Great Canadian Gaming Announces Fourth Quarter and Annual 2020 Results
TORONTO, March 2, 2021 /CNW/ - Great Canadian Gaming Corporation (TSX: GC) ("Great Canadian," or "the Company") today announced its financial results for the three month period ended December 31, 2020 (the "fourth quarter") and twelve month period ended December 31, 2020 ("2020", or the "full year").
"As we continue navigating through this period of uncertainty, we have made significant steps to position the Company for long-term success, as demonstrated by the Arrangement with Apollo Funds. This Arrangement represents a great opportunity for shareholders and we are grateful for their strong support received in favour of this Arrangement. The Company is working diligently to satisfy all closing conditions, including required regulatory approvals, to complete this transaction," stated Terrance Doyle, the Company's Interim Chief Executive Officer.
"We worked diligently since the onset of the Pandemic on our comprehensive reopening plans which positioned the Company to safely reopen its Ontario and Atlantic properties for a portion of the fourth quarter. Great Canadian takes health and safety protocols extremely seriously, and strictly follows all directives and guidance issued by public health authorities in each jurisdiction that we operate. Due to the continuing volatility of the Pandemic, the majority of the Company's properties were closed as at December 31, 2020. The health and safety of our team members and guests is of utmost importance and the Company remains ready to reopen our properties again when it is safe to do so," continued Mr. Doyle.
The temporary suspension of all of the Company's gaming facilities for the majority of 2020 resulted in decreases in revenues, expenses, Adjusted EBITDA1, shareholders' net earnings (loss), Free Cash Flow1, and total cash flows, when compared to the same period in the prior year. While the Company's Ontario and Atlantic properties were permitted to reopen for a portion of the fourth quarter, gaming revenues in each jurisdiction were significantly reduced due to the restricted operating conditions.
The Company's negative Free Cash Flow of $97.4 million in fourth quarter and $326.4 million in the full year increased, when compared to the negative Free Cash Flow of $23.2 million and $54.5 million, respectively, in the same periods in the prior year, primarily due to decreased Adjusted EBITDA from the temporary suspension of operations, as noted above, and increased interest paid, partially offset by lower income taxes paid. The negative Free Cash Flow was funded with borrowings from the Company's credit facilities, and the remaining from available cash balances.
Cash outflow for the fourth quarter was $37.1 million, compared to cash inflow of $19.9 million in the same period from the prior year. The change from cash inflow to cash outflow was primarily due to a decrease in cash generated from operating activities as a result of the temporary suspension of operations, partially offset by lower capital expenditures due to construction timing of the Company's development projects in Ontario.
Cash inflow for the full year was $105.1 million, compared to cash outflow of $7.1 million in the same period from the prior year. The change from cash outflow to cash inflow was primarily due to $189.0 million of gross proceeds received from the Senior Unsecured Debentures, increased borrowings under credit facilities, lower capital expenditures due to construction timing of the Company's development projects in Ontario, and lower repurchases of common shares under the normal course issuer bid, partially offset by a decrease in cash generated from operating activities as a result of the temporary suspension of operations.
"During the fourth quarter, we completed the construction of the casino portion at Pickering Casino Resort. We believe this casino will be a spectacular addition to the gaming and entertainment marketplace in the Greater Toronto Area once we are in a position to safely open the property. We continue to work on the remaining non-gaming amenities at Pickering Casino Resort and other projects in Ontario, including Casino Woodbine and Great Blue Heron, which will be funded by One Toronto Gaming's ("OTG") capital expenditures credit facility. Despite the impact that the Pandemic has had on our construction projects, including the timing for the launch of these developments, we do not anticipate any impact to our total planned capital spend."
"During the fourth quarter, the Company entered into amending agreements with its lenders that will continue to temporarily waive compliance with the Company's financial and operational covenants under its credit facilities. As at December 31, 2020, Great Canadian continues to remain in stable capital and liquidity position with a cash balance of $434.8 million and $972.3 million of available undrawn credit on its credit facilities, subject to applicable covenants," concluded Mr. Doyle.
Due to limited operations and the pending Arrangement with Apollo Funds, the Company will not be hosting a conference call for investors and analysts to review its financial results. For detailed financial information and analysis, please refer to the Consolidated Financial Statements and Management's Discussion and Analysis at www.gcgaming.com or www.sedar.com (available on March 2, 2021).
ABOUT GREAT CANADIAN GAMING CORPORATION
GREAT CANADIAN GAMING CORPORATION
The financial results below are unaudited and prepared by management. Expressed in millions of Canadian dollars, except for per share information.
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 anticipated arrangement with Raptor Acquisition Corp., the Company's strategy for growth and objectives, the status and prospects of the industries in which the Company operates, expected future expenditures, costs, operating and financial results, expected impact of future commitments, the Company's expected ability to obtain banking waivers, the impact of the COVID-19 pandemic on the Company's operations, the impact of conditions imposed on certain high limit players, the impact of unionization activities and labour organization, the Company's beliefs about the outcome of its notices of objection and subsequent appeals challenging the Canada Revenue Agency's reassessments and its tax position on its facility development commission prevailing, the determination and calculation of the Company's expected facility investment commission amounts in respect of its British Columbia facilities and the Company's projected future investments to obtain facility investment commission, the terms and expected benefits of the normal course issuer bid, the Company's expected share of BC horse racing industry revenue, the Company and its affiliates meeting threshold revenue growth amounts in the Ontario gaming industry, the Company's projected timeline for future development, and expectations and implications of changes in legislation and government policies, volatile gaming holds, the effects of competition in the market and potential difficulties in employee retention and recruitment. 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: compliance with the terms of operational services agreements with lottery corporations; changes to gaming laws and regulations that may impact the operational services agreements; the Company's ability to successfully close its anticipated arrangement with Raptor Acquisition Corp.; pending, proposed or unanticipated regulatory or policy changes (including those related to anti-money laundering legislation or policy that may impact high limit play), volatile gaming holds, the effects of competition in the market; the Company's ability to successfully develop properties 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; impairment of the Company's ability to obtain banking waivers; 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; temporary business interruption and closure of the Company's facilities due to COVID-19; effects of COVID-19 physical distancing measures in reopened facilities; adverse tourism trends and further decreases in levels of travel, leisure and consumer spending; adverse changes in public opinion and acceptance of gambling; competition from established competitors and new entrants in the gaming business; dependence on key personnel; the Company's ability to successfully integrate new key personnel; the timing and results of collective bargaining negotiations and potential labour disruption; adverse changes in the Company's labour relations; the Company's ability to manage its capital projects and its expanding operations in jurisdictions where it operates; 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; the risk associated with partnership relationships; First Nations rights with respect to certain land on which the Company conducts 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; privacy breaches or data theft; integration of acquired properties in Ontario; changes to anti-money laundering procedures and protocols including additional requirements for determining source of funds; unusual weather or natural disasters could adversely affect the Company's operations and financial results; and disease outbreaks. 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 2020, and as identified in the Company's disclosure record on SEDAR at www.sedar.com.
The forward-looking information in documents incorporated by reference speaks only as of the date of those documents. 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 Company undertakes no obligation to revise forward-looking information to reflect subsequent events or circumstances except as required by law. 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.
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, business acquisition, restructuring and other, gain on sale of land, and foreign exchange gain. Adjusted EBITDA is derived from the Consolidated Statements of (Loss) Earnings and Other Comprehensive (Loss) Income, and can be computed as revenues less human resources expenses and property, marketing and administration expenses plus the share of profit of equity investments relating to principal operating entities. Unless otherwise noted, Adjusted EBITDA for the current and comparative periods exclude the results of discontinued operations. 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. 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, facility development commission revenues previously deferred at Casino Nanaimo, other and the related income taxes thereon. The Company has reported Free Cash Flow as an additional measure of its operating performance, particularly to monitor the Company's non-discretionary cash requirements during the Pandemic period. Free Cash Flow can be computed as Adjusted EBITDA less the following items derived from the Consolidated Statements of Cash Flows: changes in non-cash working capital, capital expenditures, net of related accounts payable, payment of lease liabilities, interest paid and income taxes paid.
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 Terrance M. Doyle"
Great Canadian Gaming Corporation
SOURCE Great Canadian Gaming Corporation
Company Codes: Toronto:GC
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