AGS REPORTS THIRD QUARTER 2021 RESULTS
Third Quarter 2021 Highlights:
• Domestic EGM RPD Exceeded $30 for the Second Consecutive Quarter
• Domestic EGM Installed Base Increased Sequentially for the First Time Since Q3 2019
• Domestic EGM Gaming Operations Revenue Eclipsed Q3 2019 Levels
• Premium Game Footprint Nearly Doubled Year-to-Date
• Table Products Revenue Reached Another All-Time Record
• Net Loss Improved to $1.8 Million Compared to $3.9 Million in Q2 2021
• Adjusted EBITDA Margin Surpassed the Upper End of our Targeted 45% to 47% Range
• Approximately $118 Million of Available Liquidity as of September 30, 2021
• Net Leverage Reduced to 4.7x as of September 30, 2021
LAS VEGAS, NOVEMBER 4, 2021 - PlayAGS, Incorporated (NYSE: AGS) ("AGS", "us", "we" or the "Company") today reported operating results for its third quarter ended September 30, 2021.
AGS President and Chief Executive Officer David Lopez said, "Our third quarter financial performance once again reflects our growing product momentum and improved execution across all three of our operating segments. The investments we have made into our business over the past eighteen months have strengthened our company's foundation, which should pave the way for meaningful shareholder value creation in the coming quarters."
Kimo Akiona, AGS' Chief Financial Officer, added, "Supported by our solid third quarter financial results and the stability we are in seeing within our business fourth quarter to date, we now expect to be nicely free cash flow positive for the full year 2021 and to end the year with net leverage inside of 4.5x TTM Adjusted EBITDA. Looking ahead, we continue to carefully manage our leverage and liquidity position to ensure we can execute on opportunities to lower our borrowing costs as they present themselves, with an intermediate-term focus on restoring the balance sheet flexibility we had prior to the onset of COVID-19, when our balance sheet was levered well inside of 4.0x."
Third Quarter 2021 Financial Results
- Given the degree to which the COVID-19 pandemic impacted the global gaming industry throughout Q3 2020, we have included our Q3 2019 financial results in the tables presented throughout this release, as we believe comparisons to Q3 2019 metrics provide more meaningful insight into the recovery trajectory of our various business segments.
- Consolidated revenue totaled $67.3 million compared to $49.3 million and $79.4 million in Q3 2020 and Q3 2019, respectively. Growth in domestic EGM gaming operations and Interactive revenue, combined with all-time record Table Products revenue, was more than offset by declines in EGM equipment sales and international EGM gaming operations revenue versus Q3 2019 levels. Although Q3 2021 EGM equipment sales revenue came in below Q3 2019 levels, we are encouraged by evidence of operators' growing propensity to commit capital for new equipment purchases. Similarly, while efforts to curtail the spread of COVID-19, coupled with the lack of fiscal stimulus, has protracted the recovery in our Mexico gaming operations business, we remain cautiously optimistic in the prospects for the Mexico gaming market to make a full recovery.
- Gaming operations, or recurring revenue, increased to $53.2 million versus $36.3 million and $52.5 million in Q3 2020 and Q3 2019, respectively. Relative to Q3 2019, the growth achieved within our domestic EGM, Table Products, and Interactive recurring revenue businesses was partially offset by a decline in our international EGM recurring revenue business, as previously discussed. In aggregate, recurring revenue accounted for 79.1% of our consolidated Q3 2021 revenue compared to 73.7% in Q3 2020 and 66.2% in Q3 2019.
- Our 2021 third quarter net loss of $1.8 million improved as compared to net losses of $11.1 million and $5.5 million realized in Q3 2020 and Q3 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. The improvement in our reported net loss, as compared to the level reported in Q3 2019, was driven by lower D&A and income tax expense, partially offset by slightly higher interest expense.
- Total Adjusted EBITDA (non-GAAP)(1)was $31.9 million compared to $27.0 million in Q3 2020 and $36.8 million in Q3 2019. Interactive and Table Products Adjusted EBITDA increased sharply relative to the levels achieved in Q3 2019, supported by successful execution of our strategic revenue growth initiatives within each of the segments. EGM Adjusted EBITDA decreased 17.7% versus Q3 2019 levels, as the upside from our improved Q3 2021 domestic EGM gaming operations performance was more than offset by the more gradual recoveries we are experiencing within our EGM product sales and international EGM gaming operations businesses.
- Total Adjusted EBITDA margin (non-GAAP)(1) was 47.4% compared to 54.8% in Q3 2020. Margins in the prior year period benefitted from our domestic recurring revenue businesses recovering from COVID-19-related shutdowns in advance of normalization in our operating expenses as well as a sale of previously leased units to a distributor in the prior year with a favorable gross margin. Adjusted EBITDA margin expanded by 108bps versus Q3 2019, supported by 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.
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures, see non-GAAP reconciliation below.
Basis points ("bps").