Trans World Corporation Announces 2017 First Quarter Financial Results

NEW YORK--()--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,
  2017 2016
(Unaudited) (Unaudited)
 
REVENUES:
Gaming $ 10,776 $ 10,670
Rooms 1,395 785
Food and beverage 1,184 634
Other   230   144
  13,585   12,233
 
OPERATING EXPENSES:
Gaming 6,251 5,776
Rooms 644 305
Food and beverage 1,036 584
Other 138 35
Depreciation and amortization 570 500
Selling, general and administrative 3,935 3,494
       
  12,574   10,694
 
INCOME FROM OPERATIONS, before other expenses
and income taxes
 

1,011

 

1,539

 
OTHER EXPENSES:
Interest expense   (83)   (62)
 
 
INCOME BEFORE INCOME TAXES   928   1,477
 
INCOME TAX EXPENSE (334) (471)
 
NET INCOME     594   1,006
 

Other comprehensive income, foreign currency
translation adjustments, net of tax of $0

649 1,862
 
COMPREHENSIVE INCOME $ 1,243 $ 2,868
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 8,859,289 8,829,011
Diluted 9,889,113 9,438,871
 
EARNINGS PER COMMON SHARE:
Basic $ 0.07 $ 0.11
Diluted $ 0.06 $ 0.11
 
 
TRANS WORLD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

March 31, 2017 and December 31, 2016

(in thousands, except for share data)

         
ASSETS
March 31, 2017 December 31, 2016
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 11,541 $ 12,868
Prepaid expenses 956 227
Loan receivable 4,215
Other current assets   1,260   853
 
Total current assets   13,757   18,163
 
PROPERTY AND EQUIPMENT, net   47,179   41,524
 
OTHER ASSETS:
Goodwill 4,925 4,857
Deferred tax assets 100 99
Deposits and other assets   5,201   1,461
 
Total other assets   10,226   6,417
 
TOTAL ASSETS $ 71,162 $ 66,104
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Long-term debt, current maturities $ 1,278 $ 832
Accounts payable 1,186 1,169
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 LIABILITIES:
Long-term debt, less current maturities   14,257   10,646
 
Total long-term liabilities   14,257   10,646
 
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,
8,879,011 shares in 2017 and 8,854,011 shares in 2016, issued and outstanding

9 9
Additional paid-in capital 55,063 54,270
Accumulated other comprehensive loss (4,352) (5,001)
Accumulated deficit   (3,028)   (3,622)
 
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
EBITDA RECONCILIATION
Three Months Ended March 31, 2017 and 2016
(in thousands)
    Three Months Ended March 31,
2017     2016
(Unaudited) (Unaudited)
 
NET INCOME $ 594 $ 1,006
Add: Interest expense 83 62
Add: Income taxes 334 471
Add: Depreciation and amortization expense   570   500
EBITDA $ 1,581 $ 2,039
 
EBITDA margin (% of revenues) 11.6% 16.7%
 

Contacts

Trans World Corporation
Jill Yarussi, 212-983-3355
Manager of Communications
JYarussi@transwc.com
www.transwc.com

Contacts

Trans World Corporation
Jill Yarussi, 212-983-3355
Manager of Communications
JYarussi@transwc.com
www.transwc.com