Exhibit 99.1 The Stars Group Reports Fourth Quarter and Full Year 2018 Results; Provides 2019 Full Year Guidance TORONTO, March 6, 2019 – The Stars Group Inc. (NASDAQ: TSG) (TSX: TSGI) today reported its financial results for the fourth quarter and year ended December 31, 2018 and provided 2019 full year financial guidance ranges, as well as certain additional highlights and updates. Unless otherwise noted, all dollar ($) amounts are in U.S. dollars. “2018 was a landmark year for the company,” said Rafi Ashkenazi, The Stars Group’s Chief Executive Officer. “We completed the acquisitions of Sky Betting & Gaming in the U.K. and BetEasy in Australia, extended our licensed footprint to 21 jurisdictions around the world and began laying the foundations to grow our presence in the U.S.,” stated Mr. Ashkenazi. “Our International business saw strong organic growth in the year despite restrictions in certain markets and lapping the initial roll-out of our Stars Rewards program. Our United Kingdom and Australia segments both performed in-line with our expectations during the fourth quarter, and we believe they are currently well-positioned to continue gaining market share in 2019,” said Mr. Ashkenazi. “As we look at 2019 and beyond, we are excited to take advantage of the opportunities ahead of us by leveraging our leading positions in attractive markets, strong brands, technology and operating expertise. We are pleased with our performance in the first two months of the year, underpinning our confidence in our financial guidance for 2019, and we are currently on track to deliver the full $70 million in cost synergies from the acquisition of Sky Betting & Gaming within the current year alone, with potential opportunities for incremental synergies under review,” concluded Mr. Ashkenazi. Fourth Quarter and Full Year 2018 Summary Consolidated Quarter Ended December 31, Year Ended December 31, In thousands of U.S. Dollars (except percentages and per share amounts) 2018 2017 % Change 2018 2017 % Change Total revenue 652,852 360,250 81.2 % 2,029,238 1,312,315 54.6 % Gross profit (excluding depreciation and amortization) 486,815 290,359 67.7 % 1,570,074 1,064,818 47.4 % Operating income 67,090 112,266 (40.2 %) 252,922 447,394 (43.5 %) Net earnings (loss) (38,173 ) 47,175 (180.9 %) (108,906 ) 259,285 (142.0 %) Adjusted Net Earnings ¹ 144,663 111,951 29.2 % 533,948 458,940 16.3 % Adjusted EBITDA ¹ 239,404 147,002 62.9 % 780,949 600,306 30.1 % Adjusted EBITDA Margin ¹ 36.7 % 40.8 % (10.1 %) 38.5 % 45.7 % (15.9 %) Diluted (loss) earnings per Common Share ($/Share) (0.14 ) 0.23 (162.8 %) (0.49 ) 1.27 (138.7 %) Adjusted Diluted Net Earnings per Share ($/Share) ¹ 0.52 0.54 (4.2 %) 2.19 2.25 (2.9 %) Net cash inflows from operating activities 190,537 123,757 54.0 % 559,844 494,600 13.2 % Free Cash Flow ¹ 82,558 84,854 (2.7 %) 222,950 339,882 (34.4 %) As at December 31, 2018 December 31, 2017 % Change Long-term debt - principal 5,566,075 2,453,185 126.9% Long-term debt - carrying value 5,446,958 2,358,569 130.9% Cash - operational 392,853 283,225 38.7% _____________________________ 1 Non-IFRS measure. For important information on The Stars Group’s non-IFRS measures, see below under “Non-IFRS Measures” and the tables under “Reconciliation of Non-IFRS Measures to Nearest IFRS Measures”.
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Exhibit 99.1
The Stars Group Reports Fourth Quarter and Full Year 2018 Results; Provides 2019
Full Year Guidance
TORONTO, March 6, 2019 – The Stars Group Inc. (NASDAQ: TSG) (TSX: TSGI) today reported its financial results for the fourth
quarter and year ended December 31, 2018 and provided 2019 full year financial guidance ranges, as well as certain additional highlights
and updates. Unless otherwise noted, all dollar ($) amounts are in U.S. dollars.
“2018 was a landmark year for the company,” said Rafi Ashkenazi, The Stars Group’s Chief Executive Officer. “We completed the
acquisitions of Sky Betting & Gaming in the U.K. and BetEasy in Australia, extended our licensed footprint to 21 jurisdictions around
the world and began laying the foundations to grow our presence in the U.S.,” stated Mr. Ashkenazi.
“Our International business saw strong organic growth in the year despite restrictions in certain markets and lapping the initial roll-out
of our Stars Rewards program. Our United Kingdom and Australia segments both performed in-line with our expectations during the
fourth quarter, and we believe they are currently well-positioned to continue gaining market share in 2019,” said Mr. Ashkenazi.
“As we look at 2019 and beyond, we are excited to take advantage of the opportunities ahead of us by leveraging our leading positions
in attractive markets, strong brands, technology and operating expertise. We are pleased with our performance in the first two months
of the year, underpinning our confidence in our financial guidance for 2019, and we are currently on track to deliver the full $70 million
in cost synergies from the acquisition of Sky Betting & Gaming within the current year alone, with potential opportunities for incremental
synergies under review,” concluded Mr. Ashkenazi.
Fourth Quarter and Full Year 2018 Summary
Consolidated
Quarter Ended December 31, Year Ended December 31,
In thousands of U.S. Dollars
(except percentages and per share amounts) 2018 2017
%
Change 2018 2017
%
Change
Total revenue 652,852 360,250 81.2 % 2,029,238 1,312,315 54.6 %
As at December 31, 2018 December 31, 2017 % Change
Long-term debt - principal 5,566,075 2,453,185 126.9%
Long-term debt - carrying value 5,446,958 2,358,569 130.9%
Cash - operational 392,853 283,225 38.7%
_____________________________ 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 and year increased primarily as a result of the contribution of revenue from Sky Betting &
Gaming and BetEasy. Revenue for the year was also driven by growth in the International segment, primarily through the
continued development of its real-money online casino and sports betting offerings.
Debt and Cash – During the quarter, The Stars Group fully repaid the $100 million outstanding on its revolving credit facility,
ending the year with approximately $393 million in operational cash and $5.45 billion in of debt on its balance sheet, resulting
in Net Debt of $5.05 billion. In February 2019, The Stars Group continued to reduce its debt by prepaying $100 million on its
first lien term loans using cash on its balance sheet.
Kentucky – At the end of December, the Kentucky Court of Appeals ruled in The Stars Group’s favor and reversed in its
entirety the $870 million judgment issued against it by a trial court judge in December 2015 under a centuries old statute and
relating to alleged losses by Kentucky residents who played real-money online poker on PokerStars’ website during a period
between 2006 and 2011. The Supreme Court of Kentucky is currently considering whether to hear the Commonwealth’s appeal
of the reversal.
U.S. Sports Betting – In the second half of 2018, following the U.S. Supreme Court decision relating to sports betting, The
Stars Group entered into various market access agreements with Mount Airy Casino and Eldorado Resorts, Inc. (NASDAQ:
ERI) which, when combined with its existing market access deal in New Jersey with Resorts Casino Hotel, gives The Stars
Group potential access to 13 states. The Stars Group also launched its BetStars online sports betting brand in New Jersey and
became an authorized gaming operator of the NBA.
International
Quarter Ended December 31, Year Ended December 31,
____________________________ 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”.
2 Other revenue includes $1.0 million and $2.0 million for the quarter and year ended December 31, 2018, respectively, that The Stars
Group excluded from its consolidated results as it related to certain non-gaming related transactions with the United Kingdom segment.
Poker – Poker revenue slightly increased for the year, in-line with expectations, and showed overall resiliency against
continued headwinds, which primarily negatively impacted the quarter, including foreign exchange fluctuations, reduced
deposits by customers in certain markets as a result of local restrictions on some methods of payment processing and on certain
methods of downloading The Stars Group’s poker applications, as well as increased cross-selling of customers to The Stars
Group’s online casino offerings. Poker revenue in 2018 also continued to see the positive impact of shared poker liquidity
across France, Spain and Portugal, but was offset by exiting certain markets, such as Australia, and lapping the launch of the
Stars Rewards loyalty program.
Gaming and Betting – Gaming and Betting revenue for the quarter and year both increased primarily as a result of product
and content improvements, including, with respect to Gaming revenue, through the introduction of over 350 new casino games
during the year, the launch of its real-money online casino and sports betting offerings in certain new markets and the continued
success of cross-selling customers from poker to casino.
Customers – QAUs decreased primarily due to reduced activity in certain markets as a result of local restrictions on some
methods of payment processing and on certain methods of downloading The Stars Group’s poker applications.
United Kingdom
Quarter Ended December 31, Year Ended December 31,
In thousands of U.S. Dollars (except otherwise
noted) 2018 2017
%
Change 2018 2017
% Change
Stakes 1,289,374 — — 2,511,228 — —
Betting Net Win Margin (%) 10.1 % — — 8.6 % — —
Revenue
Poker 3,045 — — 5,929 — —
Gaming 84,164 — — 157,482 — —
Betting 130,732 — — 215,921 — —
Other 7,810 — — 14,799 — —
Total revenue 225,751 — — 394,131 — —
Quarterly Active Uniques (millions) 1.9 — — — — —
Quarterly Net Yield ($/QAU) 116 — — — — —
Gross profit (excluding depreciation and
amortization) 153,880 — — 275,106 — —
Gross profit margin (%) 68.2 % — — 69.8 % — —
General and administrative 135,326 — — 240,023 — —
____________________________ 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”. 2 Sales and marketing includes $1.0 million and $2.0 million for the quarter and year ended December 31, 2018, respectively, that The
Stars Group excluded from its consolidated results as it related to certain non-gaming related transactions with the International segment.
Revenue – Revenue for the quarter was positively impacted by a high Betting Net Win Margin as compared to the historical
long-term average of approximately 9%, which was driven by the mix of Stakes across different sporting events and bet types
throughout the quarter as such sporting events and bet types can have different average Betting Net Win Margins. The
comparable prior year period, which was before The Stars Group’s acquisition of Sky Betting & Gaming, saw a sustained run
of operator-favorable sporting results, leading to a high Betting Net Win Margin of 14.0%.
Customers – Growth in QAUs and Stakes remained strong for the quarter primarily driven by Sky Bet as momentum from the
2018 FIFA World Cup and start of the English Premier League season continued into the period. QAUs also benefited from
the continued roll-out of personalized promotions and new and exclusive content across the Sky Gaming brands.
Australia
Quarter Ended December 31, Year Ended December 31,
In thousands of U.S. Dollars (except otherwise
noted) 2018 2017
%
Change 2018 2017
% Change
Stakes 877,338 — — 2,570,502 — —
Betting Net Win Margin (%) 8.2 % — — 7.6 % — —
Revenue
Betting 71,542 — — 196,101 — —
Other 829 829
Total revenue 72,371 — — 196,930 — —
Quarterly Active Uniques (millions) 0.30 — — — — —
_____________________________ 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 was marginally impacted by a lower Betting Net Win Margin as compared to the historical
long-term average of approximately 8.5% which was due to a combination of operator-unfavorable sports results as well as
promotional spend relating to the migration of William Hill Australia customers to the BetEasy platform.
Customers – The Stars Group’s migration of William Hill Australia customers to the newly rebranded BetEasy platform
(formerly CrownBet) continued with approximately 85% of customers successfully migrated by the end of the quarter.
For additional information regarding The Stars Group’s reporting segments and major lines of operations, please see The Stars Group’s
consolidated financial statements for the year ended December 31, 2018 (the “2018 Annual Financial Statements”), including note 7
therein, and management’s discussion and analysis thereon (the “2018 Annual MD&A”).
2019 Full Year Guidance
The Stars Group currently expects the following 2019 full year consolidated financial guidance ranges:
Revenue of between $2,640 million and $2,765 million;
Adjusted EBITDA of between $960 million and $1,010 million; and
Adjusted Diluted Net Earnings per Share of between $1.87 and $2.11.
The above Adjusted EBITDA guidance range includes currently expected foreign currency headwinds of approximately $33 million
previously announced expected headwinds from applicable duty increases or regulatory developments of approximately $85 million and
an incremental benefit from expected cost synergies related to the acquisition of Sky Betting & Gaming of approximately $60 million.
Excluding the impact of these items and certain changes to applicable accounting standards, would imply an expected Adjusted EBITDA
growth of between 10% and 15% as compared to Adjusted EBITDA for the year ended December 31, 2018. For additional assumptions,
see below.
The Stars Group currently intends to provide certain expected growth target ranges for the next three to five years, including Revenue
and Adjusted Diluted Net Earnings per Share, as well as its expectations for Adjusted EBITDA Margin over the same time periods, and
certain related information immediately prior to its Investor Day on March 27, 2019.
In addition, to provide further clarity with respect to certain key assumptions and the impact of its 2018 acquisitions on its full year 2019
expected results, The Stars Group is also providing information for certain financial items:
Depreciation and amortization (excluding purchase price allocation amortization) of between $75 million and $85 million;
Cash interest expense of between $290 million and $300 million;
Effective tax rate (applied to Adjusted EBITDA less cash interest expense and non-purchase price allocation related
depreciation and amortization) of between 8% and 10%;
Diluted Shares of 277 million; and
Capital expenditures, which include estimated spend on intangible assets, property, plant and equipment and certain
development costs, of between $110 million and $150 million.
These unaudited expected results and other information reflect management’s view of current and future market and business conditions,
including certain accounting assumptions and assumptions of (i) expected Betting Net Win Margin of approximately 9%, (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 investments
associated with the entry into new markets, (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 (x) no material change in The Stars Group’s Diluted Shares. Such guidance is
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.
Annual Information Form, Consolidated Financial Statements, Management’s Discussion and Analysis and Additional
Information; Internal Control Over Financial Reporting
The Stars Group’s annual information form for the year ended December 31, 2018 (the “2018 AIF”), 2018 Annual Financial Statements,
2018 Annual MD&A, and additional information relating to The Stars Group and its business, can be found on SEDAR at
www.sedar.com, Edgar at www.sec.gov and The Stars Group’s website at www.starsgroup.com. The financial information presented in
this news releases was derived from the 2018 Annual Financial Statements.
Management has identified internal control deficiencies that constitute material weaknesses in The Stars Group’s internal control over
financial reporting as of December 31, 2018. These deficiencies relate to the foreign exchange translation of intercompany loans to reporting
currency and the timely assessment of inputs and assumptions used in the valuation of embedded derivatives. The Stars Group has identified
and implemented, and continues to implement, steps to remediate these deficiencies. There were no restatements required in the 2018
Annual Financial Statements or otherwise as a result of the foregoing. The impact of translation of intercompany loans was correctly
recorded in the 2018 Annual Financial Statements and there was no correction required in relation to the valuation of embedded derivatives.
For additional information, see "Disclosure Controls and Procedures and Internal Control Over Financial Reporting" in the 2018 Annual
MD&A.
In addition to press releases, securities filings and public conference calls and webcasts, The Stars Group intends to use its investor
relations page on its website as a means of disclosing material information to its investors and others and for complying with its
disclosure obligations under applicable securities laws. Accordingly, investors and others should monitor the website in addition to
following The Stars Group’s press releases, securities filings and public conference calls and webcasts. This list may be updated from
time to time.
Conference Call and Webcast Details
The Stars Group will host a conference call today, March 6, 2019 at 8:30 a.m. ET to discuss its financial results for the fourth quarter
and year ended December 31, 2018 and related matters, and provide additional detail with respect to the information in this news release,
its webcast presentation, and related annual reports and filings. To access via tele-conference, please dial +1-877-451-6152 or +1-201-
389-0879 ten minutes prior to the scheduled start of the call. The playback will be made available two hours after the event at 1-844-
512-2921 or 1-412-317-6671. The Conference ID number is 13687915. To access the webcast please use the following link:
http://public.viavid.com/index.php?id=133404.
Reconciliation of Non-IFRS Measures to Nearest IFRS Measures
The tables below present reconciliations of Adjusted EBITDA, Adjusted Net Earnings and Adjusted Diluted Net Earnings per Share to
net (loss) earnings, which is the nearest IFRS measure. For additional information, see “Reconciliations” in the 2018 Annual MD&A.
Quarter Ended December 31, 2018
In thousands of U.S. Dollars (except per share amounts) International United