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Stars Group boosts 2017 rev­enue, earn­ings guid­ance

Stockwatch Daily - - FRONT PAGE - Mr. Brian Kyle re­ports

THE STARS Group Inc. has up­dated its pre­vi­ously an­nounced guid­ance ranges for the full year 2017 and will pre­pay an ad­di­tional $75-mil­lion of sec­ond lien debt. All dol­lar amounts are in U.S. dol­lars.

“It’s been a great three months since join­ing The Stars Group and the team is en­er­gized,” said Brian Kyle, chief fi­nan­cial of­fi­cer. “As I am now fully fa­mil­iar with our fore­cast­ing and given our solid trends across all business lines, which re­in­force our con­vic­tion and com­mit­ment to our strat­egy, it is now ap­pro­pri­ate to up­date our fi­nan­cial guid­ance. In ad­di­tion, given our progress to date, we

are also able to make an­other mean­ing­ful pre­pay­ment of our debt.”

Full year guid­ance

Based on year-to-date per­for­mance, The Stars Group has up­dated its pre­vi­ous full year 2017 guid­ance and now ex­pects:

• Rev­enues of be­tween $1,285-mil­lion and $1,315-mil­lion, as com­pared with the prior range of $1.2-bil­lion and $1.26-bil­lion. The re­vised guid­ance im­plies 2017 rev­enue growth of be­tween 11 per cent and 14 per cent com­pared with t he prior year and in­cludes an ex­pec­ta­tion that real-money on-line poker rev­enue will be slightly higher year over year as The Stars Group, among other things, con­tin­ues to ex­pe­ri­ence a very pos­i­tive con­sumer re­sponse to Stars Re­wards, which was rolled out glob­ally in July;

• Ad­justed earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­za­tion of be­tween $590-mil­lion and $610-mil­lion, as com­pared with the prior range of $560-mil­lion and $580-mil­lion. The re­vised guid­ance im­plies 2017 ad­justed EBITDA growth of be­tween 13 per cent and 16 per cent com­pared with prior year;

• Ad­justed net earn­ings of be­tween $445-mil­lion and $469-mil­lion, as com­pared with the prior range of $413-mil­lion and $437-mil­lion and as com­pared with ap­prox­i­mately $367-mil­lion in 2016;

• Ad­justed net earn­ings per di­luted share of be­tween $2.17 and $2.31, as com­pared with the pre­vi­ous range of be­tween $2.01 and $2.15 and as com­pared with $1.88 in 2016.

Debt pre­pay­ment

Next week, The Stars Group will pre­pay with­out penalty an ad­di­tional $75-mil­lion un­der its sec­ond lien term loan us­ing cash on the bal­ance sheet and cash flow from op­er­a­tions. Fol­low­ing this pre­pay­ment, The Stars Group will have re­paid $115-mil­lion of its sec­ond lien debt thus far in 2017, re­sult­ing in a to­tal re­duc­tion in an­nual in­ter­est ex­pense of ap­prox­i­mately $9.5-mil­lion, and re­duc­ing the prin­ci­pal bal­ance of the sec­ond lien term loan to $95-mil­lion.

We seek Safe Har­bor.

Karen Bax­ter con­densed this news re­lease (karenb@stock­watch.com).

Divyesh Gad­hia, Harlan Good­son, Al­fred F Jr Hur­ley, David A Laz­zarato, Peter Mur­phy, Mary Louise Turner

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