LAS VEGAS, Aug. 5, 2021 /PRNewswire/ -- AGS (NYSE: AGS)
("AGS", "us", "we" or the "Company") today reported operating
results for its second quarter ended June
30, 2021.
AGS President and Chief Executive Officer David Lopez said, "We were able to
leverage our over 15,000 unit domestic EGM installed
base, our growing premium game footprint, and the revenue strength
witnessed throughout the domestic gaming market to
establish new Company records in both domestic EGM revenue per
day ("RPD") and domestic EGM gaming operations revenue in the
second quarter. Looking ahead, our improved execution and
accelerating product momentum across all three of our
business segments position us to deliver additional
growth and share taking in the coming quarters."
Kimo Akiona, AGS' Chief Financial
Officer, added, "The continuous improvement being achieved as a
result of our enhanced game content development
execution, upgraded product management capabilities, and
refined capital deployment processes, sets us on a path
to deliver more consistent financial performance, improving
our capital returns and leverage profile, and, most importantly,
strengthening shareholder value over time."
Summary of
the Three Months Ended June 30, 2021, 2020 and
2019
(In thousands,
except per-share and Adjusted EBITDA margin data)
|
|
|
|
Three Months Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Change
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2021 vs
2020
|
|
|
2021 vs
2019
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM
|
|
$
|
61,193
|
|
|
$
|
13,957
|
|
|
$
|
70,978
|
|
|
|
338.4
|
%
|
|
|
(13.8)
|
%
|
Table
Products
|
|
|
2,830
|
|
|
|
674
|
|
|
|
2,420
|
|
|
|
319.9
|
%
|
|
|
16.9
|
%
|
Interactive
|
|
|
2,814
|
|
|
|
2,157
|
|
|
|
1,111
|
|
|
|
30.5
|
%
|
|
|
153.3
|
%
|
Total
revenues
|
|
$
|
66,837
|
|
|
$
|
16,788
|
|
|
$
|
74,509
|
|
|
|
298.1
|
%
|
|
|
(10.3)
|
%
|
Income (loss) from
operations
|
|
$
|
7,428
|
|
|
$
|
(28,749)
|
|
|
$
|
1,995
|
|
|
|
(125.8)
|
%
|
|
|
272.3
|
%
|
Net (loss)
income
|
|
$
|
(3,883)
|
|
|
$
|
(42,639)
|
|
|
$
|
(7,557)
|
|
|
|
(90.9)
|
%
|
|
|
(48.6)
|
%
|
(Loss) income per
share
|
|
$
|
(0.11)
|
|
|
$
|
(1.20)
|
|
|
$
|
(0.21)
|
|
|
|
(90.8)
|
%
|
|
|
(47.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM
|
|
$
|
29,453
|
|
|
$
|
(2,191)
|
|
|
$
|
35,541
|
|
|
|
N/A
|
|
|
|
(17.1)
|
%
|
Table
Products
|
|
|
1,448
|
|
|
|
(126)
|
|
|
|
807
|
|
|
|
N/A
|
|
|
|
79.4
|
%
|
Interactive
|
|
|
1,202
|
|
|
|
1,164
|
|
|
|
(603)
|
|
|
|
3.3
|
%
|
|
|
(299.3)
|
%
|
Total Adjusted
EBITDA(1)
|
|
$
|
32,103
|
|
|
$
|
(1,153)
|
|
|
$
|
35,745
|
|
|
|
N/A
|
|
|
|
(10.2)
|
%
|
Total Adjusted
EBITDA margin(2)
|
|
|
48.0
|
%
|
|
|
-6.9
|
%
|
|
|
48.0
|
%
|
|
|
N/A
|
|
|
|
0bps
|
|
Second Quarter 2021 Financial Results
- During March and April and continuing through mid-to-late
May 2020, nearly all our customers
either closed their facilities or dramatically curtailed operations
to slow the spread of the COVID-19 virus. We believe these actions
significantly limit the year-over-year comparability of our
reported financial metrics, including revenues, income (loss) from
operations, net (loss) income, and Adjusted EBITDA. Accordingly, we
have included results from the 2019 second quarter in the tables
included in this release, as we believe these comparisons provide
more meaningful insight into the trajectory of our various business
segments.
- Consolidated revenue totaled $66.8
million compared to $16.8
million and $74.5 million in
Q2 2020 and Q2 2019, respectively. Growth in Table Products and
Interactive revenue, as compared to the levels achieved in the 2019
second quarter, was more than offset by a 13.8% decline in EGM
segment revenue versus Q2 2019 levels. Although North American slot
replacement demand has meaningfully improved over the past several
months, operators' aggregated capital spend on new equipment
purchases remains below pre-COVID-19 levels, pacing our reported
EGM revenue decline versus Q2 2019.
- Gaming operations, or recurring revenue, reached a record
$55.0 million versus $10.2 million and $53.6
million in Q2 2020 and Q2 2019, respectively. The growth
achieved within our domestic EGM, Table Products, and Interactive
recurring revenue businesses, versus the levels reached in Q2 2019,
was partially offset by a decline in our international EGM
recurring revenue business as our Mexico business continues to navigate
COVID-19-related operating restrictions. In aggregate,
recurring revenue accounted for 82.3% of our
consolidated revenue compared to 60.7% in the prior year's
quarter and 71.9% in the 2019 second quarter.
- Our 2021 second quarter net loss of $3.9
million improved as compared to net losses of $42.6 million and $7.6
million realized in Q2 2020 and Q2 2019, respectively. The
year-over-year decline in our reported net loss reflects our
improved operating performance and lower depreciation and
amortization ("D&A") expense, partially offset by slightly
higher interest expense related to our incremental $95 million term loan, which we closed upon in
May 2020. Additionally, net loss in
the prior year period was negatively impacted by $3.1 million in one-time expenses related to the
aforementioned debt financing transaction. The improvement in our
reported net loss, as compared to the level reported in Q2 2019,
was driven by fewer one-time charges and lower D&A expense,
partially offset by slightly higher interest
expense.
- Total Adjusted EBITDA (non-GAAP)(1) was $32.1 million compared to a $1.2 million Adjusted EBITDA loss in Q2 2020 and
positive $35.7 million in Q2 2019.
Interactive and Table Products Adjusted EBITDA increased sharply
relative to the levels achieved in Q2 2019, supported by successful
execution of our ongoing revenue growth initiatives in each of the
segments. EGM Adjusted EBITDA decreased 17.1% versus Q2 2019
levels, as the upside from our record Q2 2021 EGM gaming operations
performance was more than offset by the impact of the ongoing
recovery in the North American slot replacement market from
post-COVID-19 lows on our EGM unit sales.
- Total Adjusted EBITDA margin (non-GAAP)(1) improved to
48.0% in the second
quarter of 2021 compared to negative 6.9% in Q2
2020. Adjusted EBITDA margin was in line with the level reported in
Q2 2019. We attribute the strong Q2 2021 margin performance to a
favorable mix of higher-margin recurring revenues and the rate of
our revenue recovery from post-COVID-19 lows exceeding the
rate of normalization in our operating costs.
(1)
Adjusted EBITDA and Adjusted EBITDA
margin are non-GAAP measures, see non-GAAP reconciliation
below.
|
(2)
Basis points ("bps").
|
EGM
Three Months Ended
June 30, 2021 compared to Three Months Ended June 30, 2020 and
2019
|
|
(Amounts in
thousands, except unit data)
|
|
Three Months Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Change
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2021 vs
2020
|
|
|
2021 vs
2019
|
|
EGM segment
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
$
|
49,432
|
|
|
$
|
7,535
|
|
|
$
|
50,161
|
|
|
|
556.0
|
%
|
|
|
(1.5)
|
%
|
Equipment
sales
|
|
|
11,761
|
|
|
|
6,422
|
|
|
|
20,817
|
|
|
|
83.1
|
%
|
|
|
(43.5)
|
%
|
Total EGM
revenues
|
|
$
|
61,193
|
|
|
$
|
13,957
|
|
|
$
|
70,978
|
|
|
|
338.4
|
%
|
|
|
(13.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM Adjusted
EBITDA
|
|
$
|
29,453
|
|
|
$
|
(2,191)
|
|
|
$
|
35,541
|
|
|
|
N/A
|
|
|
|
(17.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM unit
information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VLT
|
|
|
-
|
|
|
|
512
|
|
|
|
517
|
|
|
|
(100.0)
|
%
|
|
|
(100.0)
|
%
|
Class II
|
|
|
11,317
|
|
|
|
12,449
|
|
|
|
12,154
|
|
|
|
(9.1)
|
%
|
|
|
(6.9)
|
%
|
Class III
|
|
|
4,129
|
|
|
|
4,833
|
|
|
|
5,750
|
|
|
|
(14.6)
|
%
|
|
|
(28.2)
|
%
|
Domestic installed
base, end of period
|
|
|
15,446
|
|
|
|
17,794
|
|
|
|
18,421
|
|
|
|
(13.2)
|
%
|
|
|
(16.2)
|
%
|
International
installed base, end of period
|
|
|
7,879
|
|
|
|
7,969
|
|
|
|
8,596
|
|
|
|
(1.1)
|
%
|
|
|
(8.3)
|
%
|
Total installed base,
end of period
|
|
|
23,325
|
|
|
|
25,763
|
|
|
|
27,017
|
|
|
|
(9.5)
|
%
|
|
|
(13.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Installed base -
Oklahoma
|
|
|
8,054
|
|
|
|
9,562
|
|
|
|
10,083
|
|
|
|
(15.8)
|
%
|
|
|
(20.1)
|
%
|
Installed base -
non-Oklahoma
|
|
|
7,392
|
|
|
|
8,232
|
|
|
|
8,338
|
|
|
|
(10.2)
|
%
|
|
|
(11.3)
|
%
|
Domestic installed
base, end of period
|
|
|
15,446
|
|
|
|
17,794
|
|
|
|
18,421
|
|
|
|
(13.2)
|
%
|
|
|
(16.2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic revenue per
day
|
|
$
|
33.11
|
|
|
$
|
5.96
|
|
|
$
|
26.16
|
|
|
|
455.5
|
%
|
|
|
26.6
|
%
|
International revenue
per day
|
|
$
|
4.66
|
|
|
$
|
0.02
|
|
|
$
|
8.22
|
|
|
|
N/A
|
|
|
|
(43.3)
|
%
|
Total revenue per
day
|
|
$
|
23.47
|
|
|
$
|
4.09
|
|
|
$
|
20.49
|
|
|
|
473.8
|
%
|
|
|
14.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic EGM unit
sales components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino opening and
expansion units
|
|
|
175
|
|
|
|
83
|
|
|
|
13
|
|
|
|
110.8
|
%
|
|
|
N/A
|
|
Other
|
|
|
438
|
|
|
|
64
|
|
|
|
1,040
|
|
|
|
584.4
|
%
|
|
|
(57.9)
|
%
|
Total Domestic EGM
units sold
|
|
|
613
|
|
|
|
147
|
|
|
|
1,053
|
|
|
|
317.0
|
%
|
|
|
(41.8)
|
%
|
International EGM
units sold
|
|
|
-
|
|
|
|
62
|
|
|
|
128
|
|
|
|
(100.0)
|
%
|
|
|
(100.0)
|
%
|
Total EGM units
sold
|
|
|
613
|
|
|
|
209
|
|
|
|
1,181
|
|
|
|
193.3
|
%
|
|
|
(48.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic average sales
price
|
|
$
|
16,902
|
|
|
$
|
19,646
|
|
|
$
|
18,178
|
|
|
|
(14.0)
|
%
|
|
|
(7.0)
|
%
|
EGM Quarterly Results
Domestic Gaming Operations(3)
- Domestic gaming operations, or recurring revenue, reached a
record $45.9 million compared to
$7.5 million and $43.7 million in Q2 2020 and Q2 2019,
respectively. Our record-setting domestic gaming operations revenue
performance reflects a uniquely healthy gaming macroeconomic
backdrop, supported by the consumer's propensity to re-engage in
social activities in response to the easing of COVID-19-related
operating restrictions and ongoing vaccination efforts, and the
continued growth in our higher-yielding premium game
footprint.
- Our domestic EGM installed base was relatively flat on a
quarterly sequential basis, as continued growth in our premium game
installed base was offset by convert-to-sale activity.
- Domestic EGM revenue per day ("RPD") of $33.11, a new Company record, increased 26.6%
versus the $26.16 achieved in Q2
2019. Domestic EGM RPD increased approximately 22% as compared to
the $27.10 realized in the
2021 first quarter. We attribute the record domestic RPD
performance to a supportive gaming macroeconomic environment, a
greater mix of higher-yielding premium games within our domestic
installed base and the opportunistic pruning of lower-yielding
units.
International Gaming Operations
- International gaming operations revenue totaled $3.5 million compared to approximately
$0 in Q2 2020 and $6.4 million in Q2 2019. The decline relative to
our Q2 2019 performance reflects the degree to which measures
implemented to slow the spread of COVID-19, including the
imposition of capacity restrictions upon our casino operator
partners, have impacted our Mexico
business. Additionally, in contrast to the United States, Mexico has not provided any type of fiscal
stimulus to support its post-COVID-19 economic recovery.
- We estimate approximately 65% of our 7,879-unit international
installed base was active as of June 30,
2021 compared to 36% as of December
31, 2020.
- International RPD was $4.66
compared to nearly $0 in Q2 2020 and
$8.22 in Q2 2019. International RPD
improved more than 58% on a quarterly sequential basis from the
$2.94 achieved in Q1 2021, supported
by an increase in the number of active playable games in casinos
throughout the 2021 second quarter.
- Our international installed base decreased by 106 units on a
quarterly sequential basis, driven by COVID-19-related floor
reconfigurations and early execution of a strategic capital
efficiency initiative.
Equipment Sales
- We sold a total of 613 EGM units compared to 209 units and
1,181 units in Q2 2020 and Q2 2019, respectively. EGM unit sales
more than doubled versus the 289 units sold in Q1 2021. We
attribute the sequential growth in EGM unit sales to greater demand
related to new casino openings and expansions, improved AGS game
content, and further recovery in core North American replacement
unit demand from post-COVID-19 lows.
- Domestic average sales price ("ASP") was $16,902 versus $19,646 and $18,178
in Q2 2020 and Q2 2019, respectively. The decline in our Q2 2021
domestic ASP was predominantly driven by a higher mix of
convert-to-sale and opening and expansion units. Excluding the
convert-to-sale units, our domestic ASP would have been
approximately $18,200, consistent
with the level achieved in Q2 2019.
- We sold units into 19 U.S. states throughout Q2 2021, with
Washington, Kentucky and Arizona emerging as our top three sales
markets.
Product Highlights
- Our premium, lease-only Starwall x Orion
("Starwall") installed base grew to over 520 games at
quarter end. Starwall games continue to produce
RPD's nicely above our company average. The Starwall's
solid game performance and the introduction of additional
configuration options have further strengthened operator interest
in the product.
- We recently commenced the commercial launch of our Orion
Curve Premium package featuring an extension of our
player-favorite game theme, Rakin' Bacon!. Initial
installs are delivering game performance nicely above house
average, helping to accelerate operator demand.
- We continue to leverage our exceptional game performance to
cultivate additional demand in existing and soon-to-open Historical
Horse Racing ("HHR") markets.
- Our Captain Riches game theme, a member of
our Ultimate Choice Jackpots ("UCJ") family of games
and available on our Orion Curve cabinet, achieved a
top 15 ranking within the "New Core Video Reel" category of the
July 2021 Eilers-Fantini Game
Performance Report. Follow-on titles within
the UCJ family are also delivering game
performance above house average, helping to further stimulate
demand for our for-sale products.
(3)
"Domestic" includes both the United
States and Canada.
|
Table Products
Three Months Ended
June 30, 2021 compared to Three Months Ended June 30, 2020 and
2019
|
|
(Amounts in
thousands, except unit data)
|
|
Three Months Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Change
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2021 vs
2020
|
|
|
2021 vs
2019
|
|
Table Products
segment revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
$
|
2,793
|
|
|
$
|
497
|
|
|
$
|
2,321
|
|
|
|
462.0
|
%
|
|
|
20.3
|
%
|
Equipment
sales
|
|
|
37
|
|
|
|
177
|
|
|
|
99
|
|
|
|
(79.1)
|
%
|
|
|
(62.6)
|
%
|
Total Table
Products revenues
|
|
$
|
2,830
|
|
|
$
|
674
|
|
|
$
|
2,420
|
|
|
|
319.9
|
%
|
|
|
16.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
Adjusted EBITDA
|
|
$
|
1,448
|
|
|
$
|
(126)
|
|
|
$
|
807
|
|
|
|
N/A
|
|
|
|
79.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
unit information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
installed base, end of period
|
|
|
4,458
|
|
|
|
3,962
|
|
|
|
3,380
|
|
|
|
12.5
|
%
|
|
|
31.9
|
%
|
Average monthly lease
price
|
|
$
|
207
|
|
|
$
|
42
|
|
|
$
|
230
|
|
|
|
392.9
|
%
|
|
|
(10.0)
|
%
|
Table Products Quarterly Results
- Adjusted EBITDA increased 79.4% versus Q2 2019 and 2.6% on a
quarterly sequential basis to a record $1.4
million. Adjusted EBITDA margin was 51.2% compared to 33.3%
in Q2 2019 and flat sequentially.
- Gaming operations, or recurring revenue, increased 20.3%
compared to Q2 2019 to a record $2.8
million, paced by continued customer adoption of our
industry-leading table game progressive products and the growing
appeal of our all-inclusive site license offering, the AGS
Arsenal. Recurring revenue increased approximately 2% over the
levels achieved in Q1 2021.
- Our installed base increased by 1,078 units versus Q2 2019 and
96 units on a quarterly sequential basis, with growth
witnessed across all segments of our diversified Table
Products portfolio, including side bets, progressives, premium
games, and card shufflers.
- Operator interest in our industry-leading and expanding table
game progressive product suite continues to build, pushing our
progressive installed base to a record 1,638 units at quarter end.
Customer demand for our Royal 9
Baccarat and Super 4 STAX progressive
products remains strong, while the installed base of our highly
anticipated Bonus Spin Xtreme ("BSX") progressive
eclipsed 20 units as of June 30,
2021. We expect the receipt of additional regulatory
approvals and the expansion of BSX to additional game
types, including roulette, to accelerate BSX customer
adoption in the quarters ahead.
- We installed 11 additional Dex S poker shufflers in
Q2 2021 increasing our total shuffler footprint to 190
units. We are currently undertaking steps to
prepare our PAX S specialty game shuffler for
a full-scale commercial launch later in the year.
- We were live with 10 site licenses at the end of Q2 2021
compared to six at the end of Q1 2021. Interest in our AGS
Arsenal site license offering continues to grow as our
customers look for ways to further enhance the efficiency of their
table game operations.
Interactive
Three Months Ended
June 30, 2021 compared to Three Months Ended June
30, 2020 and 2019
|
|
(Amounts in
thousands)
|
|
Three Months Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Change
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2021 vs
2020
|
|
|
2021 vs
2019
|
|
Interactive
segment revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Social gaming
revenue
|
|
$
|
580
|
|
|
$
|
1,095
|
|
|
$
|
890
|
|
|
|
(47.0)
|
%
|
|
|
(34.8)
|
%
|
Real-money gaming
revenue
|
|
|
2,234
|
|
|
|
1,062
|
|
|
|
221
|
|
|
|
110.4
|
%
|
|
|
910.9
|
%
|
Total Interactive
revenue
|
|
$
|
2,814
|
|
|
$
|
2,157
|
|
|
$
|
1,111
|
|
|
|
30.5
|
%
|
|
|
153.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interactive
Adjusted EBITDA
|
|
$
|
1,202
|
|
|
$
|
1,164
|
|
|
$
|
(603)
|
|
|
|
3.3
|
%
|
|
|
(299.3)
|
%
|
Interactive Quarterly Results
- Total Interactive revenue increased 30.5% year-over-year to a
record $2.8 million, supported by a
more than doubling of RMG revenue.
- Interactive Adjusted EBITDA reached a new record of
$1.2 million, marking the segment's
sixth consecutive quarter of positive Adjusted EBITDA
performance.
- RMG revenue increased 110.4% year-over-year and more than 60%
on a quarterly sequential basis, reaching a record $2.2 million. RMG revenue benefitted from the
successful launch of our RMG platform with 10 new iGaming
operators across the globe, including our initial launch into the
Canadian online market with Lotto Quebec and OLG, along with the
continued strong performance of AGS game content.
- We expect to launch our RMG platform with additional operators
and further broaden the catalogue of AGS game content available for
play online throughout the second half of 2021.
- Social gaming revenue declined 47.0% year-over-year and came in
34.8% below Q2 2019 levels. We believe our Q2 2020 B2C Social
gaming revenue benefitted from the consumers' preference to stay at
home as COVID-19 began to spread, creating a difficult
year-over-year comparison for the business. Additionally, a
back-end technological matter with one of our third-party platform
providers, that has since been fixed, further dampened our Q2 2021
revenue performance. Ongoing implementation of cost efficiency
measures helped to mitigate the impact of the Social gaming revenue
decline on our reported Interactive Adjusted EBITDA.
Liquidity and Capital Expenditures
As of June 30, 2021, we had
$118.7 million of total
available liquidity, comprised of an $88.7
million available cash balance and $30.0 million of revolver
availability, compared to total available liquidity
of $111.7 million at December 31,
2020. The total principal amount of debt outstanding,
as of June 30, 2021, was $619.2 million, predominantly comprised of
$618.0 million in first lien
term loans, which mature in February 2024.
In May 2020, we issued an
additional $95.0 million in secured
term loans to increase the Company's cash position and strengthen
our financial flexibility in response to the uncertain gaming
industry operating environment that emerged following the global
spread of the COVID-19 virus. In conjunction with the $95.0 million offering, the Company negotiated a
financial covenant relief period through December 31, 2020 related to its net first lien
leverage ratio financial covenant and implemented a revised
calculation of Adjusted EBITDA to measure the net first lien
leverage ratio for the first three quarters of 2021. As of
June 30, 2021, our net first lien
leverage ratio, measured in accordance with the revised calculation
of Adjusted EBITDA described above, was 4.1 times,
putting us in compliance with our 6.0 times financial
covenant.
Subsequent to quarter end, we successfully extended the maturity
on our $30 million revolving credit
facility to November 2023 from the
prior maturity of June 2022.
Total net debt, which is the principal amount of debt
outstanding less cash and cash equivalents, as of June 30, 2021 was approximately $530.5 million compared to
approximately $540.8 million at December 31, 2020. Our Total Net Debt Leverage
Ratio decreased from 7.5 times at December 31, 2020 to 5.0 times at
June 30, 2021 (see Total Net
Debt Leverage Ratio Reconciliation below(4)).
Second quarter 2021 capital expenditures totaled $11.5 million, primarily comprised of
$6.8 million in growth capital
expenditures, which reflect costs associated with
the placement of additional units into our leased installed
base, and $3.4 million in
intangible capital expenditures, inclusive of capitalized internal
software development costs. Capital expenditures decreased
23.5% relative to the $15.1 million
incurred in the 2019 second quarter, in line with our plans to
conservatively manage the use of our cash and only invest in those
projects presenting the highest potential return on our
investment.
(4)
Total Adjusted EBITDA and total net debt
leverage ratio are non-GAAP measures, see non-GAAP reconciliation
below.
|
Conference Call and Webcast
AGS leadership will host a conference call to review the
Company's second quarter 2021 results on
August 5, 2021, at 5 p.m. EDT.
Participants may access a live webcast of the conference call,
along with a slide presentation reviewing the quarterly results,
at the Company's Investor Relations website
http://investors.playags.com. A replay of the webcast will be
available on the website following the live event. U.S. and
Canadian participants may access the call live by telephone by
calling +1 (844) 200-6205, while international participants should
call +1 (646) 904-5544 . The conference ID/access code is
715923.
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 equipment suppliers in the world. Powered by high-performing
Class II and Class III slot products, an expansive table products
portfolio, highly rated social casino, 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 Investor & Media Contacts:
Brad Boyer, Vice President of
Investor Relations, Corporate Development and Strategy
bboyer@playags.com
Julia Boguslawski, Chief
Marketing Officer
jboguslawski@playags.com
©2021 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, the effects of COVID-19 on the
Company's business and results of operations and other factors set
forth under Item 1. "Business," Item 1A. "Risk Factors" in AGS's
Annual Report on Form 10-K, filed 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)
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2021
|
|
|
2020
|
|
Assets
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
88,688
|
|
|
$
|
81,689
|
|
Restricted
cash
|
|
|
20
|
|
|
|
20
|
|
Accounts receivable,
net of allowance of $2,114 and $2,077, respectively
|
|
|
45,375
|
|
|
|
41,743
|
|
Inventories
|
|
|
26,069
|
|
|
|
26,902
|
|
Prepaid
expenses
|
|
|
8,481
|
|
|
|
4,210
|
|
Deposits and
other
|
|
|
6,670
|
|
|
|
4,704
|
|
Total current
assets
|
|
|
175,303
|
|
|
|
159,268
|
|
Property and
equipment, net
|
|
|
74,682
|
|
|
|
81,040
|
|
Goodwill
|
|
|
286,044
|
|
|
|
286,042
|
|
Intangible
assets
|
|
|
172,512
|
|
|
|
187,644
|
|
Deferred tax
asset
|
|
|
6,850
|
|
|
|
6,762
|
|
Operating lease
assets
|
|
|
11,857
|
|
|
|
9,763
|
|
Other
assets
|
|
|
9,328
|
|
|
|
10,259
|
|
Total
assets
|
|
$
|
736,576
|
|
|
$
|
740,778
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
6,919
|
|
|
$
|
9,547
|
|
Accrued
liabilities
|
|
|
33,653
|
|
|
|
26,325
|
|
Current maturities of
long-term debt
|
|
|
6,923
|
|
|
|
7,031
|
|
Total current
liabilities
|
|
|
47,495
|
|
|
|
42,903
|
|
Long-term
debt
|
|
|
600,906
|
|
|
|
601,560
|
|
Deferred tax
liability, non-current
|
|
|
2,389
|
|
|
|
2,254
|
|
Operating lease
liabilities, long-term
|
|
|
11,373
|
|
|
|
9,497
|
|
Other long-term
liabilities
|
|
|
28,185
|
|
|
|
30,781
|
|
Total
liabilities
|
|
|
690,348
|
|
|
|
686,995
|
|
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 June 30, 2021 and at
December 31, 2020; and 36,666,966 and 36,494,002 shares issued and
outstanding at June 30, 2021 and December 31, 2020,
respectively.
|
|
|
367
|
|
|
|
364
|
|
Additional paid-in
capital
|
|
|
384,776
|
|
|
|
379,917
|
|
Accumulated
deficit
|
|
|
(333,853)
|
|
|
|
(321,412)
|
|
Accumulated other
comprehensive loss
|
|
|
(5,062)
|
|
|
|
(5,086)
|
|
Total stockholders'
equity
|
|
|
46,228
|
|
|
|
53,783
|
|
Total liabilities
and stockholders' equity
|
|
$
|
736,576
|
|
|
$
|
740,778
|
|
PLAYAGS,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(amounts in
thousands, except per share data)
|
|
|
|
Three Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Revenues
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
$
|
55,039
|
|
|
$
|
10,189
|
|
Equipment
sales
|
|
|
11,798
|
|
|
|
6,599
|
|
Total
revenues
|
|
|
66,837
|
|
|
|
16,788
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Cost of gaming
operations(5)
|
|
|
9,677
|
|
|
|
5,495
|
|
Cost of equipment
sales(5)
|
|
|
5,748
|
|
|
|
4,162
|
|
Selling, general and
administrative
|
|
|
16,300
|
|
|
|
8,609
|
|
Research and
development
|
|
|
9,009
|
|
|
|
4,931
|
|
Write-downs and other
charges
|
|
|
64
|
|
|
|
819
|
|
Depreciation and
amortization
|
|
|
18,611
|
|
|
|
21,521
|
|
Total operating
expenses
|
|
|
59,409
|
|
|
|
45,537
|
|
Income (loss) from
operations
|
|
|
7,428
|
|
|
|
(28,749)
|
|
Other expense
(income)
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
11,517
|
|
|
|
10,894
|
|
Interest
income
|
|
|
(276)
|
|
|
|
(120)
|
|
Loss on extinguishment
and modification of debt
|
|
|
-
|
|
|
|
3,102
|
|
Other (income)
expense
|
|
|
(181)
|
|
|
|
(35)
|
|
(Loss) income
before income taxes
|
|
|
(3,632)
|
|
|
|
(42,590)
|
|
Income tax (expense)
benefit
|
|
|
(251)
|
|
|
|
(49)
|
|
Net (loss)
income
|
|
|
(3,883)
|
|
|
|
(42,639)
|
|
Foreign currency
translation adjustment
|
|
|
886
|
|
|
|
575
|
|
Total
comprehensive (loss) income
|
|
$
|
(2,997)
|
|
|
$
|
(42,064)
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
loss per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.11)
|
|
|
$
|
(1.20)
|
|
Diluted
|
|
$
|
(0.11)
|
|
|
$
|
(1.20)
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
36,632
|
|
|
$
|
35,602
|
|
Diluted
|
|
$
|
36,632
|
|
|
$
|
35,602
|
|
|
(5)
Exclusive of depreciation and
amortization.
|
PLAYAGS,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands)
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(11,653)
|
|
|
$
|
(57,058)
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
37,019
|
|
|
|
45,890
|
|
Accretion of contract
rights under development agreements and placement fees
|
|
|
3,316
|
|
|
|
3,733
|
|
Amortization of
deferred loan costs and discount
|
|
|
2,680
|
|
|
|
1,429
|
|
Stock-based
compensation expense
|
|
|
4,862
|
|
|
|
2,993
|
|
Provision (benefit)
for bad debts
|
|
|
205
|
|
|
|
(199)
|
|
Loss on disposition of
long-lived assets
|
|
|
191
|
|
|
|
74
|
|
Impairment of
assets
|
|
|
653
|
|
|
|
6
|
|
Fair value adjustment
of contingent consideration
|
|
|
(56)
|
|
|
|
794
|
|
Benefit for deferred
income tax
|
|
|
49
|
|
|
|
(123)
|
|
Changes in assets and
liabilities that relate to operations:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(3,844)
|
|
|
|
26,174
|
|
Inventories
|
|
|
2,367
|
|
|
|
101
|
|
Prepaid
expenses
|
|
|
(4,270)
|
|
|
|
(1,992)
|
|
Deposits and
other
|
|
|
(1,920)
|
|
|
|
1,030
|
|
Other assets,
non-current
|
|
|
1,706
|
|
|
|
915
|
|
Accounts payable and
accrued liabilities
|
|
|
4,588
|
|
|
|
(15,900)
|
|
Net cash provided
by operating activities
|
|
|
35,893
|
|
|
|
7,867
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Customer notes
receivable
|
|
|
-
|
|
|
|
(2,579)
|
|
Purchase of intangible
assets
|
|
|
-
|
|
|
|
(925)
|
|
Software development
and other expenditures
|
|
|
(7,210)
|
|
|
|
(5,530)
|
|
Proceeds from
disposition of assets
|
|
|
22
|
|
|
|
28
|
|
Purchases of property
and equipment
|
|
|
(14,191)
|
|
|
|
(8,057)
|
|
Net cash used in
investing activities
|
|
|
(21,379)
|
|
|
|
(17,063)
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Repayment of first
lien credit facilities
|
|
|
(2,694)
|
|
|
|
(2,694)
|
|
Repayment of
incremental term loans
|
|
|
(475)
|
|
|
|
-
|
|
Payment of financed
placement fee obligations
|
|
|
(2,444)
|
|
|
|
(3,444)
|
|
Proceeds from
incremental term loans
|
|
|
-
|
|
|
|
92,150
|
|
Borrowing on
revolver
|
|
|
-
|
|
|
|
30,000
|
|
Payment of deferred
loan costs
|
|
|
-
|
|
|
|
(5,744)
|
|
Payments of previous
acquisition obligation
|
|
|
(257)
|
|
|
|
(284)
|
|
Payments on finance
leases and other obligations
|
|
|
(867)
|
|
|
|
(669)
|
|
Repurchase of
stock
|
|
|
(788)
|
|
|
|
(360)
|
|
Proceeds from stock
option exercise
|
|
|
-
|
|
|
|
158
|
|
Net cash (used in)
provided by financing activities
|
|
|
(7,525)
|
|
|
|
109,113
|
|
Effect of exchange
rates on cash and cash equivalents
|
|
|
10
|
|
|
|
(10)
|
|
Net increase in
cash, cash equivalents and restricted cash
|
|
|
6,999
|
|
|
|
99,907
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
|
81,709
|
|
|
|
13,182
|
|
Cash, cash
equivalents and restricted cash, end of period
|
|
$
|
88,708
|
|
|
$
|
113,089
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
|
|
Leased assets obtained
in exchange for new operating lease liabilities
|
|
$
|
3,042
|
|
|
$
|
-
|
|
Leased assets obtained
in exchange for new finance lease liabilities
|
|
$
|
318
|
|
|
$
|
338
|
|
|
|
|
|
|
|
|
|
|
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, 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Change
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2021 vs
2020
|
|
|
2021 vs
2019
|
|
Net (loss)
income
|
|
$
|
(3,883)
|
|
|
$
|
(42,639)
|
|
|
$
|
(7,557)
|
|
|
|
(90.9)
|
%
|
|
|
(48.6)
|
%
|
Income tax (benefit)
expense
|
|
|
251
|
|
|
|
49
|
|
|
|
(52)
|
|
|
|
412.2
|
%
|
|
|
(582.7)
|
%
|
Depreciation and
amortization
|
|
|
18,611
|
|
|
|
21,521
|
|
|
|
23,659
|
|
|
|
(13.5)
|
%
|
|
|
(21.3)
|
%
|
Other
expense
|
|
|
(181)
|
|
|
|
(35)
|
|
|
|
(46)
|
|
|
|
417.1
|
%
|
|
|
293.5
|
%
|
Interest
income
|
|
|
(276)
|
|
|
|
(120)
|
|
|
|
(31)
|
|
|
|
130.0
|
%
|
|
|
790.3
|
%
|
Interest
expense
|
|
|
11,517
|
|
|
|
10,894
|
|
|
|
9,560
|
|
|
|
5.7
|
%
|
|
|
20.5
|
%
|
Loss on
extinguishment and modification of debt
|
|
|
-
|
|
|
|
3,102
|
|
|
|
-
|
|
|
|
(100.0)
|
%
|
|
|
N/A
|
|
Write-downs and
other(6)
|
|
|
64
|
|
|
|
819
|
|
|
|
5,036
|
|
|
|
(92.2)
|
%
|
|
|
(98.7)
|
%
|
Other
adjustments(7)
|
|
|
283
|
|
|
|
1,537
|
|
|
|
429
|
|
|
|
(81.6)
|
%
|
|
|
(34.0)
|
%
|
Other non-cash
charges(8)
|
|
|
2,053
|
|
|
|
2,497
|
|
|
|
2,196
|
|
|
|
(17.8)
|
%
|
|
|
(6.5)
|
%
|
Legal and litigation
expenses including settlement payments(9)
|
|
|
434
|
|
|
|
-
|
|
|
|
3
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Acquisitions and
integration-related costs including restructuring and
severance(10)
|
|
|
-
|
|
|
|
(220)
|
|
|
|
394
|
|
|
|
(100.0)
|
%
|
|
|
(100.0)
|
%
|
Non-cash stock-based
compensation
|
|
|
3,230
|
|
|
|
1,442
|
|
|
|
2,154
|
|
|
|
124.0
|
%
|
|
|
50.0
|
%
|
Total Adjusted
EBITDA
|
|
$
|
32,103
|
|
|
$
|
(1,153)
|
|
|
$
|
35,745
|
|
|
|
N/A
|
|
|
|
(10.2)
|
%
|
(Amounts in
thousands, except Adjusted EBITDA margin)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Change
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2021 vs
2020
|
|
|
2021 vs
2019
|
|
Total
revenues
|
|
$
|
66,837
|
|
|
$
|
16,788
|
|
|
$
|
74,509
|
|
|
|
298.1
|
%
|
|
|
(10.3)
|
%
|
Adjusted
EBITDA
|
|
$
|
32,103
|
|
|
$
|
(1,153)
|
|
|
$
|
35,745
|
|
|
|
N/A
|
|
|
|
(10.2)
|
%
|
Adjusted EBITDA
margin
|
|
|
48.0
|
%
|
|
|
-6.9
|
%
|
|
|
48.0
|
%
|
|
|
(52.0)
|
%
|
|
|
0.1
|
%
|
|
(6) Write-downs and other includes items
related to loss on disposal or impairment of long-lived assets,
fair value adjustments to contingent consideration, and acquisition
costs.
|
(7) Other
adjustments are primarily composed of costs and inventory and
receivable valuation charges associated with the
COVID-19 pandemic, professional fees incurred for
projects, corporate and public filing compliance, contract
cancellation fees, and other transaction costs deemed to be
non-operating in nature, as well as costs incurred related to
initial public offering, net of costs capitalized to equity and the
cost of related secondary offerings.
|
(8) 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.
|
(9) Legal and
litigation expenses including settlement payments consist
of payments to law firms and settlements for matters that are
outside the normal course of business.
|
(10) Acquisition and integration costs
primarily relate to costs incurred after the purchase of
businesses, such as the purchase of 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:
(Amounts in
thousands, except net debt leverage ratio)
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2021
|
|
|
2020
|
|
Total principal
amount of debt
|
|
$
|
619,193
|
|
|
$
|
622,509
|
|
Less: Cash and cash
equivalents
|
|
|
88,688
|
|
|
|
81,689
|
|
Total net
debt
|
|
$
|
530,505
|
|
|
$
|
540,820
|
|
LTM Adjusted
EBITDA
|
|
$
|
106,746
|
|
|
$
|
71,669
|
|
Total net debt
leverage ratio
|
|
|
5.0
|
|
|
|
7.5
|
|
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. 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
management's 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)
|
|
Six Months
Ended June 30,
2021
|
|
|
Three Months
Ended March 31,
2021
|
|
|
Three Months
Ended June 30,
2021
|
|
Net cash provided by
operating activities
|
|
$
|
35,893
|
|
|
$
|
9,693
|
|
|
$
|
26,200
|
|
Software development
and other expenditures
|
|
|
(7,210)
|
|
|
|
(3,766)
|
|
|
|
(3,444)
|
|
Purchases of property
and equipment
|
|
|
(14,191)
|
|
|
|
(6,109)
|
|
|
|
(8,082)
|
|
Free Cash
Flow
|
|
$
|
14,492
|
|
|
$
|
(182)
|
|
|
$
|
14,674
|
|
(Amounts in
thousands)
|
|
Six Months
Ended
June 30,
2020
|
|
|
Three Months
Ended March 31,
2020
|
|
|
Three Months
Ended June 30,
2020
|
|
Net cash provided by
operating activities
|
|
$
|
7,867
|
|
|
$
|
18,809
|
|
|
$
|
(10,942)
|
|
Purchase of
intangible assets
|
|
|
(925)
|
|
|
|
(699)
|
|
|
|
(226)
|
|
Software development
and other expenditures
|
|
|
(5,530)
|
|
|
|
(3,756)
|
|
|
|
(1,774)
|
|
Purchases of property
and equipment
|
|
|
(8,057)
|
|
|
|
(6,150)
|
|
|
|
(1,907)
|
|
Free Cash
Flow
|
|
$
|
(6,645)
|
|
|
$
|
8,204
|
|
|
$
|
(14,849)
|
|
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SOURCE AGS