TNA - Evergreen Gaming Corporation (Washington Casino Company)

Discussion in 'Stock picks and trading strategies' started by goldismyfriend, Oct 7, 2017.

  1. Hello Everyone,

    Been many years since I've been on the site and I was wondering what people's thoughts were on casino & gaming companies(generally) and specifically on Evergreen Gaming Corporation(TNA).

    It trades on the TSX Venture but I figured there has to be some people here who also trade on that exchange. They unfortunately don't have a dual US listing at the moment.

    Here is a quick DD I did on the company and opinions would be much appreciated. All numbers are from SEDAR which is the Canadian version of EDGAR. I have also attached a 5 year chart of the company year end financials 2012-2017

    Evergreen Gaming Corporation Q2 Results(Ending June 30th 2017)
    All Information Can Be Found On SEDAR – www.sedar.com

    Price: $0.13
    Common Shares: 124,716,865
    Insider/Institutional Holdings: 95,967,855 or 77.51%
    Retail Shares Available: 28,749,010 or 22.49%

    Financials + MD&A – All in US Dollars

    Financials

    ASSETS - USD
    Cash: $4,499,410
    Restricted Cash: $2,283,216
    Other Assets: $176,317
    Accounts Receivable: $116,259
    Inventory: $176,643
    Deposits: $10,551
    Game License: $63,267
    Trademarks: $1,185,000
    Goodwill: $6,435,481
    Property & Equipment: $10,549,240
    TOTAL ASSETS: $25,495,384

    LIABILITIES – USD
    Notes Payable(Mortgages): $6,673,081
    Trade Payables: $4,616,249
    Notes Payable: $389,357
    Deferred Tax: $348,000
    TOTAL LIABILITIES: $12,026,687

    Asset/Debt Ratio: 2.12:1

    Note: Pending Sale of Tukwila Casino For $2 million USD - http://www.sterlingrealestate.idxbr...83212/14027-Interurban-Ave-S-Tukwila-WA-98168

    Quarterly Sales Results

    Year - Sales - Net Income – EPS (Earnings Per Share)
    2014 - $30,555,757 - $2,720,669 - $0.02c EPS - Not converted into CAD yet
    2015 - $33,338,543 - $3,933,883 - $0.03c EPS - Not converted into CAD yet
    2016 - $33,326,624 - $1,909,408 - $0.015c EPS - Not converted into CAD yet
    2017(Q1) - $8,229,974 - $337,347 - $0.003c EPS – Not converted into CAD yet
    2017(Q2) - $8,513,288 - $1,047,878 - $0.008c EPS – Not converted into CAD yet

    MD&A Highlights

    Evergreen is in the business of overseeing the gaming operations of its principal U.S. subsidiary, Washington Gaming, Inc. (“WGI”).

    Net revenue for the quarter ended June 30, 2017 was $9,411,453, an increase of $1,025,705 compared to the same period in the prior year. Gaming dollars dropped were 5% higher than the prior year quarter and the hold percentage increased .7%. The income from operations was $1,654,640 compared to $1,134,414 in the prior year quarter. This increase was due to the increase in net revenues offset by an increase in operating expenses of $505,479. The labor and benefit expenses increased due to an increase in the minimum wage and marketing expenses increased to generate more revenue.

    Net income before taxes was $1,564,515 compared to $1,003,841 in the same quarter of 2016, a $560,674 increase. The increase was due to the higher income from operations and lower finance costs due to paying off outstanding indebtedness.

    Working capital at June 30, 2017 was $2,246,239 compared to working capital of $1,744,546 at December 31, 2016. With sustained healthy revenues and ongoing game protection and expense controls, management expects continued profitable operations sufficient to exceed the cash demands necessary for the company to meet its future obligations.

    The Company’s assets at June 30, 2017 totaled $25,495,384 compared to total liabilities of $12,026,687. At December 31, 2016, total assets were $23,922,129 compared to total liabilities of $11,838,378.

    The Company’s cash at June 30, 2017 was $6,782,626, compared to $4,563,587 at December 31, 2016. These amounts include “Restricted Cash” balances of $2,283,216 and $914,071 respectively. “Restricted Cash” balances are jackpot funds held for prizes being offered at the casinos. Cash provided by operating activities for the quarter ended June 30, 2017 was $2,212,808 compared to $892,469 for the quarter ended June 30, 2016.

    The operating results for the quarter ending June 30, 2017 showed a substantial improvement from the quarter ending March 31, 2017. Net revenues increased to $9,411,453 compared to $8,229,974 in the prior quarter. This increase was attributable to an 11% increase in gaming dollars dropped and a .6% increase in the hold percentage. Income from operations increased to $1,654,640 in the second quarter compared to $609,385 in the prior quarter. This was due to the increase in net revenues offset by a $136,224 increase in operating expenses. This was primarily due to an increase in gaming taxes as a result of additional gaming revenue.

    Historically, the Company’s sources of funding have been debt and equity financing and cash flow from operations. As of June 30, 2017, the Company had arm’s length debt of $7,062,438, all related to mortgages, including the acquisition of the Lakewood property. Related party debt totalling $832,553 which was owed to Michels Development for the note from Goldies in Shoreline was paid in full in the second quarter.

    At June 30, 2017, the Company had cash of $6,782,626 and net working capital of $2,246,239. Total debt payments of $926,451 were made during the second quarter. The monthly debt service cash requirement is just under $58,000.

    TNA Photo.jpg
     
  2. Washington State Card Room & Casino Statistics Sheet

    **Note** - As per WSGC website, due to staffing shortages, Q4 2016 is the most recent statistics from card rooms that they have.

    At the end of 2016 there were 65 card room casinos in the state of Washington. Dawn Mangano joined Evergreen Gaming Corporation in June 2017.

    TNA Casinos – Riverside, Palace, Goldies, Chips,
    Dawn Mangano Prior Casinos – Macau, Caribbean(Casino & Card Room)


    Statistics Link: http://www.wsgc.wa.gov/docs/statistics/cardroom-gross/2016-4.pdf

    Out of 65, this is where TNA’s and Dawn’s casinos ranked:

    Dawn’s Prior Casinos:
    Macau Casino - #3 of 65
    Caribbean Casino - #8 of 65
    Caribbean Card Room - #42 of 65


    Evergreen Gaming Casinos:
    Riverside Casino - #6 of 65
    Goldies Casino - #11 of 65
    Palace Casino - #16 of 65
    Chips Casino - #23 of 65


    What this shows is Dawn Mangano was able to run casinos quite well and out of the 65 listed on the sheet, two of them placed under 10. Compared to Evergreen Gaming which only had one placed under 10. Three quarters have gone by and things could be different, but I believe Dawn will play a huge role in Evergreen Gaming’s growth.

    Another important note since some individuals have been worried about online gambling being a hindrance to Evergreen’s growth:

    Internet Gambling Prohibited In Washington: http://www.wsgc.wa.gov/publications/brochures/5-165-internet-gambling-brochure.pdf
     
  3. Nice article from Simply Wallstreet. Looking forward to seeing TNA's Q3 results end of November and by then their $2 million Tukwila property sale (currently pending) should be completed. I am estimating that the company will earn at least $500,000 US profit. Their Q3 is always a bit slower and I am being very conservative on the earnings, especially after making over $1 million USD last quarter. Their Q1 profit $377,000 net income but that was also hurt by Tukwila still in operation at the time.

    https://simplywall.st/news/2017/10/29/evergreen-gaming-and-other-great-cheap-stocks/

    Evergreen Gaming Corporation (TSXV:TNA)
    Evergreen Gaming Corporation engages in the gaming operations in the United States. Evergreen Gaming is run by CEO Dawn Mangano. With the company’s market capitalisation at CAD CA$17.95M, we can put it in the small-cap group

    TNA’s shares are currently trading at -22% beneath its true level of $0.17, at a price tag of $0.14, based on my discounted cash flow model. This mismatch signals an opportunity to buy TNA shares at a discount. In addition to this, TNA’s PE ratio stands at 7.2x compared to its hotels, restaurants and leisure peer level of 19.4x, indicating that relative to its comparable company group, we can invest in TNA at a lower price. TNA is also in good financial health, with short-term assets covering liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 52% has been diminishing for the past few years demonstrating TNA’s ability to pay down its debt.
     
  4. Evergreen Gaming Corporation Q3 Results(Ending September 30th 2017)
    All Information Can Be Found On SEDAR – www.sedar.com

    Previous Closing Price: $0.14
    Common Shares: 124,716,865
    Insider/Institutional Holdings: 95,967,855 or 77.51%
    Retail Shares Available: 28,749,010 or 22.49%

    Financial Results (All Numbers In USD)

    ASSETS
    Property, Plant & Equipment: $10,531,011
    Goodwill: $6,435,481
    Trademarks: $1,185,000
    Game Licenses: $60,667
    Deposits: $27,110
    Inventories: $168,011
    Accounts Receivable: $37,196
    Other Assets: $224,477
    Cash, restricted: $2,758,138
    Cash: $5,444,510
    Total Assets: $26,871,601 USD

    LIABILITIES
    Deferred Tax Liabilities: $348,000
    Notes Payable: $6,573,585
    Other Payables: $5,460,159
    Notes Payable: $393,858
    Total Liabilities: $12,775,602 USD

    3 Month Results USD
    Revenue: $8,554,697
    Net Income: $627,304

    9 Month Results USD
    Revenue: $26,196,124
    Net Income: $2,012,248

    9 Month Revenue convert into CAD and Earnings Per Share
    USD-CAD-1.27 as of November 16th 2017
    $2,012,248 X 1.27 = $2,555,554.90 CAD
    $2,555,554.90 / 124,716,865(common shares) = $0.0205 over 9 months

    1. SUBSEQUENT EVENTS
      The company has entered into an agreement to sell the real property where Palace Tukwila was located for $1,950,000. The buyer has made a $50,000 earnest money deposit and the sale is supposed to close on or before November 30, 2017. The company has mortgages on the property with balances of $1,054,956 as of September 30, 2017 which would be paid in full if the sale is completed. The book value of the property being sold is $1,434,184 as of September 30, 2017.
    **NOTE** - Tukwila was closed February 4th and has not generated any revenue since then. This will reduce liabilities substantially and give the company additional operating capital.

    TNA.V MD&A Highlights

    Overall Performance Current quarter compared to prior year

    Net revenue for the quarter ended September 30, 2017 was $8,554,697, an increase of $108,190 compared to the same period in the prior year. Gaming dollars dropped were 11.3% higher than the prior year quarter but that increase was offset by a lower hold percentage of 1.8%. The income from operations was $1,042,536 compared to $971,941 in the prior year quarter. This increase was due to the increase in net revenues partially offset by an increase in operating expenses of $37,595. The labor and benefit expenses increased due to an increase in the minimum wage, but that increase would have been even higher except for the closing of Palace Tukwila on February 4, 2017.

    Net income before taxes was $967,761 compared to $836,569 in the same quarter of 2016, a $131,192 increase. The increase was due to the higher income from operations and lower finance costs due to paying off outstanding indebtedness.

    Working capital at September 30, 2017 was $2,778,315 compared to working capital of $1,744,546 at December 31, 2016. With sustained healthy revenues and ongoing game protection and expense controls, management expects continued profitable operations sufficient to exceed the cash demands necessary for the company to meet its future obligations.

    The Company’s assets at September 30, 2017 totaled $26,871,601compared to total liabilities of $12,775,602. At December 31, 2016, total assets were $23,922,129 compared to total liabilities of $11,838,378.

    The Company’s cash at September 30, 2017 was $8,202,648, compared to $4,563,587 at December 31, 2016. These amounts include “Restricted Cash” balances of $2,758,138 and $914,071 respectively. “Restricted Cash” balances are jackpot funds held for prizes being offered at the casinos. Cash provided by operating activities for the quarter ended September 30, 2017 was $1,615,226 compared to $471,994 for the quarter ended September 30, 2016.

    Additional Information Can Be Found On SEDAR
     
  5. http://www.horizonford.com/seattle-ford-moving

    http://www.sterlingrealestate.idxbr...83212/14027-Interurban-Ave-S-Tukwila-WA-98168

    Comparing the address of the Tukwila listing and the new location of this Ford dealership, they are identical.

    From TNA.V’s the most recent MD&A (found on Sedar)

    Page 6:

    On August 5, 2015, the Company refinanced the first position note payable to a third party secured by the property at 14027 Interurban Ave S. Tukwila, WA. A new 10-year $720,000 loan at Banner Bank carries a 5% fixed interest rate for the first five years, with monthly payments of $7,659. In years 6-10, the rate will be calculated based on the Bullet Rate for the 5-year FHLB Fixed Rate Advances (the “Index”) plus a margin of three percentage points (3.0%). If the Index rate changes, the amount or number of monthly payments and/or the final payment amounts may change to accommodate the change in interest rate. The interest rate may not fall below the initial 5%, and its maximum is limited by law. This action pays off the 9.5% interest rate loan that was in place, reducing the monthly payment by $1,252 per month.


    Page 1:

    The Company has entered into an agreement to sell the real property where Palace Tukwila was located for $1,950,000. The buyer has made a $50,000 earnest money deposit and the sale is supposed to close on or before November 30, 2017.
     
  6. Year Revenue($USD) Profit/Loss $USD) Assets ($USD) Liabilities ($USD) Asset/Debt Ratio
    2012(Q1-Q4) $25,958,829 -$445,775 $15,736,142 $13,561,034 1.16
    2013(Q1-Q4) $28,341,631 $1,344,683 $15,870,890 $12,351,098 1.28
    2014(Q1-Q4) $30,555,757 $2,720,669 $18,143,126 $11,902,666 1.52
    2015(Q1-Q4) $33,338,543 $3,933,883 $19,613,905 $9,439,562 2.08
    2016(Q1-Q4) $33,326,624 $1,909,408 $23,922,129 $11,838,378 2.02
    2017(Q1-Q3) $23,451,331 $2,012,248 $26,871,601 $12,775,602 2.10

    Notes: 1) 2017 Revenue Higher Than 2016 Revenue Over 9 Months
    2) 124,716,865 Common Shares With 77.51% Insider Held
    3) Tukwila Casino Sold For $1.95US To Horizon Ford. Property unused for most of 2017
     
  7. Evergreen sells Tukwila property for $1.95M (U.S.)

    2017-12-13 15:48 MT - News Release


    An anonymous director reports

    SALE OF TUKWILA REAL ESTATE

    Evergreen Gaming Corp. has sold real estate located at 14027 Interurban Ave. South, Tukwila, Wash., 98168. This was the location of the casino that ceased operations in February of 2017. No revenue-generating use was found for the property after the closure, so it was listed for sale. The sale of real estate closed on Nov. 30, 2017, for $1.95-million (U.S.). The mortgage and a note attached to the property were paid off from the proceeds of the sale.

    © 2017 Canjex Publishing Ltd. All rights reserved.
     
  8. Evergreen sells Tukwila property for $1.95M (U.S.)

    2017-12-13 15:48 MT - News Release


    An anonymous director reports

    SALE OF TUKWILA REAL ESTATE

    Evergreen Gaming Corp. has sold real estate located at 14027 Interurban Ave. South, Tukwila, Wash., 98168. This was the location of the casino that ceased operations in February of 2017. No revenue-generating use was found for the property after the closure, so it was listed for sale. The sale of real estate closed on Nov. 30, 2017, for $1.95-million (U.S.). The mortgage and a note attached to the property were paid off from the proceeds of the sale.

    © 2017 Canjex Publishing Ltd. All rights reserved.
     
  9. January 2018 Article By Simply Wallstreet

    Evergreen Gaming Corporation (TSXV:TNA)


    Evergreen Gaming Corporation engages in the gaming operations in the United States. Evergreen Gaming is headed by CEO Dawn Mangano. It currently has a market cap of CAD CA$21.05M placing it in the small-cap category

    TNA’s stock is now floating at around -69% below its true value of $0.56, at the market price of $0.17, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. Moreover, TNA’s PE ratio is currently around 9x compared to its hospitality peer level of 16.3x, meaning that relative to its comparable set of companies, TNA’s stock can be bought at a cheaper price. TNA is also in great financial shape, with short-term assets covering liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 49% has been diminishing over the past couple of years showing its ability to reduce its debt obligations year on year.

    https://simplywall.st/stocks/ca/mat...gold-shares/news/best-cheap-stock-in-january/
     
  10. Washington Cardroom Stats From June 2017

    This is delayed by a couple quarters, but it shows how well TNA is doing compared to the competitors in the area. TNA owns 4 casinos (Chips, Goldies, Palace, Riverside) and they are placed in the following rank in terms of sales(out of 71 total)

    https://www.wsgc.wa.gov/sites/default/files/public/FY%202017%20Card%20Room%20Report%20vF.PDF

    2 THE PALACE 67-00010 $13,549,539 $0 $13,549,539 $1,354,953
    5 RIVERSIDE CASINO 67-00187 $11,190,876 $0 $11,190,876 $1,119,087
    11 GOLDIE'S SHORELINE CASINO 67-00016 $7,259,130 $0 $7,259,130 $725,914
    18 CHIPS CASINO/LAKEWOOD 67-00020 $5,777,681 $0 $5,777,681 $635,545

    TNA website for details http://www.evergreengaming.com/us/
     
  11. Washington Cardroom Stats From June 2017

    This is delayed by a couple quarters, but it shows how well TNA is doing compared to the competitors in the area. TNA owns 4 casinos (Chips, Goldies, Palace, Riverside) and they are placed in the following rank in terms of sales(out of 71 total)

    https://www.wsgc.wa.gov/sites/default/files/public/FY%202017%20Card%20Room%20Report%20vF.PDF

    2 THE PALACE 67-00010 $13,549,539 $0 $13,549,539 $1,354,953
    5 RIVERSIDE CASINO 67-00187 $11,190,876 $0 $11,190,876 $1,119,087
    11 GOLDIE'S SHORELINE CASINO 67-00016 $7,259,130 $0 $7,259,130 $725,914
    18 CHIPS CASINO/LAKEWOOD 67-00020 $5,777,681 $0 $5,777,681 $635,545

    TNA website for details http://www.evergreengaming.com/us/
     
  12. TNA Earns $1.5 Million USD In Q1 2018

    TNA.V Q1 2018 Results (Ending March 31st 2018)
    All Numbers Are In US Dollars. Information from SEDAR

    Price: $0.20
    Common Shares: 124,716,865
    Insider/Institutional Holdings: 95,967,855 or 77.51%

    Financials

    ASSETS (USD)
    Property & Equipment: $8,916,932
    Goodwill: $6,435,481
    Trademarks: $1,185,000
    Game License: $55,467
    Deposits: $36,678
    Inventories: $170,905
    Receivable: $19,963
    Other Assets: $93,404
    Restricted Cash: $3,326,656
    Cash: $8,431,973
    Total Assets: $28,672,459

    LIABILITIES (USD)
    Deferred Tax: $279,000
    Notes Payable: $5,504,185
    Trade Payable: $6,013,996
    Current Note Payable: $275,647
    Total Liabilities: $12,072,828

    Q1 2018 Performance
    Sales: $10,174,943
    Net Income: $1,482,979

    Earnings per share in Q1: $1,482,979 * 1.30(CAD) / 124,716,865 = $0.0155c EPS

    Prior Quarters - Revenue Breakdown per quarter

    Date – Sales – Net Income

    2014 - $30,555,757 - $2,720,669 USD
    2015 - $33,338,543 - $3,933,883 USD
    2016 - $33,187,853 - $1,909,408 USD
    2017 - $35,609,459 - $3,032,901 USD
    2018(Q1) - $10,174,943 - $1,482,979 USD


    Fair value for TNA.V based on 17 profitable quarters should be around $0.40. However, due to lack of investor relations (marketing), this stock still trades at an astronomical discount.

    Management Discussion Highlights

    Net revenues for the quarter ended March 31, 2018 were $10,174,943, an increase of $1,944,969 compared to the same period in the prior year. Table games revenue increased by approximately $1,381,000 as a result of gaming dollars dropped being 21.1% higher than the same period last year, and the hold percentage was up slightly by .1%. Poker revenue increased by approximately $456,000 as a result of making the Palace Lakewood all poker tables effective February 1, 2018. Operating expenses were $8,245,859 in the quarter ended March 31, 2018 compared to $7,620,589 in the prior year quarter. Labor and benefits expenses decreased slightly by approximately $11,000. This decrease was primarily due to the closure of the Palace Tukwila that took place on February 4, 2017. The decrease was offset by the increase in the minimum wage that went from $11.00 to $11.50 effective January 1, 2018. Marketing and administrative increased approximately $356,000 which was primarily due to marketing expenses increasing approximately $420,000 offset by a decrease in management fees of $75,000. The increase in marketing expenses consisted of $207,000 at the Palace Lakewood and $213,000 at the other locations. The Palace Lakewood increase was the result of promoting the location as an all poker facility. The management expenses decreased as the result of terminating the management agreement with Michels Management Services effective December 31, 2017. Gaming taxes and license expenses increased approximately $215,000 as a result of the increased gaming revenue.

    The Company’s cash at March 31, 2018 was $11,758,629, compared to $10,043,965 at December 31, 2017. These amounts include “Restricted Cash” balances of $3,326,656 and $2,975,946 respectively. “Restricted Cash” balances are jackpot funds held for prizes being offered at the casinos. Cash provided by operating activities for the quarter ended March 31, 2018 was $1,838,039 compared to $1,250,501 for the quarter ended March 31, 2017.

    The Company’s assets at March 31, 2018 totaled $28,672,459 compared to total liabilities of $12,072,828. At December 31, 2017, total assets were $27,062,630 compared to total liabilities of $11,945,978.

    Net revenue increased to $10,174,943 in the quarter ending March 31, 2017 compared to $9,413,335 in the quarter ending December 31, 2017. Gaming dollars dropped increased 3.4% in the current quarter and the hold percentage increased 0.7% compared to the quarter ending December 31, 2017. Operating expenses in the quarter ending March 31, 2018 were $8,245,859 compared to $8,394,959 in the prior quarter. Labor and benefits expense decreased approximately $112,000 in the quarter ending March 31, 2018 compared to the prior quarter. This decrease was primarily due to labor and benefits expense at Palace Lakewood decreasing approximately $154,000 as a result of converting the location to all poker on February 1, 2018.
     
  13. Looks like resistance has hit this stock over the last month despite decent earnings. Starting to unload my position and take the 100%+ gain and purchase AXM.V(AXMIF) and CAF.V(CAFZF) since they are half the price with more potential than TNA.V. Getting two stocks for the price of one is always a good deal and great diversification strategy. What the market has taught us is despite the venture at a three year low, earnings based companies continue to go up. The losses are coming from Marijuana/Crypto and speculative companies that have no capital to work with. Thus buying small caps that generate free cash flow cannot lose in these turbulent times. But AXM being in gold and CAF in coking coal used for steel, these two metals are highly sought after right now.
     

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