Kinbasha Gaming International, Inc. an owner and operator of retail gaming establishments known as pachinko, Japan’s largest leisure opportunity, today announced milestone net income and earnings per share.
With a 50 day moving average at $0.86, steady news flow, outstanding bottom-line results in fiscal 2013, and being one of the larger participants in Japan’s fragmented gaming industry there is always potential for institutional level interest from those looking to diversify their exposure into foreign markets. As a result, US gaming investors in companies like Caesars Entertainment Corp (NASDAQ: CZAR) or MTR Gaming Group, Inc. (NASDAQ: MNTG) may want to consider taking a closer look.
For starters here is today’s corporate release announcing Kinbasha’s impressive fiscal year 2013 results and conference call details:
Kinbasha Gaming International, Inc. (OTCQX: KNBA), owner and operator of retail pachinko gaming centers in Japan, has filed its annual report on Form 10-K with the SEC and released its financial results for its fiscal year ended March 31, 2013.
Summary of Fiscal Year 2013 Financial Results
- · Net revenues increased to $93.9 million in fiscal 2013, compared to $91.2 million in fiscal 2012.
- · Net income improved to $11.6 million in fiscal 2013, compared to a net loss of $6.1 million in fiscal 2012.
- · Fully diluted earnings per share (EPS) improved to $0.95 in fiscal 2013, compared to a loss of per share of $0.82 in fiscal 2012.
Analysis of Fiscal Year 2013 Financial Results
For the fiscal year ended March 31, 2013, net revenues increased to $93.9 million for the year ended March 31, 2013 from $91.2 million in the year ended March 31, 2012. Net revenues increased due to an improvement in gaming revenues, which increased to $90.6 million in fiscal 2013 from $84.6 million in fiscal 2012. The Company’s increase in net gaming revenues was a result of an increase in total wagers with a moderate decrease in pay-outs, which more than offset the decrease resulting from a 5.1% decrease in the yen/dollar exchange rate.
Net income attributable to common shareholders improved to $11.6 million for the year ended March 31, 2013 as compared to a net loss of $6.1 million in the same period of 2012. As a result, fully diluted EPS improved to $0.95 in fiscal 2013, compared to a loss of per share of $0.82 in fiscal 2012.
The improvement to net income is generally attributed to enhanced market conditions, an increase in total wagers due to the reopening of a pachinko parlor that had been closed due to earthquake damage, a $5.2 million gain on forgiveness of debt, and a non-recurring $3.0 million gain resulting from a change in the Company’s policy for employment termination benefits. Net income also increased as a result of improved payout ratios due to a shift in the mix of pachinko machines and the positive effects of Kinbasha’s marketing programs to promote more cost effective prize payouts.
“We are extremely pleased to report our breakthrough financial results for fiscal 2013,” saidMasatoshi Takahama, Chief Executive Officer of Kinbasha. “Achieving $11.6 million in net income and an EPS of $0.95 is a milestone achievement for Kinbasha, and a testament to our stated goals of improving our operations and generating shareholder value. As we execute our strategic growth initiatives, we believe the decisions we have made will position Kinbasha to grow in our proven markets while also reducing expenses and reducing debt. We believe this will be a pivotal year for Kinbasha as we continue to improve our financial metrics and expand our presence in Japan’s gaming sector.”
During the year the Company was able to reduce its total debt from $159.8 million at March 31, 2012 to $132.3 million as of March 31, 2013. As of March 31, 2013, the total debt included $109.6 million of principal and $22.7 million of accrued interest. For the past several years, the Company has negotiated with its lenders and in many cases has obtained formal or informal forbearances and loan modifications that have allowed it to effectively extend the maturity of its debt through interest only and/or reduced principal payments. As of the date of this press release, Kinbasha was not subject to any litigation or foreclosure proceedings with respect to its debt.
Corporate Highlights and Recent Events
- · Financial results include revenue of $93.9 million, along with net income of $11.6 million and fully diluted EPS of $0.95 in fiscal 2013.
- · On February 9, 2013, Kinbasha began trading on the OTCQX, becoming the first SEC-reporting company with a majority of its operations in Japan to trade on the highest platform offered through OTC Markets.
- · On March 6, 2013, Kinbasha announced a $6 million debt settlement agreement in connection with debt owed to Tokyo Star Bank. As per the agreement, payments from Kinbasha totaled approximately $737,000, resulting in a net gain on settlement of approximately $5.2 million.
- · On May 20, 2013, Kinbasha announced that it successfully introduced lower denomination slot machines at two of its parlors in the greater Tokyo area. Japan is the world’s largest market for slot machines with an installed base of approximately 1.4 million slot machines.
- · On June 20, 2013, Kinbasha announced that it will introduce the latest title in the “Sea Story” pachinko game series, which launches in July, throughout its gaming locations in Japan. The “Sea Story” series by Sanyo is the longest running and most popular title in the Japanese pachinko industry, generating over $10 billion in hardware sales since it was first introduced in 1999.
Mr. Takahama concluded, “As the only US-listed pachinko company that is SEC-reporting, we have distinct advantages over our competition in Japan for building awareness in the West, including the mainstream casino industry, as well as raising capital to fund expansion. Going forward in fiscal 2014, Kinbasha’s growth strategy is based on leveraging the company’s existing brand and operational expertise to build additional gaming locations in greater metropolitan areas such as Tokyo.”
Earnings Conference Call
Kinbasha will host its earnings conference call on July 3, 2013, at 9:30 a.m. Eastern to discuss its fiscal year-end March 31, 2013 financial results. The conference call will include a Q&A session where investors will have the opportunity to ask questions of senior management.
The teleconference can be accessed by dialing 877-407-0782 when calling within the United States or 201-689-8567 when calling internationally. Please dial in 10 minutes prior to the beginning of the call. There will be a playback available until July 16, 2013. To listen to the playback dial 877-660-6853 when calling within the United States or 201-612-7415 when calling internationally and use replay ID number: 417001.
The conference call will be simultaneously webcast and available at:
About Kinbasha Gaming International, Inc.
Based in Hitachi City, Japan, Kinbasha Gaming International, Inc. (OTCQX: KNBA) is a retail gaming company that operates 21 pachinko parlors in the Japanese prefectures of Ibaraki, Tokyo and Chiba. For more than 50 years, the company’s retail gaming establishments have offered customers the opportunity to play the games of chance known as pachinko and pachislo. Pachinko is played on a device which resembles a vertical pinball machine and pachislo is played on a machine that resembles a western style slot machine. Pachinko and pachislo are collectively ranked as Japan’s largest leisure activity. For more information on Kinbasha, please visit: www.kinbashainc.com
For comprehensive investor relations material, including fact sheets, multimedia resources, and videos regarding Kinbasha, please follow the appropriate link: Investor Portal, Overview Videoand Investor Fact Sheet
Kinbasha shares are listed on the OTCQX. Investors can access free, real-time Level 2 quotes for the company at: www.otcmarkets.com/stock/KNBA/quote
Functional Currency is Yen
Kinbasha’s functional currency is the yen, and accordingly its earnings and assets are denominated in yen. As a result, appreciation or depreciation in the value of the yen relative to the dollar would affect its financial results reported in dollars without giving effect to any underlying change in its business or results of operations. For fiscal year 2013, the yen compared to the dollar was weaker than the yen compared to the dollar for the fiscal year 2012. Accordingly, Kinbasha’s financial position as of March 31, 2013 and the results of its operations for fiscal year 2013 expressed in dollars were weaker than its financial position as of March 31, 2012 and the results of operations for fiscal year 2012.