Trans World Corporation Announces 2016 Third Quarter Financial Results

Company to host quarterly conference call today at 3:00 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 ended September 30, 2016.

Mr. Rami Ramadan, Chief Executive Officer, remarked, “In the third quarter, we saw healthy increases in drop per head, also known as increased player wagering, at all of our casinos, coupled with better consolidated win or hold percentage in live games. In addition to these improvements, we saw across-the-board increases in all gaming revenues, which contributed to superior total revenue, net income and EBITDA when compared with the same prior year third quarter. The business improvements at our casinos are largely due to exceptional customer service and effective entertainment programs that we strive to provide to all our guests. Our hotel segment, comprised of two German hotels, also showed an improvement over the prior year’s third quarter.

Despite the fact that we’ve had substantial revenue improvements, the increase in gaming tax rates that became effective in 2016 negatively affected our earnings and profit margins, which would have been much higher in the absence of such tax increases.”

2016 Third Quarter

Net income increased to $1.9 million, or $0.20 per diluted share, for the third quarter of 2016 from approximately $1.2 million, or $0.13 per diluted share, for the same prior year period. The net income increase was largely due to stronger revenue achieved and lower marketing and promotional expenses incurred.

Total revenue increased by 25.0% to approximately $13.2 million, compared with $10.5 million for the same prior year quarter.

The Company reported income before foreign income taxes of approximately $2.6 million, compared with $1.5 million reported for the third quarter in 2015. TWC incurred foreign income taxes of $653,000, as compared with a foreign income tax expense of $336,000 for the same quarter of the prior year.

EBITDA in the third quarter 2016 climbed to $3.1 million, versus approximately $2.1 million in the prior year’s comparable quarter. A table reconciling EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, to the appropriate GAAP measure is included with the Company’s financial information below.

2016 Year-to-date

Net income increased to $4.5 million, or $0.48 per diluted share, for the nine months ended September 30, 2016 from approximately $2.4 million, or $0.26 per diluted share, for the same prior year period. The net income increase was largely due to overall revenue improvement and lower marketing and promotional expenses incurred as a result of new restrictions imposed by the Czech Ministry of Finance on permissible type of promotions for all casinos.

Total revenue increased by 30.1% to approximately $38.8 million, compared with approximately $29.8 million for the same prior year period. We also had nine months of revenue from Hotel Freizeit Auefeld in 2016, compared with four months of revenue last year, when it was acquired on June 1, 2015.

The Company generated income before foreign income taxes of approximately $6.5 million, compared with approximately $3.4 million reported for the same nine-month period in 2015. TWC incurred foreign income taxes of approximately $2.0 million, as compared with a foreign income tax expense of $988,000 for the same period last year.

EBITDA reached approximately $8.4 million, versus approximately $4.9 million in the prior year’s comparable nine-month period. A table reconciling EBITDA, a non-GAAP financial measure, to the appropriate GAAP measure is included with the Company’s financial information below.

Balance Sheet Highlights

The Company’s stockholder equity at September 30, 2016, excluding the impact of accumulated other comprehensive income, like foreign exchange impact, increased by 12.2% from the stockholders’ equity balance at December 31, 2015, from approximately $43.5 million to approximately $48.8 million.

Non-US GAAP Financial Measures

This press release utilizes EBITDA and other non-US GAAP financial measures during the earnings call and/or investor presentations. Our financial statements are prepared in accordance with US GAAP. Management believes that this non-US 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 is 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, taxes and non-cash depreciation and amortization.

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.

The following defines the non-US GAAP financial measures that may be used in TWC’s press releases and earnings 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-US GAAP financial measure to its most directly comparable US GAAP measure.

For further information regarding our results of operations and financial condition for the year ended December 31, 2015, please refer to our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 7, 2016.

Conference Call

The Company will discuss these results in a conference call today at 3:00 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/q3-2016.

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, 2015. 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.

                 
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME (LOSS)
Nine and Three Months Ended September 30, 2016 and 2015
(in thousands, except for share and per share data)
 

Nine Months Ended
September 30,

Three Months Ended
September 30,

2016 2015 2016 2015
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
REVENUES $ 38,761 $ 29,786 $ 13,159 $ 10,528
 
COSTS AND EXPENSES:
Cost of revenues 20,897 15,392 7,002 5,449
Depreciation and amortization 1,690 1,345 504 504
Selling, general and administrative 9,495 9,671 3,029 3,004
               
  32,082   26,408   10,535   8,957
INCOME FROM OPERATIONS, before other
Income (expense) and foreign income taxes   6,679   3,378   2,624   1,571
 
OTHER INCOME (EXPENSE):
Interest expense (185) (140) (60) (69)
Other income       149        
 
 
INCOME BEFORE FOREIGN INCOME TAXES

6,494

3,387

2,564

1,502

 
FOREIGN INCOME TAXES   (1,969)   (988)   (653)   (336)
 
NET INCOME   4,525   2,399   1,911   1,166
 
Other comprehensive income (loss), foreign currency
translation adjustments, net of tax of $0   1,076   (2,414)   396   146
 
COMPREHENSIVE INCOME (LOSS) $ 5,601 $ (15) $ 2,307 $ 1,312
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

8,833,938

8,821,205

8,843,685

8,821,205

Diluted

9,465,848

9,258,313

9,512,056

9,257,917

 
EARNINGS PER COMMON SHARE:

Basic

$

0.51

$

0.27

$

0.22

$

0.13

Diluted

$

0.48

$

0.26

$

0.20

$

0.13

 
         

TRANS WORLD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 2016 and December 31, 2015
(in thousands, except for share data)

 

 
ASSETS
September 30, 2016 December 31, 2015
CURRENT ASSETS: (Unaudited)
Cash and cash equivalents $ 15,976 $ 10,674
Prepaid expenses 387 409
Other current assets   466   509
 
Total current assets   16,829   11,592
 
PROPERTY AND EQUIPMENT, net   37,751   37,122
 
OTHER ASSETS:
Goodwill 5,143 5,016
Deposits and other assets   1,546   1,509
 
Total other assets   6,689   6,525
 
TOTAL ASSETS $ 61,269 $ 55,239
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Long-term debt, current maturities $ 568 $ 542
Capital lease, current portion 4 22
Accounts payable 343 753
Czech gaming tax accrual 3,056 2,219
Foreign income tax accrual 724 957
Accrued expenses and other current liabilities   2,723   3,052
 
Total current liabilities   7,418   7,545
 
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 7,254 7,493
Deferred foreign tax liability   33   32
 
Total long-term liabilities   7,287   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 54,181 53,387
Accumulated other comprehensive loss (2,206) (3,282)
Accumulated deficit   (5,420)   (9,945)
 
Total stockholders' equity   46,564   40,169
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 61,269 $ 55,239
 

Reconciliation of Non-US GAAP Measures to US GAAP

The below table reconciles EBITDA, a non-US GAAP financial measure, to their most directly comparable US 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 and (non-cash) depreciation and amortization. The Company believes that this non-US GAAP financial measure provides 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
Nine and Three Months Ended September 30, 2016 and 2015
(in thousands)
 

Nine Months Ended
September 30,

Three Months Ended
September 30,

2016 2015 2016 2015
(unaudited) (unaudited) (unaudited) (unaudited)
NET INCOME $ 4,525 $ 2,399 $ 1,911 $ 1,166
Add back: Interest expense 185 140 60 69
Add back: Foreign income taxes 1,969 988 653 336
Add back: Depreciation and amortization expense   1,690   1,345   504   504
EBITDA $ 8,369 $ 4,872 $ 3,128 $ 2,075
 

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