Multimedia Games takeover weighs on GCA quarterly results
Global Cash Access Holdings Inc (GCA), a supplier of cash access products and related services to the gaming industry, posted a net loss for the fourth quarter of 2014, even though revenue for the period went up.
U.S.-based GCA on Tuesday posted a net loss of US$5.7 million for the three months to December 31 last year, or US$0.09 per diluted share, compared to net income of US$5.7 million and earnings of US$0.08 per diluted share in the prior-year period.
Revenue for the period increased by 8 percent year-on-year to US$152.1 million, but operating income slumped by 96.4 percent year-on-year to US$0.4 million. That was attributed to US$10 million in costs and accounting adjustments from the US$1.2-billion deal to acquire slot machine maker Multimedia Games Holding Co Inc, said GCA.
The deal was completed on December 19. GCA’s results for the final quarter of 2014 include 13 days of operations from Multimedia Games.
Adjusted earnings before interest, taxation, depreciation, and amortisation (EBITDA) in the fourth quarter of 2014 increased by 40 percent year-on-year to US$6.9 million. The increase in adjusted EBITDA included US$4.0 million from Multimedia Games, GCA said.
Multimedia Games saw revenue decline by nearly 19 percent year-on-year in the final quarter of 2014.
“Since completing our acquisition of Multimedia Games less than three months ago, we have been focused on our integration initiatives,” Randy Taylor, GCA executive vice president and chief financial officer, said in a statement accompanying the results.
“As of December 31, 2014, we have eliminated approximately US$10.9 million on an annual run rate basis from our overall cost structure and we expect to achieve our targeted annual run rate of US$24 million in cost synergies by calendar year end,” Mr Taylor added.
The executive said the companies plan to consolidate all manufacturing operations later this year, “which will significantly enhance manufacturing efficiencies and reduce costs”.
For full-year 2014, GCA reported net income of US$12.1 million, and earnings per diluted share of US$0.18, down from a profit of US$24.4 million, and earnings of US$0.36 per diluted share in the previous year. Revenue increased by 1.8 percent year-on-year to US$593.1 million.
“In the short time since acquiring Multimedia Games, we have made measurable progress on integrating our two organisations and are tracking to our objectives,” GCA chief executive Ram Chary said in the statement.
The combined company’s headquarters remain in Las Vegas and its game development operations will be based in Austin, Texas, where Multimedia Games has its headquarters.
“We intend to leverage our slot gaming entertainment, payments and compliance solutions to bring enhanced offerings to market that provide excellent returns on our customers’ capital investments in gaming technology,” Mr Chary added.
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