Delaware | 001-32622 | 20-0723270 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
7250 S. Tenaya Way, Suite 100 Las Vegas, Nevada | 89113 | |
(Address of principal executive offices) | (Zip Code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Document | |
99.1 |
EVERI HOLDINGS INC. | |||
Date: May 7, 2019 | By: | /s/ Todd A. Valli | |
Todd A. Valli, Senior Vice President, Corporate Finance and Chief Accounting Officer |
• | Revenues increase 11.5% to quarterly record $123.8 million reflecting record Games and FinTech revenue |
• | Net Income improves 28% to $5.9 million from $4.6 million; Diluted Earnings per share rise to $0.08 |
• | Adjusted EBITDA increases 5.7% to quarterly record $61.3 million |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(in millions, except per share amounts) | |||||||
Revenues | $ | 123.8 | $ | 111.0 | |||
Operating income (1) | $ | 25.9 | $ | 24.5 | |||
Net income (1) | $ | 5.9 | $ | 4.6 | |||
Net earnings per diluted share (1) | $ | 0.08 | $ | 0.06 | |||
Diluted shares outstanding | 75.3 | 73.3 | |||||
Adjusted EBITDA (2) | $ | 61.3 | $ | 58.0 |
(1) | Operating income, net income and net earnings per diluted share for the three months ended March 31, 2019 included approximately $0.5 million of operating expense related to the acquisition of certain player loyalty assets and other non-recurring professional service fees. |
(2) | For a reconciliation of net income to Adjusted EBITDA, see the Unaudited Reconciliation of Net Income to EBITDA and Adjusted EBITDA and to Free Cash Flow provided at the end of this release. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(in millions, except unit amounts and prices) | |||||||
Revenues | $ | 67.5 | $ | 60.2 | |||
Operating income (1) | $ | 3.1 | $ | 4.4 | |||
Adjusted EBITDA (2) | $ | 33.1 | $ | 31.7 | |||
Unit sales: | |||||||
Units sold | 1,259 | 1,063 | |||||
Average sales price ("ASP") | $ | 17,361 | $ | 17,745 | |||
Gaming operations installed base: | |||||||
Average units installed during period: | |||||||
Average units installed | 13,634 | 13,805 | |||||
Approximate daily win per unit (3) | $ | 31.76 | $ | 28.40 | |||
Units installed at end of period: | |||||||
Class II | 9,218 | 9,497 | |||||
Class III | 4,426 | 4,627 | |||||
Total installed base | 13,644 | 14,124 | |||||
Installed base - Oklahoma | 6,400 | 6,838 | |||||
Installed base - non-Oklahoma | 7,244 | 7,286 | |||||
Total installed base | 13,644 | 14,124 | |||||
Premium units | 3,004 | 2,797 |
(1) | Operating income for the three months ended March 31, 2019 includes the impact of approximately $0.2 million related to certain non-recurring professional fees. |
(2) | For a reconciliation of net income to Adjusted EBITDA, see the Unaudited Reconciliation of Net Income to EBITDA and Adjusted EBITDA and to Free Cash Flow provided at the end of this release. |
(3) | Approximate daily win per unit excludes the impact of the direct costs associated with the Company’s wide-area progressive jackpot expense. |
• | Revenues from gaming operations increased approximately 10.5%, or $4.2 million, to a record $44.3 million in the first quarter of 2019 compared to $40.1 million in the prior-year period. The year-over-year improvement reflects an approximate 12% increase in estimated daily win per unit (“DWPU”) to $31.76, which was partially offset by the anticipated year-over-year decline in the average installed base. |
◦ | As anticipated, the installed base at March 31, 2019 decreased by 480 units year over year and by 355 units on a quarterly sequential basis to 13,644 units, primarily reflecting the removal of approximately 330 lower performing units from a customer in Oklahoma and the sale of approximately 200 units from the installed base to a customer in Indiana. |
◦ | The premium portion of the installed base increased 7.4% year over year, or 207 units, to 3,004 units. Wide-area progressive units, which are a component of premium units, rose 320 units year over year and by 119 units on a quarterly sequential basis to 723 units at March 31, 2019. |
◦ | DWPU in the first quarter of 2019 increased 11.8%, or $3.36, to $31.76, compared to $28.40 in the prior-year period. The increase reflects, in part, improvements in the overall unit performance following capital investments in new cabinets and games to update a portion of the installed base and an increase in premium unit placements, including wide-area progressive games. This was the sixth consecutive quarter of year-over-year growth in DWPU. |
◦ | Interactive revenue was $1.0 million in the first quarter of 2019 compared to $0.2 million in the prior-year period. |
◦ | Revenues from the New York Lottery business were $4.7 million in the first quarter of 2019 compared to $4.5 million in the prior-year period. |
• | Revenues generated from the sale of gaming units and other related parts and equipment totaled $23.1 million in the first quarter of 2019 compared to revenues of $20.2 million in the prior-year period. Unit sales increased 18% year over year to 1,259 units in the first quarter of 2019 compared to 1,063 units in the prior-year period. |
• | Other gaming revenues, which include revenues from TournEvent of Champions® qualifying events, were less than $0.1 million in both periods. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(in millions, unless otherwise noted) | |||||||
Revenues | $ | 56.3 | $ | 50.8 | |||
Operating income (1) | $ | 22.8 | $ | 20.1 | |||
Adjusted EBITDA (2) | $ | 28.2 | $ | 26.3 | |||
Aggregate dollar amount processed (in billions): | |||||||
Cash advance | $ | 1.9 | $ | 1.7 | |||
ATM | $ | 5.3 | $ | 4.8 | |||
Check warranty | $ | 0.3 | $ | 0.3 | |||
Number of transactions completed (in millions): | |||||||
Cash advance | 2.9 | 2.7 | |||||
ATM | 24.8 | 22.9 | |||||
Check warranty | 0.9 | 0.9 |
(1) | Operating income for the three months ended March 31, 2019 includes the impact of approximately $0.3 million of non-recurring operating expenses related to the acquisition of certain player loyalty assets and other professional service fees. |
(2) | For a reconciliation of net income to Adjusted EBITDA, see the Unaudited Reconciliation of Net Income to EBITDA and Adjusted EBITDA and to Free Cash Flow at the end of this release. |
• | Revenues from cash access services, which include ATM, cash advance and check services, increased 6.8%, or $2.6 million, to $40.8 million in the first quarter of 2019 compared to $38.2 million in the first quarter of 2018. Core cash access revenue growth was the result of increased same store transactions and dollars processed, as well as the benefits from new customer wins from competitive bid processes and new casino openings or expansions. |
• | Equipment sales revenues increased 59%, or $2.6 million, to $7.0 million in the first quarter of 2019 compared to $4.4 million in the first quarter of 2018. This increase is the result of higher year over year sales of fully integrated kiosks and other operator efficiency products in the first quarter of 2019. |
• | Revenues from information services and other, which includes kiosk maintenance, compliance products, Central Credit, player loyalty and other revenue, increased $0.3 million, to $8.5 million, in the first quarter of 2019 compared to $8.2 million in the first quarter of 2018. |
• | An increase in Gaming unit sales from the 4,513 units sold in 2018; |
• | Growth in gaming operations driven by growth in both DWPU and an increase in the number of units in the year-end installed base; |
• | Increasing Interactive revenue; |
• | Higher cash access service revenue in the FinTech segment; |
• | An increase in sales of fully integrated kiosks and other FinTech equipment; and, |
• | An increase in information services and other revenue driven by expected growth in revenue related to the servicing of FinTech equipment, higher compliance revenue and software sales, maintenance and professional services from the recently acquired player loyalty technology. |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Revenues | ||||||||
Games revenues | ||||||||
Gaming operations | $ | 44,286 | $ | 40,056 | ||||
Gaming equipment and systems | 23,087 | 20,154 | ||||||
Gaming other | 54 | 7 | ||||||
Games total revenues | 67,427 | 60,217 | ||||||
FinTech revenues | ||||||||
Cash access services | 40,832 | 38,218 | ||||||
Equipment | 7,028 | 4,419 | ||||||
Information services and other | 8,488 | 8,147 | ||||||
FinTech total revenues | 56,348 | 50,784 | ||||||
Total revenues | 123,775 | 111,001 | ||||||
Costs and expenses | ||||||||
Games cost of revenues | ||||||||
Gaming operations | 4,124 | 4,182 | ||||||
Gaming equipment and systems | 12,529 | 10,741 | ||||||
Gaming other | — | — | ||||||
Games total cost of revenues | 16,653 | 14,923 | ||||||
FinTech cost of revenues | ||||||||
Cash access services | 2,697 | 2,231 | ||||||
Equipment | 4,330 | 2,514 | ||||||
Information services and other | 958 | 1,216 | ||||||
FinTech total cost of revenues | 7,985 | 5,961 | ||||||
Operating expenses | 34,648 | 32,187 | ||||||
Research and development | 7,531 | 4,311 | ||||||
Depreciation | 14,789 | 12,825 | ||||||
Amortization | 16,297 | 16,303 | ||||||
Total costs and expenses | 97,903 | 86,510 | ||||||
Operating income | 25,872 | 24,491 | ||||||
Other expenses | ||||||||
Interest expense, net of interest income | 20,400 | 20,307 | ||||||
Total other expenses | 20,400 | 20,307 | ||||||
Income before income tax | 5,472 | 4,184 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Income tax benefit | (388 | ) | (425 | ) | ||||
Net income | 5,860 | 4,609 | ||||||
Foreign currency translation | 504 | 323 | ||||||
Comprehensive income | $ | 6,364 | $ | 4,932 | ||||
Earnings per share | ||||||||
Basic | $ | 0.08 | $ | 0.07 | ||||
Diluted | $ | 0.08 | $ | 0.06 | ||||
Weighted average common shares outstanding | ||||||||
Basic | 70,334 | 68,686 | ||||||
Diluted | 75,256 | 73,285 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 5,860 | $ | 4,609 | |||
Adjustments to reconcile net income to cash (used in) provided by operating activities: | |||||||
Depreciation | 14,789 | 12,825 | |||||
Amortization | 16,297 | 16,303 | |||||
Amortization of financing costs and discounts | 890 | 905 | |||||
Loss (gain) on sale or disposal of assets | 513 | (13 | ) | ||||
Accretion of contract rights | 2,122 | 2,057 | |||||
Provision for bad debts | 2,864 | 2,182 | |||||
Deferred income taxes | (513 | ) | (561 | ) | |||
Reserve for obsolescence | 441 | 305 | |||||
Stock-based compensation | 1,773 | 2,350 | |||||
Changes in operating assets and liabilities: | |||||||
Settlement receivables | (175,748 | ) | 73,571 | ||||
Trade and other receivables | (12,385 | ) | (9,715 | ) | |||
Inventory | 57 | (1,157 | ) | ||||
Other assets | (16,756 | ) | 1,251 | ||||
Settlement liabilities | 19,931 | (74,617 | ) | ||||
Other liabilities | 27,677 | 2,456 | |||||
Net cash (used in) provided by operating activities | (112,188 | ) | 32,751 | ||||
Cash flows from investing activities | |||||||
Capital expenditures | (22,194 | ) | (26,339 | ) | |||
Acquisition | (20,000 | ) | — | ||||
Proceeds from sale of fixed assets | 33 | 72 | |||||
Placement fee agreements | (5,329 | ) | (4,643 | ) | |||
Net cash used in investing activities | (47,490 | ) | (30,910 | ) | |||
Cash flows from financing activities | |||||||
Repayments of credit facilities | (2,050 | ) | (2,050 | ) | |||
Proceeds from exercise of stock options | 4,686 | 4,088 | |||||
Purchase of treasury stock | (15 | ) | (38 | ) | |||
Net cash provided by financing activities | 2,621 | 2,000 | |||||
Effect of exchange rates on cash | (343 | ) | 147 | ||||
Cash, cash equivalents and restricted cash | |||||||
Net (decrease) increase for the period | (157,400 | ) | 3,988 | ||||
Balance, beginning of the period | 299,181 | 129,604 | |||||
Balance, end of the period | $ | 141,781 | $ | 133,592 |
At March 31, | At December 31, | ||||||
2019 | 2018 | ||||||
Cash available | |||||||
Cash and cash equivalents | $ | 139,857 | $ | 297,532 | |||
Settlement receivables | 259,288 | 82,359 | |||||
Settlement liabilities | (354,402 | ) | (334,198 | ) | |||
Net cash position | 44,743 | 45,693 | |||||
Undrawn revolving credit facility | 35,000 | 35,000 | |||||
Net cash available | $ | 79,743 | $ | 80,693 |
Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | ||||||||||||||||||||||
Games | FinTech | Total | Games | FinTech | Total | ||||||||||||||||||
Net income | $ | 5,860 | $ | 4,609 | |||||||||||||||||||
Income tax benefit | (388 | ) | (425 | ) | |||||||||||||||||||
Interest expense, net of interest income | 20,400 | 20,307 | |||||||||||||||||||||
Operating income | $ | 3,104 | $ | 22,768 | $ | 25,872 | $ | 4,353 | $ | 20,138 | $ | 24,491 | |||||||||||
Plus: depreciation and amortization | 27,156 | 3,930 | 31,086 | 24,623 | 4,505 | 29,128 | |||||||||||||||||
EBITDA | $ | 30,260 | $ | 26,698 | $ | 56,958 | $ | 28,976 | $ | 24,643 | $ | 53,619 | |||||||||||
Non-cash stock compensation expense | 557 | 1,216 | 1,773 | 627 | 1,723 | 2,350 | |||||||||||||||||
Accretion of contract rights | 2,122 | — | 2,122 | 2,057 | — | 2,057 | |||||||||||||||||
Asset acquisition expense and other non-recurring professional fees | 186 | 271 | 457 | — | — | — | |||||||||||||||||
Adjusted EBITDA | $ | 33,125 | $ | 28,185 | $ | 61,310 | $ | 31,660 | $ | 26,366 | $ | 58,026 | |||||||||||
Cash paid for interest | (12,470 | ) | (15,206 | ) | |||||||||||||||||||
Cash paid for capital expenditures | (22,194 | ) | (26,339 | ) | |||||||||||||||||||
Cash paid for placement fees | (5,329 | ) | (4,643 | ) | |||||||||||||||||||
Cash paid for income taxes, net of refunds | (92 | ) | (66 | ) | |||||||||||||||||||
Free Cash Flow | $ | 21,225 | $ | 11,772 |
2019 Adjusted EBITDA Guidance Range(1) | |||||||
Low | High | ||||||
Projected net income | $ | 16,600 | $ | 22,000 | |||
Projected income tax benefit | (1,000 | ) | (2,000 | ) | |||
Projected interest expense, net of interest income | 86,000 | 83,000 | |||||
Projected operating income | $ | 101,600 | $ | 103,000 | |||
Projected depreciation and amortization | 132,000 | 136,000 | |||||
Projected EBITDA | $ | 233,600 | $ | 239,000 | |||
Projected non-cash stock compensation expense | 8,000 | 7,000 | |||||
Projected accretion of contract rights | 10,000 | 8,000 | |||||
Projected asset acquisition expense and other non-recurring professional fees | 400 | 1,000 | |||||
Projected Adjusted EBITDA | $ | 252,000 | $ | 255,000 | |||
Projected cash paid for interest | (82,000 | ) | (80,000 | ) | |||
Projected cash paid for capital expenditures | (105,000 | ) | (108,000 | ) | |||
Projected cash paid for placement fees | (17,000 | ) | (17,000 | ) | |||
Projected cash paid for income taxes, net of refunds | (1,000 | ) | (1,000 | ) | |||
Projected Free Cash Flow | $ | 47,000 | $ | 49,000 |
(1) | All figures presented are projected estimates for the year ending December 31, 2019. |
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