“AGS third quarter financial performance improved dramatically compared to previous quarter"

AGS confirmed that nearly all of its customers' casinos have reopened as of September 30, 2020 and in this period the company report a generated positive cash from operations and FCF in the Quarter, ahead of internal expectations.

AGS President and Chief Executive Officer David Lopez said, “I am extremely proud of how our team came together to offset the challenges brought upon by the COVID-19 pandemic to deliver better than expected third quarter 2020 financial results. Our employees’ experiences throughout the pandemic will only help to strengthen their collective resolve, in turn propelling AGS to emerge a stronger and more nimble company as the world gradually returns to normal.”

Lopez added, “I continue to believe AGS has its strongest pipeline of new product and game themes in the Company’s history, positioning our EGM segment for greater success in the quarters ahead. I am particularly enthused about the prospects for our domestic EGM recurring revenue business, supported by the continued outperformance of our initial Starwall installs, and believe improved hardware and game content position us to command our fair share of future unit placements. Additionally, I remain encouraged by the strategic growth opportunities emerging within our table games segment and look for our interactive performance to continue to improve as additional states contemplate the introduction of real money online gaming legislation.”

AGS Chief Financial Officer Kimo Akiona added, “Our third quarter financial performance improved dramatically compared to the 2020 second quarter, with revenues, net loss, and adjusted EBITDA improving sharply on a sequential basis. Importantly, we were free cash flow positive in the quarter, allowing us to report a strong liquidity position of $113.2 million at quarter end. Given our better-than-expected third quarter financial performance and growing comfort with our resulting liquidity position, we elected to fully repay the $30 million outstanding on our revolving credit facility, subsequent to quarter end.”

Third Quarter 2020 Financial Results

• During March and April and continuing through mid-to-late-May, nearly all our customers closed their operations due to business disruption caused by the global spread of COVID-19 and the actions taken by governments and businesses to contain the virus. Though less impactful than in the second quarter of 2020, COVID-19-related measures continued to impact our customers’ businesses throughout the third quarter, pacing the majority of the year-over-year declines in the metrics presented above, including revenues, (loss) income from operations, net loss, and Adjusted EBITDA.
  
  
• By September 30, nearly all our customers' casinos in the United States and Canada resumed limited operations. In Mexico, approximately 50% of our customers' properties were reopened with capacity restrictions as of September 30, 2020.
  
  
• Total revenue reached $49.3 million compared to $16.8 million in the 2020 second quarter. Revenue decreased 37.9% year-over-year, with the decline predominantly attributable to the pandemic’s negative impact on our customer’s operations and, subsequently, our gaming operations revenue and EGM unit sales.
  
  
• Gaming operations revenue, or recurring revenue, totaled $36.3 million compared to $10.2 million in the 2020 second quarter. Recurring revenue decreased 30.9% year-over-year as a portion of our leased EGMs and Table Products were out of service as a result of COVID-related casino closures and capacity limitations. A year-over-year increase in our Interactive segment revenue helped to partially offset the declines in our other reporting segments.
  
  
• Our 2020 third quarter net loss of $11.1 million improved dramatically from the $42.6 million net loss reported in the 2020 second quarter. As a result of management's actions taken to reduce spending amid COVID-19, including employee furloughs, workforce reductions, and salary decreases, coupled with a strategic focus to streamline expenses, primarily in professional fees, sales and marketing activities, and, to a lesser extent, modest delays in development expenses, we were able to partially offset the flow through of our year-over-year revenue decline to minimize our reported net loss.
  
  
• Total Adjusted EBITDA (non-GAAP)(1) increased to $27.0 million from a $1.2 million loss in the 2020 second quarter. Adjusted EBITDA declined as compared to the $36.8 million delivered in the prior-year period, as year-over-year decreases in our EGM and Table Products segments were partially offset by growth in our Interactive segment.
  
  
• Total Adjusted EBITDA margin (non-GAAP)(1) increased to 54.8% in the third quarter of 2020 compared to 46.3% in the prior year, reflecting a greater mix of higher-margin lease revenues, the sale of previously leased, lower-yielding Oklahoma units to distributors with modest offsetting costs, and management's actions to reduce operating expenses and other costs in response to the COVID-19 crisis.
  

  See the full report HERE