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 financial results for the fourth quarter and year ended December 31, 2014.
Year 2014 Financial Highlights (all comparisons to the prior year)
- Net Income in 2014 increased 10.4% to $2.6 million, or $0.29 per diluted share, compared with approximately $2.4 million, or $0.26 per diluted share;
- Total revenue increased 5.4% to approximately $38.5 million, from approximately $36.5 million;
- Income before foreign income taxes increased 14.5% to $3.9 million, from $3.4 million;
- EBITDA increased 10.1% to $5.6 million, from $5.1 million; and
- In September 2014, the Company acquired the Hotel Columbus, a 117-room business property in Germany.
Fourth Quarter 2014 Financial Highlights (all comparisons to the same prior year period)
- Net income in 2014 decreased by 37.0% to $637,000, or $0.07 per diluted share, due to additional real estate transfer taxes related to the acquisition of the Hotel Columbus and an increase in foreign income tax expense;
- Total revenue decreased 1.6% to $10.2 million, from $10.4 million;
- Income before foreign income taxes was approximately $1.2 million for the fourth quarter 2014, a decrease of 18.4% compared with approximately $1.4 million; and
- EBITDA decreased 12.8% to $1.6 million, from approximately $1.9 million.
Mr. Rami Ramadan, Chief Executive Officer, commented, “We are very pleased with our year-end results. While player wins, lower drops by players and associated acquisition costs of the Hotel Columbus adversely affected our fourth quarter’s numbers, total revenue, net income and EBITDA for 2014 increased over the prior year. We can attribute these increases to several factors, including ongoing improvements in our operational efficiencies and a thriving slot business. Additionally, the four months of revenue reported in 2014 from the Hotel Columbus also contributed to an increase in total revenue for the year. As our hotel segment develops and expands, we believe that our shareholders will further benefit from the additional value of our latest acquisition.
In the year ahead, TWC is well-positioned for additional growth. We will continue to make improvements at our existing properties, while exploring new strategic acquisition opportunities in both the gaming and hospitality industries. We look forward to another profitable year as TWC evolves into a premier hotel and entertainment destination.”
For the year ended December 31, 2014, net income rose 10.4% for the year ended December 31, 2014 to $2.6 million, or $0.29 per diluted share, as compared with approximately $2.4 million, or $0.26 per diluted share, for the prior year.
Total revenue rose by 5.4%, or approximately $2.0 million, to approximately $38.5 million, compared with approximately $36.5 million for the same period a year ago. The increase in total revenue was driven largely by an increase in slot business and the additional revenue generated from the Hotel Columbus.
TWC also earned income before foreign income taxes of $3.9 million, which was $500,000 or a 14.5% improvement over the $3.4 million achieved in 2013. The Company also recognized a foreign income tax expense of $1.3 million for 2014, as compared with approximately $1.1 million for the same period of the prior year. The Company incurred the additional tax expense largely as a result of the higher income base.
The Company achieved an EBITDA of $5.6 million, representing a 10.1% increase over the $5.1 million for the prior year. 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.
2014 Fourth Quarter
Net income decreased to $637,000, or $0.07 per diluted share, for the fourth quarter of 2014 from $1.0 million, or $0.11 per diluted share, for the same period of the prior year. The decrease in net income for the fourth quarter 2014 was primarily the result of $361,000 in estimated real estate transfer taxes related to the acquisition of the Hotel Columbus, and to an increase in foreign income tax expense, which included $161,000 in deferred tax expense, related to adjustments for foreign book tax differences on fixed assets. The higher expenses were partially offset by lower overhead expenses.
Total revenue decreased 1.6% to $10.2 million, compared with $10.4 million for the same quarter of the prior year. The decrease in revenue was primarily the result of a slight decline in win percentage and lower drop per head.
The Company reported income before foreign income taxes of approximately $1.2 million, compared with $1.4 million reported for the same quarter in 2013. TWC incurred foreign income taxes of $541,000, as compared with a foreign income tax expense of $433,000 for the fourth quarter of the prior year.
TWC’s EBITDA was $1.6 million for the fourth quarter 2014, a decrease of 12.8% from approximately $1.9 million for the same prior year quarter, due to aforementioned factors.
Balance Sheet Highlights
The Company had cash and cash equivalents of approximately $6.6 million at December 31, 2014 compared with approximately $6.3 million at December 31, 2013.
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 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.
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 may include the need for debt service requirements.
The following defines the non-US GAAP financial measures used in TWC’s press releases:
- “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-US GAAP financial measure to its most directly comparable US GAAP measures.
For further information regarding our results of operations and financial condition for the year ended December 31, 2014, please refer to our Annual Report on Form 10-K as filed with the Securities and Exchange Commission today.
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/q4-2014.
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, 2014. 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 OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Years and Three Months Ended December 31, 2014 and 2013
(in thousands, except for share and per share data)
|Year Ended||Three Months Ended|
|December 31,||December 31,|
|COSTS AND EXPENSES:|
|Cost of revenues||20,732||19,757||5,598||5,431|
|Depreciation and amortization||1,630||1,600||412||407|
|Selling, general and administrative||12,118||11,632||3,024||3,127|
|INCOME FROM OPERATIONS, before other|
|Income (expenses) and foreign income taxes||3,995||3,498||1,214||1,448|
|OTHER INCOME (EXPENSES):|
|Other income (expense)||(1)||8||(1)||8|
|INCOME BEFORE FOREIGN INCOME TAXES||3,946||3,446||1,178||1,444|
|FOREIGN INCOME TAXES||(1,308)||(1,056)||(541)||(433)|
|Other comprehensive loss, foreign currency|
|translation adjustments, net of tax||(5,256)||(1,820)||(1,627)||(1,853)|
|COMPREHENSIVE INCOME (LOSS)||$||(2,618)||$||570||$||(990)||$||(842)|
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:|
|EARNINGS PER COMMON SHARE:|
TRANS WORLD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2014 and December 31, 2013
(in thousands, except for share data)
|December 31, 2014||December 31, 2013|
|Cash and cash equivalents||$||6,589||$||6,284|
|Other current assets||525||297|
|Total current assets||7,353||6,848|
|PROPERTY AND EQUIPMENT, less accumulated depreciation|
|of $12,099 and $12,246, respectively||35,469||33,464|
|Deposits and other assets||1,343||1,218|
|Total other assets||6,665||7,311|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Long-term debt, current maturities||$||234||$||138|
|Capital lease, current portion||51||48|
|Czech gaming tax accrual||1,795||1,948|
|Foreign income tax accrual||63||676|
|Accrued expenses and other current liabilities||2,358||1,702|
|Total current liabilities||5,519||5,095|
|Long-term debt, less current maturities||4,066|
|Capital lease, less current portion||24||80|
|Deferred foreign tax liability||298||560|
|Total long-term liabilities||4,388||640|
|COMMITMENTS AND CONTINGENCIES|
|Preferred stock, $0.001 par value, 4,000,000 shares authorized,|
|Common stock, $0.001 par value, 20,000,000 shares authorized,|
|8,821,205 shares in 2014 and 8,810,135 shares in 2013, issued and outstanding||9||9|
|Additional paid-in capital||52,888||52,578|
|Accumulated other comprehensive income||486||5,742|
|Total stockholders' equity||39,580||41,888|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||49,487||$||47,623|
Reconciliation of Non-US GAAP Measures to US GAAP
The below table reconciles EBITDA, a 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 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|
|Three Months and Years Ended December 31, 2014 and 2013|
|Year Ended December 31,||Three Months Ended December 31,|
|Add: Interest expense||48||60||35||12|
|Add: Income taxes||1,308||1,056||541||433|
|Add: Depreciation and amortization expense||1,630||1,600||412||407|
|EBITDA margin (% of revenues)||14.6%||14.0%||15.9%||17.9%|