Other OTC:GLXZ

Galaxy Gaming Reports Q4 and Full Year 2022 Financial Results

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LAS VEGAS, March 31, 2023 (GLOBE NEWSWIRE) — Galaxy Gaming, Inc. (OTCQB: GLXZ), a developer and distributor of casino table games and enhanced systems for land-based casinos and iGaming content, announced today its financial results for the quarter and year ended December 31, 2022.

Financial Highlights

Q4 2022 vs. Q4 2021

  • Revenue increased 5% to $5,940K
    • +14% to $6,453K at constant currency
  • Adjusted EBITDA increased 30% to $3,153K
    • Q4 2022 benefited from one-time payroll tax benefit of $575k (net)
  • Net income declined from $598K to $55K

Full Year 2022 vs. Full Year 2021

  • Revenue increased 17% to $23,442K
    • +23% to $24,632 at constant currency
  • Adjusted EBITDA increased 21% to $10,534K
  • Net loss of $(1,733)K vs. net income of $2,112K

Balance Sheet Changes (vs. December 31, 2021)

  • Cash increased 14% to $18,238K
  • Total long-term debt1 (gross) decreased to $59,741K from $60,500K
  • Stockholders’ deficit increased to $(17,885)K from $(17,286)K

1 Includes current portion.

Executive Comments

“In spite of the headwinds from exchange rates, interest rates and inflation rates, we had a solid quarter and ended 2022 on a good trajectory,” said Todd Cravens, Galaxy’s President and CEO.   “At constant currency, revenues for both the quarter and the year would have been new records for Galaxy. We enter the current year with several new games coming to market, and we will be installing the first of our Galaxy Operating System (“GoS”) progressives beginning in Q2.   We expect double-digit revenue increases in our online business in 2023, and expect revenue growth in the GG Core business to accelerate over the course of the year as GoS systems get installed, along with new content. We are working on upgrades and enhancements to GoS and expect to present GoS 2.0 at G2E in October.”

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“Some adjustments need to be made to our reported numbers to make them more comparable to the respective 2021 figures,” said Harry Hagerty, Galaxy’s CFO. “For the quarter, using last year’s exchange rates adds $512K to revenue. Our Adjusted EBITDA in the quarter benefitted from $575K in ERTC credits, which should be removed for comparability. Applying both adjustments results in pro forma revenue of $6,453K (+14%) and pro forma EBITDA of $3,090K (+43%). For the year, using last year’s exchange rates adds $1,189K to revenue, and Adjusted EBITDA benefitted from the same $575K ERTC credit. Applying both adjustments results in pro forma revenue of $24,632K and pro forma EBITDA of $11,149K.

“The currency comparisons impacted in the GG Digital operating segment more than the GG Core segment. For the quarter, revenue in GG Core was $3,944K ($4,036 in constant currency) vs. $3,951k in Q4 2021. In GG Digital, we had revenues of $1,996 in Q4 2022 ($2,416 in constant currency) vs. $1,719 in Q4 2021.   For the year, revenue in GG Core was $15,399K ($15,685K in constant currency) vs. $13,556k in 2021. In GG Digital, we had revenues of $8,043 in 2022 ($8,946 in constant currency) vs. $6,428in 2021.

“We are very comfortably in compliance with the Net Leverage covenant in our credit agreement with Fortress. Our Net Leverage was 4.0x at year-end vs. a maximum allowable of 8.0x (stepping down to 6.0x in 2023). The interest we pay on the term loan has increased sharply as short-term benchmarks increased over the last three quarters of 2022. We expect interest expense to be close to $9.0 million in 2023 based on a benchmark rate of 5.0% for the remainder of the year. We expect to generate Adjusted EBITDA in excess of interest expense and amortization in 2023, and we will also maintain significant cash balances in order to allow us to pay the interest and amortization if business trends deteriorate. We hope to be able to refinance the Fortress debt in Q4 2022 when the prepayment penalty lapses.

“For 2023, we are forecasting revenue in a range of $26-$27 million and Adjusted EBITDA in a range of $12-13 million. This forecast assumes exchange rates that existed in Q4 2022 and is based on economic conditions as they existed at the beginning of 2023.

“We have not repurchased any common stock under the authorization we received in November and will not be able to do any repurchases until after the current blackout period expires after the filing of our Q1 10-Q on May 15, 2023.”

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The company is releasing an investor deck with its earnings this quarter. Investors are encouraged to send questions to management at investors@galaxygaming.com by Monday, April 3rd. Management will record their answers to investor questions and give more detail to the investor deck. The recording should be posted on or around April 7th.

Forward-Looking Statements
This press release contains, and oral statements made from time to time by our representatives may contain, forward-looking statements based on management’s current expectations and projections, which are intended to qualify for the safe harbor of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements identified by words such as “believe,” “will,” “may,” “might,” “likely,” “expect,” “anticipates,” “intends,” “plans,” “seeks,” “estimates,” “believes,” “continues,” “projects” and similar references to future periods, or by the inclusion of forecasts or projections.  All forward-looking statements are based on current expectations and projections of future events.

These forward-looking statements reflect the current views, models, and assumptions of Galaxy Gaming, and are subject to various risks and uncertainties that cannot be predicted or qualified and could cause actual results in Galaxy Gaming’s performance to differ materially from those expressed or implied by such forward looking statements. These risks and uncertainties include, but are not limited to, the ability of Galaxy Gaming to enter and maintain strategic alliances, product placements or installations, in land based casinos or grow its iGaming business, garner new market share, secure licenses in new jurisdictions or maintain existing licenses, successfully develop or acquire and sell proprietary products, comply with regulations, have its games approved by relevant jurisdictions, and other factors. All forward-looking statements made herein are expressly qualified in their entirety by these cautionary statements and there can be no assurance that the actual results, events, or developments referenced herein will occur or be realized. Readers are cautioned that all forward-looking statements speak only to the facts and circumstances present as of the date of this press release. Galaxy Gaming expressly disclaims any obligation to update or revise any forward-looking statements, whether because of new information, future events or otherwise.

About Galaxy Gaming

Headquartered in Las Vegas, Nevada, Galaxy Gaming (galaxygaming.com) develops and distributes innovative proprietary table games, state-of-the-art electronic wagering platforms and enhanced bonusing systems to land-based, riverboat, and cruise ship and casinos worldwide. In addition, through its wholly owned subsidiary, Progressive Games Partners LLC, Galaxy licenses proprietary table games content to the online gaming industry. Connect with Galaxy on Facebook, YouTube   and Twitter.

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Non-GAAP Financial Information

Adjusted EBITDA includes adjustments to net loss/income to exclude interest, taxes, depreciation, amortization, share based compensation, gain/loss on extinguishment of debt, foreign currency exchange gains/losses, change in estimated fair value of interest rate swap liability and severance and other expenses related to litigation. Adjusted EBITDA is not a measure of performance defined in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). However, Adjusted EBITDA is used by management to evaluate our operating performance. Management believes that disclosure of Adjusted EBITDA allows investors, regulators, and other stakeholders to view of our operations in the way management does. Adjusted EBITDA should not be considered as an alternative to net income or to net cash provided by operating activities as a measure of operating results or of liquidity. Finally, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

Revenue at constant currency is a non-GAAP measure. We calculate constant currency revenue by applying the exchange rates realized in the year-ago period to the revenue earned in the respective foreign currencies in the current period. We believe that providing constant currency revenue allows readers to better understand the underlying growth of our businesses by removing the effect of exchange rate changes. In calculating EBITDA pro forma for constant currency, we do not adjust the exchange rates for expenses in current periods as the majority of our expenses are denominated in US dollars.

Contact:    
     
Media:   Phylicia Middleton (702) 936-5216
Investors:   Harry Hagerty (702) 938-1740

      Years ended December 31,
Adjusted EBITDA Reconciliation:     2022       2021  
Net (loss) income     $ (1,773,189 )   $ 2,111,812  
Interest expense       7,411,224         1,505,386  
Share redemption consideration               682,469  
Interest income       (71,223 )     (2,048 )
Depreciation and amortization       2,761,359         2,858,991  
Share-based compensation       1,278,068         1,532,455  
Foreign currency exchange loss (gain)       290,394         64,879  
Change in fair value of interest
rate swap liability
              (66,009 )
Provision (benefit) for income taxes       208,887         48,637  
Other non-recurring income       5,709          
Severance expense       28,477         12,596  
Special project expense (benefit) – Triangulum       (86,959 )     487,712  
Special project expense – Other       481,737         (503,050 )
Adjusted EBITDA     $ 10,534,484       $ 8,733,830  
    Three Months Ended December 31,
Adjusted EBITDA Reconciliation:   2022   2021  
Net (loss) income   $ 55,105   $       623,384  
Interest expense   2,129,902   1,054,912  
Share redemption consideration     96,023  
Interest income   (48,057 ) (886 )
Depreciation and amortization   571,570   698,774  
Share-based compensation   323,518   324,807  
Foreign currency exchange loss (gain)   (199,647 ) 33,478  
Provision (benefit) for income taxes   310,828   41,637  
Other non-recurring income   (12,546 ) (25,000 )
Special project expense (benefit) – Triangulum     74,688  
Special project expense – Other   21,833   (490,676 )
Adjusted EBITDA   $ 3,152,505   $ 2,431,141  
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Currency Reconciliation – Q4 2022 vs Q4 2021
                         
  Consolidated
  Q4 2022   Q4 2022 Pro Forma   Q4 2021   Change
    Realized Actual     Realized Pro Forma   Actual   Q4 2022 Q4 2022
  Revenue in Exchange Reporting   Revenue in Exchange Reporting   Reporting   Actual vs. Pro Forma vs.
  Local Rate Currency   Local Rate Currency   Currency   Q4 2021 Q4 2021
  Currency Q4 2022 Revenue   Currency Q4 2021 Revenue   Revenue   Actual Actual
EUR 1,687,114 $ 0.94 $ 1,587,722   1,687,114 $ 1.17 $ 1,977,536   $ 1,337,799   19 % 48 %
GBP £ 628,843 $ 1.16 $ 729,663   £ 628,843 $ 1.35 $ 852,003   $ 1,072,517   -32 % -21 %
USD $ 3,623,137 $ 1.00 $ 3,623,137   $ 3,623,137 $ 1.00 $ 3,623,137   $ 3,259,935   11 % 11 %
      $ 5,940,522       $ 6,452,676   $ 5,670,251   5 % 14 %
                         
  GG Core
  Q4 2022   Q4 2022 Pro Forma   Q4 2021   Change
    Realized Actual     Realized Pro Forma   Actual   Q4 2022 Q4 2022
  Revenue in Exchange Reporting   Revenue in Exchange Reporting   Reporting   Actual vs. Pro Forma vs.
  Local Rate Currency   Local Rate Currency   Currency   Q4 2021 Q4 2021
  Currency Q4 2022 Revenue   Currency Q4 2021 Revenue   Revenue   Actual Actual
EUR 72,177 $ 1.01 $ 72,679   72,177 $ 1.16 $ 83,804   $ 38,942   87 % 115 %
GBP £ 444,102 $ 1.17 $ 519,775   £ 444,102 $ 1.35 $ 599,786   $ 863,242   -40 % -31 %
USD $ 3,352,260 $ 1.00 $ 3,352,260   $ 3,352,260 $ 1.00 $ 3,352,260   $ 3,049,111   10 % 10 %
      $ 3,944,714       $ 4,035,850   $ 3,951,295   -0 % 2 %
                         
  GG Digital
  Q4 2022   Q4 2022 Pro Forma   Q4 2021   Change
    Realized Actual     Realized Pro Forma   Actual   Q4 2022 Q4 2022
  Revenue in Exchange Reporting   Revenue in Exchange Reporting   Reporting   Actual vs. Pro Forma vs.
  Local Rate Currency   Local Rate Currency   Currency   Q4 2021 Q4 2021
  Currency Q4 2022 Revenue   Currency Q4 2021 Revenue   Revenue   Actual Actual
EUR 1,614,937 $ 0.94 $ 1,515,042   1,614,937 $ 1.17 $ 1,893,731   $ 1,298,857   17 % 46 %
GBP £ 184,741 $ 1.14 $ 209,888   £ 184,741 $ 1.37 $ 252,217   $ 209,275   0 % 21 %
USD $ 270,877 $ 1.00 $ 270,877   $ 270,877 $ 1.00 $ 270,877   $ 210,824   28 % 28 %
      $ 1,995,809       $ 2,416,826   $ 1,718,956   16 % 41 %
                         
Note: Some numbers may not foot due to rounding.
Currency Reconciliation – Full Year 2022 vs Full Year 2021
                         
  Consolidated
  Full Year 2022   Full Year 2022 Pro Forma   Full Year 2021   Change
    Realized Actual     Realized Pro Forma   Actual   Full Year 2022 Full Year 2022
  Revenue in Exchange Reporting   Revenue in Exchange Reporting   Reporting   Actual vs. Pro Forma vs.
  Local Rate Currency   Local Rate Currency   Currency   Full Year 2021 Full Year 2021
  Currency Full Year 2022 Revenue   Currency Full Year 2021 Revenue   Revenue   Actual Actual
EUR 6,206,166 $ 1.06 $ 6,591,971   6,206,166 $ 1.20 $ 7,447,074   $ 4,828,354   37 % 54 %
GBP £ 2,633,850 $ 1.24 $ 3,272,999   £ 2,633,850 $ 1.37 $ 3,607,206   $ 2,383,968   37 % 51 %
USD $ 13,577,335 $ 1.00 $ 13,577,335   $ 13,577,335 $ 1.00 $ 13,577,335   $ 12,772,055   6 % 6 %
      $ 23,442,307       $ 24,631,615   $ 19,984,378   17 % 23 %
                         
  GG Core
  Full Year 2022   Full Year 2022 Pro Forma   Full Year 2021   Change
    Realized Actual     Realized Pro Forma   Actual   Full Year 2022 Full Year 2022
  Revenue in Exchange Reporting   Revenue in Exchange Reporting   Reporting   Actual vs. Pro Forma vs.
  Local Rate Currency   Local Rate Currency   Currency   Full Year 2021 Full Year 2021
  Currency Full Year 2022 Revenue   Currency Full Year 2021 Revenue   Revenue   Actual Actual
EUR 208,821 $ 1.04 $ 217,927   208,821 $ 1.18 $ 247,149   $ 106,012   106 % 133 %
GBP £ 2,017,035 $ 1.24 $ 2,498,050   £ 2,017,035 $ 1.37 $ 2,755,204   $ 1,641,463   52 % 68 %
USD $ 12,683,081 $ 1.00 $ 12,683,081   $ 12,683,081 $ 1.00 $ 12,683,081   $ 11,808,961   7 % 7 %
      $ 15,399,060       $ 15,685,435   $ 13,556,436   14 % 16 %
                         
  GG Digital
  Full Year 2022   Full Year 2022 Pro Forma   Full Year 2021   Change
    Realized Actual     Realized Pro Forma   Actual   Full Year 2022 Full Year 2022
  Revenue in Exchange Reporting   Revenue in Exchange Reporting   Reporting   Actual vs. Pro Forma vs.
  Local Rate Currency   Local Rate Currency   Currency   Full Year 2021 Full Year 2021
  Currency Full Year 2022 Revenue   Currency Full Year 2021 Revenue   Revenue   Actual Actual
EUR 5,997,345 $ 1.06 $ 6,374,044   5,997,345 $ 1.20 $ 7,199,924   $ 4,722,343   35 % 52 %
GBP £ 616,815 $ 1.26 $ 774,950   £ 616,815 $ 1.38 $ 852,002   $ 742,505   4 % 15 %
USD $ 894,254 $ 1.00 $ 894,254   $ 894,254 $ 1.00 $ 894,254   $ 963,095   -7 % -7 %
      $ 8,043,248       $ 8,946,180   $ 6,427,943   25 % 39 %
                         
Note: Some numbers may not foot due to rounding.

 

Reconciliation of Reported to Pro Forma Revenue and EBITDA
         
         
    Q4   Full Year
      2022       2022  
Reported Revenue   $ 5,940,525     $ 23,442,307  
Currency Adjustment     512,151       1,189,308  
Pro Forma Revenue   $ 6,452,676     $ 24,631,615  
         
Reported EBITDA   $ 3,153,000     $ 10,534,484  
plus: Currency Adjustment     512,151       1,189,308  
minus: ERTC Credit     (574,979 )     (574,979 )
Pro Forma EBITDA   $ 3,090,172     $ 11,148,813  

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