAS is used internally in planning and evaluating the Company's operating performance. Accordingly, management believes that disclosure of this metric offers investors, bankers and other stakeholders an additional view of the Company's operations that, when coupled with the GAAP results, provides a more complete understanding of the Company's financial results.
EBITDAS should not be considered as an alternative to net loss or to net cash used in operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating the Company's performance. A reconciliation of GAAP net loss from continuing operations to EBITDAS is included in the accompanying financial schedules.
About Galaxy Gaming
Headquartered in Las Vegas, Galaxy Gaming (www.galaxygaming.com) develops, manufactures and distributes innovative proprietary table games, state-of-the-art electronic wagering platforms and enhanced bonusing systems to land-based, riverboat, cruise ships and online casinos worldwide. Through its iGaming partner Games Marketing Ltd., Galaxy Gaming licenses its proprietary table games to the online gaming industry.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are made in accordance with the Private Securities Litigation Reform Act of 1995. The forward-looking statements herein include, but are not limited to, the expected adoption of our gaming systems by casinos and other customers, and the expected acceptance of our gaming systems by players. Our actual results may differ materially from those implied in these forward-looking statements as a result of many factors, including, but not limited to, the impact of global macroeconomic and credit conditions on our business and the business of our suppliers and customers, overall industry environment, customer acceptance of our products, delay in the introduction of new products, further approvals of regulatory authorities, adverse court rulings, production and/or quality control problems, the denial, suspension or revocation of permits or licenses by regulatory or governmental authorities, termination or non-renewal of customer contracts, competitive pressures, and our financial condition, including our ability to maintain sufficient liquidity to operate our business. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by applicable laws, and you are urged to review and consider disclosures that we make in the reports that we file with the Securities and Exchange Commission that discuss other factors germane to our business.
GALAXY GAMING, INC.
March 31, 2014
December 31, 2013
Cash and cash equivalents
Accounts receivables, net allowance for bad debts of $36,770 and $36,770
Note receivable – related party, current portion
Deferred tax asset
Other current assets
Total current assets
Property and equipment, net
Products leased and held for lease, net
Intangible assets, net
Note receivable – related party, net of current portion
Deferred tax assets, net of current portion
Other assets, net
LIABILITIES AND STOCKHOLDERS' EQUITY
Income taxes payable
Notes payable, current portion
Total current liabilities
Notes payable, net of debt discount, net of current portion
Commitments and Contingencies (See Note 11)
Preferred stock, 10,000,000 shares, $.001 par value preferred stock authorized; 0 shares issued and outstanding
Common stock, 65,000,000 shares authorized; $.001 par value 38,485,591 and 38,310,591 shares issued and outstanding
Additional paid-in capital
Accumulated other comprehensive income (loss)
Total stockholders' equity
Total liabilities and stockholders' equity
GALAXY GAMING, INC.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
March 31, 2014
March 31, 2013
Product leases and royalties
Product sales and service
Costs and expenses:
Cost of ancillary products and assembled components
Selling, general and administrative
Research and development
Total costs and expenses
Income (loss) from operations
Other income (expense):
Gain on settlement
Total other income (expense)
Income before provision for income taxes
Provision for income taxes
Basic income per share
Diluted income per share
Weighted average shares outstanding:
GALAXY GAMING, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
Cash flows from operating activities:
Net income for the period
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of debt discount
Deferred income tax provision
Changes in operating assets and liabilities:
Increase in restricted cash
(Increase) decrease in accounts receivable
Decrease (increase) in other current assets
Increase in inventory
(Increase) decrease in prepaid expenses
(Increase) in other long-term assets
(Increase) in accounts payable
Increase (decrease) in accrued expenses
Increase in income taxes payable
Increase in deferred revenue
Increase in jackpot liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of property and equipment
Payments received on note receivable
Net cash (used in) provided by investing activities
Cash flows from financing activities:
Principal payments on notes payable
Net cash used in financing activities
Effect of exchange rate changes on cash
Net decrease in cash and cash equivalents
Cash and cash equivalents – beginning of period
Cash and cash equivalents – end of period
Supplemental cash flow information:
Cash paid for interest
Inventory transferred to leased assets
Cash paid for income taxes
Supplemental non-cash financing activities information:
Effect of exchange rate on note payable in foreign currency
GALAXY GAMING, INC.
RECONCILIATION TO EBITDAS
Three Months Ended
Three Months Ended
Income tax provision (benefit)
Share based compensation
(1) EBITDAS is defined as net income (loss) from continuing operations before interest, taxes, depreciation, amortization, share-based compensation, and non-cash charges. EBITDAS does not purport to represent net earnings or net cash used in operating activities, as those terms are defined under generally accepted accounting principles, and should not be considered as an alternative to such measurements or as indicators of the Company's performance. The Company's definition of EBITDAS may not be comparable with similarly titled measures used by other companies.
CONTACT: Jonathan Wilcox
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