AGS Reports Third Quarter 2019 Results

LAS VEGAS, Nov. 7, 2019 /PRNewswire/ -- AGS (NYSE: AGS) ("AGS", "us", "we" or the "Company") today reported operating results for its third quarter ended September 30, 2019.

"Our third quarter performance was underscored by the sale of nearly 1,400 EGMs - the most in our company's history - as well as record performance in our Table Products segment. 92% of domestic EGM unit sales were from our Orion family of cabinets, including our latest addition, the Orion Upright, which accounted for approximately 300 sold units in the quarter," said David Lopez, President and Chief Executive Officer. "After a successful G2E last month, we are looking forward to launching our premium lease-only Orion Rise cabinet and Starwall LED merchandising display, as well as our highly anticipated Orion 49C, Pax S card shuffler, and Bonus Spin Xtreme progressive system.  We believe this robust suite of products will help drive growth in 2020 and beyond."

Third Quarter 2019 Financial Highlights

• Total revenue increased 5% to $79.4 million, driven by record EGM unit sales and increased gaming operations revenue in our EGM and Table Products segments.
• Gaming operations revenue, or recurring revenue, grew to $52.5 million, or 4% year-over-year, driven by an increase in our domestic and international EGM installed base, and growth in our Table Products installed base.
• EGM sold units increased 4%, to 1,391 compared to 1,332 in the prior year led by sales of the Orion Portrait and the successful launch of our new Orion Upright cabinets.
• Table Products revenue increased 39% to $2.9 million, driven by increased progressive table game placements and an increased footprint⁽³⁾ of the recently introduced Dex S card shuffler.
• Net loss of $5.5 million decreased year-over-year from net income of $4.3 million in the prior year due to increases in non-cash depreciation and amortization as well as an increase in tax expense compared to the prior year period.
• Total Adjusted EBITDA (non-GAAP)⁽¹⁾ increased 10% to $36.8 million, driven by increased revenue from our EGM and Table Products segments as well as reduced operating costs in our Interactive social gaming business.
• Total Adjusted EBITDA margin (non-GAAP)⁽¹⁾ increased to 46% in the third quarter of 2019 compared to 44% in the prior year, driven by several different factors, most notably due to improved operating performance of our Table Products and Interactive segments.

EGM Highlights

Domestic Gaming Operations

• Domestic EGM installed base grew by 2,656 units year-over-year, driven by the acquisition of 2,500 EGMs from Integrity Gaming Corp. ("Integrity") and the placement of approximately 900 incremental recurring units year-over-year. The prior year installed base included approximately 700 VLT units that were purchased in an end-of-lease buyout.⁽⁴⁾
• Sequentially, our domestic EGM installed base grew more than 300 units, driven by new casino openings.
• Domestic EGM revenue per day ("RPD") decreased 8% to $25.08 compared to $27.14 in the prior year period driven by incremental units in markets that yield lower RPD than our domestic average.  When excluding the impact of the EGMs purchased from Integrity, we estimate that Domestic RPD was $26.55.
• Oklahoma RPD decreased 17% to $18.13 compared to $21.72 in the prior year driven by the inclusion of EGMs purchased from Integrity and the continued product performance previously identified. When normalized for the impact of the EGMs purchased from Integrity, we estimate that Oklahoma RPD was $18.96.
• Non-Oklahoma RPD increased 5% to $35.85 compared to $34.18 in the prior year period driven by improved performance in markets such as Washington and California.⁽⁵⁾

International Gaming Operations

• International gaming operations revenue grew year-over-year due to the addition of 552 incremental units placed with both existing and new customers, predominantly in Mexico.
• International RPD decreased by $0.53, or 6%, as we grew our installed base in new markets and properties in Mexico that have lower yields than our average international RPD as well as initial placements in the Philippines.

Equipment Sales

• EGM equipment sales revenue increased 7%, to $26.4 million, driven by record EGM sales and increased domestic average sales price ("ASP"). Record EGM sales of 1,391 units included 1,350 domestic units, of which nearly 65% were sold into early-entry markets such as Canada, Nevada, Pennsylvania, and Michigan.
• ASP for EGMs increased 2% to $18,476 due to a greater mix of higher-priced Orion family cabinets.

Product Highlights

• The new Orion Upright footprint⁽⁶⁾ grew to more than 325 units and accounted for 22% of sales in the quarter with placements in several early-entry markets such as Arizona, Canada, New Mexico, Michigan and Oregon as well as ramping markets such as Florida and California. Placements were driven by our proven legacy games such as Golden Wins and new games such as Imperial Luck.
• Orion Portrait footprint⁽⁶⁾ increased to nearly 8,000 units, up 87% year-over-year and accounted for 57% of sales in the quarter.
• Orion Slant footprint⁽⁶⁾ increased to nearly 2,500 units and accounted for 13% of sales in the quarter.

Table Products Highlights

• Total Table Products revenue increased 39% to $2.9 million, driven by record gaming operations revenue due to an increase of 536 units year-over-year and record equipment sales.
• Gaming operations revenue increased $0.5 million, or 29%, driven by the continued growth of our progressive offerings; Bonus Spin, Royal 9 and Super 4, Buster Blackjack side bets, our newly introduced Dex S card shuffler, and our Criss Cross Poker premium game offering.
• Record equipment sales revenue increased $0.3 million, or 173%, due to the successful launch of our new Dex S card shuffler and sales of our table signage.
• Installed base of table game progressives reached more than 1,200 units, up 37% year-over-year, contributing to the 8% increase in average monthly lease price.
• Installed base of side bets reached nearly 2,100 units in the quarter.
• Continued to convert competitor progressives to our own STAX Progressives in the quarter, which helped drive the Adjusted EBITDA increase.
• We expect that momentum and demand for our new Dex S card shuffler will continue to grow, with more than 175 shufflers currently installed in 13 markets across the U.S.