LAS VEGAS, May 6, 2021 /PRNewswire/ -- AGS (NYSE: AGS)
("AGS", "us", "we" or the "Company") today reported operating
results for its first quarter ended March 31, 2021.
AGS President and Chief Executive Officer David Lopez said, "I was very pleased with our
team's execution in the 2021 first quarter and am equally as
encouraged by the macro level trends and overall sentiment we are
seeing across the gaming landscape today. Following one of the best
corporate strategic planning meetings I have ever
participated in, we are strengthening our organizational alignment
around key business objectives, which should allow us to improve
our business trajectory and overall operating efficiency."
Kimo Akiona, AGS' Chief Financial
Officer, added, "Our first quarter results once again serve as a
testament to the resiliency and durability inherent to our
company's recurring revenue-centric business model. I am confident
our improving execution and strong liquidity position will allow us
to deliver more consistent financial performance and, in turn,
further enhance shareholder value."
Summary of
the Three Months Ended March 31,
2021 and 2020
|
(In thousands,
except per-share and Adjusted EBITDA margin data)
|
|
|
|
Three Months
Ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
$
Change
|
|
|
%
Change
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM
|
|
$
|
50,518
|
|
|
$
|
50,355
|
|
|
$
|
163
|
|
|
|
0.3
|
%
|
Table
Products
|
|
|
2,756
|
|
|
|
2,482
|
|
|
|
274
|
|
|
|
11.0
|
%
|
Interactive
|
|
|
2,085
|
|
|
|
1,476
|
|
|
|
609
|
|
|
|
41.3
|
%
|
Total
revenues
|
|
$
|
55,359
|
|
|
$
|
54,313
|
|
|
$
|
1,046
|
|
|
|
1.9
|
%
|
(Loss) income from
operations
|
|
$
|
3,415
|
|
|
$
|
(5,183)
|
|
|
$
|
8,598
|
|
|
|
(165.9)
|
%
|
Net (loss)
income
|
|
$
|
(7,770)
|
|
|
$
|
(14,419)
|
|
|
$
|
6,649
|
|
|
|
(46.1)
|
%
|
(Loss) income per
share
|
|
$
|
(0.21)
|
|
|
$
|
(0.41)
|
|
|
$
|
0.19
|
|
|
|
(47.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM
|
|
$
|
24,403
|
|
|
$
|
23,372
|
|
|
$
|
1,031
|
|
|
|
4.4
|
%
|
Table
Products
|
|
|
1,411
|
|
|
|
898
|
|
|
|
513
|
|
|
|
57.1
|
%
|
Interactive
|
|
|
508
|
|
|
|
231
|
|
|
|
277
|
|
|
|
119.9
|
%
|
Total Adjusted
EBITDA(1)
|
|
$
|
26,322
|
|
|
$
|
24,501
|
|
|
$
|
1,821
|
|
|
|
7.4
|
%
|
Total Adjusted
EBITDA margin(1)
|
|
|
47.5
|
%
|
|
|
45.1
|
%
|
|
|
2.4
|
%
|
|
244
|
bps
|
First 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, (loss) income from
operations, net (loss) income, and Adjusted EBITDA.
- Consolidated revenue totaled $55.4
million compared to $54.3
million in the 2020 first quarter, representing a
year-over-year increase of 1.9%. Growth within the recurring
revenue channels of our EGM, Table Products and Interactive
businesses helped to offset the impact of ongoing sluggishness in
the North American slot replacement market on our reported revenue.
Additionally, we recognized an additional $2.1 million in sales revenue related to units
that were strategically pruned and subsequently sold as compared to
the prior year's quarter.
- We estimate approximately 99% of our 15,456-unit domestic
installed base and 51% of our 7,985-unit international installed
base was active as of March 31, 2021.
These figures compare to 90% and 36%, respectively, as of
December 31, 2020.
- Gaming operations, or recurring revenue, increased 4.1%
year-over-year to $44.4 million. The
benefits realized through the easing of COVID-19 restrictions on
our customers' operations, ongoing vaccination efforts, and
continued growth within our premium unit footprint paced our
improved EGM recurring revenue performance, while continued
progressive penetration and improved execution supported
year-over-year gaming operations revenue growth within our Table
Products and Interactive segments, respectively. In aggregate,
recurring revenue accounted for 80.2% of our
consolidated revenue compared to 78.6% in the prior year's
quarter.
- Our 2021 first quarter net loss of $7.8
million improved as compared to the $14.4 million net loss incurred in the 2020 first
quarter. The year-over-year decline in our reported net loss
reflects our improved revenue performance, led by our recurring
revenue businesses, and recognition of lower depreciation and
amortization expense as a result of several intangible assets
reaching the end of their useful lives, partially offset by higher
interest expense related to our incremental debt financing, which
we closed upon in May 2020.
- Total Adjusted EBITDA (non-GAAP)(1) increased 7.4%
year-over-year to $26.3 million.
Adjusted EBITDA increased versus the prior year across all three of
our operating segments, led by a $1.0 million, or 4.4%, year-over-year
increase in our EGM Adjusted EBITDA.
- Total Adjusted EBITDA margin (non-GAAP)(1) improved to 47.5% in
the first quarter of 2021 compared to 45.1% in
the prior year, reflecting favorable mix of higher-margin recurring
revenues and an increase in high-margin revenue generated as
part of our ongoing strategic pruning initiative, partially offset
by normalization in our operating expenses. Recall, we implemented
cost savings initiatives in the latter part of the 2020 first
quarter to preserve our liquidity in the face of the
uncertainty brought upon by the COVID-19 outbreak. These
initiatives temporarily reduced our operating expenses below
normalized run-rate levels.
(1) Adjusted
EBITDA and Adjusted EBITDA margin are non-GAAP measures, see
non-GAAP reconciliation below.
|
EGM
Three Months Ended
March 31, 2021 compared to Three Months Ended
March 31, 2020
|
|
(Amounts in
thousands, except unit data)
|
|
Three Months
Ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
$
Change
|
|
|
%
Change
|
|
EGM segment
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
$
|
39,604
|
|
|
$
|
38,885
|
|
|
$
|
719
|
|
|
|
1.8
|
%
|
Equipment
sales
|
|
|
10,914
|
|
|
|
11,470
|
|
|
|
(556)
|
|
|
|
(4.8)
|
%
|
Total EGM
revenues
|
|
$
|
50,518
|
|
|
$
|
50,355
|
|
|
$
|
163
|
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM Adjusted
EBITDA
|
|
$
|
24,403
|
|
|
$
|
23,372
|
|
|
$
|
1,031
|
|
|
|
4.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM unit
information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VLT
|
|
|
-
|
|
|
|
512
|
|
|
|
(512)
|
|
|
|
(100.0)
|
%
|
Class II
|
|
|
11,412
|
|
|
|
12,291
|
|
|
|
(879)
|
|
|
|
(7.2)
|
%
|
Class III
|
|
|
4,044
|
|
|
|
5,000
|
|
|
|
(956)
|
|
|
|
(19.1)
|
%
|
Domestic installed
base, end of period
|
|
|
15,456
|
|
|
|
17,803
|
|
|
|
(2,347)
|
|
|
|
(13.2)
|
%
|
International
installed base, end of period
|
|
|
7,985
|
|
|
|
8,286
|
|
|
|
(301)
|
|
|
|
(3.6)
|
%
|
Total installed base,
end of period
|
|
|
23,441
|
|
|
|
26,089
|
|
|
|
(2,648)
|
|
|
|
(10.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Installed base -
Oklahoma
|
|
|
8,127
|
|
|
|
9,745
|
|
|
|
(1,618)
|
|
|
|
(16.6)
|
%
|
Installed base -
non-Oklahoma
|
|
|
7,329
|
|
|
|
8,058
|
|
|
|
(729)
|
|
|
|
(9.0)
|
%
|
Domestic installed
base, end of period
|
|
|
15,456
|
|
|
|
17,803
|
|
|
|
(2,347)
|
|
|
|
(13.2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic revenue
per day
|
|
$
|
27.10
|
|
|
$
|
21.08
|
|
|
$
|
6.02
|
|
|
|
28.6
|
%
|
International
revenue per day
|
|
$
|
2.94
|
|
|
$
|
6.89
|
|
|
$
|
(3.95)
|
|
|
|
(57.3)
|
%
|
Total revenue
per day
|
|
$
|
18.89
|
|
|
$
|
16.57
|
|
|
$
|
2.32
|
|
|
|
14.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic EGM unit
sales components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino opening and expansion units
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.0
|
%
|
Other
|
|
|
289
|
|
|
|
426
|
|
|
|
(137)
|
|
|
|
(32.2)
|
%
|
Total Domestic
EGM units sold
|
|
|
289
|
|
|
|
426
|
|
|
|
(137)
|
|
|
|
(32.2)
|
%
|
International
EGM units sold
|
|
|
-
|
|
|
|
38
|
|
|
|
(38)
|
|
|
|
(100.0)
|
%
|
Total EGM units
sold
|
|
|
289
|
|
|
|
464
|
|
|
|
(175)
|
|
|
|
(37.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic average sales
price
|
|
$
|
17,520
|
|
|
$
|
17,564
|
|
|
$
|
(44)
|
|
|
|
(0.3)
|
%
|
EGM Quarterly Results
Domestic Gaming Operations(2)
- Domestic gaming operations, or recurring revenue, increased
11.2% year-over-year to $37.6 million
compared to $33.8 million in the
prior year period. The year-over-year revenue increase reflects the
combination of easing COVD-19-related restrictions on our
customers' operations and ongoing vaccination efforts, which we
believe allowed significant pent-up demand to get unlocked across
the U.S. casino landscape as the quarter progressed. Additionally,
growth within our premium game footprint continued to support our
domestic gaming operations performance in the quarter.
- Our domestic EGM installed base decreased by approximately
2,350 units year-over-year, attributable to the strategic pruning
of approximately 1,300 lower-yielding units, the end-of-lease
buyout of approximately 500 lower-earning IL VLT units and the
removal of approximately 550 units primarily associated with
COVID-19-related floor reconfigurations.
- Domestic EGM revenue per day ("RPD") increased 28.6%
year-over-year to $27.10. We
attribute the improved RPD performance to a more accommodative
casino operating environment supported by easing COVID-19-related
operating restrictions and improved vaccine distribution, the
continued growth of our premium game footprint, and the strategic
pruning of lower-yielding units. Domestic EGM RPD increased
approximately 3% as compared to the $26.42 realized in the 2019 first quarter.
- On a quarterly sequential basis, our domestic EGM installed
base decreased by approximately 800 units, including the planned
removal and sale of approximately 430 lower-yielding units as part
of our ongoing strategic pruning initiative, while our domestic EGM
RPD increased 16.5% relative to the $23.26 achieved in the 2020 fourth quarter.
Domestic EGM RPD improved month-over-month throughout the 2021
first quarter, with notable strength witnessed across several
impactful geographies during the quarter's final month. We
attribute the improving RPD trend to the release of significant
pent-up casino patron demand, which immediately followed the easing
of COVID-19-related operating restrictions and improving
vaccination efforts.
International Gaming Operations
- International gaming operations revenue decreased to
$2.0 million compared to $5.1 million in the prior year period. The
year-over-year decline reflects the impact of measures implemented
to slow the spread of COVID-19, such as temporary casino closures
and capacity restrictions, on our 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.
- International RPD was $2.94
compared to $6.89 in the 2020 first
quarter, with the decline reflecting the degree to which
COVID-19-related operating restrictions and facility closures
impacted our business. International RPD improved approximately 15%
on a quarterly sequential basis, supported by the reopening of
additional casinos throughout the 2021 first quarter. Adjusted
active unit international RPD was $7.83, down approximately 10% versus the
$8.68 achieved in the 2019 first
quarter.
- Our international installed base decreased by 301 units
year-over-year because of permanent casino closures in Mexico and COVID-19-related floor
reconfigurations. The international installed base was unchanged on
a quarterly sequential basis.
Equipment Sales
- EGM unit sales decreased to 289 units in the 2021 first
quarter, reflecting operators' preference to carefully manage
capital expenditures as their businesses recover from
COVID-19-related business disruption.
- Domestic average sales price ("ASP") of $17,520 was relatively consistent with the level
achieved in Q1 2020.
- We sold units into 14 U.S. states and two Canadian provinces,
with British Columbia, Virginia,
and Ohio emerging as our top three
sales markets.
- The Orion Curve accounted for 31% of units shipped
in the quarter.
- EGM equipment sales revenue benefitted from the planned sale of
approximately 430 previously leased, lower-yielding units to a
distributor as part of our ongoing effort to strategically prune
under-earning units from our Oklahoma installed base.(3)
Product Highlights
- Placed an additional 120 premium, lease-only Orion
Starwall games, increasing our installed base to over 420
games at quarter end. Starwall games continue to
perform well and the introduction of additional configuration
options offering greater distance between players has the potential
to further stimulate operator interest.
- Recently commenced our initial field trial of our Orion
Curve Premium package featuring an extension of our
player-favorite game theme, Rakin' Bacon.
- Subsequent to quarter end executed an omni-channel
enterprise-wide agreement with a large multi-site operator
involving our premium lease and for-sale EGM products and our
online real money gaming ("RMG") content, set to go live later this
year.
- Continue to leverage our exceptional game performance to
further penetrate the Virginia and
Kentucky Historical Horse Racing ("HHR") markets. Our HHR footprint
increased by over 65 units in the 2021 first quarter.
- Expanded our Orion Curve footprint to comprise over
420 units as of March 31, 2021,
representing a net quarterly sequential increase of approximately
95 units. The recent introduction of our
strong-performing Ultimate Choice Jackpots family
of games on the Orion Curve has received a
strong reception in the market to date.
(2) "Domestic" includes both the United
States and Canada.
|
(3) The
430 units were not included in our sold unit count or ASP for
the current period.
|
Table Products
Three Months Ended
March 31, 2021 compared to Three Months Ended March 31,
2020
|
|
(Amounts in
thousands, except unit data)
|
|
Three Months
Ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
$
Change
|
|
|
%
Change
|
|
Table Products
segment revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
$
|
2,727
|
|
|
$
|
2,324
|
|
|
$
|
403
|
|
|
|
17.3
|
%
|
Equipment
sales
|
|
|
29
|
|
|
|
158
|
|
|
$
|
(129)
|
|
|
|
(81.6)
|
%
|
Total Table
Products revenues
|
|
$
|
2,756
|
|
|
$
|
2,482
|
|
|
$
|
274
|
|
|
|
11.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
Adjusted EBITDA
|
|
$
|
1,411
|
|
|
$
|
898
|
|
|
$
|
513
|
|
|
|
57.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
unit information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
installed base, end of period
|
|
|
4,362
|
|
|
|
3,897
|
|
|
|
465
|
|
|
|
11.9
|
%
|
Average monthly lease
price
|
|
$
|
208
|
|
|
$
|
197
|
|
|
$
|
11
|
|
|
|
5.6
|
%
|
Table Products Quarterly Results
- Adjusted EBITDA increased 57.1% year-over-year to a quarterly
record $1.4 million. Adjusted EBITDA
improved 7.2% on a quarterly sequential basis. Adjusted EBITDA
margin was 51.2% compared to 36.2% in the prior year period.
- Gaming operations, or recurring revenue, increased 17.3%
year-over-year to a record $2.7
million, supported by continued growth in our installed base
and customer adoption of our all-inclusive site license offering,
the AGS Arsenal.
- Our installed base increased by 465 units year-over-year and
108 units on a quarterly sequential basis, aided by the growing
appeal of our progressive and side bet product portfolio. We
estimate approximately 90% of our installed base was active at
quarter end.
- Operator interest in our industry-leading suit of table game
progressive products continues to build, as evidenced by the 77
unit quarterly sequential increase in our progressive installed
base to a record 1,619 units.
- We successfully launched our Bonus Spin
Xtreme progressive in the 2021 first quarter and the
pipeline continues to grow. Additionally, we continue to see
growing demand for our Royal 9 Baccarat and Super
4 STAX progressives.
- We were live with six site licenses as of March 31, 2021 and interest levels remain high as
operators look for ways to further enhance the efficiency of their
table game operations.
- Equipment sales revenue decreased $0.1
million year-over-year, reflecting a decrease in DexS
card shuffler and other table game product sales.
Interactive
Three Months Ended
March 31, 2021 compared to Three Months Ended
March 31, 2020
|
|
(Amounts in
thousands)
|
|
Three Months
Ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
$
Change
|
|
|
%
Change
|
|
Interactive
segment revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Social gaming
revenue
|
|
$
|
709
|
|
|
$
|
822
|
|
|
$
|
(113)
|
|
|
|
(13.7)
|
%
|
Real-money gaming
revenue
|
|
|
1,376
|
|
|
|
654
|
|
|
|
722
|
|
|
|
110.4
|
%
|
Total Interactive
revenue
|
|
$
|
2,085
|
|
|
$
|
1,476
|
|
|
$
|
609
|
|
|
|
41.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interactive
Adjusted EBITDA
|
|
$
|
508
|
|
|
$
|
231
|
|
|
$
|
277
|
|
|
|
119.9
|
%
|
Interactive Quarterly Results
- Total Interactive revenue increased 41.3% year-over-year to
$2.1 million, while Adjusted EBITDA
totaled $0.5 million, marking an
approximately $0.3 million increase
versus the prior year.
- Interactive achieved positive Adjusted EBITDA for the fifth
consecutive quarter, supported by continued growth within our RMG
business.
- Real Money Gaming ("RMG") revenue increased 110.4%
year-over-year to a new quarterly record of $1.4 million, aided by our steadily improving
game performance, successful launch into the Pennsylvania (Q2 20) and Michigan (Q1
21) iGaming markets, and back-end integrations with
additional B2C iGaming operators. We also believe COVID-19
stay-at-home measures and other macroeconomic tailwinds
further supported our quarterly performance. RMG revenue
improved over 50% on a quarterly sequential basis.
- In Q2 21 we expect to launch our RMG platform with 11 new
operator partners and introduce additional proprietary AGS
content, including our first table game offering, to the iGaming
market.
- Social gaming revenue declined 13.7% versus the prior year
period. We believe our 2020 first quarter B2C Social gaming revenue
benefitted from the consumers' preference to stay at home as
COVID-19 began to spread, a benefit that was less pronounced in the
2021 first quarter as COVID-19 case counts declined and vaccination
efforts progressed. Recently implemented cost savings initiatives
helped to mitigate the impact of the Social gaming revenue decline
on our reported Interactive Adjusted EBITDA.
Liquidity and Capital Expenditures
As of March 31, 2021, we had
$107.3 million of available
liquidity compared to $111.7 million at December 31, 2020. The total
principal amount of debt outstanding, as of March 31, 2021, was $620.9 million, predominantly comprised of
$619.5 million in first lien
term loans, which mature in 2024.
In May 2020, we issued an
additional $95.0 million in secured
term loans to increase the Company's cash position and facilitate
financial flexibility considering uncertainty in the gaming
industry at the time resulting from the COVID-19 pandemic. 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 March 31,
2021, our net first lien leverage ratio, measured in
accordance with the revised calculation of Adjusted
EBITDA described above, was 4.0 times, putting us in
compliance with our financial covenant.
Total net debt, which is the principal amount of debt
outstanding less cash and cash equivalents, as of March 31, 2021, was approximately
$543.6 million compared to
$540.8 million at December 31, 2020. Our Total Net Debt Leverage
Ratio decreased from 7.5 times at December 31, 2020 to 7.4 times at
March 31, 2021 (see Total Net
Debt Leverage Ratio Reconciliation below(4)).
Capital expenditures decreased by 6.9% year-over-year to
$9.9 million in the current period,
in line with our plans to conservatively manage the use of our cash
and only invest in those projects providing the highest potential
return on our investment. The current quarter's capital
expenditures were primarily comprised of $5.2 million in growth capital expenditures,
which reflect costs associated with the placement of
additional units into our leased installed base, and $3.8
million in intangible capital expenditures, inclusive of
capitalized internal software development costs.
(4) Total Adjusted
EBITDA and total net debt leverage ratio are non-GAAP measures, see
non-GAAP reconciliation below.
|
Conference Call and Webcast
On May 6, 2021, at 5 p.m. EDT, AGS leadership will host a conference
call to review the Company's first quarter 2021
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 (888)
349-0106 and the call-in number for participants outside the
U.S./Canada is +1 (412)
902-0131. The conference ID/confirmation code is "AGS Q1
2021 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, 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)
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2021
|
|
|
2020
|
|
Assets
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
77,299
|
|
|
$
|
81,689
|
|
Restricted
cash
|
|
|
20
|
|
|
|
20
|
|
Accounts receivable,
net of allowance of $2,122 and $2,077, respectively
|
|
|
45,332
|
|
|
|
41,743
|
|
Inventories
|
|
|
26,567
|
|
|
|
26,902
|
|
Prepaid
expenses
|
|
|
8,615
|
|
|
|
4,210
|
|
Deposits and
other
|
|
|
5,089
|
|
|
|
4,704
|
|
Total current
assets
|
|
|
162,922
|
|
|
|
159,268
|
|
Property and
equipment, net
|
|
|
76,794
|
|
|
|
81,040
|
|
Goodwill
|
|
|
285,569
|
|
|
|
286,042
|
|
Intangible
assets
|
|
|
179,685
|
|
|
|
187,644
|
|
Deferred tax
asset
|
|
|
6,637
|
|
|
|
6,762
|
|
Operating lease
assets
|
|
|
9,331
|
|
|
|
9,763
|
|
Other
assets
|
|
|
9,243
|
|
|
|
10,259
|
|
Total
assets
|
|
$
|
730,181
|
|
|
$
|
740,778
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
6,399
|
|
|
$
|
9,547
|
|
Accrued
liabilities
|
|
|
28,912
|
|
|
|
26,325
|
|
Current maturities of
long-term debt
|
|
|
7,001
|
|
|
|
7,031
|
|
Total current
liabilities
|
|
|
42,312
|
|
|
|
42,903
|
|
Long-term
debt
|
|
|
601,044
|
|
|
|
601,560
|
|
Deferred tax
liability, non-current
|
|
|
2,358
|
|
|
|
2,254
|
|
Operating lease
liabilities, long-term
|
|
|
9,081
|
|
|
|
9,497
|
|
Other long-term
liabilities
|
|
|
29,381
|
|
|
|
30,781
|
|
Total
liabilities
|
|
|
684,176
|
|
|
|
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 March 31, 2021 and at
December 31, 2020; and 36,602,139 and 36,494,002 shares issued and
outstanding at March 31, 2021 and December 31, 2020,
respectively.
|
|
|
366
|
|
|
|
364
|
|
Additional paid-in
capital
|
|
|
381,547
|
|
|
|
379,917
|
|
Accumulated
deficit
|
|
|
(329,960)
|
|
|
|
(321,412)
|
|
Accumulated other
comprehensive loss
|
|
|
(5,948)
|
|
|
|
(5,086)
|
|
Total stockholders'
equity
|
|
|
46,005
|
|
|
|
53,783
|
|
Total liabilities
and stockholders' equity
|
|
$
|
730,181
|
|
|
$
|
740,778
|
|
PLAYAGS,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
(amounts in
thousands, except per share data)
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Revenues
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
$
|
44,416
|
|
|
$
|
42,685
|
|
Equipment
sales
|
|
|
10,943
|
|
|
|
11,628
|
|
Total
revenues
|
|
|
55,359
|
|
|
|
54,313
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Cost of gaming
operations(5)
|
|
|
8,676
|
|
|
|
9,993
|
|
Cost of equipment
sales(5)
|
|
|
3,468
|
|
|
|
5,208
|
|
Selling, general and
administrative
|
|
|
12,608
|
|
|
|
11,640
|
|
Research and
development
|
|
|
8,060
|
|
|
|
8,231
|
|
Write-downs and other
charges
|
|
|
724
|
|
|
|
55
|
|
Depreciation and
amortization
|
|
|
18,408
|
|
|
|
24,369
|
|
Total operating
expenses
|
|
|
51,944
|
|
|
|
59,496
|
|
Income (loss) from
operations
|
|
|
3,415
|
|
|
|
(5,183)
|
|
Other
expense
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
10,981
|
|
|
|
8,342
|
|
Interest
income
|
|
|
(288)
|
|
|
|
(52)
|
|
Other
expense
|
|
|
147
|
|
|
|
4,339
|
|
(Loss) income
before income taxes
|
|
|
(7,425)
|
|
|
|
(17,812)
|
|
Income tax (expense)
benefit
|
|
|
(345)
|
|
|
|
3,393
|
|
Net (loss)
income
|
|
|
(7,770)
|
|
|
|
(14,419)
|
|
Foreign currency
translation adjustment
|
|
|
(862)
|
|
|
|
(8,184)
|
|
Total comprehensive
(loss) income
|
|
$
|
(8,632)
|
|
|
$
|
(22,603)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
loss per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.21)
|
|
|
$
|
(0.41)
|
|
Diluted
|
|
$
|
(0.21)
|
|
|
$
|
(0.41)
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
36,466
|
|
|
$
|
35,543
|
|
Diluted
|
|
$
|
36,466
|
|
|
$
|
35,543
|
|
|
(5) Exclusive of
depreciation and amortization.
|
PLAYAGS,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands)
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(7,770)
|
|
|
$
|
(14,419)
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
18,408
|
|
|
|
24,369
|
|
Accretion of contract
rights under development agreements and placement fees
|
|
|
1,706
|
|
|
|
1,859
|
|
Amortization of
deferred loan costs and discount
|
|
|
1,104
|
|
|
|
492
|
|
Stock-based
compensation expense
|
|
|
1,632
|
|
|
|
1,551
|
|
Provision (benefit)
for bad debts
|
|
|
118
|
|
|
|
(299)
|
|
Loss on disposition of
long-lived assets
|
|
|
71
|
|
|
|
49
|
|
Impairment of
assets
|
|
|
653
|
|
|
|
6
|
|
Benefit for deferred
income tax
|
|
|
59
|
|
|
|
(101)
|
|
Changes in assets and
liabilities that relate to operations:
|
|
|
-
|
|
|
|
-
|
|
Accounts
receivable
|
|
|
(3,887)
|
|
|
|
20,284
|
|
Inventories
|
|
|
921
|
|
|
|
(5,324)
|
|
Prepaid
expenses
|
|
|
(4,408)
|
|
|
|
(2,068)
|
|
Deposits and
other
|
|
|
(408)
|
|
|
|
408
|
|
Other assets,
non-current
|
|
|
1,339
|
|
|
|
3,681
|
|
Accounts payable and
accrued liabilities
|
|
|
155
|
|
|
|
(11,679)
|
|
Net cash provided
by operating activities
|
|
|
9,693
|
|
|
|
18,809
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Customer notes
receivable
|
|
|
-
|
|
|
|
(2,301)
|
|
Purchase of intangible
assets
|
|
|
-
|
|
|
|
(699)
|
|
Software development
and other expenditures
|
|
|
(3,766)
|
|
|
|
(3,756)
|
|
Proceeds from
disposition of assets
|
|
|
11
|
|
|
|
27
|
|
Purchases of property
and equipment
|
|
|
(6,109)
|
|
|
|
(6,150)
|
|
Net cash used in
investing activities
|
|
|
(9,864)
|
|
|
|
(12,879)
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Repayment of first
lien credit facilities
|
|
|
(1,347)
|
|
|
|
(1,347)
|
|
Repayment of
incremental term loans
|
|
|
(238)
|
|
|
|
-
|
|
Payment of financed
placement fee obligations
|
|
|
(1,217)
|
|
|
|
(3,444)
|
|
Borrowing on
revolver
|
|
|
-
|
|
|
|
30,000
|
|
Payments of previous
acquisition obligation
|
|
|
(113)
|
|
|
|
(201)
|
|
Payments on finance
leases and other obligations
|
|
|
(525)
|
|
|
|
(333)
|
|
Repurchase of
stock
|
|
|
(778)
|
|
|
|
(348)
|
|
Proceeds from stock
option exercise
|
|
|
-
|
|
|
|
158
|
|
Net cash (used in)
provided by financing activities
|
|
|
(4,218)
|
|
|
|
24,485
|
|
Effect of exchange
rates on cash and cash equivalents
|
|
|
(1)
|
|
|
|
(13)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
(4,390)
|
|
|
|
30,402
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
|
81,709
|
|
|
|
13,182
|
|
Cash, cash
equivalents and restricted cash, end of period
|
|
$
|
77,319
|
|
|
$
|
43,584
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
|
|
Leased assets obtained
in exchange for new finance lease liabilities
|
|
$
|
288
|
|
|
$
|
254
|
|
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)
|
|
Three Months Ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Net (loss)
income
|
|
$
|
(7,770)
|
|
|
$
|
(14,419)
|
|
Income tax (benefit)
expense
|
|
|
345
|
|
|
|
(3,393)
|
|
Depreciation and
amortization
|
|
|
18,408
|
|
|
|
24,369
|
|
Other
expense
|
|
|
147
|
|
|
|
4,339
|
|
Interest
income
|
|
|
(288)
|
|
|
|
(52)
|
|
Interest
expense
|
|
|
10,981
|
|
|
|
8,342
|
|
Write-downs and
other(6)
|
|
|
724
|
|
|
|
55
|
|
Other
adjustments(7)
|
|
|
(285)
|
|
|
|
702
|
|
Other non-cash
charges(8)
|
|
|
2,181
|
|
|
|
2,555
|
|
Legal and litigation
expenses including settlement payments(9)
|
|
|
198
|
|
|
|
-
|
|
Acquisitions and
integration-related costs including restructuring and
severance(10)
|
|
|
49
|
|
|
|
452
|
|
Non-cash stock-based
compensation
|
|
|
1,632
|
|
|
|
1,551
|
|
Total Adjusted
EBITDA
|
|
$
|
26,322
|
|
|
$
|
24,501
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
thousands, except Adjusted EBITDA margin)
|
|
Three Months Ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Total
revenues
|
|
$
|
55,359
|
|
|
$
|
54,313
|
|
Adjusted
EBITDA
|
|
$
|
26,322
|
|
|
$
|
24,501
|
|
Adjusted EBITDA
margin
|
|
|
47.5
|
%
|
|
|
45.1
|
%
|
|
(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)
|
|
March
31,
|
|
December
31,
|
|
|
2021
|
|
2020
|
Total principal
amount of debt
|
|
$
|
620,922
|
|
$
|
622,509
|
Less: Cash and cash
equivalents
|
|
|
77,299
|
|
|
81,689
|
Total net
debt
|
|
$
|
543,623
|
|
$
|
540,820
|
LTM Adjusted
EBITDA
|
|
$
|
73,490
|
|
$
|
71,669
|
Total net debt
leverage ratio
|
|
|
7.4
|
|
|
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)
|
|
Three Months
Ended March
31, 2021
|
Net cash provided by
operating activities
|
|
$
|
9,693
|
Purchase of
intangible assets
|
|
|
-
|
Software development
and other expenditures
|
|
|
(3,766)
|
Purchases of property
and equipment
|
|
|
(6,109)
|
Free Cash
Flow
|
|
$
|
(182)
|
|
(Amounts in
thousands)
|
|
Three Months
Ended March
31, 2020
|
Net cash provided by
operating activities
|
|
$
|
18,809
|
Purchase of
intangible assets
|
|
|
(699)
|
Software development
and other expenditures
|
|
|
(3,756)
|
Purchases of property
and equipment
|
|
|
(6,150)
|
Free Cash
Flow
|
|
$
|
8,204
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/ags-reports-first-quarter-2021-results-301286130.html
SOURCE AGS