Fourth-quarter net income declined as revenue rose for Galaxy Gaming. The Las Vegas casino table-game and systems developer and distributor expressed optimism for new games and systems and forecast year-to-year increases in revenue and cash flow for 2023.
In a statement Friday, Galaxy Gaming said net income was $55,000 for the three months ended Dec. 31, down $598,000 a year earlier. The company didn’t report quarterly per-share earnings or explain the year-to-year decline.
Fourth-quarter adjusted earnings before interest, taxes, depreciation, and amortization, a cash-flow measure that excludes one-time costs, rose 30% to $3.1 million. The company said the fourth quarter benefited from a $575,000 one-time payroll tax benefit.
Fourth-quarter revenue rose 5% to $5.9 million.
Galaxy CEO and President Todd Cravens said his company withstood fluctuating rates — exchange, interest, and inflation — to deliver a solid quarter. “(We) ended 2022 on a good trajectory.”
Cravens said Galaxy will install the first of its Galaxy Operating System progressive games in the second quarter and expects double-digit-percentage revenue increases in its online business in 2023. He added that the company expects core-business revenue growth, as new systems are installed and new content goes to market.
Chief Financial Officer Harry Hagerty said Galaxy is “comfortably in compliance” with the net-leverage covenant in its credit agreement with Fortress. Net leverage was 4.0x at year-end, versus 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,” Hagerty said. “We expect interest expense to be close to $9 million in 2023, based on a benchmark rate of 5% for the remainder of the year.”
For the 12 months ended Dec. 31, Galaxy had a net loss of $1.8 million, or 7 cents per share, reversing year-earlier net income of $2.1 million, or 10 cents per share. Twelve-month adjusted EBITDA rose 21% to $10.5 million. Twelve-month revenue rose 15% to $23.4 million from $20 million.
In a 10-K filing with the Securities and Exchange Commission, Galaxy reported that its 12-month core operating segment revenue rose 13.6% to $15.4 million from $13.6 million, boosted by the lifting of COVID-19 restrictions and the reopening of gambling businesses in the United Kingdom.
Twelve-month digital operating segment revenue rose 25.1% to $8 million from $6.4 million helped by online customers’ growth in traditional markets and their entry into new markets.
Galaxy forecast $26 million to $27 million in revenue and adjusted EBITDA of $12 million to $13 million for full-year 2023.
Galaxy Gaming shares rose 3 cents, or 1.31 percent, Friday to close at $2.48 on the Over-the-Counter Bulletin Board.