Elixir Gaming Technologies reports 2009 first quarter results and provides market update
- Performance at NagaWorld Remains Strong and Philippines Net Win Per Day Continues to Improve from Q1 2009 -
Conference Call: Today, May 14 at 8:30 a.m. ET
Dial-in numbers: 212/231-2907 or 415/226-5360
Webcast: www.elixirgaming.com
Replay information provided below
Hong Kong – May 14, 2009 - Elixir Gaming Technologies, Inc. (NYSE Amex: EGT) (“Elixir Gaming” or “the Company”), a leading technology and solutions provider to the Pan-Asian gaming industry, today reported operating results for the first quarter ended March 31, 2009 and reviewed recent corporate progress.
Recent Highlights:
Average net win per day per machine for the first quarter 2009 was $62, an increase of 32% on a quarterly sequential basis. Average net win per day per machine for the Philippines and Cambodia was $57 and $77, respectively, up 11% and 112% on a quarterly sequential basis.
In April, the Company has sustained strong average net win per day per machine at Premier Club at NagaWorld of $163 and average net win per day per machine in our venues in the Philippines improved by 9% from first quarter 2009 levels to $62.
A total of 6 venues and 1,068 installed units in operation as of the end of the first quarter of 2009, comprised of 5 venues in the Philippines with a total of 831 installed units and 1 venue in Cambodia with a total of 237 installed units.
Significant progress on initiatives to reduce recurring operating costs with first quarter 2009 cash SG&A expense down 20% on a quarterly sequential basis. The identification of additional cost saving opportunities position Elixir Gaming to further reduce cash SG&A expense by 23%, or $0.6 million, compared to first quarter 2009 levels to under $2.0 million by the third quarter of 2009.
Total net revenue from machines on participation for the first quarter 2009 was $0.9 million, a decrease of 9% on a quarterly sequential basis reflecting the impact from the closure of all of our venues in Cambodia except Premier Club at NagaWorld and a deferment in revenue recognition at one venue in the Philippines.
$12.9 million in cash as of March 31, 2009.
Improving Net Win per Day per Machine for Gaming Machine Participation Operations
Average net win per day for the first quarter 2009 was $62, up 32% from the fourth quarter 2008 and up 130% from the prior year period. The improvement was primarily driven by strong performance at Premier Club at NagaWorld in Cambodia as well as steady improvements in net win per machine for the Philippines operations.
In Cambodia, average net win per day for the quarter was $77, up 112% from $36 in the fourth quarter 2008 and a nearly five-fold improvement compared to the prior-year period. Average net win per day for Cambodia in the first quarter 2009 includes the results from four of the Company’s venues that were closed during the quarter which serves to mask the impressive performance of Premier Club at NagaWorld, the Company’s sole venue currently in operation in Cambodia. Since the Company’s initial machine placements at Premier Club at the end of January, Elixir Gaming has experienced a strong ramp up in average net win per day per machine. In February, average net win per day per machine was $54 on an average operating machine base of 146 units. This improved to $167, notably on a higher average operating machine base of 196 units for March. In April, average net win per day per machine remained strong at $163 on an average operating machine base of 236 units.
Clarence Chung, Chairman and Chief Executive Officer of Elixir Gaming, commented, “Elixir Gaming’s operations at Premier Club in NagaWorld represent our initial efforts to act as an operator and the success we are achieving at this venue clearly demonstrates our expertise in slot management. We continue to work with our partners at NagaWorld to develop and implement marketing strategies aimed at maximizing average net win per day per machine results from our installed units.”
In the Philippines, the Company continued to generate improvements in average net win per day per machine during the first quarter 2009. Average net win per day per machine increased to $57, up 11% from $51 in the fourth quarter 2008 and up 50% from $38 in the prior year period. This trend continued in April, with average net win per day per machine improving 9% compared to the first quarter 2009 period to $62.
Mr. Chung continued, “We are being proactive in efforts to accelerate net win per day improvements in the Philippines and are working closely with our venue partners in this market on the implementation of additional marketing and promotional initiatives during the current quarter. We believe these initiatives, which leverage our expertise in marketing and promotional programs and that have been proven successful in our initial operations at Premier Club at NagaWorld, will result in further improvements to net win per machine and revenues derived from our venues in the Philippines.”
Gaming Machine Installation Growth
Elixir Gaming’s operating machine base rose 9% to 1,068 units at the end of the first quarter of 2009 from the end of the fourth quarter of 2008. As of March 31, 2009, the Company had a total of 6 venues in operation, comprised of 5 venues in the Philippines with a total of 831 installed units and 1 venue in Cambodia with a total of 237 installed units. This compares to a total of 9 venues in operation, comprised of 5 venues in the Philippines with a total of 801 installed units and 4 venues in Cambodia with a total of 176 installed units as of December 31, 2008. The growth in the Company’s operating machine base occurred despite the closure of four clubs in Cambodia that resulted in the removal of 176 machines, which was offset by the addition of 237 machines at Premier Club at NagaWorld and an additional 30 units placed in existing venues in the Philippines.
Mr. Chung added, “We continue to explore expansion opportunities in our existing and new markets. In the Philippines, our expansion plans remain on target with three to four new venues expected to open during the remainder of 2009 adding approximately 400 machines to our installed base. Given on our current rollout plan, we anticipate that two of these new venues featuring approximately 200 machines will open next month. Importantly, the new machine installations for the remainder of 2009 will be sourced primarily from our existing inventory, and therefore will require minimal amounts of capital expenditures.”
Accelerating Cost Reduction Initiatives
Simultaneous with executing measures to prudently grow the installed base and net win, the Company has implemented efforts to further streamline its cost structure. Elixir Gaming continued to make significant reductions in recurring operating expenses during the first quarter 2009 and has identified additional cost savings opportunities. These cost reduction initiatives include the closure of the Company’s Macau and Las Vegas offices and China manufacturing plant, further downsizing of the Hong Kong and Cambodia offices, voluntary senior executive salary reductions and additional headcount reductions.
As a result, the Company now expects to reduce quarterly selling, general, and administrative (SG&A) cash expense to under $2.0 million by the third quarter of 2009, compared to the previous target of $2.5 million by that period. A reduction of quarterly SG&A cash expense to under $2.0 million would represent savings of 47% in this metric compared to the third quarter of 2008 when the Company began to implement cost saving initiatives, and would provide further flexibility to pursue growth.
Q1 2009 Financial Review
Elixir Gaming’s first quarter 2009 total revenues were $1.8 million compared to $2.1 million in the fourth quarter of 2008 and $2.9 million for the first quarter of 2008. Revenue from gaming machines on participation was approximately $0.9 million in the first quarter of 2009 compared to revenue of $1.0 million in the fourth quarter of 2008 and $0.5 million in the first quarter of 2008.
In Cambodia, the Company recorded revenue from gaming machines on participation of $0.3 million, up 11% from the fourth quarter of 2008 and up 162% from the year-ago period. In the Philippines, revenue from gaming machines on participation for the first quarter of 2009 was $0.6 million, down 21% from the fourth quarter of 2008 and up 58% from the year-ago period.
Revenue from gaming machines on participation was impacted in the quarter by the venue closures in Cambodia and as a result of a change in revenue recognition from an accrual basis to a cash basis for 198 machines located in one of the Company’s venues in the Philippines. The Company believes this is an isolated situation and noted that its machine placements in this venue remain in operation as Elixir Gaming continues to work with the venue owner on an amicable resolution. Revenue from these 198 machines is now being recorded as deferred revenue. Excluding the change in revenue recognition for this one venue (accounting for revenue from this venue as if on an accrual basis), gaming machine participation revenue would have been $1.1 million, up 9% from the fourth quarter 2008 period.
Elixir Gaming reported a first quarter 2009 net loss of $6.2 million, or $0.05 per share, on a weighted average share count of 115.0 million shares compared to a net loss for the first quarter of 2008 of $5.3 million, or $0.05 per share, on a weighted average share count of 114.9 million shares. The first quarter 2009 net loss exceeded the net loss in the prior-year period due to foreign exchange losses in the first quarter 2009 compared to gains in the first quarter 2008, higher interest expense, lower sales and resulting gross margins in the Company’s non-gaming businesses, higher restructuring charges associated with headcount reductions as part of the Company’s cost cutting initiatives, and the depreciation impact on the Company’s gaming machine participation business as it continues to ramp up net wins. Cash SG&A expense for the first quarter of 2009 was $2.6 million, a decrease of $0.6 million from the fourth quarter of 2008 and $0.7 million from the year-ago period.
2009 Operating Expectations
Open three to four new venues during the remainder of 2009 adding approximately 400 machines to our operating base. Two of these new venues are on track to open in June in attractive locations in the Philippines.
Cost savings initiatives expected to result in quarterly SG&A cash expenses of under $2.0 million by the third quarter of 2009.
Turn adjusted EBITDA positive (earnings before interest, taxes, depreciation, amortization, and stock-based compensation expense) in the third or fourth quarter of 2009.
Clarence Chung concluded, “To date in 2009, Elixir Gaming has made significant progress on our initiatives to improve average win per day simultaneous with the implementation of measures to streamline our operations and cost structure. We remain very encouraged by the steady growth we are experiencing in the Philippines as well as the strong demand for our gaming machines at Premier Club at NagaWorld and we continue to seek additional growth opportunities in both existing and new markets. We have the appropriate level of electronic gaming machines in inventory to quickly and effectively take advantage of such selected growth opportunities. As a result, Elixir Gaming is positioned to begin to realize the benefits from the inherent leverage in our business model as we seek to grow shareholder value.”
Elixir Gaming is hosting a conference call and simultaneous webcast at 8:30 a.m. ET today, May 14, both of which are open to the general public. The conference call number is 212/231-2907 or 415/226-5360. Questions and answers will be reserved for call-in analysts and investors. Interested parties may also access the live call on the Internet at www.elixirgaming.com; please allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the call can be accessed for thirty days on the Internet at www.elixirgaming.com.
About Elixir Gaming Technologies, Inc.
Elixir Gaming Technologies, Inc. (NYSE Amex: EGT) is a provider of gaming technology solutions. The Company secures long-term contracts to provide comprehensive turn-key solutions to 3, 4, and 5 star hotels and other well-located venues in Asia that seek to offer casino gaming products. The Company retains ownership of the gaming machines and systems and receives recurring daily fees based on an agreed upon percentage of the net gaming win per machine and provides on-site maintenance. The Company has established a strategic presence in the Asia Pacific region with a focus on the Philippines and Cambodia markets. For more information please visit www.elixirgaming.com.
Forward Looking Statements
This press release contains forward-looking statements concerning Elixir Gaming 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. Those forward-looking statements include statements regarding expectations for the business of Elixir Gaming, its working capital requirements and future revenue and profitability. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to differences include, but are not limited to, risks related to Elixir Gaming’s inability to place gaming machines at significant levels, whether the gaming machines placed generate the expected amount of net win, the ability of Elixir Gaming to acquire additional capital as and when needed, the ability of Elixir Gaming to collect revenue and protect its assets and those other risks set forth in Elixir Gaming’s annual report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 30, 2009 and our Form 10-Q for the three-months ended March 31, 2009 to be filed May 15, 2009. Elixir Gaming cautions readers not to place undue reliance on any forward-looking statements. Elixir Gaming does not undertake, and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.
CONTACTS
Traci Mangini
SVP, Corporate Finance
702/617-4741
- financial tables follow -
Elixir Gaming Technologies, Inc. Consolidated (Unaudited)
Three Months Ended March 31,
2009
2008
Revenues:
Gaming machine participation
$
945,735)
$
518,617)
Table game products
158,479)
680,030)
Non-gaming products
678,609)
1,732,876)
1,782,823)
2,931,523)
Operating costs and expenses:
Cost of gaming machine participation
- Machine depreciation
2,390,465)
1,292,754)
- Write-off of gaming assets
378,980)
―))
- Other operating costs
341,005)
95,447)
Cost of table game products
178,967)
651,204)
Cost of non-gaming products
756,414)
1,532,485)
Selling, general and administrative
2,835,027)
5,141,588)
Research and development
95,095)
323,721)
Depreciation and amortization
323,717)
231,120)
Restructuring charges
509,071)
165,570)
7,808,741)
9,433,889)
Loss from operations
(6,025,918)
(6,502,366)
Other income/ (expense):
Interest expense and finance fees
(135,938)
(54,287)
Interest income
38,388)
366,751)
Foreign currency gains/ (losses)
(126,566)
839,966)
Other
12,379)
80,527)
(211,737)
1,232,957)
Net loss before income tax benefit
(6,237,655)
(5,269,409)
Income tax expense
(3,192)
(32,141)
Net loss
$
(6,240,847)
$
(5,301,550)
Basic and diluted loss per share
$
(0.05)
$
(0.05)
Weighted average common shares outstanding
114,956,671)
114,923,562)
Elixir Gaming Technologies, Inc. Consolidated Balance Sheets
March 31, 2009
December 31, 2008
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
12,881,331)
$
14,504,433)
Accounts receivable, trade, net of allowance for uncollectibles of $660,540 in 2009 and $923,603 in 2008
1,889,861)
1,336,261)
Due from a related party
22,966)
531,109)
Other receivables
165,817)
78,082)
Assets held for sale
195,002
―
Inventories
2,309,951)
1,096,046)
Prepaid expenses and other current assets
668,062)
1,299,487)
Total current assets
18,132,990)
18,845,418)
Gaming equipment and systems, net of accumulated depreciation of $9,305,899 in 2009 and $7,081,817 in 2008
46,239,170)
48,351,545)
Property and equipment, net of accumulated depreciation of $3,118,090 in 2009 and $2,917,153 in 2008
3,429,791)
3,724,467)
Intangible assets, net of accumulated amortization of $1,553,603 in 2009 and
$2,356,271 in 2008
3,779,001)
4,123,403)
Goodwill
84,210)
84,210)
Deposits and other assets
966,414)
1,284,679)
Total assets
$
72,631,576)
$
76,413,722)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
1,795,831)
$
806,538)
Amount due to a related party
158,247)
27,672)
Accrued expenses
3,178,688)
2,712,758)
Deferred revenue
180,260)
―
Short-term debt
3,414)
29,372)
Notes payable to a related party, current portion
5,957,906)
5,884,049)
Capital lease obligations, current portion
205,469)
269,371)
Advance for sale of assets
2,400,000
―
Customer deposits
1,464,422)
1,525,569)
Total current liabilities
15,344,237)
11,255,329)
Notes payable to a related party, net of current portion
4,667,627)
6,185,088)
Capital lease obligations, net of current portion
417,695)
468,424)
Other liabilities
649,396)
525,986)
Deferred tax liability
461,413)
495,560)
Total liabilities
21,540,368)
18,930,387)
Stockholders’ equity:
Common stock, $.001 par value, 300,000,000 shares authorized; 114,956,671 and 114,956,671 shares issued and outstanding
