Executives at Global Cash Access Holdings Inc. are seeing positive signs ahead, particularly in international markets, but revenue continued to decline in the fourth quarter of 2010.
The Las Vegas-based company, which provides cash access and related products to casinos through ATMs, point-of-sale debit card transactions, credit card cash advances and check-warranty services, on March 8 reported revenues of $137.8 million for the quarter ended Dec. 31, down 7.4% from $148.8 million during the same period a year earlier. The company reported a $259,000 loss for the quarter, which compares with a $7.2 million profit during the fourth quarter of 2009.
Scott Betts, Global Cash Access president and CEO, noted during a March 8 earnings call with analysts that the quarter’s results were in line with pre-announced results released earlier this year. For the year, revenue totaled $606 million, or 54 cents per share. He predicted this year cash earnings per share will be between 40 cents and 43 cents.
During the call, Betts noted the company’s recent agreement to provide cash-access services to Galaxy Casino SA in Macau, which is scheduled to open in May.
“This is an important step in getting that business growing,” he said. “Our ability to offer innovation on both the payments as well as the kiosk side was instrumental in getting this contract. We now have a product suite that gives us the ability to offer services others cannot.”
As such, Betts said Global Cash Access is in a good position to gain ground in Macau “as many of the original cash-access contracts come up for renewal over the next 12 to 16 months.”
In addition, the company has signed substantially all of the top London casino operators, and he said Global Cash Access expects to relaunch its cash-access business in the United Kingdom in the next 30 days.
“This has been a long process since the Gaming Act of 2005 prohibited cash access in casinos as they were performed back then,” Betts said. Since then, we have been working nonstop with the operators and the Gaming Commission to develop a system that meets everyone’s current requirements. So, after three years of work, we believe we can reopen our UK business.”
Betts noted that when Global Cash Access was forced to shut down its UK business in 2007, it was contributing about $7 million annually in revenues. “After a period of market validation, we plan to expand across the UK,” he said. “This has been tremendous work by our international team, and certainly a nod to perseverance.”
In terms of market momentum in general, transaction volume, particularly credit card volumes, continue to slip, suggesting that any recovery is being fueled by the core player population stabilizing, Betts noted. “We certainly need to see [transactions to increase] to be more confident in a recovery,” he said. “The trends look promising, but we are still in a very challenging economy.”
ATM revenues during the quarter totaled $72.5 million, down 1.2% from $73.4 million. Check-warranty revenues dropped 18.2%, to $6.3 million from $7.7 million. Cash-advance revenues totaled $53.6 million, down 15.5% from $63.4 million.
ATM transactions totaled 17.2 million, down 8% from 18.7 million. Check-warranty transactions dropped 15.4%, to 1.1 million from 1.3 million. Cash-advance transactions totaled 2.2 million, down 15.4% from 2.6 million.
In terms of aggregate dollar amounts processed, ATM volume totaled $3.1 billion, down 3.1% from $3.2 billion. Check-warranties dropped 33%, to $200 million from $300 million. Cash advances totaled $1.2 billion, down 7.7% from $1.3 billion.
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