LAS VEGAS, March 4, 2020 /PRNewswire/ -- AGS (NYSE: AGS)
("AGS", "us", "we", or the "Company") today reported operating
results for its fourth quarter and full year ended December 31, 2019.
AGS President and Chief Executive Officer David Lopez said, "Fourth quarter Adjusted
EBITDA growth of 18% year-over-year was driven by strong EGM and
Table Products performance, with continued demand for titles on
Orion Portrait, as well as our Super 4 Progressive for table games.
2020 is one of — if not the most — significant product launch years
in AGS' history, with the Orion Rise, the Orion Curve, the
Starwall, and the Pax S card shuffler all debuting on casino floors
this year. We feel confident that this lineup of new products,
along with brand extensions and innovative offerings on our current
portfolio, will provide meaningful long-term growth opportunities
for AGS."
Summary of the
Three and Twelve Months Ended December 31, 2019 and
2018
|
(In thousands,
except per-share and Adjusted EBITDA margin data)
|
|
|
|
Three months ended
December 31,
|
|
Twelve months
ended December 31,
|
|
|
2019
|
|
|
2018
|
|
|
%
Change
|
|
2019
|
|
|
2018
|
|
|
%
Change
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM
|
|
|
$ 73,710
|
|
|
|
$ 68,664
|
|
|
|
7.3%
|
|
|
$ 289,642
|
|
|
|
$ 271,025
|
|
|
|
6.9%
|
Table
Products
|
|
|
2,757
|
|
|
|
2,137
|
|
|
|
29.0%
|
|
|
10,194
|
|
|
|
7,651
|
|
|
|
33.2%
|
Interactive
|
|
|
1,319
|
|
|
|
1,294
|
|
|
|
1.9%
|
|
|
4,878
|
|
|
|
6,623
|
|
|
|
(26.3)%
|
Total
revenues
|
|
|
$ 77,786
|
|
|
|
$ 72,095
|
|
|
|
7.9%
|
|
|
$ 304,714
|
|
|
|
$ 285,299
|
|
|
|
6.8%
|
Operating
income
|
|
|
$ 7,815
|
|
|
|
$ 1,918
|
|
|
|
307.5%
|
|
|
$ 23,737
|
|
|
|
$ 25,290
|
|
|
|
(6.1)%
|
Net income (loss)
attributable to PlayAGS, Inc.
|
|
|
$ 1,423
|
|
|
|
$ (10,345)
|
|
|
|
(113.8)%
|
|
|
$ (11,752)
|
|
|
|
$ (20,846)
|
|
|
|
(43.6)%
|
Income (loss) per
share
|
|
|
$ 0.04
|
|
|
|
$ (0.29)
|
|
|
|
(113.8)%
|
|
|
$ (0.33)
|
|
|
|
$ (0.61)
|
|
|
|
(45.9)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM
|
|
|
$ 36,630
|
|
|
|
$ 32,174
|
|
|
|
13.8%
|
|
|
$ 144,718
|
|
|
|
$ 137,371
|
|
|
|
5.3%
|
Table
Products
|
|
|
1,005
|
|
|
|
258
|
|
|
|
289.5%
|
|
|
3,699
|
|
|
|
942
|
|
|
|
292.7%
|
Interactive
|
|
|
(370)
|
|
|
|
(884)
|
|
|
|
(58.1)%
|
|
|
(2,355)
|
|
|
|
(2,107)
|
|
|
|
11.8%
|
Total Adjusted
EBITDA(1)
|
|
|
$ 37,265
|
|
|
|
$ 31,548
|
|
|
|
18.1%
|
|
|
$ 146,062
|
|
|
|
$ 136,206
|
|
|
|
7.2%
|
Total Adjusted
EBITDA margin(2)
|
|
|
47.9%
|
|
|
|
43.8%
|
|
|
410 bps
|
|
|
47.9%
|
|
|
|
47.7%
|
|
|
20 bps
|
Fourth Quarter 2019 Financial
Highlights
- Total revenue increased 8% to $77.8
million, driven by EGM sales and increased gaming
operations, or recurring revenue, from our EGM and Table Products
segments.
- Recurring revenue increased 5% to $51.6
million, driven by an increase in our domestic EGM and Table
Products installed base.(3)
- EGM sold units increased 11% to 1,283 compared to 1,159 in the
prior year, led by sales of Orion Portrait and the
recently introduced Orion
Upright.
- Net income of $1.4 million
increased year-over-year from a net loss of $10.3 million due to an increase in operating
income. The prior year also included a non-cash, pre-tax impairment
of goodwill of $4.8 million and
$2.0 million of debt
modification-related expenses, both of which were not present in
the current year.
- Total Adjusted EBITDA (non-GAAP)(1) increased 18% to a
quarterly record of $37.3 million,
driven by increased contributions from our EGM and Table Products
segments, in addition to reduced operating expenses in our
Interactive segment.
- Total Adjusted EBITDA margin (non-GAAP)(1) increased to 48% in
the fourth quarter of 2019 compared to 44% in the prior year,
driven by several different factors, most notably due to increased
contributions from all three of our segments and reduced operating
costs.
(1) Adjusted
EBITDA and Adjusted EBITDA margin are non-GAAP measures, see
non-GAAP reconciliation below.
|
(2) Basis
points ("bps").
|
(3) "Domestic" includes both the United
States and Canada.
|
EGM
|
|
Three and Twelve
Months Ended December 31, 2019 compared to Three and Twelve Months
Ended December 31, 2018
|
|
(Amounts in
thousands, except unit data)
|
|
Three months ended
December 31,
|
|
Twelve months
ended December 31,
|
|
|
2019
|
|
2018
|
|
%
Change
|
|
2019
|
|
2018
|
|
%
Change
|
EGM segment
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
$
|
47,586
|
|
$
|
45,508
|
|
4.6%
|
|
$
|
196,101
|
|
$
|
187,809
|
|
4.4%
|
Equipment
sales
|
|
|
26,124
|
|
|
23,156
|
|
12.8%
|
|
|
93,541
|
|
|
83,216
|
|
12.4%
|
Total EGM
revenues
|
|
$
|
73,710
|
|
$
|
68,664
|
|
7.3%
|
|
$
|
289,642
|
|
$
|
271,025
|
|
6.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM Adjusted
EBITDA
|
|
$
|
36,630
|
|
$
|
32,174
|
|
13.8%
|
|
$
|
144,718
|
|
$
|
137,371
|
|
5.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM unit
information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VLT
|
|
|
512
|
|
|
797
|
|
(35.8)%
|
|
|
512
|
|
|
797
|
|
(35.8)%
|
Class II
|
|
|
12,415
|
|
|
11,790
|
|
5.3%
|
|
|
12,415
|
|
|
11,790
|
|
5.3%
|
Class III
|
|
|
5,441
|
|
|
3,709
|
|
46.7%
|
|
|
5,441
|
|
|
3,709
|
|
46.7%
|
Domestic installed
base, end of period
|
|
|
18,368
|
|
|
16,296
|
|
12.7%
|
|
|
18,368
|
|
|
16,296
|
|
12.7%
|
International
installed base, end of period
|
|
|
8,497
|
|
|
8,351
|
|
1.7%
|
|
|
8,497
|
|
|
8,351
|
|
1.7%
|
Total installed base,
end of period
|
|
|
26,865
|
|
|
24,647
|
|
9.0%
|
|
|
26,865
|
|
|
24,647
|
|
9.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Installed base -
Oklahoma
|
|
|
10,171
|
|
|
7,643
|
|
33.1%
|
|
|
10,171
|
|
|
7,643
|
|
33.1%
|
Installed base -
non-Oklahoma
|
|
|
8,197
|
|
|
8,653
|
|
(5.3)%
|
|
|
8,197
|
|
|
8,653
|
|
(5.3)%
|
Domestic installed
base, end of period
|
|
|
18,368
|
|
|
16,296
|
|
12.7%
|
|
|
18,368
|
|
|
16,296
|
|
12.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic revenue per
day
|
|
$
|
24.97
|
|
$
|
26.41
|
|
(5.5)%
|
|
$
|
25.65
|
|
$
|
27.02
|
|
(5.1)%
|
International revenue
per day
|
|
$
|
7.65
|
|
$
|
8.07
|
|
(5.2)%
|
|
$
|
8.13
|
|
$
|
8.41
|
|
(3.3)%
|
Total revenue per
day
|
|
$
|
19.52
|
|
$
|
20.20
|
|
(3.4)%
|
|
$
|
20.10
|
|
$
|
20.96
|
|
(4.1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic EGM units
sold
|
|
|
1,173
|
|
|
1,159
|
|
1.2%
|
|
|
4,600
|
|
|
4,341
|
|
6.0%
|
International EGM
units sold
|
|
|
110
|
|
|
-
|
|
100.0%
|
|
|
279
|
|
|
46
|
|
506.5%
|
Total EGM units
sold
|
|
|
1,283
|
|
|
1,159
|
|
10.7%
|
|
|
4,879
|
|
|
4,387
|
|
11.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic average sales
price
|
|
$
|
17,833
|
|
$
|
18,782
|
|
(5.1)%
|
|
$
|
18,302
|
|
$
|
18,383
|
|
(0.4)%
|
EGM Quarterly Highlights
Domestic Gaming Operations
- Domestic gaming operations revenue increased $2.1 million, or 5%, driven by the acquisition of
Integrity Gaming Corp. ("Integrity") in February 2019.
- Domestic EGM revenue per day ("RPD") decreased 5% to
$24.97 compared to $26.41 in the prior year period driven by
incremental units in Oklahoma that
yield lower RPD than our domestic average.
- Domestic non-Oklahoma RPD increased 7% to $35.63 compared to $33.35 in the prior year period driven by
improved performance in markets such as Washington, Florida, and the Midwest.(4)
- Oklahoma RPD decreased 12% to $18.15 compared to $20.70 in the prior year driven by the decrease
in product performance that was discussed in previous quarterly
results and the impact of EGMs purchased from Integrity. Oklahoma
RPD was flat sequentially signaling stabilization as a result of
some of our efforts to improve performance.
- Domestic EGM installed base grew by 2,072 units year-over-year,
driven by the acquisition of 2,500 EGMs from Integrity, and offset
by a sale of 327 previously leased, lower-yielding Oklahoma units to a distributor.(5) The prior
year installed base included 280 VLT units that were purchased in
an end-of-lease buyout.(6)
International Gaming Operations
- International gaming operations revenue was relatively flat
year-over-year.
- International RPD decreased by $0.42, or 5%, driven primarily by placements into
new markets and properties in Mexico that have lower yields than our average
international RPD.
Equipment Sales
- EGM equipment sales revenue increased 13%, to $26.1 million, driven by increased EGM unit sales
as well as the sale of 327 previously leased, lower-yielding
Oklahoma units to a distributor as
part of our ongoing strategic management of our installed base. The
327 units were not included in our sold unit count or domestic
average sales price ("ASP") for the current period.
- EGM sales of 1,283 units included 1,173 domestic units, of
which more than 50% were sold into early-entry markets such as
Canada, Arkansas, Nevada, and Washington.
- Domestic ASP for EGMs decreased to $17,833 due primarily to a large sale to a single
customer in the quarter. When normalized for the impact of the
large sale, we estimate that ASP was $18,250.
Segment Highlights
- The new Orion Upright
footprint(7) grew to more than 630 units and accounted for 24% of
sales in the quarter with placements in several early-entry markets
such as Arizona, Canada, New
Mexico, Michigan, and
Oregon as well as ramping markets
such as Florida and California. Placements were driven by our
proven legacy games such as Golden
Wins and new games such as Imperial Luck.
- The Orion Portrait footprint(7) increased to more than
9,000 units, up 79% year-over-year and accounted for 57% of sales
in the quarter.
- Placed 670 Orion Portraits with our hit title Rakin'
Bacon! in the quarter.
(4) Excludes the positive impact of the
removal of 280 VLT units which are lower yielding than our domestic
average.
|
(5) The
327 units were not included in our sold unit count or ASP for the
current period.
|
(6) The VLT units were not
included in our sold unit count for either period (130 units were
sold in the first quarter of 2019 and 150 units were sold in the
second quarter of 2019).
|
(7) Footprint includes sold and leased
units.
|
Table Products
|
|
Three and Twelve
Months Ended December 31, 2019 compared to Three and Twelve Months
Ended December 31, 2018
|
|
(Amounts in
thousands, except unit data)
|
|
Three months ended
December 31,
|
|
|
Twelve months
ended December 31,
|
|
|
2019
|
|
|
2018
|
|
|
%
Change
|
|
|
2019
|
|
|
2018
|
|
%
Change
|
Table Products
segment revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
$
|
2,653
|
|
|
$
|
2,120
|
|
|
25.1
|
%
|
|
$
|
9,555
|
|
|
$
|
7,377
|
|
29.5%
|
Equipment
sales
|
|
|
104
|
|
|
|
17
|
|
|
511.8
|
%
|
|
|
639
|
|
|
|
274
|
|
133.2%
|
Total Table
Products revenues
|
|
$
|
2,757
|
|
|
$
|
2,137
|
|
|
29.0
|
%
|
|
$
|
10,194
|
|
|
$
|
7,651
|
|
33.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
Adjusted EBITDA
|
|
$
|
1,005
|
|
|
$
|
258
|
|
|
|
289.5
|
%
|
|
$
|
3,699
|
|
|
$
|
942
|
|
292.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
unit information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
installed base, end of period
|
|
|
3,766
|
|
|
|
3,162
|
|
|
19.1
|
%
|
|
|
3,766
|
|
|
|
3,162
|
|
19.1%
|
Average monthly lease
price
|
|
$
|
239
|
|
|
$
|
224
|
|
|
6.7
|
%
|
|
|
230
|
|
|
$
|
218
|
|
5.5%
|
Table Products Quarterly Highlights
- Total Table Products revenue increased 29% to $2.8 million, driven by an increase of 604
recurring units and increased equipment sales compared to the prior
year.
- Record Table Products recurring revenue increased $0.5 million, or 25%, driven by the continued
growth of our progressive and premium offerings as well as growth
of the recently introduced Dex S card shuffler.
- Installed base of table game progressives reached more than
1,300 units, up 38% year-over-year, driving a 7% increase in
average monthly lease price due to increased placements of our
Royal 9 Baccarat Progressive, Blackjack Match Progressive,
and Super 4 Blackjack games.
- Revenue from our premium offerings increased 19% to
$0.4 million due to increased
placements of Criss Cross Poker.
- Equipment sales revenue increased driven by sales of our table
signage and to a lesser extent the recently launched Dex S
card shuffler.
- Adjusted EBITDA increased $0.7
million, or 290%, driven by increased revenue and relatively
flat operating expenses compared to the prior year.
- Installed more than 100 progressive units in the quarter, with
key installs in Arizona and
Ontario.
Interactive
|
|
Three and Twelve
Months Ended December 31, 2019 compared to Three and Twelve Months
Ended December 31, 2018
|
|
(Amounts in
thousands)
|
|
Three months ended
December 31,
|
|
Twelve months
ended December 31,
|
|
|
2019
|
|
|
2018
|
|
|
%
Change
|
|
2019
|
|
|
2018
|
|
|
%
Change
|
Interactive
segment revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Social gaming
revenue
|
|
$
|
713
|
|
|
$
|
1,114
|
|
|
|
(36.0)%
|
|
$
|
3,319
|
|
|
$
|
6,147
|
|
|
|
(46.0)%
|
Real-money gaming
revenue
|
|
|
606
|
|
|
|
180
|
|
|
|
236.7%
|
|
|
1,559
|
|
|
|
476
|
|
|
|
227.5%
|
Total Interactive
revenue
|
|
$
|
1,319
|
|
|
$
|
1,294
|
|
|
|
1.9%
|
|
$
|
4,878
|
|
|
$
|
6,623
|
|
|
|
(26.3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interactive
Adjusted EBITDA
|
|
$
|
(370)
|
|
|
$
|
(884)
|
|
|
|
(58.1)%
|
|
$
|
(2,355)
|
|
|
$
|
(2,107)
|
|
|
|
11.8%
|
Interactive Quarterly Highlights
- The increase in Interactive Adjusted EBITDA is primarily due to
an increase in real-money gaming ("RMG") revenue and decreased
operating costs.
- RMG revenue increased $0.4
million driven by the continued launch of our proven
land-based EGM content in the European RMG market as well as our
recent launch into the New Jersey RMG market.
- Our RMG platform is now live in New
Jersey with four operators, three of which went live in the
fourth quarter: Golden Nugget, Resorts Digital Gaming, and Mohegan
Sun.
- Total revenue remained relatively flat while Interactive
Adjusted EBITDA increased $0.5
million compared to the prior year as a result of
strategically optimizing our user acquisition costs and
restructuring within our social business.
Balance Sheet Review
As of December 31, 2019, we had
$13.2 million in cash and cash
equivalents compared to $70.7 million
at December 31, 2018. Total net debt,
which is the principal amount of debt outstanding less cash and
cash equivalents as of December 31,
2019, was approximately $520.6
million compared to $468.1
million at December 31, 2018.
Net debt as of December 31,
2019 increased by $52.5 million
compared to December 31, 2018,
primarily driven by the acquisition of Integrity. Our Total Net
Debt Leverage Ratio increased from 3.4 times at December 31, 2018, to 3.6 times at December 31, 2019, see Total Net Debt Leverage
Ratio Reconciliation below.(8) Capital expenditures decreased
$4.6 million to $17.4 million in the fourth quarter, compared to
$22.0 million in the prior year
period due to a reduction in domestic EGM units placed on lease
compared to the prior year period.
Full year free cash flow(8) of $16.9
million remained flat compared to the prior year period due
to an increase in cash from operations of $4.9 million and offset by an increase in capital
expenditures of $4.9 million driven
by the development of new products and increased placement fee
arrangements, see Free Cash Flow Reconciliation below.
Approximately $48.7 million
remained available under the $50
million share repurchase program as of December 31, 2019 and there were no open market
purchases of common stock in the fourth quarter.
2020 Outlook
We expect to generate total adjusted EBITDA of $148 - $153 million
in 2020, representing growth of approximately 1% - 5% compared to
the prior year period. We expect 2020 capital expenditures to be in
the range of $67 - $71 million.
The Company's full-year 2020 Adjusted EBITDA guidance does not
take into consideration potential regulatory risk related to a
property in Texas, as identified
in our Risk Factors on page 13 of our latest 10-K, issued
today. Additionally, the Company's guidance does not
contemplate any potential impact related to the COVID-19 virus.
(Amounts in
millions)
|
|
2019 Actual
Results
|
|
2020
Guidance
|
|
Growth
Percentage
|
|
Adjusted
EBITDA
|
|
$146.1
|
|
$148 -
$153
|
|
1% - 5%
|
|
Capex
|
|
$71.1
|
|
$67 - $71
|
|
(6%) - 0%
|
|
|
(8) Total Adjusted
EBITDA, total net debt leverage ratio, free cash flow, and adjusted
total net debt leverage ratio, are non-GAAP measures see non-GAAP
reconciliation below.
|
Conference Call and Webcast
On March 4, 2020, at 5 p.m. EST, AGS leadership will host a conference
call to present the fourth quarter and full year
2019 results. Listeners may access a live webcast of the
conference call, along with accompanying slides, at AGS' Investor
Relations website at http://investors.playags.com/. A replay of the
webcast will be available on the website following the live event.
To listen by telephone, the U.S./Canada toll-free call-in number is +1 (844)
746-0637 and the call-in number for participants outside the
U.S./Canada is +1 (412) 317-5261.
The conference ID/confirmation code is "AGS Q4 2019 Earnings
Call".
Company Overview
AGS is a global company focused on creating a diverse mix of
entertaining gaming experiences for every kind of player. Our roots
are firmly planted in the Class II tribal gaming market, but our
customer-centric culture and remarkable growth have helped us
branch out to become one of the most all-inclusive commercial
gaming suppliers in the world. Powered by high-performing Class II
and Class III slot products, an expansive table products portfolio,
highly rated social casino and real-money gaming solutions for
players and operators, and best-in-class service, we offer an
unmatched value proposition for our casino partners. Learn more at
playags.com.
AGS Media & Investor Contacts:
Julia Boguslawski, Chief
Marketing Officer and Executive Vice President of Investor
Relations
jboguslawski@playags.com
Steven Kopjo, Director of
Investor Relations
skopjo@playags.com
©2020 PlayAGS, Inc. Products referenced herein are sold by AGS
LLC or other subsidiaries of PlayAGS, Inc. Solely for convenience,
marks, trademarks and trade names referred to in this press release
appear without
the ® and TM and SM symbols,
but such references are not intended to indicate, in any way, that
PlayAGS, Inc. will not assert, to the fullest extent under
applicable law, its rights or the rights of the applicable licensor
to these marks, trademarks and trade names.
Forward-Looking Statement
This release contains, and oral statements made from time to
time by our representatives may contain, forward-looking statements
based on management's current expectations and projections, which
are intended to qualify for the safe harbor of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements include statements regarding the proposed public
offering and other statements identified by words such as
"believe," "will," "may," "might," "likely," "expect,"
"anticipates," "intends," "plans," "seeks," "estimates,"
"believes," "continues," "projects" and similar references to
future periods, or by the inclusion of forecasts or projections.
All forward-looking statements are based on current expectations
and projections of future events.
These forward-looking statements reflect the current views,
models, and assumptions of AGS, and are subject to various risks
and uncertainties that cannot be predicted or qualified and could
cause actual results in AGS's performance to differ materially from
those expressed or implied by such forward looking statements.
These risks and uncertainties include, but are not limited to, the
ability of AGS to maintain strategic alliances, unit placements or
installations, grow revenue, garner new market share, secure new
licenses in new jurisdictions, successfully develop or place
proprietary product, comply with regulations, have its games
approved by relevant jurisdictions and other factors set forth
under the section entitled "Risk Factors" its annual report on Form
10-K filed with the Securities and Exchange Commission, as such
factors may be updated from time to time in our periodic filings
with the Securities and Exchange Commission. All forward-looking
statements made herein are expressly qualified in their entirety by
these cautionary statements and there can be no assurance that the
actual results, events or developments referenced herein will occur
or be realized. Readers are cautioned that all forward-looking
statements speak only to the facts and circumstances present as of
the date of this press release. AGS expressly disclaims any
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise.
PLAYAGS,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(amounts in
thousands, except share and per share data)
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2019
|
|
|
2018
|
|
Assets
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
13,162
|
|
|
$
|
70,726
|
|
Restricted
cash
|
|
|
20
|
|
|
|
78
|
|
Accounts receivable,
net of allowance of $723 and $855 respectively
|
|
|
61,224
|
|
|
|
44,704
|
|
Inventories
|
|
|
32,875
|
|
|
|
27,438
|
|
Prepaid
expenses
|
|
|
2,983
|
|
|
|
3,566
|
|
Deposits and
other
|
|
|
5,332
|
|
|
|
4,231
|
|
Total current
assets
|
|
|
115,596
|
|
|
|
150,743
|
|
Property and
equipment, net
|
|
|
103,598
|
|
|
|
91,547
|
|
Goodwill
|
|
|
287,049
|
|
|
|
277,263
|
|
Intangible
assets
|
|
|
230,451
|
|
|
|
196,898
|
|
Deferred tax
asset
|
|
|
4,965
|
|
|
|
2,544
|
|
Operating lease
assets
|
|
|
11,543
|
|
|
|
—
|
|
Other
assets
|
|
|
9,176
|
|
|
|
12,347
|
|
Total
assets
|
|
$
|
762,378
|
|
|
$
|
731,342
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
15,598
|
|
|
$
|
14,821
|
|
Accrued
liabilities
|
|
|
34,840
|
|
|
|
26,659
|
|
Current maturities of
long-term debt
|
|
|
6,038
|
|
|
|
5,959
|
|
Total current
liabilities
|
|
|
56,476
|
|
|
|
47,439
|
|
Long-term
debt
|
|
|
518,689
|
|
|
|
521,924
|
|
Deferred tax
liability - non-current
|
|
|
1,836
|
|
|
|
1,443
|
|
Operating lease
liability, long-term
|
|
|
11,284
|
|
|
|
—
|
|
Other long-term
liabilities
|
|
|
40,309
|
|
|
|
24,732
|
|
Total
liabilities
|
|
|
628,594
|
|
|
|
595,538
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
|
Preferred stock at
$0.01 par value; 50,000,000 shares authorized, no shares issued and
outstanding
|
|
|
—
|
|
|
|
—
|
|
Common stock at $0.01
par value; 450,000,000 shares authorized at December 31, 2019 and
December 31, 2018; 35,534,558 and 35,353,296 shares issued and
outstanding at December 31, 2019 and 2018, respectively.
|
|
|
355
|
|
|
|
353
|
|
Additional paid-in
capital
|
|
|
371,311
|
|
|
|
361,628
|
|
Accumulated
deficit
|
|
|
(235,474)
|
|
|
|
(222,403)
|
|
Accumulated other
comprehensive loss
|
|
|
(2,408)
|
|
|
|
(3,774)
|
|
Total stockholders'
equity
|
|
|
133,784
|
|
|
|
135,804
|
|
Total liabilities
and stockholders' equity
|
|
$
|
762,378
|
|
|
$
|
731,342
|
|
PLAYAGS,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
(amounts in
thousands, except per share data)
|
|
|
|
Three months
ended
December 31,
|
|
|
Twelve months
ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
$
|
51,558
|
|
|
$
|
48,922
|
|
|
$
|
210,534
|
|
|
$
|
201,809
|
|
Equipment
sales
|
|
|
26,228
|
|
|
|
23,173
|
|
|
|
94,180
|
|
|
|
83,490
|
|
Total
revenues
|
|
|
77,786
|
|
|
|
72,095
|
|
|
|
304,714
|
|
|
|
285,299
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of gaming
operations(9)
|
|
|
10,234
|
|
|
|
10,206
|
|
|
|
40,955
|
|
|
|
39,268
|
|
Cost of equipment
sales(9)
|
|
|
12,607
|
|
|
|
10,751
|
|
|
|
45,513
|
|
|
|
39,670
|
|
Selling, general and
administrative
|
|
|
15,442
|
|
|
|
15,627
|
|
|
|
61,785
|
|
|
|
63,038
|
|
Research and
development
|
|
|
9,163
|
|
|
|
8,371
|
|
|
|
34,338
|
|
|
|
31,745
|
|
Write-downs and other
charges
|
|
|
53
|
|
|
|
5,471
|
|
|
|
6,912
|
|
|
|
8,753
|
|
Depreciation and
amortization
|
|
|
22,472
|
|
|
|
19,751
|
|
|
|
91,474
|
|
|
|
77,535
|
|
Total operating
expenses
|
|
|
69,971
|
|
|
|
70,177
|
|
|
|
280,977
|
|
|
|
260,009
|
|
Income from
operations
|
|
|
7,815
|
|
|
|
1,918
|
|
|
|
23,737
|
|
|
|
25,290
|
|
Other expense
(income)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
8,494
|
|
|
|
9,354
|
|
|
|
36,248
|
|
|
|
37,607
|
|
Interest
income
|
|
|
(51)
|
|
|
|
(45)
|
|
|
|
(163)
|
|
|
|
(207)
|
|
Loss on extinguishment
and modification of debt
|
|
|
—
|
|
|
|
2,017
|
|
|
|
—
|
|
|
|
6,625
|
|
Other (income)
expense
|
|
|
(486)
|
|
|
|
367
|
|
|
|
4,622
|
|
|
|
10,488
|
|
Loss before income
taxes
|
|
|
(142)
|
|
|
|
(9,775)
|
|
|
|
(16,970)
|
|
|
|
(29,223)
|
|
Income tax benefit
(expense)
|
|
|
1,565
|
|
|
|
(570)
|
|
|
|
5,449
|
|
|
|
8,377
|
|
Net income
(loss)
|
|
|
1,423
|
|
|
|
(10,345)
|
|
|
|
(11,521)
|
|
|
|
(20,846)
|
|
Less: Net income
attributable to non-controlling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
(231)
|
|
|
|
-
|
|
Net income (loss)
attributable to PlayAGS, Inc.
|
|
|
1,423
|
|
|
|
(10,345)
|
|
|
|
(11,752)
|
|
|
|
(20,846)
|
|
Foreign currency
translation adjustment
|
|
|
1,769
|
|
|
|
(1,661)
|
|
|
|
1,366
|
|
|
|
29
|
|
Total
comprehensive income (loss)
|
|
$
|
3,192
|
|
|
$
|
(12,006)
|
|
|
$
|
(10,386)
|
|
|
$
|
(20,817)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and loss
income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.04
|
|
|
$
|
(0.29)
|
|
|
|
(0.33)
|
|
|
$
|
(0.61)
|
|
Diluted
|
|
$
|
0.04
|
|
|
$
|
(0.29)
|
|
|
|
(0.33)
|
|
|
$
|
(0.61)
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
35,448
|
|
|
|
35,353
|
|
|
|
35,424
|
|
|
|
34,404
|
|
Diluted
|
|
|
35,766
|
|
|
|
35,353
|
|
|
|
35,424
|
|
|
|
34,404
|
|
|
(9) Exclusive of
depreciation and amortization.
|
PLAYAGS,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands)
|
|
|
|
Twelve months
ended December
31,
|
|
|
|
2019
|
|
|
2018
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(11,521)
|
|
|
$
|
(20,846)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
91,474
|
|
|
|
77,535
|
|
Accretion of contract
rights under development agreements and placement fees
|
|
|
6,378
|
|
|
|
4,552
|
|
Amortization of
deferred loan costs and discount
|
|
|
1,917
|
|
|
|
1,826
|
|
Payment-in-kind
interest payments
|
|
|
—
|
|
|
|
(37,624)
|
|
Write-off of deferred
loan cost and discount
|
|
|
—
|
|
|
|
3,876
|
|
Stock-based
compensation expense
|
|
|
9,001
|
|
|
|
10,933
|
|
Provision (benefit)
for bad debts
|
|
|
294
|
|
|
|
(441)
|
|
Loss on disposition of
assets
|
|
|
1,068
|
|
|
|
1,963
|
|
Impairment of
assets
|
|
|
5,343
|
|
|
|
6,089
|
|
Fair value adjustment
of contingent consideration
|
|
|
501
|
|
|
|
701
|
|
Deferred income
tax
|
|
|
(1,927)
|
|
|
|
(970)
|
|
Changes in assets and
liabilities that relate to operations:
|
|
|
—
|
|
|
|
—
|
|
Accounts
receivable
|
|
|
(15,033)
|
|
|
|
(11,488)
|
|
Inventories
|
|
|
490
|
|
|
|
4,907
|
|
Prepaid
expenses
|
|
|
715
|
|
|
|
(895)
|
|
Deposits and
other
|
|
|
(449)
|
|
|
|
(748)
|
|
Other assets,
non-current
|
|
|
6,565
|
|
|
|
12,204
|
|
Accounts payable and
accrued liabilities
|
|
|
(6,827)
|
|
|
|
(6,063)
|
|
Net cash provided
by operating activities
|
|
|
87,989
|
|
|
|
45,511
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Customer notes
receivable
|
|
|
(2,382)
|
|
|
|
—
|
|
Business
acquisitions, net of cash acquired
|
|
|
(54,935)
|
|
|
|
(4,452)
|
|
Purchase of
intangible assets
|
|
|
(6,295)
|
|
|
|
(1,119)
|
|
Software development
and other expenditures
|
|
|
(14,350)
|
|
|
|
(10,460)
|
|
Proceeds from
disposition of assets
|
|
|
450
|
|
|
|
519
|
|
Purchases of property
and equipment
|
|
|
(50,420)
|
|
|
|
(54,602)
|
|
Net used in
investing activities
|
|
|
(127,932)
|
|
|
|
(70,114)
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Proceeds from
incremental term loans
|
|
|
—
|
|
|
|
29,874
|
|
Repayment of first
lien credit facilities
|
|
|
(5,387)
|
|
|
|
(5,211)
|
|
Repayment of senior
secured credit facilities
|
|
|
—
|
|
|
|
(115,000)
|
|
Payments on equipment
long term note payable and capital leases
|
|
|
(1,396)
|
|
|
|
(2,883)
|
|
Payment of deferred
loan costs
|
|
|
—
|
|
|
|
(41)
|
|
Payment of financed
placement fee obligations
|
|
|
(8,215)
|
|
|
|
(3,628)
|
|
Payment of previous
acquisition obligation
|
|
|
(1,748)
|
|
|
|
—
|
|
Proceeds from stock
option exercise
|
|
|
685
|
|
|
|
774
|
|
Proceeds from
issuance of common stock
|
|
|
—
|
|
|
|
176,341
|
|
Initial public
offering costs
|
|
|
—
|
|
|
|
(4,160)
|
|
Repurchase of
shares
|
|
|
(1,320)
|
|
|
|
—
|
|
Distributions to
non-controlling interest owners
|
|
|
(302)
|
|
|
|
—
|
|
Net cash (used in)
provided by financing activities
|
|
|
(17,683)
|
|
|
|
76,066
|
|
Effect of exchange
rates on cash and cash equivalents
|
|
|
4
|
|
|
|
(1)
|
|
(Decrease) increase in
cash and cash equivalents
|
|
|
(57,622)
|
|
|
|
51,462
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
|
70,804
|
|
|
|
19,342
|
|
Cash, cash
equivalents and restricted cash, end of period
|
|
$
|
13,182
|
|
|
$
|
70,804
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
$
|
33,567
|
|
|
$
|
35,392
|
|
Cash paid during the
period for taxes
|
|
$
|
1,548
|
|
|
$
|
1,742
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
|
|
Non-cash consideration
given in business acquisition
|
|
$
|
—
|
|
|
$
|
500
|
|
Intangible assets
obtained under placement fee arrangements
|
|
$
|
40,338
|
|
|
$
|
2,000
|
|
Leased assets obtained
in exchange for new finance lease liabilities
|
|
$
|
1,326
|
|
|
$
|
1,454
|
|
Leased assets obtained
in exchange for new operating lease liabilities
|
|
$
|
13,048
|
|
|
$
|
—
|
|
Non-GAAP Financial Measures
To provide investors with additional information in connection
with our results as determined by generally accepted accounting
principles in the United States
("GAAP"), we disclose the following non-GAAP financial measures:
total Adjusted EBITDA, total Adjusted EBITDA margin, total net debt
leverage ratio, adjusted total net debt leverage ratio, and Free
Cash Flow. These measures are not financial measures calculated in
accordance with GAAP and should not be considered as a substitute
for net income, operating income, cash flows, or any other measure
calculated in accordance with GAAP, and may not be comparable to
similarly titled measures reported by other companies.
Total Adjusted EBITDA
This press release and accompanying schedules provide certain
information regarding Adjusted EBITDA, which is considered a
non-GAAP financial measure under the rules of the Securities and
Exchange Commission.
We believe that the presentation of total Adjusted EBITDA is
appropriate to provide additional information to investors about
certain material non-cash items that we do not expect to continue
at the same level in the future, as well as other items we do not
consider indicative of our ongoing operating performance. Further,
we believe total Adjusted EBITDA provides a meaningful measure of
operating profitability because we use it for evaluating our
business performance, making budgeting decisions, and comparing our
performance against that of other peer companies using similar
measures. It also provides management and investors with additional
information to estimate our value.
Total Adjusted EBITDA is not a presentation made in accordance
with GAAP. Our use of the term total Adjusted EBITDA may vary from
others in our industry. Total Adjusted EBITDA should not be
considered as an alternative to operating income or net income.
Total Adjusted EBITDA has important limitations as an analytical
tool, and you should not consider it in isolation or as a
substitute for the analysis of our results as reported under
GAAP.
Our definition of total Adjusted EBITDA allows us to add back
certain non-cash charges that are deducted in calculating net
income and to deduct certain gains that are included in calculating
net income. However, these expenses and gains vary greatly, and are
difficult to predict. They can represent the effect of long-term
strategies as opposed to short-term results. In addition, in the
case of charges or expenses, these items can represent the
reduction of cash that could be used for other corporate purposes.
Due to these limitations, we rely primarily on our GAAP results,
such as net loss, (loss) income from operations, EGM Adjusted
EBITDA, Table Products Adjusted EBITDA or Interactive Adjusted
EBITDA and use Total Adjusted EBITDA only supplementally.
The total Adjusted EBITDA discussion above is also applicable to
its margin measure, which is calculated as total Adjusted EBITDA as
a percentage of Total Revenue.
The following table presents a reconciliation of total Adjusted
EBITDA to net loss, which is the most comparable GAAP measure:
Total Adjusted
EBITDA Reconciliation
|
|
(Amounts in
thousands)
|
|
Three months
ended
December 31,
|
|
|
Twelve months
ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Net income (loss)
attributable to PlayAGS, Inc.
|
|
$
|
1,423
|
|
|
$
|
(10,345)
|
|
|
$
|
(11,752)
|
|
|
$
|
(20,846)
|
|
Income tax (benefit)
expense
|
|
|
(1,565)
|
|
|
|
570
|
|
|
|
(5,449)
|
|
|
|
(8,377)
|
|
Depreciation and
amortization
|
|
|
22,472
|
|
|
|
19,751
|
|
|
|
91,474
|
|
|
|
77,535
|
|
Other (income)
expense
|
|
|
(486)
|
|
|
|
367
|
|
|
|
4,622
|
|
|
|
10,488
|
|
Interest
income
|
|
|
(51)
|
|
|
|
(45)
|
|
|
|
(163)
|
|
|
|
(207)
|
|
Interest
expense
|
|
|
8,494
|
|
|
|
9,354
|
|
|
|
36,248
|
|
|
|
37,607
|
|
Write-downs and
other(10)
|
|
|
53
|
|
|
|
5,471
|
|
|
|
6,912
|
|
|
|
8,753
|
|
Loss on
extinguishment and modification of debt(11)
|
|
|
-
|
|
|
|
2,017
|
|
|
|
-
|
|
|
|
6,625
|
|
Other
adjustments(12)
|
|
|
206
|
|
|
|
208
|
|
|
|
909
|
|
|
|
2,426
|
|
Other non-cash
charges(13)
|
|
|
2,537
|
|
|
|
1,743
|
|
|
|
9,078
|
|
|
|
6,633
|
|
Legal and litigation
expenses including settlement payments(14)
|
|
|
96
|
|
|
|
203
|
|
|
|
1,844
|
|
|
|
992
|
|
Acquisitions and
integration related costs including restructuring and
severance(15)
|
|
|
394
|
|
|
|
488
|
|
|
|
3,338
|
|
|
|
3,644
|
|
Non-cash stock-based
compensation
|
|
|
3,692
|
|
|
|
1,766
|
|
|
|
9,001
|
|
|
|
10,933
|
|
Adjusted
EBITDA
|
|
$
|
37,265
|
|
|
$
|
31,548
|
|
|
$
|
146,062
|
|
|
$
|
136,206
|
|
|
(Amounts in
thousands, except Adjusted EBITDA margin)
|
|
Three months
ended
December 31,
|
|
|
Twelve months
ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Total
revenues
|
|
$
|
77,786
|
|
|
$
|
72,095
|
|
|
$
|
304,714
|
|
|
$
|
285,299
|
|
Adjusted
EBITDA
|
|
$
|
37,265
|
|
|
$
|
31,548
|
|
|
$
|
146,062
|
|
|
$
|
136,206
|
|
Adjusted EBITDA
margin
|
|
|
47.9
|
%
|
|
|
43.8
|
%
|
|
|
47.9
|
%
|
|
|
47.7
|
%
|
|
(10) Write-downs and
other include items related to loss on disposal or
impairment of long-lived assets and fair value adjustments to
contingent consideration.
|
(11) Loss
on extinguishment and modification of debt primarily
relates to the refinancing of long-term debt, in which deferred
loan costs and discounts related to old senior secured credit
facilities were written-off.
|
(12) Other adjustments are
primarily composed of professional fees incurred for projects,
corporate and public filing compliance, contract cancellation fees
and other transaction costs deemed to be non-operating in
nature.
|
(13) Other non-cash
charges are costs related to non-cash charges and losses
on the disposition of assets, non-cash charges on capitalized
installation and delivery, which primarily includes the costs to
acquire contracts that are expensed over the estimated life of each
contract and non-cash charges related to accretion of contract
rights under development agreements.
|
(14) Legal and litigation related
costs consist of payments to law firms and settlements for
matters that are outside the normal course of
business.
|
(15) Acquisitions and integration
related costs primarily relate to costs incurred after the
purchase of businesses, such as the purchase of AGS iGaming and
Integrity, to integrate operations and obtain costs synergies.
Restructuring and severance costs primarily relate to costs
incurred through the restructuring of the Company's operations from
time to time and other employee severance costs recognized in the
periods presented.
|
Total Net Debt Leverage Ratio Reconciliation
The following table presents a reconciliation of total net debt
and total net debt leverage ratio and adjusted total net debt
leverage ratio:
(Amounts in
thousands, except net debt leverage ratio)
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2019
|
|
|
2018
|
|
Total debt
|
|
$
|
533,727
|
|
|
$
|
538,799
|
|
Less: Cash and cash
equivalents
|
|
|
13,162
|
|
|
|
70,726
|
|
Total net
debt
|
|
$
|
520,565
|
|
|
$
|
468,073
|
|
LTM Adjusted
EBITDA
|
|
$
|
146,062
|
|
|
$
|
136,206
|
|
Total net debt
leverage ratio
|
|
|
3.6
|
|
|
|
3.4
|
|
Free Cash Flow
This schedule provides certain information regarding Free Cash
Flow, which is considered a non-GAAP financial measure under the
rules of the Securities and Exchange Commission.
We define Free Cash Flow as net cash provided by operating
activities less cash outlays related to capital expenditures and
payments of in-kind interest related to the redemption of our
HoldCo PIK notes. We define capital expenditures to include
purchase of intangible assets, software development and other
expenditures, and purchases of property and equipment. In arriving
at Free Cash Flow, we subtract cash outlays related to capital
expenditures from net cash provided by operating activities because
they represent long-term investments that are required for normal
business activities. As a result, subject to the limitations
described below, Free Cash Flow is a useful measure of our cash
available to repay debt and/or make other investments.
Free Cash Flow adjusts for cash items that are ultimately within
our discretion to direct, and therefore, may imply that there is
less or more cash that is available than the most comparable GAAP
measure. Free Cash Flow is not intended to represent residual cash
flow for discretionary expenditures since debt repayment
requirements and other non-discretionary expenditures are not
deducted. These limitations are best addressed by using Free Cash
Flow in combination with the GAAP cash flow numbers.
The following table presents a reconciliation of Free Cash
Flow:
(amounts in
thousands)
|
|
Twelve months
ended
December 31,
2019
|
|
|
Nine months
ended
September 30,
2019
|
|
|
Three months
ended
December 31,
2019
|
|
Net cash provided by
operating activities
|
|
$
|
87,989
|
|
|
$
|
62,481
|
|
|
$
|
25,508
|
|
Purchase of
intangible assets
|
|
|
(6,295)
|
|
|
|
(4,926)
|
|
|
|
(1,369)
|
|
Software development
and other expenditures
|
|
|
(14,350)
|
|
|
|
(9,957)
|
|
|
|
(4,393)
|
|
Purchases of property
and equipment
|
|
|
(50,420)
|
|
|
|
(38,760)
|
|
|
|
(11,660)
|
|
Free Cash
Flow
|
|
$
|
16,924
|
|
|
$
|
8,838
|
|
|
$
|
8,086
|
|
|
(amounts in
thousands)
|
|
Twelve months
ended
December 31,
2018
|
|
|
Nine months
ended
September 30,
2018
|
|
|
Three months
ended
December 31,
2018
|
|
Net cash provided
(used) by operating activities
|
|
$
|
45,511
|
|
|
$
|
13,320
|
|
|
$
|
32,191
|
|
Purchase of
intangible assets
|
|
|
(1,119)
|
|
|
|
(931)
|
|
|
|
(188)
|
|
Software development
and other expenditures
|
|
|
(10,460)
|
|
|
|
(8,794)
|
|
|
|
(1,666)
|
|
Purchases of property
and equipment
|
|
|
(54,602)
|
|
|
|
(34,457)
|
|
|
|
(20,145)
|
|
Payments-in-kind
interest payments
|
|
|
37,624
|
|
|
|
37,624
|
|
|
|
-
|
|
Free Cash
Flow
|
|
$
|
16,954
|
|
|
$
|
6,762
|
|
|
$
|
10,192
|
|
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SOURCE AGS