The Stars Group Reports First Quarter 2019 Results.
TORONTO: The Stars Group Inc. (NASDAQ: TSG) (TSX: TSGI) today reported its financial results for the first quarter ended March 31, 2019 and provided certain additional highlights and updates. Unless otherwise noted, all dollar ($) amounts are in U.S. dollars.
"During the quarter, we delivered on key components of our 2019 objectives," said Rafi Ashkenazi, The Stars Group's Chief Executive Officer. "As we continue to lay the foundations to deliver sustainable long-term growth across the group, we are also now focused on positioning our new FOX Bet brand as a market leader in the U.S."
"We continued to see growth in most markets in our International segment on a constant currency basis during the quarter, despite challenging operational conditions, the cessation of operations in certain markets and foreign exchange headwinds having a significant impact on our reported results as compared to the first quarter in 2018. Our United Kingdom segment continues to exceed our expectations operationally with record levels of new depositing customers, and an acceleration of growth in QAUs, Stakes and gaming revenue, although this performance was masked in the reported results by a record low Betting Net Win Margin of 5%. In Australia, we are pleased with our performance and continue to build our platform for market share gains," said Mr. Ashkenazi.
"Underlying trends were similar in April and into May across the three segments, but with a significantly higher Betting Net Win Margin in the United Kingdom segment that is above its historical average of 9%. As we look at the remainder of 2019, we see opportunities for improved revenue growth, with a deep pipeline of new products, content and offers, leveraging our talent and skills across segments. Our leading positions in attractive markets, strong brands, technology and operating expertise have been bolstered by the new partnership with FOX Sports and positions us well for long-term growth," concluded Mr. Ashkenazi.
First Quarter 2019 Summary
Consolidated
Three Months Ended March 31,
In thousands of U.S. Dollars
(except percentages and per share amounts)
2019
2018
% Change
Total revenue
580,384
392,891
47.7%
Gross profit (excluding depreciation and amortization)
417,748
312,627
33.6%
Operating income
61,537
113,867
(46.0%)
Net earnings
27,658
74,361
(62.8%)
Adjusted Net Earnings1
105,600
138,762
(23.9%)
Adjusted EBITDA1
195,355
175,022
11.6%
Adjusted EBITDA Margin1
33.7%
44.5%
(24.4%)
Diluted earnings per Common Share ($/Share)
0.10
0.36
(71.6%)
Adjusted Diluted Net Earnings per Share ($/Share)1
0.38
0.67
(42.8%)
Net cash inflows from operating activities
110,385
132,069
(16.4%)
Free Cash Flow1
(37,513)
82,259
(145.6%)
As at
March 31, 2019
December 31, 2018
% Change
Long-term debt - principal
5,439,072
5,566,075
(2.3%)
Long-term debt - carrying value
5,323,705
5,446,958
(2.3%)
Cash - operational
266,513
392,853
(32.2%)
_____________________________
1 Non-IFRS measure. For important information on The Stars Group's non-IFRS measures, see below under "Non-IFRS Measures" and the tables under "Reconciliation of Non-IFRS Measures to Nearest IFRS Measures".
Revenue - Revenue for the quarter increased primarily as a result of the contribution of revenue from Sky Betting & Gaming and BetEasy, as described below.
U.S. Sports Betting - On May 8, 2019, The Stars Group and FOX Sports, a unit of Fox Corporation (Nasdaq: FOXA, FOX), announced plans to launch FOX Bet, the first-of-its-kind national media and sports wagering partnership in the United States. In addition to the commercial agreement of up to 25 years and associated product launches, exclusive trademark, advertising and editorial integration rights and licenses, Fox Corporation also acquired 14,352,331 newly issued common shares in The Stars Group, representing 4.99% of The Stars Group's issued and outstanding common shares, at a price of $16.4408 per share, for aggregate proceeds of approximately $236 million. Prior to the tenth anniversary of the commercial agreement, and subject to certain conditions and applicable gaming regulatory approvals, FOX Sports has the right to acquire up to a 50% equity stake in The Stars Group's U.S. business.
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