Galaxy Gaming, a Las Vegas casino table games and systems developer, manufacturer and distributor, posted lower earnings but surging revenue and cash flow for its fourth quarter.
Galaxy Gaming also set a $23.5 million to $25 million 2022 revenue target and altered its board compensation methodology, spurred by its stock price, which has climbed 71.5% in 12 months.
In an 8-K filing Thursday with the Securities and Exchange Commission, Galaxy Gaming said its net income was $598,384 for the three months ended December 31, down from $1.2 million a year earlier. The company didn’t disclose earnings per share.
Galaxy noted that 2020’s fourth-quarter result included an $840,000 gain related to the forgiveness of a Paycheck Protection Program loan. Galaxy added that its 2020 adjusted EBITDA included a $652,000 add-back of legal and other expenses related to litigation with Triangulum Partners LLC.
In November, Galaxy and company founder Robert Saucier settled a more-than-2-year-old legal dispute. Galaxy agreed to pay Triangulum Partners, which Saucier leads, $39.1 million plus interest accrued at 2% annually from May 6, 2021, through December 31, 2021.
Galaxy said it and Triangulum would stay in litigation pending the settlement’s payment and that Saucier and Triangulum wouldn’t compete with Galaxy for five years from the funds’ payment date.
Galaxy’s fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that excludes one-time costs, rose 84.6% to $2.4 million from $1.3 million.
Fourth-quarter revenue more than tripled, rising to $5.7 million from $1.7 million.
Galaxy’s stock rose 7 cents, or 1.15% Friday to close at $4.70 on the Over-the-Counter Bulletin Board.
In a statement, Galaxy Gaming CEO Todd Cravens said his company ended 2021 with momentum, thriving even as some client properties recovered slowly from forced COVID-19 closures.
“We believe that, as the impacts of the COVID-19 pandemic continue to subside for our clients, we will experience a strong recovery in our … core business (felt and electronics) and continued growth in our iGaming business.”
Chief Financial Officer Harry Hagerty said Galaxy Gaming has significant cash balances and modest debt maturities and will continue to build its cash position to keep net leverage low.
Along with the 2022 revenue forecast (which would top 2021’s $20 million in revenue), Hagerty said Galaxy is forecasting full-year adjusted EBITDA of $11.5 to $12.5 million, barring another COVID-19 lockdown or negative effects from the Russia-Ukraine war.
Galaxy also, as mentioned, said it would restructure board compensation, setting annual targets of $150,000 for board members, $175,000 for the audit committee chair and $200,000 for the board chair.
The compensation would be paid 60% in cash and 50% in stock. Cash compensation will be paid monthly in arrears; stock compensation will be paid quarterly in arrears.
The board includes Chairman Mark Lipparelli, Audit Committee Chairwoman Cheryl Kondra and directors Gavin Isaacs, Bryan W. Walters and William Zender.
“Using a share price of $4.45, the proposed board compensation plan would result in 74,157 shares being issued to our five directors in 2022,” Galaxy said. “Based on the 23,718,968 shares outstanding on March 28, 2022, this represents projected dilution of approximately 3/10ths of 1 percent.”
For the 12 months ended December 31, Galaxy Gaming earned $2.1 million, reversing a year-earlier loss of $2.2 million. Twelve-month adjusted EBITDA surged to $8.3 million from $1.4 million. Twelve-month revenue rose to $20 million from $6.4 million.
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