The struggling casino industry continues to put a strain on Global Cash Access Holdings Inc.’s financial performance.
The Las Vegas-based company provides cash-access products and related services to more than 1,100 casinos worldwide through ATMs, point-of-sale debit card transactions, credit card cash advances and check-warranty services.
As was the case in the second quarter, Global Cash earned less revenue from the casinos it services, but at a slower rate of decline. “Same-store” revenue declined 7.1% compared with 11.1% for the first nine months of 2009. During the third quarter, however, same-store revenue declined 3.5% from the same time period last year.
Global Cash views the single-digit decline as welcome news, but revenue stabilization is at least several quarters away, Scott Betts, the company’s president and CEO, told analysts during a Nov. 4 conference call to discuss third-quarter earnings.
Reduction in consumer credit card use continues a trend from previous quarters, Betts acknowledged. Global Cash does not expect to see a strong recovery in credit card volume in the next year.
The company appears optimistic about upcoming contract renewals, however. “We believe we are making very positive progress with all our current 2010 renewals, though not always at the price we would like,” Betts said.
Last quarter, Betts acknowledged the loss of a contract with Harrah’s Entertainment (see story).
Global Cash is still on track to beta test Quickticket, which enables casino patrons to have the choice of withdrawing cash or obtaining a slot ticket when conducting an ATM transaction. The company is completing a conversion to a new bank sponsor and wants to wait until after the holiday season to test the system.
Global Cash reported net income of $4.9 million for the quarter ended Sept. 30, down 39.5% from $8.1 million during the same period last year. Revenues fell 7.4%, to $152.1 million from $164.3 million.
ATM revenues totaled $79.7 million, down 2.2% from $81.5 million. Check-service revenues dropped 31.9%, to $6.4 million from $9.4 million. Cash-advance revenues totaled $60.5 million, down 13.2% from $69.7 million.
In an analyst report, Tim Willi from Wells Fargo Securities LLC wrote that, while declines slowed in the quarter, “they were marginal and lagged our expectations.”
Global Cash’s stock has modest upside potential, depending on several factors such as how the company recovers from losing Harrah’s, a conservative outlook for domestic gambling activity and the uncertainty surrounding an MGM Grand contract renewal amid increased competition, Willi wrote.
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