Canadian-based gambling group Great Canadian Gaming Corporation released its fourth-quarter earnings and full-year ended December 31, 2020, financial report, stressing the material impact of the coronavirus outbreak.
Suspension of Gaming Venues
Great Canadian noted the temporary suspension of all of its gaming venues for the majority of the year was the reason behind the decrease in revenues, adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), cash flows, and shareholder earnings when compared to the figures produced in the 12-month period preceding this one.
“Due to the continuing volatility of the Pandemic, the majority of the Company’s properties were closed as at December 31, 2020.”Terrance Doyle, Interim CEO, Great Canadian Gaming Corporation
Even at properties that were allowed to re-open in the fourth quarter like the Ontario and Atlantic ones, revenues from gaming were crippled by the severe restrictions imposed on operations with regards to mitigating risks to public safety.
Temporary property suspensions resulted in decreased adjusted EBITDA for the fourth quarter, so for the full year, which in turn resulted in negative free cash flow. The free cash flow reading was also impacted by increased interest payments and partially offset by lower income taxes.
Cash Outflow in Q4, Cash Inflow in 2020
Great Canadian posted Q4 2020 negative free cash flow of C$97.4 million, more than 4 times higher compared to the C$23.2 million it posted in the fourth quarter of 2019. For the full 2020 negative free cash flow was C$326.4 million, 6 times higher than the C$54.5 million in 2019.
To finance the negative balance in free cash flow, Great Canadian utilized its existing credit facilities and remaining cash balances.
The decrease in cash-generating activities due to the prolonged property closures resulted in a change from a cash inflow to cash outflow balance, C$37.1 million in the fourth quarter of 2020, compared to C$19.9 million inflow in Q4 2019. The change to cash outflow was also partially affected by a decrease in capital expenditure related to the timing of construction development projects in Ontario.
The full-year reading posted C$105.1 million cash inflow, compared to a cash outflow of C$7.1 million in 2019, with the change from outflow to inflow due to C$189 million from senior unsecured debentures, increased borrowing, lower capital expenditures in Ontario, and lower common share repurchases. The reading was also partially offset by the slump in cash generated from gaming operations.
Regarding the company’s outlook, interim chief executive officer Terrance Doyle noted the company’s progress with regards to construction projects, the completion of the casino portion at Pickering Casino Resort, the continuing work on its gaming amenities, as well as Casino Woodbine and Great Blue Heron projects.
Doyle also pointed out the amendments achieved in the fourth quarter with Great Canadian lenders to continue to temporarily waive compliance requirements with the company’s financial and operational covenants.
“As at December 31, 2020, Great Canadian continues to remain in stable capital and liquidity position with a cash balance of $434.8 million and $972.3 million of available undrawn credit on its credit facilities, subject to applicable covenants.”Terrance Doyle, Interim CEO, Great Canadian Gaming Corporation