AGEM releases March 2018 Index

The AGEM Index again experienced declines during March 2018. The composite index closed the month at 505.15 points, a drop of 8.32 points or 1.62 percent, when compared to February 2018. The AGEM Index reported a year-over-year increase for the 30th consecutive month and has climbed 134.87 points, or 36.87 percent, since March 2017.

During the latest period, seven of the 13 global gaming equipment manufacturers reported month-to-month increases in stock price. Six manufacturers reported decreases in stock price during the month, with one manufacturer posting a double-digit percentage decline.

The March performance of the AGEM Index paralleled the three major stock market indexes. The S&P 500 reported a month-to-month decrease of 2.69 percent to 2,640.87. The Dow Jones Industrial Average decreased 3.70 percent to 24,103.11, while the NASDAQ decreased 2.88 percent during the period to 7,063.45.

Positive contributors to the March 2018 AGEM Index included the following: 

• PlayAGS Inc. (AGS) contributed 1.44 points due to a 12.31 percent increase in stock price to $23.26.
• International Game Technology PLC (IGT) reported a 0.87 percent increase in stock price to $26.73, contributing 0.68 points
  
  Selected negative contributors included the following:

• With its stock price falling 2.39 percent to AU$24.06, Aristocrat Leisure Limited (ASX: ALL) contributed negative 5.80 points.
• Scientific Games Corporation (SGMS) reported a 6.41 percent decrease in stock price to $41.60, contributing negative 3.43 points.

During the past month, Everi Holdings (EVRI) released its year-end results for its fiscal year ending in December 2017. Total revenues increased by $115.5 million over the prior year, growing by 13.4 percent to reach $974.9 million in 2017. Operating income generated by Everi in 2017 was $81.8 million, an increase of $200.4 million over the prior year. The increase in operating income in 2017 was primarily attributable to the lack of a goodwill impairment in 2017, which had cost Everi $146.3 million the prior year. During 2017, the company’s operating income margin was 8.3 percent.

Galaxy Gaming Inc. (GLXZ) also recently released its yearend results for its fiscal year ending in December 2017. Total revenues during 2017 grew by 19.3 percent from $12.5 million to $14.9 million. Despite sales growth, the company’s operating income and adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) both declined, as did their corresponding margins as a percentage of total revenue. During 2017, operating income decreased by 26.1 percent from $3.4 million to $2.5 million, a decrease of $885,000. Galaxy Gaming’s operating income margin decreased from 27.2 percent to 16.9 percent, a decline of 10.3 percentage points. Adjusted EBITDA decreased by 2.8 percent during 2017, dropping from $5.2 million in 2016 to $5.1 million in 2017. Adjusted EBITDA margins decreased from 42.0 percent in 2016 to 34.2 percent, a decrease of 5.8 percentage points.

Gaming Partners International (GPIC) released its yearend results for its fiscal year ending in December 2017. Revenues and gross profit both declined during 2017, as did the company’s gross profit margins. Revenues during 2017 dropped from $82.1 million to $80.6 million, a decrease of $1.5 million, or 1.9 percent. Gross profits decreased from $25.3 million in 2016 to $22.7 million in 2017, a drop of $2.7 million or 10.5 percent. Gross profit margins also decreased during 2017 from 30.8 percent to 28.1 percent, a decrease of 2.7 percentage points.

As demonstrated by its positive contribution to the AGEM Index, PlayAGS’s stock has continued to perform strongly despite the mixed fortunes of its competitors. The company’s performance was evident in the recently released results for its fiscal year ended in December 2017. During 2017, total revenues and operating income both increased significantly. Total revenue increased by 27.1 percent during 2017, growing from $166.8 million to $212.0 million. Operating income increased by $31.6 million during 2017, growing from an operating loss of $17.1 million in 2016 to an operating income of $14.5 million during 2017. The operating income margin for 2017 was 6.8 percent, compared to a margin of negative 10.2 percent in 2016.