Adjusted EBITDA increased to $34.5 million (39%)

AGS announces Q1 2018 results

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. Additionally, recurring revenue grew to $49.6 million.
2018-05-07
Reading time 3:30 min
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. Additionally, recurring revenue grew to $49.6 million or 23% year-over-year.

PlayAGS, Inc. today reported operating results for its first quarter 2018 and quarter ended March 31, 2018.

"The first quarter of 2018 was absolutely tremendous for AGS - we achieved records in every key category, including revenue, adjusted EBITDA, average selling price, and recurring revenue. We reported the most EGM sales revenue in our company's history with 838 units sold, driven largely by the continued success of the Orion Portrait cabinet, while our Tables and Interactive segments both reported their strongest EBITDA quarters to date," said David Lopez, President and CEO of AGS. "With industry-leading game performance and the recent introduction of the new Orion Slant, AGS shows no signs of slowing down and we are confident that 2018 will be our best year yet."

First Quarter Financial Highlights

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.

First Quarter Business Highlights

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.

Balance Sheet Review

Capital expenditures increased $0.6 million to $15.0 million in the first quarter, compared to $14.4 million in the prior year period. As of March 31, 2018, AGS had $25.8 million in cash and cash equivalents compared to $19.2 million at December 31, 2017. Total net debt, which is the principal amount of debt outstanding less cash and cash equivalents, as of March 31, 2018, was approximately $487.7 million compared to $648.7 million at December 31, 2017. This substantial reduction was driven by the IPO, the exercise in full of the underwriters' overallotment option and the settlement of our HoldCo PIK notes during the first quarter.

2018 Outlook

Based on our year-to-date progress and due to our current momentum, we now expect our adjusted EBITDA in 2018 to be between $126 and $131 million. This is an upward revision to the guidance we previously released and is based on greater visibility that we now have for Orion Portrait and other products throughout the year. We maintain our capital expenditures range of $55 to $60 million.

 

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