TORONTO, March 27, 2019 /CNW/ - The Stars Group Inc.
(NASDAQ: TSG) (TSX: TSGI) will host its 2019 Investor Day today in
New York City beginning at
8:00 am ET.
The day will include presentations by Executive Chairman
Dave Gadhia, Chief Executive Officer
Rafi Ashkenazi, Chief Financial
Officer Brian Kyle, and other senior
executives who will provide certain highlights and updates,
including potential growth opportunities, medium-term financial and
leverage targets, an update on Sky Betting & Gaming cost
synergies and a first quarter 2019 performance update. Unless
otherwise noted, all dollar ($) amounts are in U.S. dollars.
"The Stars Group is now a diversified global market leader with
what we believe to be leading product offerings and an expansive
geographic reach. Building on this strong foundation, we are
introducing medium-term growth targets as we continue to progress
with our vision to be the world's favorite iGaming destination,"
said Mr. Ashkenazi.
"Looking ahead, we will strive to enhance our leadership
positions within the high-growth markets in which we operate, as
well as leverage the full suite of assets and capabilities across
our businesses to provide what we believe to be the most exciting
and engaging gaming experience to our customers. With powerful
structural growth drivers in our industry, including a broad trend
towards locally licensed online gaming, we believe that as one of
the most licensed online gaming operators in the world, with
proprietary technology that supports a highly scalable business
model with limited capex, we are well-positioned to capitalize on
this trend. We are focused on using our competitive
advantages to continue to deliver strong organic growth and steady
free cash flow generation to support our accelerated deleveraging
plans while driving long-term shareholder value," concluded Mr.
Ashkenazi.
Financial and Leverage Targets
In conjunction with its Investor Day, The Stars Group is
announcing the following financial and leverage target ranges that
it currently believes it has an opportunity to achieve over the
three to five year period from its previously announced full year
2019 financial guidance ranges, as applicable:
- Annual Constant Currency Revenue growth of 8% to 12%;
- Adjusted EBITDA Margin range broadly in line with the implied
Adjusted EBITDA Margin from The Stars Group's 2019 financial
guidance, with fluctuations during the period based on potential
investments in new and existing markets to support growth;
- Annual Adjusted Diluted Net Earnings per Share growth of at
least 10%; and
- Leverage of 3.5x or lower.
Supporting assumptions are detailed below in "Financial and
Leverage Target Assumptions".
Constant Currency Revenue, Adjusted Diluted Net Earnings per
Share, Adjusted EBITDA Margin, and Leverage are non-IFRS measures.
For important information on The Stars Group's non-IFRS measures,
see below under "Non-IFRS Measures".
Sky Betting & Gaming Cost Synergies
The Stars Group has identified incremental recurring cost
synergies beginning in 2020 from its acquisition of Sky Betting
& Gaming and related operational efficiencies across the
International and United Kingdom
segments of approximately $30
million, for a currently expected total of approximately
$100 million per year. The Stars
Group continues to expect related implementation costs to remain at
approximately $84 million, the
majority of which will be incurred in 2019.
First Quarter 2019 Performance Update
With respect to the first quarter of 2019, The Stars Group
currently expects that consolidated revenue and Adjusted EBITDA
will be in-line and consistent with its expectations and
assumptions used in its previously announced 2019 full year
financial guidance. In particular, it expects International segment
revenues of approximately $345 to
$355 million with strong underlying
growth in most markets offset by certain market closures,
challenging operating conditions in other markets, and unfavorable
movements in foreign exchange rates. On a local currency basis, The
Stars Group also expects strong operational trends in the
United Kingdom segment, with
mid-teens growth in Stakes, high double-digit growth in Gaming
revenue and Adjusted EBITDA Margin slightly higher than the prior
year period. The Stars Group expects that Betting Net Win Margin
for the first quarter will be between 6% and 7%, which is at the
lower end of its historical range, primarily due to the success of
its Cheltenham Festival promotions, which contributed to over 20%
growth in QAUs in that segment and which The Stars Group believes
will support its anticipated double-digit United Kingdom revenue growth in the full year
in local currency. The Australia
segment had strong first quarter revenue growth of over 75%
year-over-year in local currency.
The foregoing represent The Stars Group's current estimates as
it relates to the anticipated performance of its three reporting
segments for the first quarter of 2019, including, as it relates to
the United Kingdom and
Australia segments, as if it had
completed the acquisitions of Sky Betting & Gaming and BetEasy
on January 1, 2018. These estimated
anticipated results are based solely on information available to
The Stars Group as of the date of this news release, and are
subject to change.
Live Presentation, Conference Call and Webcast
Details
The Stars Group will host an Investor Day in New York City on Wednesday, March 27, 2019 at 8:00 a.m. ET. Presentations by members of
executive management are expected to conclude at approximately
12:00 p.m. ET.
- This event will be webcast live at approximately 8:00 a.m. ET and can be accessible through
http://www.webcasthd.com/tsg
- Presentation slides will be posted prior to the start of the
event to www.starsgroup.com under The Stars Group, Investor
Relations, Financial and Corporate Information.
Financial and Leverage Targets Assumptions
These unaudited financial and leverage targets reflect
management's view of current and future market and business
conditions, in particular over the next five years, including
certain accounting assumptions and assumptions of: (i) expected
Betting Net Win Margin of approximately 9% (reflecting the
long-term average); (ii) no material changes in the current
challenging operating conditions in certain markets from prior
regulatory changes, including constraints on payment processing,
and no material changes to current expectations with respect to
certain macroeconomic or political events, including Brexit; (iii)
no other material regulatory events or material changes in
applicable taxes or duty rates; (iv) no material change in The
Stars Group's current estimate of its aggregate addressable U.S.
market size of approximately 23 states and $9.3 billion by 2025; (v) no material foreign
currency exchange rate fluctuations, particularly against the Euro,
Great Britain pound sterling and
Australian dollar; (vi) no material impairment or write-down
of the assets to which depreciation and amortization relates; (vii)
no material change in the prevailing EURIBOR or LIBOR rates as at
December 31, 2018 and no material
adverse impact on applicable hedging counterparties; (viii) no
material change in the mix of taxable income by jurisdiction, rate
of corporate tax or tax regimes in the jurisdictions in which The
Stars Group currently operates; (ix) no material change in the
geographies where The Stars Group currently offers its products;
and * no material change in The Stars Group's Diluted Shares.
Such targets are based on a Euro to U.S. dollar exchange rate of
1.135 to 1.00, a Great Britain
pound sterling to U.S. dollar exchange rate of 1.31 to 1.00 and an
Australian dollar to U.S. dollar exchange rate of 0.712 to 1.00,
Diluted Shares of 277,000,000, and certain accounting
assumptions.
About The Stars Group
The Stars Group is a provider of technology-based product
offerings in the global gaming and interactive entertainment
industries. Its brands have millions of registered customers
globally and collectively are leaders in online and mobile betting,
poker, casino and other gaming-related offerings. The Stars Group
owns or licenses gaming and related consumer businesses and brands,
including PokerStars, PokerStars Casino, BetStars, Full Tilt,
BetEasy, Sky Bet, Sky Vegas,
Sky Casino, Sky Bingo, Sky Poker,
and Oddschecker, as well as live poker tour and events brands,
including the PokerStars Players No Limit Hold'em Championship,
European Poker Tour, PokerStars Caribbean Adventure, Latin American
Poker Tour, Asia Pacific Poker Tour, PokerStars Festival and
PokerStars MEGASTACK. The Stars Group is one of the world's most
licensed online gaming operators with its subsidiaries collectively
holding licenses or approvals in 21 jurisdictions throughout the
world, including in Europe,
Australia, and the Americas. The
Stars Group's vision is to become the world's favorite iGaming
destination and its mission is to provide its customers with
winning moments.
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 growth, financial and operational
expectations and projections, such as certain future growth
opportunities, plans and strategies, certain financial items
relating to medium-term financial and leverage targets, expected
cost synergies and implementation costs to realize such synergies,
and expected first quarter 2019 performance results.
Forward-looking statements and information can, but may not always,
be identified by the use of words such as "seek", "anticipate",
"plan", "continue", "estimate", "expect", "may", "will", "project",
"predict", "potential", "targeting", "intend", "could", "might",
"would", "should", "believe", "objective", "ongoing", "imply",
"assumes", "goal", "likely" and similar references to future
periods or the negatives of these words or variations or synonyms
of these words or comparable terminology and similar 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 the assumptions set forth in this news release, market
and economic conditions, business prospects or opportunities,
future plans and strategies, projections, technological
developments, anticipated events and trends and regulatory changes
that affect The Stars Group, its subsidiaries, and its and their
respective customers and 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 as of the date
hereof, there can be no assurance that these assumptions or
estimates are accurate or that any of these expectations will prove
accurate. Forward-looking statements 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: customer and operator preferences and changes in the
economy; reputation and brand growth; competition and the
competitive environment within addressable markets and industries;
macroeconomic conditions and trends in the gaming and betting
industry; ability to predict fluctuations in financial results from
quarter to quarter, including as a result in fluctuations in
Betting Net Win Margin; ability to mitigate tax risks and adverse
tax consequences, including, without limitation, changes in tax
laws or administrative policies relating to tax and the imposition
of new or additional taxes, such as value-added and point of
consumption taxes, and gaming duties; The Stars Group's substantial
indebtedness requires that it use a significant portion of its cash
flow to make debt service payments; impact of inability to complete
future or announced acquisitions or to integrate businesses
successfully, including, without limitation, Sky Betting &
Gaming and BetEasy; an ability to realize all or any of The Stars
Group's estimated synergies and cost savings in connection with
acquisitions, including, without limitation, the acquisition of Sky
Betting & Gaming and the Australian
acquisitions; applicable law; ability to mitigate foreign
exchange and currency risks; legal and regulatory requirements;
potential changes to the gaming regulatory framework; the heavily
regulated industry in which The Stars Group carries on its
business; ability to obtain, maintain and comply with all
applicable and required licenses, permits and certifications to
offer, operate and market its product offerings, including
difficulties or delays in the same; social responsibility concerns
and public opinion; protection of proprietary technology and
intellectual property rights; intellectual property infringement or
invalidity claims; and systems, networks, telecommunications or
service disruptions or failures or cyber-attacks and failure to
protect customer data, including personal and financial
information. These factors are not intended to represent a
complete list of the factors that could affect The Stars Group;
however, these factors as well as 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, 2018, including under
the heading "Risk Factors and Uncertainties", and in its
management's discussion and analysis for the year ended
December 31, 2018 ("2018 Annual
MD&A"), including under the headings "Caution Regarding
Forward-Looking Statements", "Risk Factors and Uncertainties" and
"Non-IFRS Measures, Key Metrics and Other Data", 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 in the future with applicable
securities authorities in the future, should be considered
carefully. Investors are cautioned not to put undue reliance on
forward-looking statements or information. Any forward-looking
statement or information in this news release are expressly
qualified by this cautionary statement. 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 Measures
This news release references non-IFRS financial measures. The
Stars Group believes these non-IFRS financial measures will provide
investors with useful supplemental information about the financial
and operational 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, identifying and evaluating trends, and
making decisions. The Stars Group believes that such non-IFRS
financial measures provide useful information about its underlying,
core operating results and trends, enhance the overall
understanding of its past performance and future prospects and
allow for greater transparency with respect to metrics and measures
used by management in its financial and operational
decision-making.
Although management believes these non-IFRS 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. They are not recognized measures under IFRS and do not have
standardized meanings prescribed by IFRS. These measures may be
different from non-IFRS financial measures used by other companies
any may not be comparable to similar meanings prescribed by other
companies, limiting its usefulness for comparison purposes.
Moreover, presentation of certain of these measures is provided for
period-over-period 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 provides the following non-IFRS measures
in this news release:
Adjusted EBITDA means net earnings before financial expenses,
income taxes expense (recovery), depreciation and amortization,
stock-based compensation, restructuring, net earnings (loss) on
associate and certain other items.
Adjusted EBITDA Margin means Adjusted EBITDA as a proportion of
total revenue.
Adjusted Net Earnings means net earnings before interest
accretion, amortization of intangible assets resulting from
purchase price allocations following acquisitions, stock-based
compensation, restructuring, net earnings (loss) on associate, and
certain other items. In addition, as previously disclosed, The
Stars Group makes adjustments for (i) the re-measurement of
contingent consideration, which was previously included in, and
adjusted for through, interest accretion, but starting with The
Stars Group's interim condensed consolidated financial statements
and related notes for the three and nine months ended September 30, 2018 (the "Q3 2018 Financial
Statements"), it is a separate line item, (ii) the re-measurement
of embedded derivatives and ineffectiveness on cash flow hedges,
each of which were new line items in the Q3 2018 Financial
Statements, and (iii) certain non-recurring tax adjustments and
settlements. Each adjustment to net earnings is then adjusted for
the tax impact, where applicable, in the respective jurisdiction to
which the adjustment relates. Adjusted Net Earnings and any other
non-IFRS measures used by The Stars Group that relies on or
otherwise incorporates Adjusted Net Earnings that was reported for
previous periods have not been restated under the updated
definition on the basis that The Stars Group believes that the
impact of the change to those periods would not be material.
Adjusted Diluted Net Earnings per Share means Adjusted Net
Earnings attributable to the Shareholders of The Stars Group
Inc. divided by Diluted Shares. Diluted Shares means the
weighted average number of common shares of The Stars Group
("Common Shares") on a fully diluted basis, including options,
other equity-based awards such as warrants and any convertible
preferred shares of The Stars Group then outstanding. The
effects of anti-dilutive potential Common Shares are ignored in
calculating Diluted Shares. Diluted Shares used in the calculation
of diluted earnings per share may differ from diluted shares used
in the calculation of Adjusted Diluted Net Earnings per Share where
the dilutive effects of the potential Common Shares differ.
Constant Currency Revenue means IFRS reported revenue for the
relevant period calculated using the prior year's monthly average
exchange rates for its local currencies other than the U.S. dollar.
Currently, The Stars Group provides Constant Currency Revenue for
the International segment and its applicable lines of operations.
It does not currently provide Constant Currency Revenue for the
United Kingdom and Australia segments because The Stars Group
does not have comparative periods for these segments.
Leverage means Net Debt divided by trailing twelve month
Adjusted EBITDA.
Net Debt means total long-term debt less operational cash.
For additional information on certain of The Stars Group's
non-IFRS measures and the reasons why it believes such measures are
useful, see above and the 2018 Annual MD&A, including under the
headings "Management's Discussion and Analysis", "Non-IFRS
Measures, Key Metrics and Other Data", "Segment Results of
Operations" and "Reconciliations".
Key Metrics and Other Data
The Stars Group provides the following key metrics in this news
release:
Stakes means betting amounts wagered on The Stars Group's
applicable online betting product offerings, and is also an
industry term that represents the aggregate amount of funds wagered
by customers within the Betting line of operation for the period
specified.
Betting Net Win Margin means Betting revenue as a proportion of
Stakes.
QAUs for the United Kingdom
reporting segment (which currently includes the Sky Betting &
Gaming business operations only) means quarterly active unique
customers (online and mobile) who have settled a Stake or made a
wager on any betting or gaming product within the relevant period.
The Stars Group defines active unique customer for the United Kingdom reporting segment as a customer
who played at least once on one of its real-money offerings during
the period, and excludes duplicate counting, even if that customer
is active across more than one line of operation.
The Stars Group is also in the process of integrating its recent
acquisitions, as applicable, and implementing its recently changed
operating and reporting segments, and once complete, The Stars
Group may revise or remove currently presented key metrics or
report certain additional or other measures in the future.
For additional information on The Stars Group's key metrics and
other data, see the 2018 Annual MD&A, including under the
headings "Non-IFRS Measures, Key Metrics and Other Data" and
"Segment Results of Operations".
View original
content:http://www.prnewswire.com/news-releases/the-stars-group-provides-highlights-and-performance-update-for-investor-day-300819159.html
SOURCE The Stars Group Inc.