Great Canadian Gaming Announces Third Quarter 2015 Results

RICHMOND, BC, Nov. 4, 2015 /CNW/ - Great Canadian Gaming Corporation [TSX:GC] ("Great Canadian," or "the Company") today announced its financial results for the three month period (the "third quarter") ended September 30, 2015.

THIRD QUARTER 2015 HIGHLIGHTS

• Revenues of $113.8 million, a $1.5 million increase when compared to the same period in the prior year.
• EBITDA⁽¹⁾ of $47.5 million, a 4% increase when compared to the same period in the prior year and the second highest quarter in the Company's history.
• First nine months of 2015 EBITDA⁽¹⁾ of $135.5 million, an increase of $2.4 million when compared to the same period in the prior year.
• Adjusted net earnings⁽¹⁾ of $22.6 million, a 12% increase when compared to the same period in the prior year.
• On September 8, 2015, awarded first bundle in Ontario Gaming Modernization Process.
• On October 1, 2015, completed the acquisition of Casino New Brunswick.

Great Canadian generated revenues of $113.8 million during the third quarter, a 1% increase from the third quarter of 2014. EBITDA during the third quarter was $47.5 million, a 4% increase from the third quarter of 2014. EBITDA as a percentage of revenues for the third quarter was 41.7%, a 1.2 percentage point increase from the third quarter of 2014. The improved EBITDA in the third quarter of 2015 was primarily due to increased revenues from the majority of the Company's properties, most notably Hard Rock Casino Vancouver, Great American Casinos, Nova Scotia Casinos, Vancouver Island Casinos, and the Other BC Casinos. EBITDA similarly increased at nearly all of the Companies' properties in the most recent third quarter with the exception of River Rock Casino Resort, which experienced a decline primarily attributed to a 3% decrease in revenues. Corporate and other costs also contributed to the improved EBITDA as these decreased 22% in the third quarter of 2015 when compared to the prior year period. On a year-to-date basis, Great Canadian's EBITDA was $2.4 million higher than the first nine months of 2014.

Great Canadian's adjusted net earnings for the third quarter of 2015 were $22.6 million. After adjusting for items of note in the current and prior periods' net earnings (listed on page 6 of this press release), the Company's adjusted net earnings for the third quarter were 12% higher when compared with the same period in 2014, primarily due to the increase in EBITDA and decreases in amortization expense and share-based compensation.

"Great Canadian was very active during the third quarter of 2015," stated Rod Baker, Great Canadian's President and Chief Executive Officer. "We continued our efforts to enhance guest experience and improve results at each of our properties while also pursuing value-creating business development opportunities.

• Following the recent launch of Hard Rock Casino Vancouver's VIP table games area earlier this year and as part of our continuing efforts to enhance guest experience at the property we added a new value-price "Buffet at Unlisted" on September 16, 2015;
• We continued our plans to rebrand and reposition our Fraser Downs Racetrack and Casino in Surrey, British Columbia, into the "Elements Casino" which is scheduled to open on December 17, 2015;
• We commenced an expansion of the premium slots gaming area at River Rock to provide guests a more private gaming experience;
• We announced in September that we were the successful bidder for the Ontario East gaming bundle, the first awarded under that province's gaming modernization plans. We are in the midst of transition planning with the OLG and are targeting to complete the acquisition on January 11, 2016; and
• We received the required regulatory approvals and completed the acquisition of Casino New Brunswick on October 1, 2015.

"River Rock's revenues in the third quarter of 2015 decreased by 3% when compared to the strong level achieved during the same period last year. While the third quarter's table drop decreased 5% compared to the prior year period, it was still the second highest table drop in the property's history. In addition, while we often focus on the property's table games performance, its slot coin-in and slot win was the highest in the property's history and continued the trend of year-over-year quarterly growth that began in the second quarter of 2014. We believe this is continuing evidence of the property's long-term potential.

"At the end of the third quarter, Great Canadian maintained both a strong cash balance and an undrawn revolving credit facility," concluded Mr. Baker. "The Company remains well-positioned to take advantage of new opportunities for value creation. While we continue to pursue potential opportunities in Ontario and elsewhere, we will also continue to efficiently manage our operations and explore other options to grow our business."

The Company also wishes to announce that certain of its executives have indicated that they may wish to undertake an early exercise (before the expiry date) of certain long-held stock options. The election platform of the recently elected Liberal Party proposed certain changes to the tax treatment of stock options. The early exercise of options is intended to be undertaken to have such exercise treated under the current tax rules. These executives have indicated that while they would, in the normal course, sell certain of the shares acquired to fund the payment of the exercise price and all related taxes, they would also be prepared to hold the balance of the shares for an extended period of time. For the President and Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer that commitment period would be a minimum of three years. For the remaining executives that period would be a minimum of the otherwise remaining duration of the options exercised which is generally between 1 to 2 years. The exercise of these options is expected to be completed through an automatic share distribution plan. A definitive decision by the executives will be made in compliance with the Company's trading policies and in compliance with the terms of the automatic share distribution plan.

Great Canadian will host a conference call for investors and analysts today, November 4, 2015, at 2:00 PM Pacific Time in order to review the financial results for the period ended September 30, 2015.  To participate in the conference call, please dial 416-764-8688, 778-383-7413, or toll free at 1-888-390-0546 (Passcode: 17689595). Questions will be reserved for institutional investors and analysts. Interested parties may also access the call via the Investor Relations section of the Company's website, www.gcgaming.com/financials. Investors using the website should allow 15 minutes for the registration and installation of any necessary software. A replay of the call will also be available at www.gcgaming.com/financials.

ABOUT GREAT CANADIAN GAMING CORPORATION
Great Canadian Gaming Corporation operates gaming, entertainment and hospitality facilities in British Columbia, Ontario, Nova Scotia, New Brunswick, and Washington State. The Company's 17 gaming properties consist of three community gaming centres, four racetracks (two with casinos operated by the Company), and ten casinos, including two with Four Diamond resort hotels. A key element of Great Canadian's business model is its commitment to social responsibility. PROUD of our people, our business, our community is Great Canadian's brand that unifies the company's community, volunteering and social responsibility efforts. Under the PROUD program, Great Canadian annually invests over $2 million in our communities, and in 2014, over 1,200 charitable organizations were supported by Great Canadian. In each Canadian gaming jurisdiction, the majority of gross gaming revenue from gaming facilities goes back directly to provincial governments for the purpose of supporting programs like healthcare, education and social services. Further information is available on the Company's website, www.gcgaming.com.

Please refer to the Condensed Interim Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") at www.gcgaming.com (available on November 4, 2015) or www.sedar.com (available on November 5, 2015) for detailed financial information and analysis.

The financial results on the following pages are unaudited and prepared by management.  Expressed in millions of Canadian dollars, except for per share information.

GREAT CANADIAN GAMING CORPORATION
Condensed Interim Consolidated Statements of Earnings
(Unaudited - Expressed in millions of Canadian dollars, except for per share information)

GREAT CANADIAN GAMING CORPORATION
Condensed Interim Consolidated Statements of Financial Position
(Unaudited - Expressed in millions of Canadian dollars)

GREAT CANADIAN GAMING CORPORATION
Adjusted Net Earnings
(Unaudited - Expressed in millions of Canadian dollars)

DISCLAIMER

This press release contains certain "forward-looking information" or statements within the meaning of applicable securities legislation. Forward-looking information is based on the Company's current expectations, estimates, projections and assumptions that were made by the Company in light of its historical trends and other factors. All information or statements, other than statements of historical fact, are forward-looking information including statements that address expectations, estimates or projections about the future, the Company's strategy for growth and objectives, expected future expenditures, costs, operating and financial results, expected impact of future commitments, the completion of the acquisition of the gaming facilities, assets and undertakings contained within the Ontario Lottery and Gaming Corporation's Bundle 2 (East),the future ability of the Company to operate the Georgian Downs and Flamboro Downs facilities beyond the terms of the signed Ontario Lease Agreements and Ontario Racing Agreements, the Company's beliefs about the outcome of its notices of objection challenging the Canada Revenue Agency's reassessments and its tax position on its facility development commission prevailing, the terms and expected benefits of the normal course issuer bid, and expectations and implications of changes in legislation and government policies.  Forward-looking information may be identified by words such as "anticipate", "believe", "expect", or similar expressions. Such forward-looking information is not a guarantee of future performance and may involve a number of risks and uncertainties. 

Although forward-looking information is based on information and assumptions that the Company believes are current, reasonable and complete, they are subject to unknown risks, uncertainties, and a number of factors that could cause actual results to vary materially from those expressed or implied by such forward-looking information. Such factors may include, but are not limited to: terms of operational services agreements with lottery corporations; changes to gaming laws that may impact the operational services agreements, pending, proposed or unanticipated regulatory or policy changes; the outcome of restructuring of gaming in Ontario; the Company's ability to obtain and renew required business licenses, leases, and operational services agreements; the future of horse racing in Ontario; unanticipated fines, sanctions and suspensions imposed on the Company by its regulators; impact of global liquidity and credit availability; actual and possible reassessments of the Company's prior tax filings by tax authorities; the results of the Company's notices of objection challenging reassessments received by the Canada Revenue Agency; the Company's tax position on its facility development commission prevailing; adverse tourism trends and further decreases in levels of travel, leisure and consumer spending; competition from established competitors and new entrants in the gaming business; dependence on key personnel; the timing and results of collective bargaining negotiations; adverse changes in the Company's labour relations; the Company's ability to manage its capital projects and its expanding operations; the risk that systems, procedures and controls may not be adequate to meet regulatory requirements or to support current and expanding operations; potential undisclosed liabilities and capital expenditures associated with acquisitions; negative connotations linked to the gaming industry; First Nations rights with respect to some land on which we conduct our operations; future or current legal proceedings; construction disruptions; financial covenants associated with credit facilities and long-term debt; credit, liquidity and market risks associated with our financial instruments; interest and exchange rate fluctuations; non-realization of cost reductions and synergies; demand for new products and services; fluctuations in operating results; economic uncertainty and financial market volatility; technology dependence; and privacy breaches or data theft.  The Company cautions that this list of factors is not exhaustive.  Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.  These factors and other risks and uncertainties are discussed in the Company's continuous disclosure documents filed with the Canadian securities regulatory authorities from time to time, including in the "Risk Factors" section of the Company's Annual Information Form for fiscal 2014, and as identified in the Company's disclosure record on SEDAR at www.sedar.com.

Readers are cautioned not to place undue reliance on the forward-looking information, as there can be no assurance that the plans, intentions, or expectations upon which they are based will occur. The forward-looking information contained herein is made as of the date hereof, is subject to change after such date, and is expressly qualified in its entirety by cautionary statements in this press release.  Forward-looking information is provided for the purpose of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of the Company's operating environment.  The Company undertakes no obligation to publicly revise forward-looking information to reflect subsequent events or circumstances except as required by law.

The Company has included non-International Financial Reporting Standards ("non-IFRS") measures in this press release. EBITDA, as defined by the Company, means earnings before interest and financing costs (net of interest income), income taxes, depreciation and amortization, share-based compensation, impairment reversal of long-lived assets, restructuring and other, and foreign exchange gain and other.  EBITDA is derived from the condensed interim consolidated statements of earnings, and can be computed as revenues less human resources expenses, and property, marketing and administration expenses. The Company believes EBITDA is a useful measure because it provides information to management about the operating and financial performance of the Company and its ability to generate operating cash flow to fund future working capital needs, service outstanding debt, and fund future capital expenditures. EBITDA is also used by the investors and analysts for the purpose of valuing the Company. Adjusted net earnings, as defined by the Company, means net earnings plus or minus items of note that management may reasonably quantify and that it believes will provide the reader with a better understanding of the Company's underlying business performance.  Items of note may vary from time to time and in this press release include impairment reversal of long-lived assets, FDC revenues previously deferred at Fraser Downs, restructuring severance costs, uneconomic lease provision due to Kent casino closure, jackpot and marketing fund liabilities reversed due to Kent casino closure, non-recurring payment received for right of way access, and the related income taxes thereon.

Readers are cautioned that these non-IFRS definitions are not recognized measures under International Financial Reporting Standards ("IFRS"), do not have standardized meanings prescribed by IFRS, and should not be construed to be alternatives to net earnings determined in accordance with IFRS or as indicators of performance or liquidity or cash flows. The Company's method of calculating these measures may differ from methods used by other entities and accordingly our measures may not be comparable to similarly titled measures used by other entities or in other jurisdictions.  The Company uses these measures because it believes they provide useful information to both management and investors with respect to the operating and financial performance of the Company.

ON BEHALF OF

GREAT CANADIAN GAMING CORPORATION

"Original Signed By Rod N. Baker"

_____________________
Rod N. Baker
President and Chief Executive Officer

GREAT CANADIAN GAMING CORPORATION [TSX:GC]
95 Schooner Street
Coquitlam, BC
V3K 7A8
(604) 303-1000
Website: www.gcgaming.com

SOURCE Great Canadian Gaming Corporation