Affinity Gaming upbeat despite revenue decline in Q3

Michael Siberling, chief executive of Affinity Gaming, has praised the firm’s performance during the three months to September 30, despite recording a drop in revenue.

Total net revenue in the third quarter was $96.4 million (€89.5 million), down 5.4% from $102 million in the corresponding period last year, due to what the firm said was its “ongoing focus on marketing to more profitable players”.

Operating income increased by 0.7% year-on-year to $9.1 million, although the company was hit by a decline in net income, which dropped by 161.2% to a loss of $1.2 million.

Affinity was also able to post adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $17.7 million during the three months, 6.4% more than last year.

As a result of its performance in Q3, total net revenue for the nine months to the end of September stands at $286.8 million, 4.5% lower than at the same point in 2015.

Operating income is up 11.5% to $33.3 million, with net income also climbing by 42.8% to €3.7 million, and adjusted EBITDA up 9.2% to €57.3 million.

“Consolidated adjusted EBITDA in the third quarter rose 6.4% over last year’s levels as our property management and operating teams continue to successfully drive more profitable gaming play while managing costs which resulted in a 210 basis point year-over-year improvement in adjusted EBITDA margins to 18.4%,” Siberling said.

“Over the last two years, we have successfully executed our strategic plan targeted at significantly improving margins and returns from the company’s operating assets.

“This has been accomplished by rebuilding our executive team with new leadership across most operating departments, executing against a new set of operating principles, simplifying our capital structure and lowering the cost of capital and de-levering the business.

“In particular, our focus on improving the effectiveness of our promotional campaigns and refining our marketing programs is leading to higher margin revenue at our properties, which when combined with process improvements and realised cost efficiencies drove a 6.4% increase in 2016 third quarter adjusted EBITDA to $17.7 million.

“The 2016 third-quarter adjusted EBITDA growth is on top of our 33% growth in 2015 third quarter adjusted EBITDA and marks our eighth consecutive quarter of adjusted EBITDA improvements.”

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