LAS VEGAS,– 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 |
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(In thousands, except per-share and Adjusted EBITDA margin data) |
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Three months ended December 31, |
Twelve months ended December 31, |
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2019 |
2018 |
% Change |
2019 |
2018 |
% Change |
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Revenues: |
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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)% |
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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)% |
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Net income (loss) attributable to PlayAGS, Inc. |
$ 1,423 |
$ (10,345) |
(113.8)% |
$ (11,752) |
$ (20,846) |
(43.6)% |
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Income (loss) per share |
$ 0.04 |
$ (0.29) |
(113.8)% |
$ (0.33) |
$ (0.61) |
(45.9)% |
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Adjusted EBITDA: |
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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% |
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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
(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 |
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Three and Twelve Months Ended December 31, 2019 compared to Three and Twelve Months Ended December 31, 2018 |
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(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% |
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EGM Adjusted EBITDA |
$ |
36,630 |
$ |
32,174 |
13.8% |
$ |
144,718 |
$ |
137,371 |
5.3% |
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EGM unit information: |
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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)% |
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International revenue per day |
$ |
7.65 |
$ |
8.07 |
(5.2)% |
$ |
8.13 |
$ |
8.41 |
(3.3)% |
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Total revenue per day |
$ |
19.52 |
$ |
20.20 |
(3.4)% |
$ |
20.10 |
$ |
20.96 |
(4.1)% |
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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
International Gaming Operations
Equipment Sales
Segment Highlights
(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 |
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Three and Twelve Months Ended December 31, 2019 compared to Three and Twelve Months Ended December 31, 2018 |
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(Amounts in thousands, except unit data) |
Three months ended December 31, |
Twelve months ended December 31, |
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2019 |
2018 |
% Change |
2019 |
2018 |
% Change |
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Table Products segment revenues: |
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Gaming operations |
$ |
2,653 |
$ |
2,120 |
25.1 |
% |
$ |
9,555 |
$ |
7,377 |
29.5% |
||||||||||
Equipment sales |
104 |
17 |
511.8 |
% |
639 |
274 |
133.2% |
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Total Table Products revenues |
$ |
2,757 |
$ |
2,137 |
29.0 |
% |
$ |
10,194 |
$ |
7,651 |
33.2% |
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Table Products Adjusted EBITDA |
$ |
1,005 |
$ |
258 |
289.5 |
% |
$ |
3,699 |
$ |
942 |
292.7% |
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Table Products unit information: |
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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
Interactive |
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Three and Twelve Months Ended December 31, 2019 compared to Three and Twelve Months Ended December 31, 2018 |
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(Amounts in thousands) |
Three months ended December 31, |
Twelve months ended December 31, |
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2019 |
2018 |
% Change |
2019 |
2018 |
% Change |
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Interactive segment revenue: |
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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% |
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Total Interactive revenue |
$ |
1,319 |
$ |
1,294 |
1.9% |
$ |
4,878 |
$ |
6,623 |
(26.3)% |
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Interactive Adjusted EBITDA |
$ |
(370) |
$ |
(884) |
(58.1)% |
$ |
(2,355) |
$ |
(2,107) |
11.8% |
Interactive Quarterly Highlights
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 |
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Adjusted EBITDA |
$146.1 |
$148 – $153 |
1% – 5% |
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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.