Everi Holdings Inc. (NYSE:EVRI) (“Everi” or the “Company”) today
reported record financial results for the second quarter ended
June 30, 2019.
“Our focus on product innovation across both
Games and FinTech, a commitment to excellence in customer service,
and our continued prudent fiscal management once again helped drive
record quarterly operating results,” said Everi President and CEO,
Michael Rumbolz. “We generated our twelfth consecutive quarter of
year over year revenue and Adjusted EBITDA growth, and our sixth
consecutive quarter of positive net income. Revenue was up 9.3% to
a record $129.7 million, net income increased 267% to $5.5 million,
and Adjusted EBITDA rose 7.7% to a record $64.1 million. This
growth was achieved across the business as the Games and FinTech
businesses each had record revenues and Adjusted EBITDA. Free
Cash Flow continues to grow as we generated $7.0 million in the
quarter and $28.2 million for the first half of 2019, which is up
$21.8 million compared to the first half of 2018. We repaid
$15.7 million on our Term Loan during the second quarter and we
expect to continue to utilize Free Cash Flow to reduce debt.”
Consolidated Full Quarter Comparative
Results (unaudited)
|
Three Months
Ended June 30, |
|
2019 |
|
2018 |
|
|
|
|
|
(in
millions, except per share amounts) |
Revenues |
$ |
129.7 |
|
|
$ |
118.7 |
|
|
|
|
|
Operating income (1) |
$ |
24.9 |
|
|
$ |
22.6 |
|
|
|
|
|
Net income (1) |
$ |
5.5 |
|
|
$ |
1.5 |
|
|
|
|
|
Net earnings per diluted share
(1) |
$ |
0.07 |
|
|
$ |
0.02 |
|
|
|
|
|
Diluted shares
outstanding |
79.2 |
|
|
73.4 |
|
|
|
|
|
Adjusted EBITDA (2) |
$ |
64.1 |
|
|
$ |
59.5 |
|
(1) Operating income, net income and net earnings per diluted
share for the three months ended June 30, 2019 included
approximately $0.8 million of operating expense for certain
non-recurring professional fees and related costs and expenses
associated with the acquisition of certain player loyalty assets
and a non-cash charge of $0.8 million for the write-off of
inventory related to certain legacy cabinets. Operating
income, net income, and net earnings per diluted share for the
three months ended June 30, 2018 include a non-cash charge of $2.6
million related to the write-off of certain inventory and fixed
assets.
(2) For a reconciliation of net income to Adjusted EBITDA, see
the Unaudited Reconciliation of Net Income to EBITDA and Adjusted
EBITDA and to Free Cash Flow provided at the end of this
release.
Mr. Rumbolz added, “The record Games segment
operating performance included continued growth across nearly all
of the business’ key performance indicators. Second quarter unit
sales increased 14.6% as we continue to see strong demand for our
new Empire MPX cabinet and achieve solid sales for our mechanical
reel games in our popular Player Classic cabinet. As anticipated,
we returned to growth in our installed base in the second quarter
driven primarily by a strong increase in premium unit placements,
including wide-area progressive (“WAP”) units. Our premium
unit installed base rose nearly 23% year over year, with WAP units
up more than 56%, or 288 units, to 800 units at quarter end.
The higher performance of our premium games as well as the
investments we have made to improve the performance of the balance
of the installed units led to the seventh consecutive quarter of
growth in daily win per unit (“DWPU”), which improved 9.4% to a
quarterly record $32.26.
“Our FinTech business also continues to grow, as
the segment generated record revenue and Adjusted EBITDA in the
second quarter. This is a testament to our ability to offer
industry leading integrated solutions that help our customers
operate more efficiently and maximize funds delivered to their
casino floors while providing their guests with a rich, seamless
experience. We are successfully executing on the attractive
replacement cycle opportunity for integrated kiosk sales, with the
second quarter representing another period of strong equipment
sales. Information services revenues also rose more than 55% in the
quarter inclusive of the benefit from our player loyalty technology
acquired in March.
“Everi’s outlook for continued growth remains
very promising. The improvement in our games and expansion of our
offerings to better serve our customers will help drive additional
growth across both segments of our business over the balance of the
year. We expect a continued expansion of our installed base
over the second half of the year along with increases in DWPU and
year-over-year growth in full year unit sales. We also expect
further growth across our FinTech revenue drivers in the second
half of the year, including the ongoing trend of strong sales of
our integrated kiosks and further upside related to our new player
loyalty technology. As a result of the continued strength in both
lines of business, we remain on track to achieve our outlook for
full year Adjusted EBITDA of $252 million to $255 million and for
full year Free Cash Flow to double compared to last year.”
Second Quarter 2019 Results
Overview
Revenues for the second quarter of 2019
increased 9.3% to a record $129.7 million, from $118.7 million in
the second quarter of 2018. Games and FinTech segment
revenues were $69.4 million and $60.3 million, respectively, for
the second quarter of 2019. Operating income of $24.9 million for
the second quarter of 2019 compares to $22.6 million in the second
quarter of 2018.
The Company recorded income before income tax of
$4.4 million in the second quarter of 2019 compared to $0.3 million
in the second quarter of 2018. Income before income tax for
the three months ended June 30, 2018 includes $1.2 million in
transaction related fees and $0.2 million from the loss on early
extinguishment of debt related to the May 2018 repricing of the
Company’s Senior Secured Term Loan. Net income increased
approximately 267% to $5.5 million, or $0.07 per diluted share, for
the second quarter of 2019 as compared to net income of $1.5
million, or $0.02 per diluted share, in the prior-year period.
Adjusted EBITDA for the second quarter of 2019
increased approximately 7.7%, or $4.6 million, to a record $64.1
million from $59.5 million in the second quarter of 2018.
Games and FinTech segment Adjusted EBITDA for the three months
ended June 30, 2019 were $34.7 million and $29.4 million,
respectively. Games and FinTech segment Adjusted EBITDA for
the three months ended June 30, 2018 were $33.7 million and $25.8
million, respectively.
New Vice President of Investor
Relations
Everi also announces that William Pfund recently
joined the Company in the new role of Vice President of Investor
Relations. He will be responsible for managing all aspects of
the Company’s investor relations activities. Prior to joining
Everi, Mr. Pfund has held similar roles in the gaming industry with
Scientific Games Corporation and WMS Industries.
Randy Taylor, Executive Vice President and Chief
Financial Officer for Everi, commented, “We’re very pleased to
welcome Bill to Everi. He brings a proven track record for
developing and managing investor relations programs. Bill’s
knowledge of the industry will help to expand our interactions with
both existing as well as potential new investors.”
Games Segment Full Quarter Comparative
Results (unaudited)
|
Three Months Ended June 30, |
|
|
|
|
|
2019 |
|
2018 |
|
|
|
(in millions, except unit amounts and prices) |
Revenues |
$ |
69.4 |
|
|
$ |
66.0 |
|
|
|
|
|
Operating income (1) |
$ |
2.6 |
|
|
$ |
2.3 |
|
|
|
|
|
Adjusted EBITDA (2) |
$ |
34.7 |
|
|
$ |
33.7 |
|
|
|
|
|
Unit sales: |
|
|
|
Units sold |
1,270 |
|
|
1,108 |
|
Average sales price ("ASP") |
$ |
17,338 |
|
|
$ |
17,650 |
|
|
|
|
|
Gaming operations installed
base: |
|
|
|
Average units installed during period: |
|
|
|
Average units installed |
13,624 |
|
|
14,174 |
|
Approximate daily win per unit (3) |
$ |
32.26 |
|
|
$ |
29.49 |
|
|
|
|
|
Units installed at end of period: |
|
|
|
Class II |
9,205 |
|
|
9,494 |
|
Class III |
4,489 |
|
|
4,707 |
|
Total installed base |
13,694 |
|
|
14,201 |
|
|
|
|
|
Installed base - Oklahoma |
6,372 |
|
|
6,761 |
|
Installed base - non-Oklahoma |
7,322 |
|
|
7,440 |
|
Total installed base |
13,694 |
|
|
14,201 |
|
|
|
|
|
Premium units |
3,413 |
|
|
2,782 |
|
(1) Operating income for the three months ended
June 30, 2019 included approximately $0.3 million of operating
expense for certain non-recurring professional fees and related
costs and a non-cash charge of $0.8 million for the write-off of
inventory related to certain legacy cabinets. Operating
income for the three months ended June 30, 2018 includes a non-cash
charge of $2.6 million related to the write-off of certain
inventory and fixed assets.(2) For a reconciliation of net income
to Adjusted EBITDA, see the Unaudited Reconciliation of Net Income
to EBITDA and Adjusted EBITDA and to Free Cash Flow provided at the
end of this release.(3) Approximate daily win per unit excludes the
impact of the direct costs associated with the Company’s wide-area
progressive jackpot expense.
2019 Second Quarter Games Segment
Highlights
Games segment revenues were $69.4 million in the second quarter
of 2019 compared to $66.0 million in the second quarter of
2018.
• Revenues from gaming operations and other
increased approximately 5.3%, or $2.3 million, to a record $46.0
million in the second quarter of 2019 compared to $43.7 million in
the prior-year period. The year-over-year improvement
reflects an approximate 9.4% increase in estimated DWPU to a
quarterly record $32.26, which was partially offset by the
anticipated year-over-year decline in the average installed
base.
- As anticipated, the installed base at June 30, 2019 declined
507 units year over year to 13,694 units, reflecting previously
disclosed unit reductions in the second half of 2018 and the first
quarter of 2019. On a quarterly sequential basis, the
installed base grew by 50 units, primarily reflecting the continued
expansion of premium units, partially offset by the Company’s
proactive removal of lower performing games at a customer’s
facilities in Oklahoma and conversions from lease to sale
throughout the installed base.
- The premium portion of the installed base increased 22.7% year
over year, or by 631 units, to 3,413 units, which was 409 units
higher on a quarterly sequential basis. Wide-area progressive
units, which are a component of premium units, grew by 288 units
year over year and by 77 units on a quarterly sequential basis to
800 units at June 30, 2019.
- DWPU in the second quarter of 2019 increased 9.4%, or $2.77, to
$32.26, compared to $29.49 in the prior-year period. The increase
reflects, in part, growth in premium unit placements, including
wide-area progressive games, and improvements in overall unit
performance following capital investments in new cabinets and games
and an update of a portion of the installed base. This was
the seventh consecutive quarter of year-over-year growth in
DWPU.
- Interactive revenue was $1.3 million in the second quarter of
2019 compared to $0.3 million in the prior-year period.
- Revenues from the New York Lottery business were $4.9 million
in the second quarter of 2019 compared to $4.8 million in the
prior-year period.
• Revenues generated from the sale of gaming
units and other related parts and equipment totaled $23.4 million
in the second quarter of 2019 compared to revenues of $22.3 million
in the prior-year period. Unit sales increased 14.6% year over year
to 1,270 units in the second quarter of 2019 compared to 1,108
units in the prior-year period.
Financial Technology Solutions Segment
Full Quarter Comparative Results (unaudited)
|
Three Months
Ended June 30, |
|
2019 |
|
2018 |
|
|
|
|
|
(in millions, unless otherwise noted) |
Revenues |
$ |
60.3 |
|
|
$ |
52.7 |
|
|
|
|
|
Operating income (1) |
$ |
22.3 |
|
|
$ |
20.3 |
|
|
|
|
|
Adjusted EBITDA (2) |
$ |
29.4 |
|
|
$ |
25.8 |
|
|
|
|
|
Aggregate dollar amount processed
(in billions): |
|
|
|
Cash advance |
$ |
1.9 |
|
|
$ |
1.7 |
|
ATM |
$ |
5.3 |
|
|
$ |
4.9 |
|
Check warranty |
$ |
0.4 |
|
|
$ |
0.3 |
|
|
|
|
|
Number of transactions completed
(in millions): |
|
|
|
Cash advance |
2.9 |
|
|
2.7 |
|
ATM |
24.8 |
|
|
23.0 |
|
Check warranty |
0.9 |
|
|
0.9 |
|
(1) Operating income for the three months ended June 30,
2019 includes the impact of approximately $0.5 million of operating
expense for certain non-recurring professional fees and related
costs and certain expenses associated with the acquisition of
certain player loyalty assets.(2) For a reconciliation of net
income to Adjusted EBITDA, see the Unaudited Reconciliation of Net
Income to EBITDA and Adjusted EBITDA and to Free Cash Flow at the
end of this release.
2019 Second Quarter Financial Technology
Solutions Segment Highlights
FinTech revenues increased approximately 14.4%
to $60.3 million in the second quarter of 2019 compared to $52.7
million in the prior-year period.
• Revenues from cash access services, which
include ATM, cash advance and check services, were $39.7 million in
the second quarter of 2019 and 2018. Second quarter 2019 cash
access services revenues reflect the benefit from increased same
store transactions and dollars processed, as well as the benefits
from new customer wins from competitive bid processes and new
casino openings or expansions. This was offset by the impact of
increased commission expense resulting from the Company securing
long-term cash access extensions with several large customers as
well as an impact from higher interchange costs related to certain
ATM transactions. The Company expects to recover a portion of
the prospective impact from the interchange cost increases in the
second half of 2019.
• Equipment sales revenues increased 62.5%, or
$3.0 million, to $7.8 million in the second quarter of 2019
compared to $4.8 million in the second quarter of 2018. This
increase is primarily due to higher year over year sales of fully
integrated kiosks and other operator efficiency products in
addition to $1.1 million of equipment sales from the newly acquired
player loyalty and marketing business.
• Revenues from information services and other,
which includes kiosk maintenance, compliance products, Central
Credit, player loyalty and other revenue, increased 56.1%, or $4.6
million, to $12.8 million, in the second quarter of 2019 compared
to $8.2 million in the second quarter of 2018. The increase is
primarily due to $3.8 million of new revenues related to recurring
software license support for the newly acquired player loyalty and
marketing business.
2019 Outlook
Everi today reiterated its 2019 forecast for its
expectation to generate growth in revenue, Adjusted EBITDA and Free
Cash Flow. Adjusted EBITDA is expected to rise to between $252
million to $255 million, with broad-based growth across the
Company’s operating segments including expectations for:
• An increase in Games unit sales from the 4,513 units sold in
2018;
• Growth in gaming operations revenue driven by
increases in both DWPU and in the number of units in the year-end
installed base;
• Higher Interactive revenue;
• Higher cash access service revenue;
• An increase in sales of fully integrated
kiosks and other FinTech equipment including player loyalty
equipment; and,
• An increase in information services and other
revenue driven by expected growth in revenue related to the
servicing of FinTech equipment, higher compliance revenue and
software sales, maintenance and professional services from the
recently acquired player loyalty technology.
In addition, the Company expects capital
expenditures and placement fees for 2019 will be between $122
million and $125 million, including approximately $3 million to $5
million related to the player loyalty acquisition.
For a reconciliation of projected net income to
projected Adjusted EBITDA, see the Reconciliation of Projected Net
Income to Projected EBITDA, Projected Adjusted EBITDA and Free Cash
Flow provided at the end of this release.
Investor Conference Call and
Webcast
The Company will host an investor conference
call to discuss its 2019 second quarter results at 5:00 p.m. ET
today. The conference call may be accessed live over the
phone by dialing (800) 263-0877 or for international callers by
dialing (646) 828-8143. A replay will be available beginning
at 8:00 p.m. ET today and may be accessed by dialing (844) 512-2921
or (412) 317-6671 for international callers; the PIN number is
2252326. The replay will be available until August 13,
2019. The call will be webcast live from the Company’s website
at www.everi.com (select “Investors” followed by “Events &
Presentations”).
Non-GAAP Financial
Information
In order to enhance investor understanding of
the underlying trends in our business, our cash balance and cash
available for our operating needs, and to provide for better
comparability between periods in different years, we are providing
in this press release Adjusted EBITDA, Free Cash Flow, Net Cash
Position and Net Cash Available, which are not measures of our
financial performance or position under United States Generally
Accepted Accounting Principles (“GAAP”). Accordingly, Adjusted
EBITDA, and Free Cash Flow should not be considered in isolation or
as a substitute for measures prepared in accordance with
GAAP. These measures should be read in conjunction with, our
net earnings, operating income, basic or diluted earnings per share
and cash flow data prepared in accordance with GAAP. With respect
to Net Cash Position and Net Cash Available, these measures should
be read in conjunction with cash and cash equivalents prepared in
accordance with GAAP.
We define Adjusted EBITDA as earnings before
interest, loss on extinguishment of debt, taxes, depreciation and
amortization, non-cash stock compensation expense, accretion of
contract rights, the write-off of inventory and fixed assets, and
asset acquisition expense and other non-recurring professional
service fees. We present Adjusted EBITDA as we use this measure to
manage our business and consider this measure to be supplemental to
our operating performance. We also make certain compensation
decisions based, in part, on our operating performance, as measured
by Adjusted EBITDA; and our current credit facility and existing
senior unsecured notes require us to comply with a consolidated
secured leverage ratio that includes performance metrics
substantially similar to Adjusted EBITDA.
We define Free Cash Flow as Adjusted EBITDA less
cash paid for interest, cash paid for capital expenditures, cash
paid for placement fees, and cash paid for taxes net of
refunds. We present Free Cash Flow as a measure of
performance and believe it provides investors with another
indicator of our operating performance. It should not be inferred
that the entire Free Cash Flow amount is available for
discretionary expenditures.
A reconciliation of the Company’s net income per
GAAP to Adjusted EBITDA and Free Cash Flow is included in the
Unaudited Reconciliation of Net Income to EBITDA and Adjusted
EBITDA and to Free Cash Flow provided at the end of this release.
Additionally, a reconciliation of each segment’s operating income
to EBITDA and Adjusted EBITDA is also included. On a segment level,
operating income per GAAP, rather than net earnings per GAAP, is
reconciled to EBITDA and Adjusted EBITDA as the Company does not
report net earnings by segment. Management believes that this
presentation is meaningful to investors in evaluating the
performance of the Company’s segments.
We define (i) Net Cash Position as cash and cash
equivalents plus settlement receivables less settlement liabilities
and (ii) Net Cash Available as Net Cash Position plus undrawn
amounts available under our revolving credit facility. We present
Net Cash Position because our cash position, as measured by
cash and cash equivalents, depends upon changes in settlement
receivables and the timing of payments related to settlement
liabilities. As such, our cash and cash equivalents can change
substantially based upon the timing of our receipt of payments for
settlement receivables and payments we make to customers for our
settlement liabilities. We present Net Cash Available as
management monitors this amount in connection with its forecasting
of cash flows and future cash requirements.
A reconciliation of the Company’s cash and cash
equivalents per GAAP to Net Cash Position and Net Cash Available is
included in the Unaudited Reconciliation of Cash and Cash
Equivalents to Net Cash Position and Net Cash Available provided at
the end of this release.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains “forward-looking
statements” as defined in the U.S. Private Securities Litigation
Reform Act of 1995. In this context, forward-looking statements
often address our expected future business and financial
performance, and often contain words such as “goal,” “target,”
“future,” “estimate,” “expect,” “anticipate,” “intend,” “plan,”
“believe,” “seek,” “project,” “may,” “should,” or “will” and
similar expressions to identify forward-looking statements.
Examples of forward-looking statements include, among others,
statements the Company makes regarding (a) its ability to continue
expanding the segments of the gaming floor the Company’s games
address; execute on key initiatives and deliver ongoing
improvements; accelerate Free Cash Flow generation; integrate the
acquisition and achieve future growth; drive growth for the
Company’s installed base and its DWPU, and create incremental value
for its shareholders; and (b) its guidance related to 2019
financial and operational metrics, including Adjusted EBITDA, Free
Cash Flow, unit sales of Gaming units and FinTech equipment, the
installed base size and placements, DWPU, revenues, the
contribution from the acquisition and anticipated levels of capital
expenditures and placement fees, depreciation expense, amortization
expense, interest expense, and income tax benefit, including cash
tax payments, cash interest payments, non-cash stock compensation
expense, accretion of contract rights and net income.
The forward-looking statements in this press
release are subject to additional risks and uncertainties,
including those set forth under the heading “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our periodic reports filed with the
Securities and Exchange Commission (the “SEC”), including, without
limitation, our Annual Report on Form 10-K for the year ended
December 31, 2018 , and are based on information available to us on
the date hereof.
These cautionary statements qualify our
forward-looking statements and you are cautioned not to place undue
reliance on these forward-looking statements. Any forward-looking
statement contained herein speaks only as of the date on which it
is made, and we do not intend, and assume no obligation, to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
This press release should be read in conjunction
with the Form 10-Q to which it relates, and with the information
included in our other press releases, reports and other filings
with the SEC. Understanding the information contained in these
filings is important in order to fully understand our reported
financial results and our business outlook for future periods.
About Everi
Everi is a leading supplier of technology
solutions for the casino gaming industry. The Company Powers the
Casino Floor® by providing casino operators with a diverse
portfolio of products including innovative gaming machines and
casino operational and management systems that include
comprehensive, end-to-end financial technology solutions, critical
intelligence offerings, and gaming operations efficiency
technology. Everi also provides proven, tier one land-based game
content to online social and real-money markets via its Remote Game
Server and operates social play for fun casinos. Everi’s mission is
to be a transformative force for casino operations by facilitating
memorable player experiences, delivering reliable protection and
security, and striving for customer satisfaction and operational
excellence. For more information, visit www.everi.com.
Contacts
Investor RelationsJCIRRichard
Land, James Leahy212-835-8500 or evri@jcir.com
Everi Holdings Inc.Corporate ContactWilliam
PfundVP, Investor Relations
702-676-9513 or william.pfund@everi.com
EVERI HOLDINGS INC. AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME ANDCOMPREHENSIVE
INCOME(In thousands, except earnings per share
amounts)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues |
|
|
|
|
|
|
|
|
Games revenues |
|
|
|
|
|
|
|
|
Gaming operations |
|
$ |
45,576 |
|
|
$ |
43,022 |
|
|
$ |
89,862 |
|
|
$ |
83,078 |
|
Gaming equipment and systems |
|
23,412 |
|
|
22,278 |
|
|
46,499 |
|
|
42,431 |
|
Gaming other |
|
391 |
|
|
648 |
|
|
445 |
|
|
656 |
|
Games total revenues |
|
69,379 |
|
|
65,948 |
|
|
136,806 |
|
|
126,165 |
|
FinTech revenues |
|
|
|
|
|
|
|
|
Cash access services |
|
39,696 |
|
|
39,739 |
|
|
80,528 |
|
|
77,958 |
|
Equipment |
|
7,835 |
|
|
4,765 |
|
|
14,863 |
|
|
9,183 |
|
Information services and other |
|
12,796 |
|
|
8,230 |
|
|
21,284 |
|
|
16,377 |
|
FinTech total revenues |
|
60,327 |
|
|
52,734 |
|
|
116,675 |
|
|
103,518 |
|
Total revenues |
|
129,706 |
|
|
118,682 |
|
|
253,481 |
|
|
229,683 |
|
Costs and
expenses |
|
|
|
|
|
|
|
|
Games cost of revenues |
|
|
|
|
|
|
|
|
Gaming operations |
|
3,726 |
|
|
4,211 |
|
|
7,850 |
|
|
8,393 |
|
Gaming equipment and systems |
|
13,432 |
|
|
12,045 |
|
|
25,961 |
|
|
22,786 |
|
Gaming other |
|
347 |
|
|
559 |
|
|
347 |
|
|
559 |
|
Games total cost of revenues |
|
17,505 |
|
|
16,815 |
|
|
34,158 |
|
|
31,738 |
|
FinTech cost of revenues |
|
|
|
|
|
|
|
|
Cash access services |
|
2,968 |
|
|
2,446 |
|
|
5,665 |
|
|
4,676 |
|
Equipment |
|
4,597 |
|
|
3,426 |
|
|
8,927 |
|
|
5,940 |
|
Information services and other |
|
970 |
|
|
980 |
|
|
1,928 |
|
|
2,197 |
|
FinTech total cost of revenues |
|
8,535 |
|
|
6,852 |
|
|
16,520 |
|
|
12,813 |
|
Operating expenses |
|
39,167 |
|
|
37,570 |
|
|
73,815 |
|
|
69,757 |
|
Research and development |
|
6,672 |
|
|
4,595 |
|
|
14,203 |
|
|
8,906 |
|
Depreciation |
|
15,258 |
|
|
13,701 |
|
|
30,047 |
|
|
26,526 |
|
Amortization |
|
17,690 |
|
|
16,552 |
|
|
33,987 |
|
|
32,855 |
|
Total costs and expenses |
|
104,827 |
|
|
96,085 |
|
|
202,730 |
|
|
182,595 |
|
Operating income |
|
24,879 |
|
|
22,597 |
|
|
50,751 |
|
|
47,088 |
|
Other
expenses |
|
|
|
|
|
|
|
|
Interest expense, net of interest income |
|
20,433 |
|
|
22,122 |
|
|
40,833 |
|
|
42,429 |
|
Loss on extinguishment of debt |
|
— |
|
|
166 |
|
|
— |
|
|
166 |
|
Total other expenses |
|
20,433 |
|
|
22,288 |
|
|
40,833 |
|
|
42,595 |
|
Income before income tax |
|
4,446 |
|
|
309 |
|
|
9,918 |
|
|
4,493 |
|
Income tax benefit |
|
(1,040 |
) |
|
(1,166 |
) |
|
(1,428 |
) |
|
(1,591 |
) |
Net income |
|
5,486 |
|
|
1,475 |
|
|
11,346 |
|
|
6,084 |
|
Foreign currency translation |
|
(35 |
) |
|
(1,058 |
) |
|
469 |
|
|
(735 |
) |
Comprehensive income |
|
$ |
5,451 |
|
|
$ |
417 |
|
|
$ |
11,815 |
|
|
$ |
5,349 |
|
Earnings per
share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.08 |
|
|
$ |
0.02 |
|
|
$ |
0.16 |
|
|
$ |
0.09 |
|
Diluted |
|
$ |
0.07 |
|
|
$ |
0.02 |
|
|
$ |
0.15 |
|
|
$ |
0.08 |
|
Weighted average
common shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
71,477 |
|
|
69,203 |
|
|
70,909 |
|
|
68,946 |
|
Diluted |
|
79,158 |
|
|
73,440 |
|
|
77,211 |
|
|
73,323 |
|
EVERI HOLDINGS INC. AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(In
thousands)
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
Cash flows from
operating activities |
|
|
|
Net income |
$ |
11,346 |
|
|
$ |
6,084 |
|
Adjustments to reconcile net income to cash (used in) provided by
operating activities: |
|
|
|
Depreciation |
30,047 |
|
|
26,526 |
|
Amortization |
33,987 |
|
|
32,855 |
|
Amortization of financing costs and discounts |
1,789 |
|
|
3,061 |
|
Loss on sale or disposal of assets |
1,121 |
|
|
215 |
|
Accretion of contract rights |
4,318 |
|
|
4,178 |
|
Provision for bad debts |
5,912 |
|
|
5,114 |
|
Deferred income taxes |
(1,748 |
) |
|
(1,909 |
) |
Write-down of inventory and fixed assets |
843 |
|
|
2,575 |
|
Reserve for obsolescence |
670 |
|
|
1,053 |
|
Stock-based compensation |
4,160 |
|
|
4,305 |
|
Loss on extinguishment of debt |
— |
|
|
166 |
|
Changes in operating assets and liabilities: |
|
|
|
Settlement receivables |
(161,117 |
) |
|
87,336 |
|
Trade and other receivables |
(16,497 |
) |
|
(20,230 |
) |
Inventory |
(4,570 |
) |
|
(2,359 |
) |
Other assets |
(18,500 |
) |
|
1,977 |
|
Settlement liabilities |
(3,478 |
) |
|
(99,859 |
) |
Other liabilities |
24,060 |
|
|
(1,857 |
) |
Net cash (used in) provided by operating
activities |
(87,657 |
) |
|
49,231 |
|
Cash flows from investing
activities |
|
|
|
Capital expenditures |
(45,683 |
) |
|
(57,936 |
) |
Acquisition |
(20,000 |
) |
|
— |
|
Proceeds from sale of fixed assets |
50 |
|
|
79 |
|
Placement fee agreements |
(11,648 |
) |
|
(10,117 |
) |
Net cash used in investing activities |
(77,281 |
) |
|
(67,974 |
) |
Cash flows from financing
activities |
|
|
|
Repayments of credit facilities |
(17,700 |
) |
|
(4,100 |
) |
Debt issuance costs and discounts |
— |
|
|
(1,276 |
) |
Proceeds from exercise of stock options |
9,450 |
|
|
6,373 |
|
Purchase of treasury stock |
(980 |
) |
|
(47 |
) |
Net cash (used in) provided by financing
activities |
(9,230 |
) |
|
950 |
|
Effect of exchange rates on cash |
714 |
|
|
(620 |
) |
Cash, cash equivalents
and restricted cash |
|
|
|
Net decrease for the period |
(173,454 |
) |
|
(18,413 |
) |
Balance, beginning of the period |
299,181 |
|
|
129,604 |
|
Balance, end of the period |
$ |
125,727 |
|
|
$ |
111,191 |
|
EVERI HOLDINGS INC. AND
SUBSIDIARIESUNAUDITED RECONCILIATION OF CASH AND
CASH EQUIVALENTSTO NET CASH POSITION AND NET CASH
AVAILABLE(In thousands)
|
At June 30, |
|
At December 31, |
|
2019 |
|
2018 |
Cash
available |
|
|
|
Cash and cash equivalents |
$ |
123,845 |
|
|
$ |
297,532 |
|
Settlement receivables |
244,183 |
|
|
82,359 |
|
Settlement liabilities |
(331,291 |
) |
|
(334,198 |
) |
Net Cash Position |
36,737 |
|
|
45,693 |
|
|
|
|
|
Undrawn revolving credit facility |
35,000 |
|
|
35,000 |
|
|
|
|
|
Net Cash Available |
$ |
71,737 |
|
|
$ |
80,693 |
|
EVERI HOLDINGS INC. AND
SUBSIDIARIESUNAUDITED RECONCILIATION OF NET INCOME
TO EBITDA AND ADJUSTED EBITDA ANDTO FREE CASH
FLOW(In thousands)
|
Three Months Ended June 30, 2019 |
|
Three Months Ended June 30, 2018 |
|
Games |
|
FinTech |
|
Total |
|
Games |
|
FinTech |
|
Total |
Net income |
|
|
|
|
$ |
5,486 |
|
|
|
|
|
|
$ |
1,475 |
|
Income tax benefit |
|
|
|
|
(1,040 |
) |
|
|
|
|
|
(1,166 |
) |
Loss on extinguishment of
debt |
|
|
|
|
— |
|
|
|
|
|
|
166 |
|
Interest expense, net of interest
income |
|
|
|
|
20,433 |
|
|
|
|
|
|
22,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
$ |
2,552 |
|
|
$ |
22,327 |
|
|
$ |
24,879 |
|
|
$ |
2,307 |
|
|
$ |
20,290 |
|
|
$ |
22,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: depreciation and
amortization |
28,093 |
|
|
4,855 |
|
|
32,948 |
|
|
26,021 |
|
|
4,232 |
|
|
30,253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
$ |
30,645 |
|
|
$ |
27,182 |
|
|
$ |
57,827 |
|
|
$ |
28,328 |
|
|
$ |
24,522 |
|
|
$ |
52,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock compensation
expense |
736 |
|
|
1,650 |
|
|
2,386 |
|
|
677 |
|
|
1,278 |
|
|
1,955 |
|
Accretion of contract rights |
2,197 |
|
|
— |
|
|
2,197 |
|
|
2,121 |
|
|
— |
|
|
2,121 |
|
Write-off of inventory and fixed
assets |
843 |
|
|
— |
|
|
843 |
|
|
2,575 |
|
|
— |
|
|
2,575 |
|
Asset acquisition expense and
other non-recurring professional fees |
298 |
|
|
519 |
|
|
817 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
34,719 |
|
|
$ |
29,351 |
|
|
$ |
64,070 |
|
|
$ |
33,701 |
|
|
$ |
25,800 |
|
|
$ |
59,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest |
|
|
|
|
(27,079 |
) |
|
|
|
|
|
(27,638 |
) |
Cash paid for capital
expenditures |
|
|
|
|
(23,489 |
) |
|
|
|
|
|
(31,597 |
) |
Cash paid for placement fees |
|
|
|
|
(6,319 |
) |
|
|
|
|
|
(5,474 |
) |
Cash paid for income taxes, net
of refunds |
|
|
|
|
(201 |
) |
|
|
|
|
|
(156 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow |
|
|
|
|
$ |
6,982 |
|
|
|
|
|
|
$ |
(5,364 |
) |
EVERI HOLDINGS INC. AND
SUBSIDIARIESUNAUDITED RECONCILIATION OF NET INCOME
TO EBITDA AND ADJUSTED EBITDA ANDTO FREE CASH
FLOW(In thousands)
|
Six Months Ended June 30, 2019 |
|
Six Months Ended June 30, 2018 |
|
Games |
|
FinTech |
|
Total |
|
Games |
|
FinTech |
|
Total |
Net income |
|
|
|
|
$ |
11,346 |
|
|
|
|
|
|
$ |
6,084 |
|
Income tax benefit |
|
|
|
|
(1,428 |
) |
|
|
|
|
|
(1,591 |
) |
Loss on extinguishment of
debt |
|
|
|
|
— |
|
|
|
|
|
|
166 |
|
Interest expense, net of interest
income |
|
|
|
|
40,833 |
|
|
|
|
|
|
42,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
$ |
5,656 |
|
|
$ |
45,095 |
|
|
$ |
50,751 |
|
|
$ |
6,660 |
|
|
$ |
40,428 |
|
|
$ |
47,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: depreciation and
amortization |
55,249 |
|
|
8,785 |
|
|
64,034 |
|
|
50,644 |
|
|
8,737 |
|
|
59,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
$ |
60,905 |
|
|
$ |
53,880 |
|
|
$ |
114,785 |
|
|
$ |
57,304 |
|
|
$ |
49,165 |
|
|
$ |
106,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock compensation
expense |
1,293 |
|
|
2,867 |
|
|
4,160 |
|
|
1,304 |
|
|
3,001 |
|
|
4,305 |
|
Accretion of contract rights |
4,318 |
|
|
— |
|
|
4,318 |
|
|
4,178 |
|
|
— |
|
|
4,178 |
|
Write-off of inventory and fixed
assets |
843 |
|
|
— |
|
|
843 |
|
|
2,575 |
|
|
— |
|
|
2,575 |
|
Asset acquisition expense and
other non-recurring professional fees |
484 |
|
|
790 |
|
|
1,274 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
67,843 |
|
|
$ |
57,537 |
|
|
$ |
125,380 |
|
|
$ |
65,361 |
|
|
$ |
52,166 |
|
|
$ |
117,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest |
|
|
|
|
(39,549 |
) |
|
|
|
|
|
(42,844 |
) |
Cash paid for capital
expenditures |
|
|
|
|
(45,683 |
) |
|
|
|
|
|
(57,936 |
) |
Cash paid for placement fees |
|
|
|
|
(11,648 |
) |
|
|
|
|
|
(10,117 |
) |
Cash paid for income taxes, net
of refunds |
|
|
|
|
(293 |
) |
|
|
|
|
|
(222 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow |
|
|
|
|
$ |
28,207 |
|
|
|
|
|
|
$ |
6,408 |
|
EVERI HOLDINGS INC. AND
SUBSIDIARIESRECONCILIATION OF PROJECTED NET INCOME
TO PROJECTED EBITDAAND PROJECTED ADJUSTED EBITDA
AND TO PROJECTED FREE CASH FLOWFOR THE YEAR ENDING
DECEMBER 31, 2019(In thousands)
|
2019 Adjusted EBITDA Guidance Range(1) |
|
Low |
|
High |
Projected net income |
$ |
20,000 |
|
|
$ |
26,000 |
|
Projected income tax benefit |
(2,000 |
) |
|
(3,000 |
) |
Projected interest expense, net
of interest income |
83,000 |
|
|
80,000 |
|
|
|
|
|
Projected operating income |
$ |
101,000 |
|
|
$ |
103,000 |
|
|
|
|
|
Projected depreciation and
amortization |
130,000 |
|
|
134,000 |
|
|
|
|
|
Projected EBITDA |
$ |
231,000 |
|
|
$ |
237,000 |
|
|
|
|
|
Projected non-cash stock
compensation expense |
9,000 |
|
|
8,000 |
|
Projected accretion of contract
rights |
9,000 |
|
|
8,000 |
|
Projected asset acquisition
expense and other non-recurring professional fees |
3,000 |
|
|
2,000 |
|
|
|
|
|
Projected Adjusted EBITDA |
$ |
252,000 |
|
|
$ |
255,000 |
|
|
|
|
|
Projected cash paid for
interest |
(79,000 |
) |
|
(77,000 |
) |
Projected cash paid for capital
expenditures |
(105,000 |
) |
|
(108,000 |
) |
Projected cash paid for placement
fees |
(17,000 |
) |
|
(17,000 |
) |
Projected cash paid for income
taxes, net of refunds |
(1,000 |
) |
|
(1,000 |
) |
|
|
|
|
Projected Free Cash Flow |
$ |
50,000 |
|
|
$ |
52,000 |
|
(1) All figures presented are projected
estimates for the year ending December 31, 2019.
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