TORONTO, Sept. 15, 2017 /CNW/ - The Stars Group Inc.
(Nasdaq: TSG; TSX: TSGI) today updated its previously announced
guidance ranges for the full year 2017 and announced the prepayment
of an additional $75 million of
second lien debt. All dollar ($) amounts are in U.S. dollars.
"It's been a great three months since joining The Stars Group
and the team is energized," said Brian
Kyle, Chief Financial Officer. "As I am now fully familiar
with our forecasting and given our solid trends across all business
lines, which reinforce our conviction and commitment to our
strategy, it is now appropriate to update our financial guidance.
In addition, given our progress to date, we are also able to make
another meaningful prepayment of our debt."
Full Year Guidance
Based on year-to-date performance, The Stars Group has updated
its previous full year 2017 guidance and now expects:
- Revenues of between $1,285
and $1,315 million, as compared to the prior range of
$1,200 and $1,260 million. The
revised guidance implies 2017 revenue growth of between 11% and 14%
compared to the prior year and includes an expectation that
real-money online poker revenue will be slightly higher
year-over-year as The Stars Group, among other things, continues to
experience a very positive consumer response to Stars Rewards,
which was rolled out globally in July;
- Adjusted EBITDA of between $590 and $610 million, as compared to the prior
range of $560 and $580 million. The
revised guidance implies 2017 Adjusted EBITDA growth of between 13%
and 16% compared to prior year;
- Adjusted Net Earnings of between $445 and $469 million, as compared to the prior
range of $413 and $437 million and as
compared to approximately $367
million in 2016; and
- Adjusted Net Earnings per Diluted Share of between
$2.17 and $2.31, as compared to the
previous range of between $2.01 and
$2.15 and as compared to $1.88
in 2016.
These estimates reflect management's view of current and future
market and business conditions, including assumptions of (i)
anticipated negative operating conditions in Poland primarily related to constraints on
processing payments in that jurisdiction, the cessation of
real-money online poker in Australia on September
11, 2017, and the cessation of real-money online gaming in
Colombia on July 17, 2017, (ii) the introduction of Stars
Rewards, The Stars Group's previously disclosed cross-vertical
customer loyalty program, (iii) no other material adverse
regulatory events and (iv) no material foreign currency exchange
rate fluctuations, particularly against the Euro which is the
primary depositing currency of The Stars Group's customers, that
could impact customer purchasing power as it relates to The Stars
Group's U.S. dollar denominated product offerings. Such guidance is
also now based on a Euro to U.S. dollar exchange rate of 1.18 to
1.00 and all other currencies at their average exchange rate for
the month of August, in each case for the remainder of 2017,
unaudited expected results and certain accounting assumptions.
Debt Prepayment
Next week, The Stars Group will prepay without penalty an
additional $75 million under its
second lien term loan using cash on the balance sheet and cash flow
from operations. Following this prepayment, The Stars Group
will have repaid $115 million of its
second lien debt thus far in 2017, resulting in a total reduction
in annual interest expense of approximately $9.5 million, and reducing the principal balance
of the second lien term loan to $95
million.
About The Stars Group
The Stars Group is a leading provider of technology-based
products and services in the global gaming and interactive
entertainment industries. Through its Stars Interactive division,
The Stars Group ultimately owns gaming and related consumer
businesses and brands, including PokerStars, PokerStars Casino,
BetStars, Full Tilt, StarsDraft, and the PokerStars Championship,
PokerStars Festival and PokerStars Megastack live poker tour brands
(incorporating aspects of the European Poker Tour, PokerStars
Caribbean Adventure, Latin American Poker Tour and the Asia Pacific
Poker Tour). These brands together have more than 113 million
registered customers globally and collectively form the largest
poker business in the world, comprising online poker games and
tournaments, sponsored live poker competitions, marketing
arrangements for branded poker rooms in popular casinos in major
cities around the world, and poker programming and content created
for television and online audiences. The Stars Group, through
certain of these brands, also offers non-poker gaming products,
including casino, sportsbook and daily fantasy sports. The Stars
Group, through certain of its subsidiaries, is licensed or approved
to offer, or offers under third party licenses or approvals, its
products and services in various jurisdictions throughout the
world, including in Europe, both
within and outside of the European Union, the Americas and
elsewhere. In particular, PokerStars is the world's most licensed
online gaming brand, holding licenses or related operating
approvals in 17 jurisdictions.
Cautionary Note Regarding Forward Looking Statements
This news release contains forward-looking statements and
information within the meaning of the Private Securities Litigation
Reform Act of 1995 and applicable securities laws, including,
without limitation, certain financial and operational expectations
and projections, such as full year 2017 financial guidance,
and certain future operational and growth plans and strategies.
Forward-looking statements and information can, but may not always,
be identified by the use of words such as "anticipate", "plan",
"continue", "estimate", "expect", "may", "will", "project",
"predict", "potential", "targeting", "intend", "could", "might",
"would", "should", "believe", "objective", "ongoing", "imply" and
similar references to future periods or the negatives of these
words and expressions. These statements and information, other than
statements of historical fact, are based on management's current
expectations and are subject to a number of risks, uncertainties,
and assumptions, including market and economic conditions, business
prospects or opportunities, future plans and strategies,
projections, technological developments, anticipated events and
trends and regulatory changes that affect us, our customers and our
industries. Although The Stars Group and management believe the
expectations reflected in such forward-looking statements and
information are reasonable and are based on reasonable assumptions
and estimates, there can be no assurance that these assumptions or
estimates are accurate or that any of these expectations will prove
accurate. Forward-looking statements and information are inherently
subject to significant business, regulatory, economic and
competitive risks, uncertainties and contingencies that could cause
actual events to differ materially from those expressed or implied
in such statements. Specific risks and uncertainties include, but
are not limited to: the heavily regulated industry in which The
Stars Group carries on business; interactive entertainment and
online and mobile gaming generally; current and future laws or
regulations and new interpretations of existing laws or regulations
with respect to online and mobile gaming; potential changes to the
gaming regulatory framework; legal and regulatory requirements;
ability to obtain, maintain and comply with all applicable and
required licenses, permits and certifications to distribute and
market its products and services, including difficulties or delays
in the same; significant barriers to entry; competition and the
competitive environment within The Stars Group's addressable
markets and industries; impact of inability to complete future
acquisitions or to integrate businesses successfully; ability to
develop and enhance existing products and services and new
commercially viable products and services; ability to mitigate
foreign exchange and currency risks; ability to mitigate tax risks
and adverse tax consequences, including, without limitation, the
imposition of new or additional taxes, such as value-added and
point of consumption taxes, and gaming duties; risks of foreign
operations generally; protection of proprietary technology and
intellectual property rights; ability to recruit and retain
management and other qualified personnel, including key technical,
sales and marketing personnel; defects in The Stars Group's
products or services; losses due to fraudulent activities;
management of growth; contract awards; potential financial
opportunities in addressable markets and with respect to individual
contracts; ability of technology infrastructure to meet applicable
demand; systems, networks, telecommunications or service
disruptions or failures or cyber-attacks; regulations and laws that
may be adopted with respect to the Internet and electronic commerce
and that may otherwise impact The Stars Group in the jurisdictions
where it is currently doing business or intends to do business;
ability to obtain additional financing on reasonable terms or at
all; refinancing risks; customer and operator preferences and
changes in the economy; dependency on customers' acceptance of its
products and services; consolidation within the gaming industry;
litigation costs and outcomes; expansion within existing and into
new markets; relationships with vendors and distributors; and
natural events. Other applicable risks and uncertainties include,
but are not limited to, those identified in The Stars Group's
Annual Information Form for the year ended December 31, 2016, including under the heading
"Risk Factors and Uncertainties", and in The Stars Group's
management's discussion and analysis for the three and six months
ended June 30, 2017 ("Q2 2017
MD&A"), including under the headings "Risk Factors and
Uncertainties", "Limitations of Key Metrics and Other Data" and
"Key Metrics", each available on SEDAR at www.sedar.com, EDGAR at
www.sec.gov and The Stars Group's website at www.starsgroup.com,
and in other filings that The Stars Group has made and may make
with applicable securities authorities in the future. Investors are
cautioned not to put undue reliance on forward-looking statements
or information. Any forward-looking statement or information speaks
only as of the date hereof, and The Stars Group undertakes no
obligation to correct or update any forward-looking statement,
whether as a result of new information, future events
or otherwise, except as required by applicable law.
Non-IFRS and Non-U.S. GAAP Measures
This news release references non-IFRS and non-U.S. GAAP
financial measures, including Adjusted EBITDA, Adjusted Net
Earnings and Adjusted Net Earnings per Diluted Share. The Stars
Group believes these non-IFRS and non-U.S. GAAP financial measures
will provide investors with useful supplemental information about
the financial performance of its business, enable comparison of
financial results between periods where certain items may vary
independent of business performance, and allow for greater
transparency with respect to key metrics used by management in
operating its business. Although management believes
these financial measures are important in evaluating The Stars
Group, they are not intended to be considered in isolation or as a
substitute for, or superior to, financial information prepared and
presented in accordance with IFRS or U.S. GAAP. They are not
recognized measures under IFRS or U.S. GAAP and do not have
standardized meanings prescribed by IFRS or U.S. GAAP. These
measures may be different from non-IFRS and non-U.S. GAAP financial
measures used by other companies, limiting its usefulness for
comparison purposes. Moreover, presentation of certain of these
measures is provided for year-over-year comparison purposes, and
investors should be cautioned that the effect of the adjustments
thereto provided herein have an actual effect on The Stars Group's
operating results. The Stars Group uses the following non-IFRS and
non-U.S. GAAP measures in this release:
Adjusted EBITDA means net earnings (loss) before interest and
financing costs, income taxes, depreciation and amortization,
stock-based compensation, restructuring and certain other
items.
Adjusted Net Earnings means net earnings (loss) before interest
accretion, amortization of intangible assets resulting from
purchase price allocation following acquisitions, deferred income
taxes, stock-based compensation, restructuring, foreign exchange,
and certain other items. Adjusted Net Earnings per Diluted Share
means Adjusted Net Earnings divided by Diluted Shares. Diluted
Shares means the weighted average number of common shares on a
fully diluted basis, including options, other equity-based awards,
warrants and convertible preferred shares. The effects of
anti-dilutive potential common shares are ignored in calculating
Diluted Shares. See note 5 to The Stars Group's unaudited interim
condensed consolidated financial statements for the three and six
months ended June 30,
2017. For the purposes of the full year 2017 financial
guidance provided in this release, Diluted Shares equals between
203,000,000 and 205,000,000 for the high and low ends of the
Adjusted Net Earnings per Diluted Share range, respectively.
The Stars Group has not provided a reconciliation of the
non-IFRS measures to the nearest IFRS measures included in its full
year 2017 financial guidance provided in this release, including
Adjusted EBITDA, Adjusted Net Earnings and Adjusted Net Earnings
per Diluted Share, because certain reconciling items necessary to
accurately project such IFRS measures, particularly net earnings
(loss), cannot be reasonably projected due to a number of factors,
including variability from potential foreign exchange fluctuations
impacting financial expenses, and the nature of other non-recurring
or one-time costs (which are excluded from non-IFRS measures but
included in net earnings (loss)), as well as the typical
variability arising from the audit of annual financial statements,
including, without limitation, certain income tax provision
accounting, and related accounting matters.
For additional information on The Stars Group's non-IFRS
measures, see the Q2 2017 MD&A, including under the headings
"Management's Discussion and Analysis" and "Selected Financial
Information—Other Financial Information".
SOURCE The Stars Group Inc.