NEW YORK--(BUSINESS WIRE)--Trans World Corporation (“TWC” or the “Company”) (OTCQB:TWOC), an owner and operator of casinos and hotels in Europe, today reported financial results for the fourth quarter and year ended December 31, 2016.
In 2016, the Company generated significantly better net income and earnings per share (“EPS”) than in 2015, as a result of stronger performance at all of its operating units. In addition, we acquired Hotel Kranichhöhe in Much, Germany, on December 21, 2016, effective for accounting purposes as of December 1, 2016. This was previously reported in an 8-K filing and press release. The three German hotels form our Hotel Segment, while the three Czech casinos and Hotel Savannah form our Casino Segment.
Mr. Rami Ramadan, Chief Executive Officer, commented, “2016 was a landmark year for the Company. We established records in both EPS of $0.67, and revenues of $53.2 million. This was an improvement on the successful results achieved in 2015, whereby EPS of $0.42 increased by 45.0% and revenues of $42.4 million, increased by 10.2% as compared with 2014. The increase in revenues in 2016 was the result of on-going improvements in our operations, entertainment, and amenities, as well as continued commitment to providing our patrons with the highest level of customer service. We believe that the expansion of our Hotel Segment is complementary to our Casino Segment, and that it will provide long-term benefits to our shareholders. With respect to the Hotel Segment, on March 1, 2017, TWC acquired a 176-room, four-star business hotel located on the banks of the Danube River in Linz, as previously reported in an 8-K filing and press release.
“TWC remains well-positioned for further expansion and growth. We continually strive to improve our existing casino and hotel properties in response to the needs of our growing clientele, while simultaneously searching for acquisition opportunities in both the gaming and hospitality industries. This approach will strengthen the Company’s foundation and our position in the markets we serve.”
2016 versus 2015
For the year ended December 31, 2016, net income rose 65.7% to $6.3 million, or $0.67 per diluted share, as compared with $3.8 million, or $0.42 per diluted share, for the prior year. Excluding the impact of the Hotel Kranichhöhe acquisition in the last month of 2016, our earnings would have been $0.71 per diluted share for the year, an increase of 69%. Notwithstanding the acquisition and integration costs incurred for this property, we expect this acquisition to have a positive effect on both earnings and revenues going forward.
Total revenue rose by 25.7%, or $10.8 million, to $53.2 million, compared with $42.3 million in the prior year, driven largely by strong revenues generated at all of its operating units, as well as by the full year of operation of Hotel Freizeit Auefeld, in Hann. Münden, Germany, which was acquired in June 2015.
The Company achieved an EBITDA of $11.4 million, a 56.1% increase over $7.3 million for the prior year. A table reconciling EBITDA, a non-U.S. GAAP (United States Generally Accepted Accounting Principles) financial measure, to the appropriate U.S. GAAP measure, is included with the Company’s financial information below.
2016 Fourth Quarter versus 2015 Fourth Quarter
Net income increased to $2.4 million, or $0.19 per diluted share, for the fourth quarter of 2016 from $1.8 million, or $0.16 per diluted share, for the same period in 2015. Excluding the impact of the Hotel Kranichhöhe acquisition expenses incurred in December 2016, our earnings would have been $0.23 per diluted share for the fourth quarter, a 43.7% improvement over the same quarter a year ago.
Total revenue increased 14.2% to $14.4 million, compared with $12.6 million for the same quarter of the prior year. The increase in revenue was largely the result of improvements in business volume from both the Casino and Hotel Segments.
TWC’s fourth quarter EBITDA was $3.0 million, an increase of 25.0% from $2.4 million for the prior year quarter. (See the reconciliation table, below).
Balance Sheet Highlights
The Company’s stockholders’ equity at December 31, 2016 increased by 13.7% over the prior year, to $5.16 per share. In addition, the Company had cash and cash equivalents of $17.0 million, including a current loan receivable of $4.2 million (resulting from a timing difference for the bank loan for Hotel Kranichhöhe acquisition), compared to total long-term debt of $11.4 million.
Non-US GAAP Financial Measures
This press release utilizes just EBITDA in the press release, but may use other non-U.S. GAAP financial measures during the earnings call and/or investor presentations. Our financial statements are prepared in accordance with U.S. GAAP. Management believes that this non-U.S. GAAP financial measure reflects the results of our operations or financial condition in other ways, are common to the gaming and hotel industries, and are commonly used by lending institutions and investors in evaluating our performance in comparison to our competitors and the market in general. This belief is based on conversations and meetings our management has had with our lenders and investors where the substance of these talks has typically centered on historical and prospective EBITDA measurements. Based on management’s observations, even though EBITDA measurement is not U.S. GAAP, it does enhance investors’ understanding of the Company’s business.
In addition, management presents, and uses for its own analysis, EBITDA as supplemental disclosure because management believes that it is widely used in the gaming and hotel industries to measure our performance and the basis for the valuation of our Company in the market. EBITDA measures our ability to meet our working capital requirements, make capital expenditures and perform analyses on possible acquisitions that may include the need for debt service requirements.
In short, these performance measurements give an analytic view of the Company’s operational earnings and EBITDA, in particular, reflects our earnings on a cash-basis, excluding the impact of our debt obligations, taxes and non-cash depreciation and amortization.
The following defines the non-U.S. GAAP financial measures that may be used in TWC’s press releases and earning’s calls:
- “Drop per head” is the per guest average dollar value of gaming chips purchased.
- “EBITDA” is earnings before interest, taxes, depreciation and amortization.
- “Live game attendance” is the number of patrons who played at our table games during a particular period.
- “Live games (business)” is the total dollar value of revenues generated by our table games.
- “Slot business” is the total dollar value of revenues generated by our slot machines.
- “Slot game attendance” is the number of patrons who played our slot machines during a particular period.
- “Win percentage” is the ratio of net win (the difference between gaming wagers and the amount paid out to patrons) to total drop (the dollar value of gaming chips purchased in a given period).
The Company has presented the table below to reconcile EBITDA, a non-U.S. GAAP financial measure to its most directly comparable U.S. GAAP measure.
For further information regarding our results of operations and financial condition for the year ended December 31, 2016, please refer to our Annual Report on Form 10-K as filed with the Securities and Exchange Commission today.
Conference Call
The Company will discuss these results in a conference call today at 2:00 PM ET.
| The dial-in numbers are: | ||||
| Live Participant Dial In (Toll Free): | 877-407-9037 | |||
| Live Participant Dial In (International): | 201-493-6738 |
The conference call will also be webcast live via the Investor Relations section of Trans World’s website at www.transwc.com, or by clicking the following link: http://transwc.equisolvewebcast.com/q4-2016.
About Trans World Corporation
Trans World Corporation, founded in 1993, is a publicly-traded, Nevada corporation, headquartered in the U.S., with all of its gaming and hotel operations in Europe. Additional information about TWC can be found on the Company’s website at www.transwc.com.
The press release herein contains certain forward-looking statements and data regarding operating trends and future results of operations. For this purpose, any statements and data contained herein that are not historical fact may be deemed to be forward-looking data. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipates,” “estimates,” or “continue” or comparable terminology or the negative thereof are intended to identify certain forward-looking statements. These statements, by their nature, involve substantial risks and uncertainties, both known and unknown, and actual results may differ materially from any future results expressed or implied by such forward-looking statements. Such risks include but are not limited to, our dependence on our current management, the regulatory environment in which our operations reside, uncertainties over the development and success of our current and future gaming and hotel operations, general global macroeconomic and local economic conditions, extreme weather, and changes in tax or gaming laws or regulations. Additional information concerning potential factors that could affect the Company’s financial results, including other risks and uncertainties, is disclosed in our periodic reports filed with the U.S. Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2016. The Company undertakes no obligation (and expressly disclaims any such obligation) to publicly update or revise any forward-looking statements or data whether as a result of new information, future events or otherwise.
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TRANS WORLD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS Years and Three Months Ended December 31, 2016 and 2015 (in thousands, except for share and per share data) |
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| Year Ended | Three Months Ended | ||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||
| REVENUES | $ | 53,238 | $ | 42,386 | $ | 14,477 | $ | 12,600 | |||||||||||||
| COSTS AND EXPENSES: | |||||||||||||||||||||
| Cost of revenues | 28,673 | 21,747 | 7,776 | 6,355 | |||||||||||||||||
| Depreciation and amortization | 2,220 | 1,863 | 530 | 518 | |||||||||||||||||
| Selling, general and administrative | 13,235 | 13,467 | 3,740 | 3,796 | |||||||||||||||||
| 44,128 | 37,077 | 12,046 | 10,669 | ||||||||||||||||||
| INCOME FROM OPERATIONS, before other | |||||||||||||||||||||
| income (expenses) and income taxes | 9,110 | 5,309 | 2,431 | 1,931 | |||||||||||||||||
| OTHER INCOME (EXPENSES): | |||||||||||||||||||||
| Interest expense | (243 | ) | (206 | ) | (58 | ) | (66 | ) | |||||||||||||
| Other income | 124 | 149 | 124 | ||||||||||||||||||
| (119 | ) | (57 | ) | 66 | (66 | ) | |||||||||||||||
| INCOME BEFORE INCOME TAXES | 8,991 | 5,252 | 2,497 | 1,865 | |||||||||||||||||
| INCOME TAXES | (2,668 | ) | (1,394 | ) | (699 | ) | (406 | ) | |||||||||||||
| NET INCOME | 6,323 | 3,858 | 1,798 | 1,460 | |||||||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||||||||||||
| Basic | 8,838,984 | 8,822,488 | 8,854,011 | 8,826,296 | |||||||||||||||||
| Diluted | 9,498,578 | 9,259,553 | 9,577,100 | 9,263,138 | |||||||||||||||||
| EARNINGS PER COMMON SHARE: | |||||||||||||||||||||
| Basic | $ | 0.72 | $ | 0.44 | $ | 0.20 | $ | 0.17 | |||||||||||||
| Diluted | $ | 0.67 | $ | 0.42 | $ | 0.19 | $ | 0.16 | |||||||||||||
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TRANS WORLD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS December 31, 2016 and December 31, 2015 (in thousands, except for share data) |
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| ASSETS | |||||||||||
| December 31, 2016 | December 31, 2015 | ||||||||||
| CURRENT ASSETS: | |||||||||||
| Cash and cash equivalents | $ | 12,868 | $ | 10,674 | |||||||
| Prepaid expenses | 227 | 409 | |||||||||
| Loan receivable | 4,215 | ||||||||||
| Other current assets | 853 | 509 | |||||||||
| Total current assets | 18,163 | 11,592 | |||||||||
| PROPERTY AND EQUIPMENT, net | 41,524 | 37,122 | |||||||||
| OTHER ASSETS: | |||||||||||
| Goodwill | 4,857 | 5,016 | |||||||||
| Deferred tax assets | 99 | ||||||||||
| Deposits and other assets | 1,461 | 1,509 | |||||||||
| Total other assets | 6,417 | 6,525 | |||||||||
| TOTAL ASSETS | $ | 66,104 | $ | 55,239 | |||||||
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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| CURRENT LIABILITIES: | |||||||||||
| Long-term debt, current maturities | $ | 832 | $ | 542 | |||||||
| Capital lease, current portion | 22 | ||||||||||
| Accounts payable | 1,169 | 753 | |||||||||
| Czech gaming tax accrual | 3,305 | 2,219 | |||||||||
| Foreign income tax accrual | 956 | 957 | |||||||||
| Accrued expenses and other current liabilities | 3,540 | 3,052 | |||||||||
| Total current liabilities | 9,802 | 7,545 | |||||||||
| LONG-TERM LIABILITIES: | |||||||||||
| Long-term debt, less current maturities | 10,646 | 7,493 | |||||||||
| Deferred foreign tax liability | 32 | ||||||||||
| Total long-term liabilities | 10,944 | 7,525 | |||||||||
| COMMITMENTS AND CONTINGENCIES | |||||||||||
| STOCKHOLDERS' EQUITY: | |||||||||||
| Preferred stock, $0.001 par value, 4,000,000 shares authorized, | |||||||||||
| none issued | |||||||||||
| Common stock, $0.001 par value, 20,000,000 shares authorized, | |||||||||||
| 8,854,011 shares in 2016 and 8,829,011 shares in 2015, issued and outstanding | 9 | 9 | |||||||||
| Additional paid-in capital | 54,270 | 53,387 | |||||||||
| Accumulated other comprehensive income | (5,001 | ) | (3,282 | ) | |||||||
| Accumulated deficit | (3,622 | ) | (9,945 | ) | |||||||
| Total stockholders' equity | 45,656 | 40,169 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 66,104 | $ | 55,239 | |||||||
Reconciliation of Non-US GAAP Measures to US GAAP
The table below reconciles EBITDA, a non-U.S. GAAP (United States Generally Accepted Accounting Principles) financial measure, to its most directly comparable U.S. GAAP measure. The EBITDA performance measurement gives an analytic view of the Company’s operational earnings on a cash-basis, excluding the impact of debt obligations, taxes and (non-cash) depreciation and amortization. The Company believes that this non-U.S. GAAP financial measure provides useful information to its investors as well as to others who might be interested in purchasing shares of TWC’s common stock. This belief is based on conversations and meetings TWC’s management has had with its investors. Based on management’s observations, it appears that, even though this measurement is not “U.S. GAAP,” it does enhance investors’ understanding of the Company’s business.
| TRANS WORLD CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||
| EBITDA RECONCILIATION | |||||||||||||||||||||
| Three Months and Years Ended December 31, 2016 and 2015 | |||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||
| Year Ended December 31, | Three Months Ended December 31, | ||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||
| NET INCOME | $ | 6,323 | $ | 3,858 | $ | 1,798 | $ | 1,460 | |||||||||||||
| Add: Interest expense | 243 | 206 | 58 | 66 | |||||||||||||||||
| Add: Income taxes | 2,668 | 1,394 | 699 | 406 | |||||||||||||||||
| Add: Depreciation and amortization expense | 2,220 | 1,863 | 530 | 518 | |||||||||||||||||
| EBITDA | $ | 11,454 | $ | 7,321 | $ | 3,085 | $ | 2,450 | |||||||||||||
| EBITDA margin (% of revenues) | 21.5 | % | 17.3 | % | 21.3 | % | 19.4 | % | |||||||||||||
