Thunderbird Resorts Inc.: Third Quarter 2015 Interim Management Statement
October 2015 Revenue Report
/EINPresswire.com/ -- PANAMA, REPUBLIC OF PANAMA -- (Marketwired) -- 11/17/15 -- Thunderbird Resorts Inc. ("Thunderbird" or "Group") (EURONEXT: TBIRD)(FRANKFURT: 4TR) announces its interim results for the first quarter and three months ended September 30, 2015.
Group Overview for Third Quarter 2015
Performance Under our Stated Goals(1)
In the Group's Half-year Report 2015, our CEO stated certain goals to achieving profitability and building a healthy, growing company. Here is a snapshot of our performance under these stated goals in Q3 2015:
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Stated Goal Progress
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Development On February 25, 2015, the Group sold its
economic interest and management rights in
its seven casinos in Costa Rica as a
strategic decision to exit a mature
operation in which we only owned an
approximate 50% stake. The net cash
received for the Group's approximate 50%
share was approximately $8.1 million. We
continue to own real estate in Costa Rica
with an appraised value to our 50% of
approximately $14.9 million, which real
estate is free and clear of debt and is
being held for sale. On April 22, 2015, the
Group opened a 1,200 square meters
entertainment venue in Managua, Nicaragua
with 111 slot machines, 21 gaming table
positions and 110 F&B positions. Based on
five full months of operation, this
property is generating $226 thousand in
property EBITDA on an annualized basis as
compared to -$23 thousand of property
EBITDA for the full year 2014 for the
Pharaoh's Holiday Inn that it replaced.
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Grow EBITDA(2) in Continuing Property EBITDA increased by 11.2% and
Operations adjusted EBITDA increased by 35.8% through
Q3 2015 as compared to the same period in
2014.
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Reduce Debt and / or Refinance Gross debt has been reduced to $35.8
Remaining Debt million as of September 30, 2015, as
compared to $46.2 million on December 31,
2014. Net debt (gross debt less cash and
cash equivalents) has been reduced to $31.1
million on September 30, 2015, as compared
to $41.3 million on December 31, 2014. As
of this date, we continue to seek
refinancing of our secured Peru-related
debt.
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Increase Shareholder Value From January to October 2015, the Company
has purchased 660,000 shares while
directors/officers have purchased 850,000
shares. We continue to believe that our
share price does not reflect the intrinsic
value of the company. We continue to
evaluate our capital structure, the sale of
part or all of our approximately $76
million in real estate (based on appraised
values) and other strategic alternatives to
optimize value for shareholders. The goal
of any material transaction would be to
"right size" cash flow and to build
shareholder value by investing in growth.
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(1) Unless otherwise stated, all figures reported herein are in USD and
report the results of those businesses that were continuing as of September
30, 2015, as compared to those same businesses through the nine months ended
September 30, 2014, or through year-end 2014. Our stated goals have evolved
over the last year, but are materially the same as set forth in previous
reports.
(2) "EBITDA" is not an accounting term under IFRS, and refers to earnings
before net interest expense, income taxes, depreciation and amortization,
equity in earnings of affiliates, minority interests, development costs,
other gains and losses, and discontinued operations. "Property EBITDA" is
equal to EBITDA at the country level(s). "Adjusted EBITDA" is equal to
property EBITDA less "Corporate expenses," which are the expenses of
operating the parent company and its non-operating subsidiaries and
affiliates.
Summary Third Quarter 2015 Consolidated P&L:
Below is our consolidated profit / (loss) summary for the nine months ended September 30, 2015, as compared with the same period of 2014. In summary, Group revenue decreased by $1.4 million or 4.3% on a USD basis (see "Forex" note below below where it shows revenue on a currency neutral basis has grown), while adjusted EBITDA increased by $696 thousand or 35.8% because of aggressive efficiency.
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(In thousands)
Nine months ended
September 30 %
2015 2014 Variance change
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Net gaming wins $ 25,716 $ 25,937 $ (221) -0.9%
Food and beverage sales 2,304 2,518 (214) -8.5%
Hospitality and other sales 3,455 4,421 (966) -21.9%
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Total revenues 31,475 32,876 (1,401) -4.3%
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Promotional allowances 3,539 3,441 98 2.8%
Property, marketing and
administration 22,109 24,197 (2,088) -8.6%
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Property EBITDA 5,827 5,238 589 11.2%
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Corporate Expenses 3,188 3,295 (107) -3.2%
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Adjusted EBITDA 2,639 1,943 696 35.8%
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Property EBITDA as a percentage of
revenues 8.4% 5.9%
Depreciation and amortization 2,836 2,903 (67) -2.3%
Interest and financing costs, net 3,175 2,807 368 13.1%
Management fee attributable to non-
controlling interest - (347) 347 -100.0%
Project development 91 - 91 0.0%
Foreign exchange (gain) / loss 406 125 281 224.8%
Other (gains) / losses 1,488 1,280 208 16.3%
Income taxes 248 246 2 0.8%
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Loss for the period from continuing
operations $ (5,605) $ (5,071) $ (534) 10.5%
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Forex: The strengthening of the US dollar versus our operating currencies continues to have a material impact on our as reported profit / (loss) as compared to the same period in 2014. Under a currency neutral analysis (in which the same exchange rate would be applied to both periods as to remove Forex swings from the analysis), Group revenue would have grown by $1.5 million or 4.9% and adjusted EBITDA would have increased by $1.1 million or 77.0%.
Interest and Financing costs, net: The increase in financing costs, net was due to the fact that in 2014 the Group benefitted from material interest income from the financed portion of its sale of Philippines assets, which loan has since been repaid by the purchaser. Our average weighted borrowing cost as of September 30, 2015, was just 8.60% as we have continued to pay down our highest interest debt.
Below is the Group's Gross debt and Net Debt on September 30, 2015.
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(In thousands; proportional consolidation)
Sep-15 Jun-15 Mar-14
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Borrowings $ 34,187 $ 34,947 $ 37,088
Obligations under leases and hire purchase 1,673 564 684
contracts
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Gross Debt $ 35,860 $ 35,511 $ 37,773
Less: cash and cash equivalents (excludes 4,668 7,755 10,525
restricted cash)
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Net Debt $ 31,192 $ 27,756 $ 27,248
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Note: Gross debt above is presented net of debt issuance costs (costs of debt at time of issuance, which are currently non-cash and amortize over time) which is why there is an approximate $0.3 million variance with the total Principal balance below.
The increase in Obligations under leases as of September 2015 was due to the addition of $1.9 million of gaming machines debt in Peru as detail below:
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Balance Interest Maturity
Additions Sep 30, 2015 Collateral rate date
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Peru
Obligations under 1,909 1,232 Gaming 8.0% Jul, Aug
leases machines and Sep
2017
Total $ 1,909 $ 1,232
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The Group estimates its debt schedule as follows starting in October 2015:
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Principal Payment 2015 2016 2017 2018
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Corporate $ 3,660,952 $ 5,963,599 $ 4,909,213 $ 2,513,506
Peru 511,195 2,167,105 1,726,695 1,395,824
Nicaragua 58,336 265,953 269,563 294,887
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Total $ 4,230,503 $ 8,396,657 $ 6,905,471 $ 4,204,217
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Interest Payment 2015 2016 2017 2018
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Corporate $ 666,514 $ 1,686,670 $ 908,049 $ 619,272
Peru 283,035 1,036,716 815,066 620,176
Nicaragua 58,480 172,373 145,763 120,439
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Total $ 1,008,029 $ 2,895,759 $ 1,868,878 $ 1,359,887
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Principal Payment 2019 Thereafter Total
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Corporate $ 1,375,026 $ 3,397,095 $ 21,819,391
Peru 6,613,313 - 12,414,132
Nicaragua 735,749 322,190 1,946,698
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Total $ 8,724,088 $ 3,719.285 $ 36,180,221
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Interest Payment 2019 Thereafter Total
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Corporate $ 456,979 $ 419,584 $ 4,757,068
Peru 223,950 - 2,978,943
Nicaragua 92,985 30,880 620,920
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Total $ 773,914 $ 450,464 $ 8,356,931
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Peru Update
Summary Peru Third Quarter 2015 Consolidated P&L:
Our Peru profit / (loss) summary for the nine months ended September 30, 2015, as compared with the same period of 2014 is set out below. In summary, Peru revenue has reduced by $1.9 million or 8.4% on a USD basis (see "Forex" note below for information on currency neutral revenue), while property EBITDA has increased by $840 thousand or 23.9% due to aggressive efficiency programs.
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(In thousands)
Nine months ended
September 30 %
2015 2014 Variance change
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Net gaming wins $16,648 $ 16,984 $ (336) -2.0%
Food and beverage sales 815 1,335 (520) -39.0%
Hospitality and other sales 3,294 4,336 (1,042) -24.0%
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Total revenues 20,757 22,655 (1,898) -8.4%
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Promotional allowances 2,231 2,191 40 1.8%
Property, marketing and
administration 14,178 16,956 (2,778) -16.4%
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Property EBITDA 4,348 3,508 840 23.9%
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Property EBITDA as a percentage of
revenues 20.9% 15.5%
Depreciation and amortization 2,310 2,443 (133) -5.4%
Interest and financing costs, net 991 983 8 0.8%
Management fee attributable to non-
controlling interest 7 (64) 71 -110.9%
Foreign exchange (gain) / loss 766 368 398 108.2%
Other (gains) / losses (97) (3) (94) 3133.3%
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Loss for the period from continuing
operations $ 371 $ (219) $ 590 -269.4%
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Forex: Under a currency neutral basis (in which the same exchange rate would be applied to both periods), Peru revenue would have grown by $491 thousand or 2.4% and property EBITDA would have increased by $1.2 million or 38.6%.
Profit for the period in Peru is $371 thousand (an improvement of $590 thousand as compared to 2014), which primarily is the result of efficiency programs the Group has implemented that have led to the reduction of $2.8 million in property, marketing and administration expense.
Key business drivers: a) During Q3 and Q4 2014, the Group opened 24 electronic roulette and 56 new table positions, and 2015 is the first full year of operation of these positions; b) The consolidation of our Peru administrative offices to free up space and increase space for third party rentals is expected to have an impact in Q1 2016; c) Effective April 30, 2015, the Group's contract to manage the El Pueblo Resort expired, thus reducing revenue on an annualized basis by approximately $730 thousand; and d) The Group announced in its 2014 Annual Report that it has reduced payroll by approximately $1.5 million (annualized) between September 2014 and approximately April 2015. The year-to-date impact of these reductions as of September 30, 2015 has been $1.6 million, which is materially higher than forecasted.
Nicaragua Update
Summary Nicaragua First Quarter 2015 Consolidated P&L:
Below is our Nicaragua profit / (loss) summary for the nine months ended September 30, 2015, as compared with the same period of 2014. In summary, Nicaragua revenue has increased by $567 thousand or 5.6% on a USD basis (see "Forex" note below) and property EBITDA has decreased by $251 thousand or 14.5% partially due to: a) The growth of lower margin food and beverage revenue; and b) A one-time increase in marketing expense related to the opening of our new casino property (described below).
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(In thousands)
Nine months ended
September 30 %
2015 2014 Variance change
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Net gaming wins $ 9,068 $ 8,953 $ 115 1.3%
Food and beverage sales 1,489 1,183 306 25.9%
Hospitality and other sales 161 15 146 973.3%
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Total revenues 10,718 10,151 567 5.6%
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Promotional allowances 1,308 1,250 58 4.6%
Property, marketing and
administration 7,931 7,171 760 10.6%
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Property EBITDA 1,479 1,730 (251) -14.5%
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Property EBITDA as a percentage of
revenues 13.8% 17.0%
Depreciation and amortization 501 413 88 21.3%
Interest and financing costs, net 118 103 15 14.6%
Management fee attributable to non-
controlling interest 34 18 16 88.9%
Project development 91 - 91 0.0%
Foreign exchange (gain) / loss 140 131 9 6.9%
Other (gains) / losses (6) 24 (30) -125.0%
Income taxes 221 218 3 1.4%
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Loss for the period from continuing
operations $ 380 $ 823 $ (443) -53.8%
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Forex: On a currency neutral basis (in which the same exchange rate would be applied to both periods), Nicaragua revenue would have grown by $1.0 million or 10.9% and property EBITDA would have decreased by $169 thousand or 10.3%.
Profit for the period in Nicaragua is $380 thousand (a reduction of $443 thousand), which is primarily the result of the increased property, marketing and administration expense as described above. The profit for the period was also impacted by higher depreciation (non-cash item) and by project development costs of $91 thousand. Both items were directly related to the opening of the new Pharaoh's Bolonia casino.
Key business driver - new Pharaoh's Bolonia Casino: On April 22, 2015, the Group opened a 1,200 square meters entertainment venue with 111 slot machines, 21 gaming table positions and 110 F&B positions. This property is located in a premium area in the heart of Managua in which the government is investing heavily to promote tourism. The Group has moved its Pharaoh's Holiday Inn property to this new location which is owned by the Company and which has far superior market visibility, parking and space distribution for our business. The facility also has 29 additional gaming positions as compared to the old casino it replaced. Based on Q3 results (first full quarter of operation), the annualized revenue and EBITDA of the Casino Bolivar would be $2.3 million and $252 thousand, respectively.
Other Group Updates
Below are the material events in our business since filing our 2015 Half-year Report on August 30, 2015.
Over the course of several weeks beginning September 9, 2015, the Company announced that various directors and officers purchased 846,184 of its issued and outstanding common shares through the market as well as from a shareholder in a private transaction. In addition, Thunderbird itself purchased 660,000 shares through the facilities of the Euronext Amsterdam in accordance with the applicable rules of the exchange concerning private transactions. The shares were purchased at an average share price of $0.50 per share.
In September 2015, the Company announced the reduction of debt balance owed to a single lender from approximately $3.4 million to $600 thousand, for a gross debt reduction of $2.8 million and one-time gain to the Group of $2.9 million. Gross debt balances forecast for the end of October 2015, are preliminarily estimated at $33 million.
OCTOBER 2015 REVENUE REPORT
Below is the Group's preliminary revenue report for October 2015 as compared with October 2014:
---------------------------------------------------------------------------- Group-wide sales by country - October October Year-over-year (unaudited, in millions)(1) 2015 2014 increase/(decrease) ---------------------------------------------------------------------------- Peru(2) $2.20 $2.57 -14.40% Nicaragua 1.20 1.06 13.21% ---------------------------------------------------------------------------- Total Consolidated Operating Revenues $3.40 $3.63 -6.34% ---------------------------------------------------------------------------- ( 1) Revenues reported are based on monthly average exchange rates, are same store and are in USD millions. (2) Revenues are generated primarily from gaming, and secondarily from our fully-owned Fiesta Hotel and from 2 hotels under management.
Forex: On a currency neutral basis, our October 2015 revenues would have improved as follows:
-- Peru revenue for October 2015 as compared to October 2014 would have
decreased by approximately $100 thousand or -4.35%.
-- Nicaragua revenue for October 2015 as compared to October 2014 would
have increased by approximately $190 thousand or 18.81%.
-- Total revenue for October 2015 as compared to October 2014 would have
increased by approximately $90 thousand or 2.72%.
For more detail on these developments, please visit www.thunderbirdresorts.com to find our press releases dated January to October 2015.
Capital Resources and Liquidity
The Group measures its liquidity needs by:
-- Monitoring short-term obligations on a country-by-country and global,
consolidated basis, with short-term inflows and outflows forecasted for
the financial year, updated weekly.
-- Monitoring long-term, scheduled debt servicing payments.
-- Rolling forward 5-year cash flow models each month based on the
financial results year-to-date through the previous month.
The Group has the capacity to manage liquidity with different tools at its disposal, including:
-- Raising of debt or equity capital at both the operations and Group
levels.
-- Selling of non-strategic assets.
-- Restructuring or deferral of unsecured lenders.
-- Restructuring of salaries of key personnel.
-- Deferral or aging of accounts payables.
-- Cost management programs at both the operations and Group levels.
Based upon our current expectations for the third quarter of 2015, we anticipate that our available cash balances, our cash flow from operations and available borrowing capacity under our existing credit arrangements will be sufficient to fund our liquidity requirements for at least the next 18 months.
Document Availability: Copies of the Third Quarter Interim Management Statement in the English language will be available at no cost at the Group's website at www.thunderbirdresorts.com. Copies in the English language are available at no cost at the Group's operational office in Panama and at the offices of our local paying agent ING Commercial Banking, Paying Agency Services, Location Code TRC 01.013, Foppingadreef 7, 1102 BD Amsterdam, the Netherlands (tel: +31 20 563 6619, fax: +31 20 563 6959, email: iss.pas@ing.nl). Copies are also available on SEDAR at www.SEDAR.com.
ABOUT THE COMPANY
We are an international provider of branded casino and hospitality services, focused on markets in Latin America. Our mission is to "create extraordinary experiences for our guests." Additional information about the Group is available at www.thunderbirdresorts.com.
Cautionary Notice: This release contains certain forward-looking statements within the meaning of the securities laws and regulations of various international, federal, and state jurisdictions. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential revenue and future plans and objectives of the Group are forward-looking statements that involve risk and uncertainties. There can be no assurances that such statements will prove to be accurate and actual results could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Group's forward-looking statements include competitive pressures, unfavorable changes in regulatory structures, and general risks associated with business, all of which are disclosed under the heading "Risk Factors" and elsewhere in the Group's documents filed from time-to-time with the AFM and other regulatory authorities.
Contacts:
Thunderbird Resorts Inc.
Peter LeSar
Chief Financial Officer
Phone: (507) 223-1234
Email: plesar@thunderbirdresorts.com
www.thunderbirdresorts.com
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