MATTHEWS, NC — (Marketwire) — 03/07/13 — PokerTek, Inc. (NASDAQ: PTEK) today reported financial results for the fourth quarter and full year ended December 31, 2012.
Financial Highlights:
Results strengthening on second-half revenue growth and expense management
Recurring revenue increased 41% sequentially from Q2 2012 to Q4 2012
Gross Margins at 70%
Operating expenses decreased 26% for the year and 18% for the quarter
Net loss from continuing operations improved 48% for the year and 57% for the quarter
Positive EBITDAS for second consecutive year
“Business momentum and recurring revenue trends strengthened significantly in the second half of the year,” commented Mark Roberson, Chief Executive Officer. “We increased our penetration in the United States and Canada and also began our re-entry into Mexico, driving a 41% sequential increase in recurring revenue over the past six months. Compared to prior year, fourth quarter operating results improved 57%, bringing PokerTek to within 2 cents of EPS profitability in the fourth quarter.
“Entering 2013, our growth plans include entering several new markets including Macau, Colombia, Uruguay and Peru, while also expanding our current presence in the United States, Canada and Mexico. Building on our momentum from 2012, we are well positioned to deliver recurring revenue and earnings growth in 2013.”
Revenue from North America increased with new installations in Canada and the United States in the second half of 2012. However, revenue comparisons to prior year were impacted by several factors, including the timing of our reentry in Mexico, a trend of declining economic conditions in Eastern Europe, and a shift in our revenue mix from hardware sales to more recurring revenue in 2012. As a result, total annual revenue was $5.2 million in 2012 compared to $6.5 million in 2011, a reduction of 20.3%. For the fourth quarter, total revenue was $1.3 million for both 2012 and 2011.
Revenue from license and service fees increased $0.2 million for the fourth quarter and decreased $0.6 million on an annual basis, compared to the respective periods in 2011 for the reasons noted above. On a sequential basis, revenue from license and service fees increased 41% from June 2012 as recent installations began contributing recurring revenue.
Revenue from sales of systems and equipment decreased $0.1 million for the fourth quarter and $0.7 million on an annual basis, compared to the respective periods in 2011. In 2012, our revenue was more heavily weighted towards recurring revenue license and service fees, whereas the prior year was more heavily weighted towards sales of systems and equipment. The change in sales mix creates unfavorable total revenue comparisons to prior year, but also represents an increase in the base of recurring revenue carrying forward to 2013.
Gross profit was $0.9 million for the both fourth quarter of 2012 and 2011. Gross profit margins were essentially flat in the fourth quarter of 2012 compared to 2011 at approximately 70%. Gross profit was $3.8 million in 2012 compared to $4.6 million in 2011, a reduction of $0.8 million, or 17.5%. Gross profit margins increased to 72.6% in 2012 compared to 70.1% in 2011. On an annual basis, gross profit margins improved primarily due to changes in sales mix which are more heavily weighted to higher margin recurring revenue, as well as reduced product costs and depreciation.
Operating expenses decreased 18.4% to $1.1 million in the fourth quarter of 2012 from $1.3 million in the same period in 2011. Operating expenses decreased 26.5% to $4.5 million in 2012 from $6.1 million in 2011. We implemented cost reduction initiatives which have streamlined our overhead and reduced spending on personnel, regulatory approvals, and professional fees in both the quarterly and full year periods.
Net loss from continuing operations improved 56.9% to $0.2 million ($0.02 per share) in the fourth quarter of 2012 from $0.4 million ($0.06 per share) in the same period in 2011. Net loss from continuing operations improved 48.4% to $0.8 million ($0.11 per share) in 2012 from $1.6 million ($0.24 per share) in 2011. The improvement in net loss from continuing operations resulted primarily from reductions in operating expenses.
Including the results of discontinued operations, net loss improved 69.0% to $0.2 million ($0.02 per share) for the fourth quarter of 2012 from $0.6 million ($0.08 per share) in the same period in 2011. Net loss improved 56.1% to $0.8 million ($0.10 per share) in 2012 from $1.8 million ($0.27 per share) in 2011.
EBITDAS, a non-GAAP financial measure (described below), was positive $133 thousand for the fourth quarter of 2012, compared to a negative EBITDAS of $45 thousand for the fourth quarter of 2011. EBTIDAS was positive $423 thousand in 2012 compared to positive $456 thousand in 2011 on an annual basis.
The Company-s cash used in continuing operations was $0.8 million for 2012 compared to $0.9 million for 2011.
As of December 31, 2012, the Company-s cash balance was $0.2 million and total debt was $0.3 million. During 2012, total debt was reduced by $0.4 million, or 57%.
Subsequent to the end of year, the Company completed a $0.5 million private placement transaction to provide additional working capital to execute the Company-s growth plans in 2013. The Company also renewed its line of credit with Silicon Valley Bank on March 1, 2013.
Gaming positions deployed worldwide totaled 2,310 of December 31, 2012 comprised of 2,160 PokerPro® and 150 ProCore gaming positions. As of December 31, 2011, 2,028 gaming positions were deployed comprised of 1,944 PokerPro and 84 ProCore gaming positions.
During 2012, total gaming positions increased in North America and Mexico and decreased in other international markets. During the fourth quarter, the Company removed underperforming leased gaming positions, primarily from Eastern Europe, and also repurchased certain gaming positions which had previously been sold. These activities increase the Company-s available inventory and the Company expects to redeploy those positions in other regions during 2013 to meet anticipated demand and to increase recurring revenue.
The Company plans to enter several new markets, expand penetration in existing markets and obtain additional regulatory approvals for its products during 2013. Those plans specifically include increasing penetration in the United States, Canada and Mexico, while entering several new markets in South America and Asia with PokerPro, Blackjack Pro and EZ Baccarat.
By executing those plans, the Company expects to build on the momentum from the second half of 2012, increase recurring revenue while maintaining gross margins in the high 60% to low 70% range and controlling expense growth to leverage its operations. As a result, the Company expects its financial results to continue to improve in 2013.
A conference call and webcast will be held on Thursday, March 7, 2013 at 11:00 am EST, for management to discuss the company-s fourth-quarter 2012 performance. Interested parties may listen to and participate in the conference call by dialing 866.202.3048 (U.S./Canada) or +1 617.213.8843 (Other) and entering passcode 30018032. A live webcast of the conference call will be available through a link on our website, , under the heading “Investors.” For those unable to participate in the live call, an archived replay will be made available on our website. A replay of the conference call will also be available approximately two hours after the conclusion of the call for approximately one week by dialing 888.286.8010 (U.S./Canada) or +1 617.801.6888 (Other) and entering passcode 45593688.
PokerTek, Inc. prepares its consolidated financial statements in accordance with United States generally accepted accounting principles (“GAAP”). In addition to disclosing financial results prepared in accordance with GAAP, the company discloses information regarding EBITDAS, which differs from the term EBITDA as it is commonly used. In addition to adjusting net income (loss) from continuing operations to exclude taxes, interest, and depreciation and amortization, EBITDAS also excludes noncash charges, certain non-recurring charges and share-based compensation expense. EBITDA and EBITDAS are not measures of performance defined in accordance with GAAP. However, EBITDAS is used internally in planning and evaluating the company-s operating performance. Accordingly, management believes that disclosure of this metric offers investors, bankers and other stakeholders an additional view of the company-s operations that, when coupled with the GAAP results, provides a more complete understanding of the company-s financial results.
EBITDAS should not be considered as an alternative to net loss or to net cash used in operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating the company-s performance. A reconciliation of GAAP net loss from continuing operations to EBITDAS is included in the accompanying financial schedules.
PokerTek, Inc. (NASDAQ: PTEK) () is a licensed gaming company headquartered in Matthews, NC that develops and distributes electronic table games solutions for the gaming industry. The company-s products are installed worldwide, and include PokerPro and Blackjack Pro. For more information, visit: .
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are made in accordance with the Private Securities Litigation Reform Act of 1995. The forward-looking statements herein include, but are not limited to, the expected adoption of our gaming systems by casinos and other customers, and the expected acceptance of our gaming systems by players. Our actual results may differ materially from those implied in these forward-looking statements as a result of many factors, including, but not limited to, the impact of global macroeconomic and credit conditions on our business and the business of our suppliers and customers, overall industry environment, customer acceptance of our products, delay in the introduction of new products, further approvals of regulatory authorities, adverse court rulings, production and/or quality control problems, the denial, suspension or revocation of permits or licenses by regulatory or governmental authorities, termination or non-renewal of customer contracts, competitive pressures, and our financial condition, including our ability to maintain sufficient liquidity to operate our business. These and other risks and uncertainties are described in more detail in our most recent annual report on Form 10-K and other reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by applicable laws, and you are urged to review and consider disclosures that we make in the reports that we file with the Securities and Exchange Commission that discuss other factors germane to our business.
Contact:
Mark Roberson
Chief Executive Officer
PokerTek, Inc.
704.849.0860, x101
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