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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Global Cash Access's deal for Multimedia Games affects quarterly results

11 March 2015

LAS VEGAS -- Global Cash Access owned slot machine maker Multimedia Games, Inc. for just 13 days in December, but the business had an impact on the company’s fourth-quarter results.

The Las Vegas-based provider of payment processing products to casinos said its net loss of $5.7 million in the quarter that ended Dec. 31 was attributed to $10 million in costs and accounting adjustments from the $1.2 billion deal to acquire the slot machine company, which translated into a loss of 9 cents per share.

A year ago, Global Cash Access reported net income of $5.7 million, or 8 cents per share.

During the quarter, Global Cash Access increased total revenue 8 percent to $152.1 million, which included $7.4 million from Multimedia Games.

For all of 2014, Global Cash Access reported net income of $12.1 million, earnings per share of 18 cents and net revenue of $593 million.

“In the short time since acquiring Multimedia Games, we have made measurable progress on integrating our two organizations and are tracking to our objectives,” Global Cash Access CEO Ram Chary said in a statement.

Multimedia Games, which maintains a headquarters in Austin, Texas, saw revenue decline almost 19 percent in the quarter.

In a pre-earnings note to investors Monday, Eilers Research founder Todd Eilers said he expected Multimedia to report the decline in revenue. A year earlier, the slot machine manufacturer benefited from the sale of some 400 new slot machines to two California Indian casinos.

Eilers said the vast majority of Multimedia’s sales have been to replace older company machines.

“The sizable new and expansionary orders last year are not normal,” Eilers said.

Multimedia Games, which was nearly shut down in 2010, has been considered one of the gaming industry’s top turnaround stories. Games produced by the slot machine maker were taking away floor space from casino companies when the sale to Global Cash was made.

The transaction was somewhat of a surprise. Global Cash Access was largely known as a casino industry provider of ATMs, point-of-sale and debit-card transaction equipment and slot machine redemption kiosks.

Chary said the purchase of Multimedia Games offers the company a way to provide enhanced gaming products to casinos.

Global Cash Chief Financial Officer Randy Taylor said the company’s eliminated $10.9 million in costs since the merger was completed. He said the company expects to reach the goal of $24 million in cost savings by year’s end.

On Monday, Global Cash Access said it signed a new multi-year agreement with Las Vegas Sands Corp., extending its existing services to include the deployment of integrated payment kiosks at The Venetian, Palazzo and Sands Bethlehem in Pennsylvania.

Shares of Global Cash Access fell 11 cents, or 1.49 percent, to close at $7.27 on the New York Stock Exchange amid a major market sell-off on Tuesday. But they rebounded in after-hours trading.