Everi Holdings Inc. (NYSE: EVRI) (“Everi” or the “Company”), a
premier provider of land-based and digital casino gaming products,
financial technology and player loyalty solutions, today announced
selected preliminary financial results for the fourth quarter and
full year ended December 31, 2020, in connection with an
opportunity to take advantage of favorable market conditions to
lower its cost of debt by repricing $735.5 million of its First
Lien Term Loan due 2024. While the expected results demonstrate
sequential improvement, the preliminary 2020 fourth quarter results
reflect continued impact from the COVID-19 pandemic and related
casino closures.
The Company expects 2020 fourth quarter
consolidated revenues to be in a range of approximately $117
million to $121 million reflecting quarterly sequential improvement
from $112.1 million in the 2020 third quarter. Revenues were $145.2
million in the 2019 fourth quarter. The Company expects its
quarterly net loss to be in a range of $1.4 million to $0.3
million, inclusive of approximately $1.5 million in pre-tax charges
related to the consolidation of certain facilities and the
write-off of certain inventory. This compares to a net loss of $0.9
million in the 2020 third quarter and a net loss of $4.1 million in
the 2019 fourth quarter, which included the impact of a $6.4
million pre-tax charge for litigation settlement and approximately
$1.6 million of additional charges.
The Company further expects that Adjusted
EBITDA, a non-GAAP financial measure, will be in a range of $60
million to $62 million for the 2020 fourth quarter, compared to
$59.8 million in the 2020 third quarter, and $63.2 million in the
2019 fourth quarter.
Reflecting the significant impact of the
pandemic’s effect on the casino and hospitality industry throughout
the year, revenue for 2020 is expected to be in a range of $381
million to $385 million with net loss in a range of $85 million to
$83 million compared with revenues of $533.2 million and net income
of $16.5 million in 2019.
Michael Rumbolz, Chief Executive Officer of
Everi, said, “Our preliminary 2020 fourth quarter results reflect
quarterly sequential improvement highlighting the ongoing strength
and balance of our business, as well as the benefit of our focus on
consistent improvement in our operating execution. Even with
increased casino closures and further restrictions on certain
casino activities in the fourth quarter, the sequential
progress of our expected financial and operating results
demonstrate the significant improvements to our Games and FinTech
product portfolios over the last several years. This includes our
efforts to innovate new products that help our customers extend the
connection with their guests and operate more efficiently. The
combination of our improved operating performance and the ongoing
benefits of our cost-enhancement initiatives is expected to result
in Free Cash Flow that is approximately triple the amount we
reported in last year’s fourth quarter. We expect our operating
strength and momentum to continue in the 2021 first quarter, as
casinos again begin to reopen and casino activities improve
compared to 2020 fourth quarter levels.”
The preliminary unaudited results noted in this
release are derived from preliminary internal financial reports and
are subject to revision based on the Company’s procedures and
controls associated with the completion of its year-end financial
reporting, including all the customary reviews and approvals, and
completion of the audit by the Company’s independent registered
public accounting firm of its audit of such financial statements
for the year ended December 31, 2020. Accordingly, actual results
may differ from these preliminary results and such differences may
be material. The Company currently anticipates releasing its 2020
fourth quarter and full year results on March 9, 2021 after the
market close.
The Company is sharing these preliminary
financial results in connection with a potential repricing
transaction, in which it would take advantage of favorable market
conditions to negotiate and reprice its $735.5 million of First
Lien Term Loan.
Cautionary Note Regarding
Forward-Looking Statements
The preliminary unaudited 2020 fourth quarter
and full year results noted above are derived from preliminary
internal financial reports and are subject to revision upon the
completion of the Company’s customary financial reporting process,
including customary reviews, internal audit procedures and
approvals. Accordingly, actual results may differ from these
preliminary results and such differences may be material.
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 its ability to reprice its
outstanding $735.5 million aggregate principal First Lien Term Loan
that matures in 2024, its expectation that the proposed repricing
transaction will lower its annual cash interest expense and enhance
its financial flexibility, its expectations regarding its 2020
fourth quarter and annual results of operations.
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 filings with the Securities and
Exchange Commission (the “SEC”), including, without limitation, our
Annual Report on Form 10‑K for the fiscal year ended December 31,
2019 filed with the SEC on March 2, 2020 and subsequent periodic
reports, 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 our most recent reports on Form 10‑K and Form 10‑Q, and 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.
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, and Free Cash Flow, 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 and should be read in conjunction with our net
earnings (loss), operating income (loss), basic or diluted earnings
(loss) per share and cash flow data prepared in accordance with
GAAP.
We define Adjusted EBITDA as earnings (loss)
before interest, taxes, depreciation and amortization, non-cash
stock compensation expense, accretion of contract rights, the
write-off of inventory, property and equipment and intangible
assets, the adjustment of certain purchase accounting liabilities,
non-recurring professional fees, value added tax refunds net of
related professional fees, a litigation settlement charge, certain
non-cash inventory write-off charges and certain office
consolidation gains and expenses. 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 credit
facility, senior secured notes and senior unsecured notes require
us to comply with a consolidated secured leverage ratio that
includes performance metrics substantially similar to Adjusted
EBITDA.
A reconciliation of the Company’s expected net
loss per GAAP to Adjusted EBITDA for the fourth quarter of 2020 and
the actual net loss per GAAP to Adjusted EBITDA for the fourth
quarter of 2019 is provided at the end of this release.
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.
About Everi
Everi (NYSE: EVRI) is a leading supplier of
imaginative entertainment and trusted technology solutions for the
casino and digital gaming industry. Everi’s mission is to transform
the casino floor through innovative gaming and financial technology
and loyalty solutions. With a focus on both land-based and digital
gaming operators and players, the Company develops entertaining
games and gaming machines, gaming systems and services that
facilitate memorable player experiences, and is a preeminent and
comprehensive provider of financial products and services that
offer convenient and secure cash and cashless-based financial
transactions, self-service player loyalty tools and applications,
and intelligence software and other intuitive solutions that
improve casino operational efficiencies and fulfill regulatory
compliance requirements. Everi provides these products and services
in its effort to help make customers even more successful. For more
information, please visit www.everi.com, which is updated regularly
with financial and other information about the Company.
CONTACTSInvestor
Relations |
|
Everi Holdings Inc.William PfundSVP, Investor Relations702-676-9513
or william.pfund@everi.com |
JCIRRichard Land, James Leahy212-835-8500 or
evri@jcir.com |
EVERI HOLDINGS INC. AND
SUBSIDIARIESUNAUDITED RECONCILIATION OF NET LOSS
TO EBITDA AND ADJUSTED EBITDAAND FREE CASH
FLOW($ in thousands) |
|
|
Three Months Ended December 31, |
|
2020 |
|
2019 |
|
Expected Range |
|
Actual Reported |
Net loss |
$ |
(1,400 |
) |
|
$ |
(300 |
) |
|
$ |
(4,144 |
) |
Income tax provision (benefit) |
800 |
|
|
(500 |
) |
|
2,224 |
|
Loss on extinguishment of debt |
— |
|
|
— |
|
|
179 |
|
Interest expense, net of interest income |
18,300 |
|
|
18,400 |
|
|
17,714 |
|
Operating income |
$ |
17,700 |
|
|
$ |
17,600 |
|
|
$ |
15,973 |
|
|
|
|
|
|
|
Plus: depreciation and amortization |
35,700 |
|
|
37,000 |
|
|
34,930 |
|
EBITDA |
$ |
53,400 |
|
|
$ |
54,600 |
|
|
$ |
50,903 |
|
|
|
|
|
|
|
Non-cash stock compensation expense |
2,800 |
|
|
3,000 |
|
|
3,716 |
|
Accretion of contract rights |
2,300 |
|
|
2,500 |
|
|
2,170 |
|
Write-off of inventory, property and equipment and intangible
assets |
700 |
|
|
900 |
|
|
425 |
|
Adjustment to certain purchase accounting liabilities |
— |
|
|
— |
|
|
(129 |
) |
Non-recurring professional fees and other, net |
— |
|
|
— |
|
|
(281 |
) |
Litigation settlement accrual |
— |
|
|
— |
|
|
6,350 |
|
Office and warehouse consolidation, net |
800 |
|
|
1,000 |
|
|
— |
|
Adjusted EBITDA |
$ |
60,000 |
|
|
$ |
62,000 |
|
|
$ |
63,154 |
|
|
|
|
|
|
|
Cash paid for interest |
(22,100 |
) |
|
(22,400 |
) |
|
(25,274 |
) |
Cash paid for capital expenditures |
(24,600 |
) |
|
(23,500 |
) |
|
(32,649 |
) |
Cash paid for placement fees |
— |
|
|
(100 |
) |
|
— |
|
Cash paid for income taxes, net of refunds |
(800 |
) |
|
— |
|
|
(763 |
) |
Free Cash Flow |
$ |
12,500 |
|
|
$ |
16,000 |
|
|
$ |
4,468 |
|
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