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Global Cash Access renews, expands MGM Resorts contract


Global Cash Access Inc. has renewed its cash services contract with MGM Resorts International, an agreement one analyst believes could be worth up to $8 million in additional revenue in 2014.

Under the agreement, Las Vegas-based Global Cash Access will continue to provide the gaming company cash access services, and will install ticket redemption kiosks at MGM Resorts properties.

“We are excited to expand this important relationship with MGM Resorts,” Global Cash Access President and CEO David Lopez said.

MGM Resorts’ portfolio of casinos includes Bellagio, MGM Grand and Aria. Lopez said the company looks forward to integrating its “full suite of kiosk equipment and services with our core cash access products” to meet MGM’s cash services needs.

Financial terms of the deal weren’t disclosed.

David Bain, a leisure and entertainment analyst with Sterne Agee, expects the MGM agreement to support other customer acquisition discussions.

“Global Cash Access’ agreement to provide MGM with core cash access services as well as ticket redemption kiosks and services to (its) properties lowers its renewal risk profile and augments its customer acquisition upside potential,” Bain wrote in a research report released Monday.

He wrote that these agreements typically last three to five years. Bain also expects the new redemption kiosk agreement to be worth between $5 million and $8 million in additional revenue in 2014.

“The renewal economics of the MGM core access deal is likely at slightly lower margin than the last one,” Bain wrote. “However, with kiosks and likelihood of higher 2014 and 2013 volume at MGM facilities, we believe the full MGM deal to be additive to our 2014 earnings outlook.”

Sterne Agee projects Global Cash Access to post 2013 earnings per share of 82 cents, with that figure increasing to 94 cents a share for 2014. The cash services company posted third-quarter net income of $5.78 million, or earnings of 9 cents a share, compared with net income of $7.08 million, or 11 cents per share, a year earlier.

Revenues fell 2.5 percent to $146.1 million from $149.8 million.

Bain rates Global Cash Access a “buy,” with a price target of $12 a share. Shares of Global Cash Access gained 29 cents, or 3.01 percent, to close at $9.92 on heavy volume of 630,283 shares traded Monday on the New York Stock Exchange.

Bain said the company’s online lottery progress continues with a rollout of instant tickets online in North Carolina and Minnesota. Global Cash Access also has an agreement with Scientific Games to provide online payment service and integrated mobile wallet functionality.

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893. Follow @sierotyfeatures on Twitter.

 

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