Galaxy Gaming Reports Q-2 Financial Results
LAS VEGAS, Aug. 15, 2016 (GLOBE NEWSWIRE) -- Galaxy Gaming, Inc. (OTC:GLXZ), the world's largest independent developer, manufacturer and distributor of casino table games and enhanced systems, announced today its results for the three and six months ended June 30, 2016.
Financial Highlights
Q-2 2016 vs. Q-2 2015
- Revenue of $3,064K increased 14%
- Adjusted EBITDA of $1,311K increased 56%
- Pre-tax gain of $609K increased 387%
- Net income of $378K increased 427%
Q-2 2016 vs. Q-1 2016
- Revenue of $3,064K increased 3%
- Adjusted EBITDA of $1,311K increased 6%
- Pre-tax gain of $609K increased 14%
- Net income of $378K decreased less than 1%
6 Months 2016 vs. 6 Months 2015
- Revenue of $6,048K increased 15%
- Adjusted EBITDA of $2,541K increased 50%
- Pre-tax gain of $1,145K increased 375%
- Net income of $757K increased 463%
Executive Comments
Robert B. Saucier, Galaxy’s CEO stated, “The seeds for growth we previously sowed are now being harvested. As evidenced by this record-breaking quarter, our core business continues to build, thus enhancing our ultra-high margin recurring revenue stream. This performance allows us to continue to pay down our long-term debt whilst reinvesting for further growth. At this halfway point, we remain convinced that 2016 will be our best year ever.
Mr. Saucier continued, “It is also evident from these numbers that our business model is extremely scalable. For example, the 15% increase in year-to-date revenues resulted in a 463% increase in net income. Another way to look at it is that of the $781K additional revenue realized in the first half of 2016, 80% of those dollars dropped to the bottom line.”
Financial Summary
Revenue. Total revenue for the second quarter 2016 increased 14% to $3,064,171, over the same quarter 2015. This increase is primarily due to additional placement of premium games and expansion into new territories. Between the second quarter 2016 and first quarter 2016, total revenues increased 3% to $3,064,171. This increase was recognized in all categories of products, with premium games netting the largest gains. The annualized recurring revenue run-rate as of June 30, 2016 is approximately $12,256,684.
Total costs and expenses. Expenses for the second quarter 2016 decreased 4% to $2,200,459, when compared to the same quarter 2015. The decrease is primarily due to lower legal and professional expenses. The total costs and expenses in the second quarter 2016 increased less than 1% to $2,220,459 compared to the first quarter 2016, primarily driven by increases in research & development costs.
Adjusted EBITDA. Adjusted EBITDA, a non-GAAP financial measure (described below), for the second quarter 2016 increased 56% to $1,310,515, compared to the same quarter 2015. Increased gross revenues and lower selling, general & administrative expenses contributed to the increase in Adjusted EBITDA between the periods. Adjusted EBITDA in the second quarter 2016 increased 6% to $1,310,515 compared to the first quarter in 2016. This increase was also driven by the combination of an increase in gross revenues and a decrease in selling, general & administrative expenses. The decrease in selling, general & administrative expenses was primarily driven by lower legal costs attributed to litigation.
Net income. Net income for the second quarter 2016 was $377,527, which was an increase of 427% from the same quarter 2015. The increase was primarily due to the increases in our recurring revenues and lower costs and expenses. The net income of $377,527 in the second quarter decreased less than 1% compared to the first quarter 2016. This increase was the combined result of increased revenues and decreases in selling, general & administrative expenses, for reasons previously mentioned.
Semi-Annual 2016 Financial Results Teleconference and Webcast
Galaxy Gaming, Inc. will host an investor teleconference and webcast to discuss its financial results for the quarter and six months ended June 30, 2016. Details for the call, which is scheduled to include a web presentation, are as follows:
When: Tuesday, August 30th at 1:00pm Pacific Time (4:00pm Eastern)
US/Canada: (877) 627-6582
International: (719) 325-4886
Passcode: 9838092
Web Presentation: http://ir.galaxygaming.com
Use of Non-GAAP Measures
Galaxy Gaming, Inc. (the “Company”) 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 Adjusted EBITDA, 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, Adjusted EBITDA also excludes noncash charges, certain non-recurring charges and share-based compensation expense. EBITDA and Adjusted EBITDA are not measures of performance defined in accordance with GAAP. However, Adjusted EBITDA 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.
Adjusted EBITDA 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 Adjusted EBITDA is included in the accompanying financial schedules.
About Galaxy Gaming
Headquartered in Las Vegas, Nevada, Galaxy Gaming (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. The Company is also expanding its global presence through its partnership with WPT Enterprises, Inc., owner of the World Poker Tour. Galaxy’s games can be played online at FeelTheRush.com. Connect with Galaxy on Facebook, YouTube and Twitter.
This press release may contain "forward looking" statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and is subject to the safe harbors created thereby. Forward looking statements are subject to change and involve risks and uncertainties that could significantly affect future results, including those risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. Although the Company believes any expectations expressed in any forward looking statements are reasonable, future results may differ materially from those expressed in any forward looking statements. The Company undertakes no obligation to update the information in this press release except as required by law and represents that the information speaks only as of today's date.
| GALAXY GAMING, INC. | ||||||||
| CONDENSED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
| ASSETS |
June 30, 2016 |
December 31, 2015 |
||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 642,738 | $ | 570,623 | ||||
| Restricted cash | 71,073 | 97,859 | ||||||
| Accounts receivables, net allowance for bad debts of $31,000 and $30,944 | 1,754,598 | 1,828,669 | ||||||
| Prepaid expenses | 97,182 | 106,338 | ||||||
| Inventories, net | 504,267 | 411,700 | ||||||
| Deferred tax asset | — | 43,017 | ||||||
| Other current assets | 2,161 | 2,489 | ||||||
| Total current assets | 3,072,019 | 3,060,695 | ||||||
| Property and equipment, net | 263,231 | 298,877 | ||||||
| Products leased and held for lease, net | 155,405 | 134,485 | ||||||
| Intangible assets, net | 12,517,011 | 13,261,636 | ||||||
| Goodwill | 1,091,000 | 1,091,000 | ||||||
| Deferred tax assets, net of current portion | — | 82,562 | ||||||
| Other assets, net | 41,793 | 41,793 | ||||||
| Total assets | $ | 17,140,459 | $ | 17,971,048 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,181,215 | $ | 1,421,848 | ||||
| Accrued expenses | 1,158,864 | 823,964 | ||||||
| Income taxes payable | 519,781 | 170,331 | ||||||
| Deferred revenue | 851,859 | 717,690 | ||||||
| Jackpot liabilities | 90,073 | 106,671 | ||||||
| Deferred tax liability | 75,358 | — | ||||||
| Capital lease obligations, current portion | 39,270 | 59,196 | ||||||
| Long-term debt, current portion | 3,998,548 | 4,648,120 | ||||||
| Deferred rent, current portion | 10,568 | 6,197 | ||||||
| Total current liabilities | 7,925,536 | 7,954,017 | ||||||
| Deferred rent, net of current portion | 47,359 | 52,643 | ||||||
| Capital lease obligations, net of current portion | 62,701 | 78,008 | ||||||
| Long-term debt, net of debt discount, net of current portion | 5,676,863 | 7,436,171 | ||||||
| Total liabilities | 13,712,459 | 15,520,839 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ equity | ||||||||
| 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 39,315,591 and 39,215,591 shares issued and outstanding |
39,316 | 39,216 | ||||||
| Additional paid-in capital | 3,013,772 | 2,963,841 | ||||||
| Accumulated deficit | (35,552 | ) | (792,446 | ) | ||||
| Accumulated other comprehensive income | 410,464 | 239,598 | ||||||
| Total stockholders’ equity | 3,428,000 | 2,450,209 | ||||||
| Total liabilities and stockholders’ equity | $ | 17,140,459 | $ | 17,971,048 | ||||
| GALAXY GAMING, INC. | ||||||||||||||||
| CONDENSED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| FOR THE THREE MONTHS ENDED | FOR THE SIX MONTHS ENDED | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product leases and royalties | $ | 3,057,172 | $ | 2,677,384 | $ | 6,038,991 | $ | 5,255,696 | ||||||||
| Product sales and service | 6,999 | 5,216 | 9,279 | 10,999 | ||||||||||||
| Total revenue | 3,064,171 | 2,682,600 | 6,048,270 | 5,266,695 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of ancillary products and assembled components | 29,672 | 23,989 | 51,312 | 47,278 | ||||||||||||
| Selling, general and administrative | 1,622,105 | 1,700,503 | 3,274,304 | 3,279,579 | ||||||||||||
| Research and development | 101,879 | 116,441 | 181,221 | 269,429 | ||||||||||||
| Depreciation | 45,032 | 43,018 | 88,696 | 84,311 | ||||||||||||
| Amortization | 372,312 | 372,313 | 744,625 | 750,386 | ||||||||||||
| Share-based compensation | 29,459 | 36,072 | 49,931 | 54,942 | ||||||||||||
| Total costs and expenses | 2,200,459 | 2,292,336 | 4,390,089 | 4,485,925 | ||||||||||||
| Income from operations | 863,712 | 390,264 | 1,658,181 | 780,770 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 90 | 5,320 | 146 | 11,205 | ||||||||||||
| Interest expense | (255,218 | ) | (270,865 | ) | (513,413 | ) | (550,803 | ) | ||||||||
| Total other expense | (255,128 | ) | (265,545 | ) | (513,267 | ) | (539,598 | ) | ||||||||
| Income before provision for income taxes | 608,584 | 124,719 | 1,144,914 | 241,172 | ||||||||||||
| Provision for income taxes | (231,057 | ) | (53,146 | ) | (388,020 | ) | (106,740 | ) | ||||||||
| Net income | $ | 377,527 | $ | 71,573 | $ | 756,894 | $ | 134,432 | ||||||||
| Basic income per share | $ | 0.01 | $ | 0.00 | $ | 0.02 | $ | 0.00 | ||||||||
| Diluted income per share | $ | 0.01 | $ | 0.00 | $ | 0.02 | $ | 0.00 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 39,315,591 | 39,065,591 | 39,383,369 | 39,028,091 | ||||||||||||
| Diluted | 39,465,676 | 39,065,591 | 39,565,633 | 39,028,508 | ||||||||||||
| GALAXY GAMING, INC. | ||||||||
| CONDENSED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| FOR THE SIX MONTHS | ||||||||
| ENDED | ||||||||
| June 30, | ||||||||
| 2016 | 2015 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income for the period | $ | 756,894 | $ | 134,432 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation expense | 88,696 | 84,311 | ||||||
| Amortization expense | 744,625 | 750,386 | ||||||
| Provision for bad debt expense | — | 40,000 | ||||||
| Inventory reserve | — | 47,069 | ||||||
| Amortization of debt discount | 104,316 | 104,316 | ||||||
| Deferred income tax provision | 388,020 | 202,506 | ||||||
| Share-based compensation | 49,931 | 54,942 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease (increase) in restricted cash | 26,786 | (28,408 | ) | |||||
| Decrease (increase) in accounts receivable | 71,287 | (51,744 | ) | |||||
| Decrease (increase) in other current assets | 328 | (8,156 | ) | |||||
| Increase in inventory | (137,704 | ) | (20,348 | ) | ||||
| Decrease (increase) in prepaid expenses | 9,156 | (117,860 | ) | |||||
| (Decrease) increase in accounts payable | (241,190 | ) | 286,986 | |||||
| Increase in income taxes payable | 349,450 | — | ||||||
| Increase in accrued expenses | 327,090 | 14,837 | ||||||
| Increase in deferred revenue | 134,169 | 35,086 | ||||||
| (Decrease) increase in jackpot liabilities | (16,598 | ) | 28,464 | |||||
| (Decrease) increase in deferred rent | (913 | ) | 1,685 | |||||
| Net cash provided by operating activities | 2,654,343 | 1,558,504 | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisition of property and equipment | (28,832 | ) | (44,066 | ) | ||||
| Net cash used in investing activities | (28,832 | ) | (44,066 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Principal payments on capital leases | (35,233 | ) | (32,464 | ) | ||||
| Principal payments on notes payable | (2,488,778 | ) | (1,800,231 | ) | ||||
| Net cash used in financing activities | (2,524,011 | ) | (1,832,695 | ) | ||||
| Effect of exchange rate changes on cash | (29,385 | ) | 5,233 | |||||
| Net increase (decrease) in cash and cash equivalents | 72,115 | (313,024 | ) | |||||
| Cash and cash equivalents – beginning of period | 570,623 | 560,184 | ||||||
| Cash and cash equivalents – end of period | $ | 642,738 | $ | 247,160 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | 530,660 | $ | 446,487 | ||||
| Inventory transferred to leased assets | $ | 45,137 | $ | 11,034 | ||||
| Cash paid for income taxes | $ | 20,000 | $ | — | ||||
| Supplemental non-cash financing activities information: | ||||||||
| Effect of exchange rate on note payable in foreign currency | $ | 24,318 | $ | 152,523 | ||||
| GALAXY GAMING, INC. | ||||||||||||||||||||||
| RECONCILIATION TO ADJUSTED EBITDA | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| Three Months Ended | Six Months Ended | Three Months Ended | ||||||||||||||||||||
|
June 30, |
June 30, |
March 31, | ||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | ||||||||||||||||||
| Net income | $ | 377,527 | $ | 71,573 | $ | 756,894 | $ | 134,432 | $ | 379,367 | ||||||||||||
| Interest income | (90 | ) | (5,320 | ) | (146 | ) | (11,205 | ) | (56 | ) | ||||||||||||
| Interest expense | 255,218 | 270,865 | 513,413 | 550,803 | 258,195 | |||||||||||||||||
| Income tax provision | 231,057 | 53,146 | 388,020 | 106,740 | 156,863 | |||||||||||||||||
| Depreciation | 45,032 | 43,018 | 88,696 | 84,311 | 43,662 | |||||||||||||||||
| Amortization | 372,312 | 372,313 | 744,625 | 750,386 | 372,312 | |||||||||||||||||
| Share based compensation | 29,459 | 36,072 | 49,931 | 54,942 | 20,471 | |||||||||||||||||
| Adjusted EBITDA(1) | $ | 1,310,515 | $ | 841,667 | $ | 2,541,433 | $ | 1,670,409 | $ | 1,230,814 | ||||||||||||
(1) Adjusted EBITDA is defined as net income (loss) from continuing operations before interest, taxes, depreciation, amortization, share-based compensation, and non-cash charges. Adjusted EBITDA 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 Adjusted EBITDA may not be comparable with similarly titled measures used by other companies.
Contact: Gary A. Vecchiarelli (702) 939-3254
Released August 15, 2016