NEW YORK--(BUSINESS WIRE)--Trans World Corporation (“TWC” or the “Company”) (OTCQB: TWOC), a premier owner and operator of casinos and hotels in Europe, today reported its financial results for the quarter ended March 31, 2017.
Mr. Rami Ramadan, Chief Executive Officer, remarked, “TWC’s first quarter revenues were flat compared to the same period last year, primarily as a result of severe winter weather in our market area that negatively affected our operations in the Czech Republic and Germany. The harsh winter, which brought low temperatures not experienced in the Czech Republic in the last 50 years, as well as exceptionally heavy snow, resulted in icy road conditions, and prevented many of our repeat and new customers from visiting our establishments on those days. Additionally, we experienced a below-average win percentage. These unanticipated factors contravened our forecast of an approximate 6.0% increase in casino attendance and an increase of approximately $1.4 million in casino revenue versus the same quarter a year ago. As evidenced by an attendance rebound in April and early May 2017, casino metrics now appear to be tracking as expected for the second quarter 2017 to date. Despite the winter’s disruption, due to the strong loyalty of our clientele, our exceptional customer service, and the continued success of our Players’ Club incentive program, our casino segment was able to maintain overall revenue comparable with last year’s first quarter.”
Mr. Ramadan continued, “Excluding Hotel Kranichhöhe in Much, Germany, and Steigenberger Hotel in Linz, Austria, that were acquired by the Company in December 2016 and March 2017, respectively, our hotel segment displayed revenue resiliency during the winter, posting a marginal improvement over the first quarter last year.
“During the quarter, TWC began building the Trans World Hotels brand, inclusive of the marketing and standardization processes, which will encompass all five hotels in its portfolio, something the Company has successfully accomplished with its American Chance Casinos brand. The standardization steps include a common hotel logo, room amenities, room type standards, market segments, and promotional materials. TWC has also begun implementing centralization of the hotel sales function as well as the yield management system.
“In addition, during the quarter, we made significant progress executing on our hotel investment initiatives in line with our stated hotel acquisition strategy. Most notably, we commenced the multi-unit, multi-phase renovations of our newly acquired hotels, Hotel Kranichhöhe and Steigenberger Hotel.”
The Company acquired the Steigenberger Hotel at what it believes is a particularly favorable purchase price as a result of a bank required sale.
2017 First Quarter
Net income was $594,000, or $0.06 per diluted share, for the first quarter of 2017 versus $1.0 million, or $0.11 per diluted share, for the same prior year period. The net income decrease was primarily due to additional gaming taxes paid.
Total revenue increased by 11.1% to approximately $13.6 million, compared with $12.2 million for the same quarter of the prior year. The quarter’s results benefited from the inclusion of a full three months of revenue from Hotel Kranichhöhe and one-month of revenue from the newly acquired Steigenberger Hotel.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) in the first quarter 2017 declined by 22.5% to approximately $1.6 million, versus $2.0 million in the prior year’s first quarter. Excluding the extraordinary weather and win percentage noted above, EBITDA would have been up in the period. A table reconciling EBITDA, a non-U.S. GAAP (United States Generally Accepted Accounting Principles) financial measure, to the appropriate GAAP measure is included with the Company’s financial information below.
Balance Sheet Highlights
The Company’s stockholders’ equity at March 31, 2017 increased by 4.5% over the prior year’s comparable period, to $5.38 per share.
Non-U.S. GAAP Financial Measures
This press release utilizes EBITDA to express certain financial information about the results of our operations for the quarter ended March 31, 2017. EBITDA is a non-U.S. GAAP financial measure. 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 that are common to the gaming and hotel industries, and that 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 a supplemental disclosure because management believes that it is widely used in the gaming and hotel industries to measure performance and serves as the basis for valuation of our Company in the market. EBITDA measures our ability to meet our working capital requirements and debt obligations, make capital expenditures and perform analyses on possible acquisitions that may include the need for additional debt service requirements.
In short, this performance measurement gives an analytic view of the Company’s operational earnings and reflects our earnings on a cash-basis, excluding the impact of our debt obligations, taxes and non-cash depreciation and amortization.
In addition to EBITDA, management may use other non-U.S. GAAP financial measures to describe our business in press releases, on earning calls and in meetings with stockholders and investors. The following defines the other non-U.S. GAAP financial measures that may be used in TWC’s press releases, earnings calls or meetings:
- “Drop per head” is the per guest average dollar value of gaming chips purchased.
- “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 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 three months ended March 31, 2017, please refer to our Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission.
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 forecasts, 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.
|TRANS WORLD CORPORATION AND SUBSIDIARIES|
|CONSOLIDATED STATEMENTS OF INCOME|
|AND COMPREHENSIVE INCOME|
|Three Months Ended March 31, 2017 and 2016|
|(in thousands, except for share and per share data)|
|Three Months Ended March 31,|
|Food and beverage||1,184||634|
|Food and beverage||1,036||584|
|Depreciation and amortization||570||500|
|Selling, general and administrative||3,935||3,494|
INCOME FROM OPERATIONS, before other expenses
and income taxes
|INCOME BEFORE INCOME TAXES||928||1,477|
|INCOME TAX EXPENSE||(334)||(471)|
Other comprehensive income, foreign currency
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:|
|EARNINGS PER COMMON SHARE:|
TRANS WORLD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2017 and December 31, 2016
(in thousands, except for share data)
|March 31, 2017||December 31, 2016|
|Cash and cash equivalents||$||11,541||$||12,868|
|Other current assets||1,260||853|
|Total current assets||13,757||18,163|
|PROPERTY AND EQUIPMENT, net||47,179||41,524|
|Deferred tax assets||100||99|
|Deposits and other assets||5,201||1,461|
|Total other assets||10,226||6,417|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Long-term debt, current maturities||$||1,278||$||832|
|Czech gaming tax accrual||3,370||3,305|
|Foreign income tax accrual||894||956|
|Accrued expenses and other current liabilities||2,485||3,540|
|Total current liabilities||9,213||9,802|
|Long-term debt, less current maturities||14,257||10,646|
|Total long-term liabilities||14,257||10,646|
|COMMITMENTS AND CONTINGENCIES|
Preferred stock, $0.001 par value, 4,000,000 shares authorized,
Common stock, $0.001 par value, 20,000,000 shares authorized,
|Additional paid-in capital||55,063||54,270|
|Accumulated other comprehensive loss||(4,352)||(5,001)|
|Total stockholders' equity||47,692||45,656|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||71,162||$||66,104|
Reconciliation of Non-U.S. GAAP Measures to U.S. 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 and lenders. 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|
|Three Months Ended March 31, 2017 and 2016|
|Three Months Ended March 31,|
|Add: Interest expense||83||62|
|Add: Income taxes||334||471|
|Add: Depreciation and amortization expense||570||500|
|EBITDA margin (% of revenues)||11.6%||16.7%|