Trans World Corporation Announces 2014 Third Quarter Financial Results

Company to host quarterly conference call today at 2:00 p.m. ET

NEW YORK--()--Trans World Corporation (“TWC” or the “Company”) (OTCQB:TWOC), a premier owner and operator of casinos and hotels in Europe, today reported financial results for the third quarter and nine months ended September 30, 2014.

Highlights of 2014 Third Quarter (all comparisons year-over-year)

  • Net income increased 22.9% to $868,000, or $0.10 per diluted share, compared with $706,000, or $0.08 per diluted share, in the prior year;
  • Total revenue increased by 9.7% to approximately $9.7 million;
  • Income before foreign income taxes rose by $163,000 or 16.7% for the period;
  • EBITDA increased 11.4% to $1.5 million; and
  • Purchase of Hotel Columbus, a 117-room business property, completed during period.

Highlights of 2014 Year-to-Date (all comparisons year-over-year)

  • Net income rose by 45.1% to $2.0 million, or $0.22 per diluted share for the first nine months of 2014, compared with approximately $1.4 million, or $0.15 per diluted share, in the prior year;
  • Total revenue increased by 8.3% to $28.2 million for the nine month period 2014; and
  • EBITDA increased 23.3% to approximately $4.0 million.

Mr. Rami Ramadan, Chief Executive Officer, commented, “We are very pleased to see increases in revenue, net income and EBITDA for the third quarter and nine-month period of 2014 as compared with the prior year. These improvements were the result of the continued success of our slot business as well as an increase in occupancy at our Hotel Savannah for the third quarter when compared with the prior year. Furthermore, the revenue that we received from Hotel Columbus during our first month of ownership, albeit minor, contributed to the increase in total revenue, as well. We believe that as we strive to improve the property, it will continue to add further value for our shareholders.”

During the third quarter and nine month period ended September 30, 2014, TWC’s player loyalty programs continued to be both effective and successful. These programs, in combination with TWC’s promotional events and the Company’s efforts to provide the highest level of customer service to its guests, resulted in an increase in total casino attendance of 13.1% for the quarter and a 9.9% increase for the nine months period of 2014, when viewed against the prior year’s comparable periods. In the same comparisons, the Company also reported increases in drop-per-head of 1.7% and 4.5% for the three and nine-month periods of 2014, respectively.

Hotel Columbus

In September 2014, TWC completed its acquisition of Hotel Columbus; a four-star 117-room property located in the suburb of Seligenstadt, Germany, approximately 25 minutes from both downtown Frankfurt and Frankfurt international airport. The acquisition was previously reported in a press release on September 15, 2014.

2014 Third Quarter

Third quarter 2014 total revenue increased 9.7% to approximately $9.7 million, compared with $8.8 million for the same quarter of the prior year. The increase in revenue was the result of stronger slot business during the period, which increased by 8.2% over the same quarter of the prior year. The increase in revenue was also attributable to a rise in hotel occupancy at the Hotel Savannah, as well as a result of the additional revenue received in the month of September from the Hotel Columbus.

The Company reported income before foreign income taxes of $1.1 million, a $163,000 or a 16.7% increase over the $974,000 in the same quarter a year ago. TWC incurred foreign income taxes of $269,000, as compared with a foreign income tax expense of $268,000 for the third quarter of the prior year.

Net income increased 22.9%, to $868,000, or $0.10 per diluted share, for the third quarter of 2014 from $706,000, or $0.08 per diluted share, for the same period of the prior year.

EBITDA was $1.5 million for the third quarter 2014 from approximately $1.4 million for the same three-month period in 2013, primarily as a result of stronger revenues.

2014 Year-to-date

For the nine months ended September 30, 2014, total revenue was $28.2 million, compared with approximately $26.1 million for the nine month period a year ago, primarily driven by increases in slot business and hotel revenue.

TWC also earned income before foreign income taxes of approximately $2.8 million, which was $766,000 or a 38.3% improvement over the $2.0 million achieved in the year ago period. The Company also recognized a foreign income tax expense of $767,000 for the first nine months of 2014, as compared with $623,000 for the same period of the prior year. The additional expense was due to a higher income base.

Net income rose 45.1% for the nine months ended September 30, 2014 to $2.0 million, or $0.22 per diluted share, as compared with approximately $1.4 million, or $0.15 per diluted share, for the first nine months of the prior year.

EBITDA was approximately $4.0 million, a 23.3% increase from $3.2 million for the same nine-month period in 2013 due to stronger revenues. A table reconciling EBITDA, a non-US GAAP (United States Generally Accepted Accounting Principles) financial measure, to the appropriate US GAAP measure is included with the Company’s financial information below.

Balance Sheet Highlights

The Company had cash of approximately $4.5 million at September 30, 2014 compared with approximately $6.3 million at December 31, 2013. The decline in cash was due to the Company’s cash investment to acquire Hotel Columbus.

Non-US GAAP Financial Measures

This press release utilizes a number of financial measures that are not used when preparing our financial statements in accordance with United States generally accepted accounting principles (“US GAAP”). Management believes that these non-US GAAP financial measures reflect the results of our operations or financial condition in other ways, are common to the gaming industry, 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 the EBITDA and other noted measurements are not “US GAAP,” they do enhance investors’ understanding of the Company’s business.

In short, these performance measurements give an analytic view of the Company’s operational earnings and EBITDA, in particular, reflect earnings on a cash-basis, excluding the impact of debt obligations and (non-cash) depreciation and amortization. Corporate book value represents our stockholders’ equity on a diluted per share basis.

Management presents, and uses for its own analysis, EBITDA, corporate book value and other non-US GAAP financial measures as supplemental disclosure because management believes that they are widely used in the gaming industry 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 might include the need for debt service requirements. Corporate book value measures our retained earnings on a diluted per share basis.

The following defines the non-US GAAP financial measures used in TWC’s press releases:

  • “Corporate book value” is our stockholders’ equity divided by our diluted weighted average common shares outstanding for a particular period.
  • “Drop per head” is the per guest average dollar value of gaming chips purchased.
  • “EBITDA” is our earnings before interest, taxes, depreciation and amortization.
  • “Live game attendance” is the number of patrons who played 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 below tables to reconcile non-US GAAP financial measures to their most directly comparable US GAAP measures.

For further information regarding our results of operations and financial condition for the quarter ended September 30, 2014, please refer to our Quarterly Report on Form 10-Q 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/q3-2014

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, 2013. 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
CONDENSED CONSOLIDATED INCOME STATEMENT
AND COMPREHENSIVE INCOME (LOSS)
Nine and Three Months Ended September 30, 2014 and 2013
(in thousands, except for share data)
 
Nine Months Ended

September 30,

Three Months Ended

September 30,

  2014       2013     2014       2013  
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
REVENUES $ 28,227   $ 26,074   $ 9,687   $ 8,831  
 
COSTS AND EXPENSES:
Cost of revenues 15,134 14,326 5,118 4,854
Depreciation and amortization 1,218 1,193 402 408
Selling, general and administrative 9,094 8,505 3,021 2,587
               
  25,446     24,024     8,541     7,849  

INCOME FROM OPERATIONS, before other expense and foreign income taxes

  2,781     2,050     1,146     982  
 
OTHER EXPENSE:
Interest expense, net   (13 )   (48 )   (9 )   (8 )
 
 
INCOME BEFORE FOREIGN INCOME TAXES 2,768 2,002 1,137 974
 
FOREIGN INCOME TAXES   (767 )   (623 )   (269 )   (268 )
 
NET INCOME   2,001     1,379     868     706  
 
Other comprehensive income (loss), foreign currency translation adjustments, net of tax   (3,629 )   33     (3,230 )   2,031  
 
COMPREHENSIVE INCOME (LOSS) $ (1,628 ) $ 1,412   $ (2,362 ) $ 2,737  
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 8,811,991 8,826,375 8,816,571 8,825,335
Diluted   9,116,988     9,052,827     9,124,206     9,051,787  
 
EARNINGS PER COMMON SHARE:
Basic $ 0.23   $ 0.16   $ 0.10   $ 0.08  
Diluted $ 0.22   $ 0.15   $ 0.10   $ 0.08  
 
   
TRANS WORLD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2014 and December 31, 2013
(in thousands, except for share data)
   
ASSETS
September 30, 2014 December 31, 2013
CURRENT ASSETS: (Unaudited)
Cash $ 4,492 $ 6,284
Prepaid expenses 170 267
Prepaid foreign income tax 105
Other current assets   522     297  
 
Total current assets   5,289     6,848  
 

PROPERTY AND EQUIPMENT, less accumulated depreciation of $12,295 and $12,246, respectively

  37,478     33,464  
 
OTHER ASSETS:
Goodwill 5,591 6,093
Deposits and other assets   1,362     1,218  
 
Total other assets   6,953     7,311  
 
TOTAL ASSETS $ 49,720   $ 47,623  
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Long-term debt, current maturities $ 242 $ 138
Capital lease, current portion 33 48
Accounts payable 548 583
Czech gaming tax accrual 1,695 1,948
Foreign income tax accrual 676
Accrued expenses and other current liabilities   1,849     1,702  
 
Total current liabilities   4,367     5,095  
 
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 4,301
Capital lease, less current portion 34 80
Deferred foreign tax liability   514     560  
 
Total long-term liabilities   4,849     640  
 
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, 8,823,405 shares in 2014 and 8,810,135 shares in 2013, issued and outstanding

9 9
Additional paid-in capital 52,822 52,578
Accumulated other comprehensive income 2,113 5,742
Accumulated deficit   (14,440 )   (16,441 )
 
Total stockholders' equity   40,504     41,888  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 49,720   $ 47,623  
 

Reconciliation of Non-US GAAP Measures to US GAAP

The below table reconciles EBITDA and corporate book value, non-US GAAP (Generally Accepted Accounting Principles) financial measures, to their most directly comparable US GAAP measures. The EBITDA performance measurement gives an analytic view of the Company’s operational earnings on a cash-basis, excluding the impact of debt obligations and (non-cash) depreciation and amortization. The corporate book value is derived from stockholders’ equity divided by the weighted average of diluted common shares outstanding (rounded). The Company believes that these non-US GAAP financial measures provide useful information to its investors as well as to others who might be interested in purchasing shares of TWC 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 these measurements are not “US GAAP,” they do enhance investors’ understanding of the Company’s business.

   
TRANS WORLD CORPORATION AND SUBSIDIARIES
EBITDA RECONCILIATION
Three and Nine Months Ended September 30, 2014 and 2013
(in thousands)
             
Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
INCOME FROM OPERATIONS $ 868 $ 706 $ 2,001 $ 1,379
Add: Interest expense, net 9 8 13 48
Add: Income taxes 269 268 767 623
Add: Depreciation and amortization expense   402     408     1,218     1,193  
EBITDA $ 1,548   $ 1,390   $ 3,999   $ 3,243  
 
EBITDA margin (% of revenues) 16.0 % 15.7 % 14.2 % 12.4 %

Contacts

Trans World Corporation
Jill Yarussi, 212-983-3355
Manager of Communications
JYarussi@transwc.com
www.transwc.com
or
The Equity Group Inc. (Investor Relations Representative)
Adam Prior, 212-836-9606
Senior Vice President
APrior@equityny.com
or
Terry Downs, 212-836-9615
Associate
Tdowns@equityny.com
www.theequitygroup.com

Contacts

Trans World Corporation
Jill Yarussi, 212-983-3355
Manager of Communications
JYarussi@transwc.com
www.transwc.com
or
The Equity Group Inc. (Investor Relations Representative)
Adam Prior, 212-836-9606
Senior Vice President
APrior@equityny.com
or
Terry Downs, 212-836-9615
Associate
Tdowns@equityny.com
www.theequitygroup.com