Several months after hiring an adviser and exploring the sale of a majority stake in the company, Galaxy Gaming reported fourth-quarter net income, reversing a year-earlier loss.
Galaxy, a Las Vegas-based developer, manufacturer and distributor of casino table games and systems, said in November it had retained Macquarie Capital to help explore options, including a sale of the majority stake held by Triangulum Partners LLC.
The announcement came after CEO Robert Saucier resigned without explanation. Todd Cravens replaced Saucier as CEO.
In a statement March 14, Galaxy board Chairman Mark Lipparelli said the company will stick to its plan to expand geographically and add products. The contemplated stake sale was not addressed.
Galaxy said it would comment further only when it deems such comments are “appropriate or necessary.”
“While our formal process is concluded, we will continue to evaluate other opportunities to enhance shareholder value as they may, from time to time, arise,” Lipparelli said.
Cravens said the review has given the company a clearer view of its progress.
“This process has required us to do a very thorough review of the opportunities facing Galaxy’s business both in the near and long term,” Cravens, who is also Galaxy’s president, said in the statement. “We have seen steady improvements in our market reach and financial performance in the past year and we believe that there is a bright future for Galaxy.”
On Monday, in a filing with the Securities and Exchange Commission, Galaxy said it earned $438,000 for the three months ended Dec. 31, reversing a year-earlier loss of $66,000. Earnings per share weren’t listed.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure excluding nonrecurring costs, increased 8 percent to $1.6 million. Revenue rose 26 percent to $4.9 million.
In the filing, Galaxy said it invested in research and staff to develop enhanced table games, boosted its sales and marketing budget and applied for licenses in “several jurisdictions.” However, the company warned, these applications may cause “significant legal and regulatory expenses” that could postpone future initiatives or investments in inventory; research and development; and personnel.
“It is our intention to continue such initiatives and investments,” Galaxy wrote. “However, to the extent (that) we are not able to achieve our growth objectives or raise additional capital, we will need to evaluate the reduction of operating expenses.”
Galaxy’s table games take classic card games, including poker and blackjack, and add new elements. For example, its 21+3 game adds three-card poker to blackjack. Players win if their two cards and the dealer’s up card form a poker hand of a straight or better.
“What we find is that people like simple and people like something that they know,” Cravens said in a tweet highlighted by equities.com. “Players love it (21+3), we love it for the simplicity of it, but what we like about it now is that with the progressive system that we are using, we are able to extend the brand and do more things with it but also incorporate new titles.”
Market analyst Stephen L. Canaval wrote on equities.com that Galaxy’s refreshing of the classics, sometimes aided by intellectual property bought from the Gaming Innovation Center at the University of Nevada, Las Vegas’ International Gaming Institute, has helped the company appeal to variety-seeking younger gamblers. The strategy leverages young person peer group perspective; in the Innovation Center, students design games for commercial operators.
For the 12 months ended Dec. 31, Galaxy had net income of $1.2 million, reversing an $11,000 net loss. Adjusted EBITDA rose 18 percent to $6.6 million.
Revenue rose 25 percent to $18.6 million from $14.9 million. Galaxy said higher bonus jackpot system revenue and game placements spurred the increase.
Galaxy Gaming shares fell 3 cents, or 1.75 percent, Monday to close at $1.57 on the Over-the-Counter Bulletin Board. The share price has risen 50 percent in the past 12 months.
Follow Matthew Crowley on Twitter @copyjockey
