Great Canadian Gaming announces third quarter 2017 results

COQUITLAM, BC, Nov. 9, 2017 /CNW/ - Great Canadian Gaming Corporation [TSX:GC] ("Great Canadian," or "the Company") today announced its financial results for the three month period ended September 30, 2017 (the "third quarter").

THIRD QUARTER 2017 HIGHLIGHTS

• On August 8, 2017, the Company announced that Ontario Gaming GTA Limited Partnership ("the Partnership"), a partnership in which Great Canadian holds a 49.0% interest, was selected as the successful proponent by the Ontario Lottery and Gaming Corporation ("OLG") to operate certain gaming facilities in the Greater Toronto Area (the "GTA Bundle").
  
  
• Third quarter 2017 revenues of $159.6 million, increased by 5% when compared to the same period in the prior year.
  
  
• Adjusted EBITDA⁽¹⁾ for the third quarter of $62.7 million, was consistent with the same period in the prior year.
  
  
• Shareholders net earnings of $26.9 million or $0.44 per common share and adjusted shareholders' net earnings⁽¹⁾ of $27.3 million or $0.45 per common share; both were consistent with the same period in the prior year.
  
  
• During the third quarter, the Company started construction of the new Shorelines Casino Peterborough, which is expected to complete in the third quarter of 2018 and will replace the current Shorelines Slots at Kawartha Downs.
  
  
•  The Company submitted a bid on the Request for Proposals ("RFP") for OLG's Gaming Bundle 6 (West GTA) and is currently assessing OLG's RFPs for Gaming Bundle 7 (Central) and Gaming Bundle 8 (Niagara).

"The GTA Bundle is the largest award by the OLG as part of the modernization of its casino operations," stated Rod Baker, the Company's President and Chief Executive Officer. "As a result of this award, the Partnership will acquire all the gaming assets in the GTA Bundle and will have the exclusive right to operate these assets for a minimum period of 22 years.  We look forward to this historic opportunity to service Canada's largest metropolitan region."

During the third quarter of 2017, Great Canadian generated revenues of $159.6 million, an increase of 5% when compared to the same period in the prior year.  This increase reflects the contributions from Shorelines Casino Belleville, which was opened on January 11, 2017 as well as increased revenues at all property groups, except for River Rock Casino Resort ("River Rock").

Adjusted EBITDA during the third quarter was $62.7 million, consistent with the same period in the prior year.  Hard Rock Casino Vancouver and Other BC Casinos achieved improved Adjusted EBITDA this quarter, but the increases were offset by a decline in Adjusted EBITDA at River Rock and Great American Casinos. 

Shareholders' net earnings for the third quarter was $26.9 million, consistent with the same period in the prior year.  Decreases in business acquisition, restructuring and other costs and income taxes, were mostly offset by increases in amortization and share-based compensation.  Shareholders' net earnings per common share of $0.44, decreased by 2% when compared to the same period in the prior year due to a 1% increase in weighted average number of shares outstanding.

"Great Canadian generated improvements to revenues at all properties, except for River Rock, during the third quarter of 2017, when compared to the same period in the prior year.  Wagering increased at River Rock but the site experienced low table hold this quarter mainly due to high win rate from VIP players," stated Mr. Baker.

"Our expansion plans continued with the ground breaking ceremony for the new Shorelines Casino Peterborough on September 6, 2017 to mark the official start of the construction.  We look forward to the completion of this new casino in the third quarter of 2018.  Additionally, the multi-million dollar redevelopment of View Royal Casino continued to make good progress during the third quarter of 2017.  The first phase of this project, which includes the gaming floor, is targeted to complete in December 2017.  Renovations at River Rock are also progressing well; our guests will be able to enjoy the improved amenities by the end of this year.  We look forward to completing these projects and other developments at our properties to enhance guest experiences."

"We are working on the transition of the GTA Bundle to the Partnership, with the expected closing date of the acquisition to be in the first quarter of 2018.  We continue to pursue opportunities in OLG's gaming modernization plan.  The Company submitted a bid on the West GTA gaming bundle in July, and is currently assessing OLG's Request for Proposals for the Central gaming bundle and Niagara gaming bundle." 

"At the end of the third quarter, Great Canadian maintained a strong cash balance of $289 million and had available capacity on its undrawn senior secured revolving credit facility of $282 million, net of outstanding letters of credit," concluded Mr. Baker.  "Given our strong financial position, 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."

Great Canadian will host a conference call for investors and analysts today, November 9, 2017, at 2:00 PM Pacific Time in order to review the financial results for the period ended September 30, 2017.  To participate in the conference call, please dial 416-764-8688, 778-383-7413, or toll free at 1-888-390-0546.  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
Founded in 1982, Great Canadian Gaming Corporation is a BC based company that operates 22 gaming, entertainment and hospitality facilities in British Columbia, Ontario, New Brunswick, Nova Scotia, and Washington State. Fundamental to the Company's culture 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 $2.5 million in our communities, and in 2016, over 1,500 charitable organizations were supported by Great Canadian. In each Canadian gaming jurisdiction, a significant portion of gross gaming revenue from gaming facilities is retained by our crown partners on behalf of their provincial government for the purpose of supporting programs like healthcare, education and social services.

Please refer to the Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") at www.gcgaming.com (available on November 9, 2017) or www.sedar.com (available on November 10, 2017) 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.

The following table reconciles shareholders' net earnings to adjusted shareholders' net earnings.

After adjusting for the above items of note, the Company's adjusted shareholders' net earnings decreased by $0.1 million in the third quarter of 2017, when compared to the same period in the prior year.

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 historical trends and other factors.  Forward-looking statements are frequently but not always identified by words such as "expects", "anticipates", "believes", "intends", "estimates", "potential", "targeted", "planned", "possible" or similar expressions or statements that events, conditions or results "will", "may", "could" or "should" occur or be achieved.  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 (including participation in Ontario's gaming modernization program and possible expansion of gaming in British Columbia), expected future expenditures, costs, operating and financial results, expected impact of future commitments, 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 impact of conditions imposed on certain VIP players in British Columbia, the impact of unionization activities, the Company's position on its claim against the British Columbia Lottery Corporation ("BCLC") with respect to the collection of marketing contributions, 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.  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 (including those that impact VIP play); the outcome of modernization of gaming in Ontario; the Company's ability to obtain and renew required business licenses, leases, and operational services agreements; 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 and subsequent appeals challenging reassessments received by the Canada Revenue Agency; the Company's tax position on its facility development commission prevailing; the results of the Company's litigation with BCLC; 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; 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 2016, and as identified in the Company's disclosure record on SEDAR at www.sedar.com.

The Company believes that the expectations reflected in forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct.  Readers are cautioned not to place undue reliance on the forward-looking information.  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.  Adjusted 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, business acquisition, restructuring and other, and foreign exchange (gain) loss and other.  Adjusted EBITDA is derived from the condensed interim consolidated statements of earnings and other comprehensive loss, and can be computed as revenues plus share of profit of equity investment less human resources expenses, and property, marketing and administration expenses.  The Company believes Adjusted 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.  Adjusted EBITDA is also used by investors and analysts for the purpose of valuing the Company.  Adjusted shareholders' net earnings, as defined by the Company, means shareholders' 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 pre-opening costs, restructuring severance costs, impairment reversal of long-lived assets, FDC revenues previously deferred at Casino Nanaimo, other 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

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