Nevada | 001-38357 | 46-3698600 | ||
(State of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
PLAYAGS, INC. | |||
May 3, 2018 | By: | /s/ Kimo Akiona | |
Kimo Akiona | |||
Chief Financial Officer, Chief Accounting Officer and Treasurer, (Principal Financial and Accounting Officer) |
• | Record Quarterly Revenue of $64.9 Million Grew 36% Year-Over-Year |
• | Record Adjusted EBITDA of $34.5 Million Grew 39% Year-Over-Year |
• | Record Recurring Revenue of $49.6 Million Grew 23% Year-Over-Year |
• | EGM Units Sold of 838 grew 85% Year-Over-Year |
• | Net Loss of $9.5 Million Improved 23% Year-Over-Year, which includes $8.0 million initial non-cash stock based compensation expense |
Three Months Ended March 31, | ||||||||||
2018 | 2017 | % Change | ||||||||
Revenues | ||||||||||
EGM | $ | 61,258 | $ | 45,012 | 36.1 | % | ||||
Table Products | 1,670 | 632 | 164.2 | % | ||||||
Interactive | 1,928 | 2,130 | (9.5 | )% | ||||||
Total revenue | $ | 64,856 | $ | 47,774 | 35.8 | % | ||||
Operating income | $ | 2,238 | $ | 2,183 | 2.5 | % | ||||
Net loss | $ | (9,538 | ) | $ | (12,386 | ) | 23.0 | % | ||
Loss per share | $ | (0.30 | ) | $ | (0.53 | ) | 43.4 | % | ||
Adjusted EBITDA | ||||||||||
EGM | $ | 34,304 | $ | 25,199 | 36.1 | % | ||||
Table Products | 186 | $ | (177 | ) | 205.1 | % | ||||
Interactive | 9 | (117 | ) | 107.7 | % | |||||
Total adjusted EBITDA(1) | $ | 34,499 | $ | 24,905 | 38.5 | % | ||||
EGM Units Sold | 838 | 453 | 85.0 | % | ||||||
EGM total installed base, end of period | 24,033 | 21,204 | 13.3 | % |
• | Total revenue increased 36% to $64.9 million, a company record, driven by continued growth of our EGMs in the Class III marketplace, led by demand for our newer premium Orion Portrait cabinet. |
• | Recurring revenue grew to $49.6 million or 23% year-over-year, primarily attributable to the contribution of EGMs purchased from Rocket Gaming and Table Products purchased from In Bet in the Fall of 2017, as well as our yield optimization efforts and the popularity of the Orion Portrait cabinet. |
• | EGM equipment sales increased 107% to $15.2 million, another company record, due to the sale of 838 units, approximately 60% of which were Orion Portrait cabinet. |
• | Adjusted EBITDA increased to $34.5 million, or 39%, driven by an increase in revenue, and partially offset by increased adjusted operating expenses of $3.8 million primarily due to increased headcount in our R&D studios including our new studio in Sydney, Australia. |
• | Total adjusted EBITDA margin increased to 53% in the first quarter 2018 compared to 52% driven by several different factors, most notably due to the operating leverage from the assets purchased from Rocket Gaming. |
• | SG&A expenses increased $6.5 million in the first quarter of 2018 primarily due to an initial non-cash charge of $6.2 million in stock based compensation recorded in connection with the IPO, as well as increased costs due to higher headcount. |
• | R&D expenses increased $3.3 million in the first quarter of 2018 driven by an initial non-cash charge of $1.6 million in stock based compensation recorded in connection with the IPO, as well as increased headcount, and the development of our new Orion Slant cabinet and DEX S card shuffler. |
• | Net loss also improved to $9.5 million from $12.4 million, which included non-cash stock based compensation in the current quarter of $8.2 million versus no non-cash stock based compensation in the prior year. |
• | Domestic EGM installed base increased by over 2,500 units year-over-year driven by the purchase of approximately 1,500 EGMs from Rocket Gaming in December 2017 and the popularity of our ICON and Orion Portrait cabinets. |
• | Domestic EGM revenue per day increased 3% to $26.72 driven by our yield optimization efforts as well as the growing footprint of our latest high-performing products in both current and new markets. |
• | EGM units sold increased to 838 in the current quarter compared to 453 in the prior year led by sales of the Orion Portrait cabinet. |
• | EGM average selling price (ASP) increased over 13% to $17,758, a quarterly company record, driven by record sales of the Orion Portrait cabinet. |
• | On a trailing twelve months basis, nearly $5.6 million of our recurring revenue came from our yield optimization efforts. |
• | Table Products increased 940 units, or 56%, to 2,631 units driven by both organic growth - most notably in Buster Blackjack and Bonus Spin progressive units - and the purchase of approximately 500 In Bet assets in the third quarter of 2017. |
• | Our ICON cabinet footprint grew 172% to over 5,400 total units in the field. |
• | Introduced to the market in Q1 of 2017, our Orion Portrait cabinet ended Q1 2018 with a footprint of over 2,800 total units, up 49% from year end. |
March 31, | December 31, | ||||||
2018 | 2017 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 25,821 | $ | 19,242 | |||
Restricted cash | 78 | 100 | |||||
Accounts receivable, net of allowance of $1,284 and $1,462, respectively | 38,766 | 32,776 | |||||
Inventories | 29,006 | 24,455 | |||||
Prepaid expenses | 4,516 | 2,675 | |||||
Deposits and other | 3,435 | 3,460 | |||||
Total current assets | 101,622 | 82,708 | |||||
Property and equipment, net | 80,509 | 77,982 | |||||
Goodwill | 279,941 | 278,337 | |||||
Intangible assets | 222,557 | 232,287 | |||||
Deferred tax asset | 3,734 | 1,115 | |||||
Other assets | 13,674 | 24,813 | |||||
Total assets | $ | 702,037 | $ | 697,242 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 11,506 | $ | 11,407 | |||
Accrued liabilities | 16,411 | 24,954 | |||||
Current maturities of long-term debt | 7,055 | 7,359 | |||||
Total current liabilities | 34,972 | 43,720 | |||||
Long-term debt | 493,865 | 644,158 | |||||
Deferred tax liability - noncurrent | — | 1,016 | |||||
Other long-term liabilities | 26,734 | 36,283 | |||||
Total liabilities | 555,571 | 725,177 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity | |||||||
Preferred stock at $0.01 par value; 100,000 shares authorized, no shares issued and outstanding | — | — | |||||
Common stock at $0.01 par value; 450,000,000 shares authorized at March 31, 2018 and 46,629,155 at December 31, 2017; and 35,212,917 and 23,208,076 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively. | 352 | 149 | |||||
Additional paid-in capital | 358,075 | 177,276 | |||||
Accumulated deficit | (211,095 | ) | (201,557 | ) | |||
Accumulated other comprehensive loss | (866 | ) | (3,803 | ) | |||
Total stockholders’ equity | 146,466 | (27,935 | ) | ||||
Total liabilities and stockholders’ equity | $ | 702,037 | $ | 697,242 |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
Revenues | |||||||
Gaming operations | $ | 49,632 | $ | 40,433 | |||
Equipment sales | 15,224 | 7,341 | |||||
Total revenues | 64,856 | 47,774 | |||||
Operating expenses | |||||||
Cost of gaming operations(1) | 8,858 | 7,471 | |||||
Cost of equipment sales(1) | 7,399 | 3,852 | |||||
Selling, general and administrative | 16,777 | 10,281 | |||||
Research and development | 8,625 | 5,304 | |||||
Write downs and other charges | 1,610 | 232 | |||||
Depreciation and amortization | 19,349 | 18,451 | |||||
Total operating expenses | 62,618 | 45,591 | |||||
Income from operations | 2,238 | 2,183 | |||||
Other (income) expense | |||||||
Interest expense | 10,424 | 15,160 | |||||
Interest income | (52 | ) | (15 | ) | |||
Loss on extinguishment and modification of debt | 4,608 | — | |||||
Other (income) expense | 9,232 | (2,809 | ) | ||||
Loss before income taxes | (21,974 | ) | (10,153 | ) | |||
Income tax benefit (expense) | 12,436 | (2,233 | ) | ||||
Net loss | (9,538 | ) | (12,386 | ) | |||
Foreign currency translation adjustment | 2,937 | 875 | |||||
Total comprehensive loss | $ | (6,601 | ) | $ | (11,511 | ) | |
Basic and diluted loss per common share: | |||||||
Basic | $ | (0.30 | ) | $ | (0.53 | ) | |
Diluted | $ | (0.30 | ) | $ | (0.53 | ) | |
Weighted average common shares outstanding: | |||||||
Basic | 31,735 | 23,208 | |||||
Diluted | 31,735 | 23,208 |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities | |||||||
Net loss | $ | (9,538 | ) | $ | (12,386 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 19,349 | 18,451 | |||||
Accretion of contract rights under development agreements and placement fees | 1,084 | 1,149 | |||||
Amortization of deferred loan costs and discount | 451 | 939 | |||||
Payment-in-kind interest capitalized | — | 112 | |||||
Payment-in-kind interest payments | (37,624 | ) | — | ||||
Write off of deferred loan cost and discount | 3,410 | — | |||||
Stock based compensation expense | 8,153 | — | |||||
(Benefit) provision for bad debts | (142 | ) | 595 | ||||
Loss on disposition of assets | 340 | 577 | |||||
Impairment of assets | 570 | 285 | |||||
Fair value adjustment of contingent consideration | 700 | — | |||||
(Benefit) provision for deferred income tax | (3,551 | ) | 1,350 | ||||
Changes in assets and liabilities that relate to operations: | |||||||
Accounts receivable | (4,820 | ) | 637 | ||||
Inventories | (2,462 | ) | 2,315 | ||||
Prepaid expenses | (1,826 | ) | (1,062 | ) | |||
Deposits and other | 118 | (90 | ) | ||||
Other assets, non-current | 11,618 | (1,089 | ) | ||||
Accounts payable and accrued liabilities | (18,646 | ) | (4,564 | ) | |||
Net cash provided by (used in) operating activities | (32,816 | ) | 7,219 | ||||
Cash flows from investing activities | |||||||
Purchase of intangible assets | (568 | ) | (358 | ) | |||
Software development and other expenditures | (2,490 | ) | (2,210 | ) | |||
Proceeds from disposition of assets | 21 | — | |||||
Purchases of property and equipment | (11,931 | ) | (11,861 | ) | |||
Net cash used in investing activities | (14,968 | ) | (14,429 | ) | |||
Cash flows from financing activities | |||||||
Repayment of PIK notes | (115,000 | ) | — | ||||
Repayment of senior secured credit facilities | (1,288 | ) | (1,833 | ) | |||
Payment of financed placement fee obligations | (879 | ) | (1,320 | ) | |||
Payments on equipment long term note payable and capital leases | (678 | ) | — | ||||
Proceeds from issuance of common stock | 176,341 | — | |||||
Initial public offering cost | (4,160 | ) | — | ||||
Proceeds from employees in advance of common stock issuance | — | 25 | |||||
Net cash used in financing activities | 54,336 | (3,128 | ) | ||||
Effect of exchange rates on cash and cash equivalents | 5 | 3 | |||||
Decrease in cash and cash equivalents | 6,557 | (10,335 | ) | ||||
Cash, cash equivalents and restricted cash, beginning of period | 19,342 | 18,077 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 25,899 | $ | 7,742 | |||
Supplemental cash flow information: | |||||||
Cash paid during the period for interest | $ | 8,412 | $ | 9,655 | |||
Cash paid during the period for taxes | $ | 101 | $ | 273 |
Three months ended March 31, | $ | % | ||||||||||||
2018 | 2017 | Change | Change | |||||||||||
Net loss | $ | (9,538 | ) | $ | (12,386 | ) | $ | 2,848 | 23.0 | % | ||||
Income tax expense (benefit) | (12,436 | ) | 2,233 | (14,669 | ) | (656.9 | )% | |||||||
Depreciation and amortization | 19,349 | 18,451 | 898 | 4.9 | % | |||||||||
Other (income) expense | 9,232 | (2,809 | ) | 12,041 | (428.7 | )% | ||||||||
Interest income | (52 | ) | (15 | ) | (37 | ) | (246.7 | )% | ||||||
Interest expense | 10,424 | 15,160 | (4,736 | ) | (31.2 | )% | ||||||||
Write downs and other(1) | 1,610 | 232 | 1,378 | 594.0 | % | |||||||||
Loss on extinguishment and modification of debt(2) | 4,608 | — | 4,608 | 100.0 | % | |||||||||
Other adjustments(3) | 396 | 647 | (251 | ) | (38.8 | )% | ||||||||
Other non-cash charges(4) | 1,574 | 2,111 | (537 | ) | (25.4 | )% | ||||||||
New jurisdiction and regulatory licensing costs(5) | — | 235 | (235 | ) | (100.0 | )% | ||||||||
Legal & litigation expenses including settlement payments(6) | — | 399 | (399 | ) | (100.0 | )% | ||||||||
Acquisition & integration related costs(7) | 1,179 | 647 | 532 | 82.2 | % | |||||||||
Non-cash stock based compensation(8) | 8,153 | — | 8,153 | 100.0 | % | |||||||||
Total Adjusted EBITDA | $ | 34,499 | $ | 24,905 | $ | 9,594 | 38.5 | % |
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