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Share Name | Share Symbol | Market | Type |
---|---|---|---|
PlayAGS Inc | NYSE:AGS | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.15 | 1.74% | 8.79 | 8.86 | 8.63 | 8.76 | 262,322 | 21:27:00 |
LAS VEGAS, Nov. 5, 2020 /PRNewswire/ -- PlayAGS, Inc. (NYSE: AGS) ("AGS", "us", "we", or the "Company"), a designer and developer of equipment and services solutions for the global gaming industry, today reported financial results for the third quarter ended September 30, 2020.
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."
Summary of the Three Months Ended September 30, 2020 and 2019 (In thousands, except per-share and Adjusted EBITDA margin data) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||||
Revenues: | ||||||||||||||||
EGM | $ | 45,081 | $ | 75,299 | $ | (30,218) | (40.1) | % | ||||||||
Table Products | 2,262 | 2,861 | (599) | (20.9) | % | |||||||||||
Interactive | 1,941 | 1,217 | 724 | 59.5 | % | |||||||||||
Total revenues | $ | 49,284 | $ | 79,377 | $ | (30,093) | (37.9) | % | ||||||||
(Loss) income from operations | $ | (12,750) | $ | (3,593) | $ | (9,157) | 254.9 | % | ||||||||
Net loss attributable to PlayAGS, Inc. | $ | (11,078) | $ | (5,536) | $ | (5,542) | 100.1 | % | ||||||||
Loss per share | $ | (0.31) | $ | (0.16) | $ | (0.15) | 99.0 | % | ||||||||
Adjusted EBITDA: | ||||||||||||||||
EGM | $ | 25,000 | $ | 35,825 | $ | (10,825) | (30.2) | % | ||||||||
Table Products | 1,272 | 1,409 | (137) | (9.7) | % | |||||||||||
Interactive | 750 | (447) | 1,197 | (267.8) | % | |||||||||||
Total Adjusted EBITDA(1) | $ | 27,022 | $ | 36,787 | $ | (9,765) | (26.5) | % | ||||||||
Total Adjusted EBITDA margin(2) | 54.8 | % | 46.3 | % | N/A | 848 bps |
Third Quarter 2020 Financial Results
(1) Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures, see non-GAAP reconciliation below. |
(2) Basis points ("bps") |
EGM | ||||||||||||||||
Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019 | ||||||||||||||||
(Amounts in thousands, except unit data) | Three Months Ended | |||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||||
EGM segment revenues: | ||||||||||||||||
Gaming operations | $ | 32,188 | $ | 48,854 | $ | (16,666) | (34.1) | % | ||||||||
Equipment sales | 12,893 | 26,445 | (13,552) | (51.2) | % | |||||||||||
Total EGM revenues | $ | 45,081 | $ | 75,299 | $ | (30,218) | (40.1) | % | ||||||||
EGM Adjusted EBITDA | $ | 25,000 | $ | 35,825 | $ | (10,825) | (30.2) | % | ||||||||
EGM unit information: | ||||||||||||||||
VLT | 512 | 517 | (5) | (1.0) | % | |||||||||||
Class II | 11,887 | 12,355 | (468) | (3.8) | % | |||||||||||
Class III | 4,426 | 5,852 | (1,426) | (24.4) | % | |||||||||||
Domestic installed base, end of period | 16,825 | 18,724 | (1,899) | (10.1) | % | |||||||||||
International installed base, end of period | 8,030 | 8,668 | (638) | (7.4) | % | |||||||||||
Total installed base, end of period | 24,855 | 27,392 | (2,537) | (9.3) | % | |||||||||||
Installed base - Oklahoma | 9,063 | 10,503 | (1,440) | (13.7) | % | |||||||||||
Installed base - non-Oklahoma | 7,762 | 8,221 | (459) | (5.6) | % | |||||||||||
Domestic installed base, end of period | 16,825 | 18,724 | (1,899) | (10.1) | % | |||||||||||
Domestic revenue per day | $ | 20.81 | $ | 25.08 | $ | (4.27) | (17.0) | % | ||||||||
International revenue per day | $ | 0.78 | $ | 7.99 | $ | (7.21) | (90.2) | % | ||||||||
Total revenue per day | $ | 14.50 | $ | 19.68 | $ | (5.18) | (26.3) | % | ||||||||
Domestic EGM unit sales components: | ||||||||||||||||
Casino opening and expansion units | 117 | 348 | (231) | (66.4) | % | |||||||||||
Other | 270 | 1,002 | (732) | (73.1) | % | |||||||||||
Total Domestic EGM units sold | 387 | 1,350 | (963) | (71.3) | % | |||||||||||
International EGM units sold | - | 41 | (41) | (100.0) | % | |||||||||||
Total EGM units sold | 387 | 1,391 | (1,004) | (72.2) | % | |||||||||||
Domestic average sales price | $ | 18,190 | $ | 18,476 | $ | (286) | (1.5) | % |
EGM Quarterly Results
Domestic Gaming Operations(3)
International Gaming Operations
Equipment Sales
Product Highlights
(3) "Domestic" includes both the United States and Canada. |
(4) The 476 previously leased units sold to distributors were not included in our sold unit count or ASP for the current period. |
Table Products | ||||||||||||||||
Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019 | ||||||||||||||||
(Amounts in thousands, except unit data) | Three Months Ended | |||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||||
Table Products segment revenues: | ||||||||||||||||
Gaming operations | $ | 2,170 | $ | 2,451 | $ | (281) | (11.5) | % | ||||||||
Equipment sales | 92 | 410 | $ | (318) | (77.6) | % | ||||||||||
Total Table Products revenues | $ | 2,262 | $ | 2,861 | $ | (599) | (20.9) | % | ||||||||
Table Products Adjusted EBITDA | $ | 1,272 | $ | 1,409 | $ | (137) | (9.7) | % | ||||||||
Table Products unit information: | ||||||||||||||||
Table Products installed base, end of period | 4,012 | 3,601 | 411 | 11.4 | % | |||||||||||
Average monthly lease price | $ | 169 | $ | 232 | $ | (63) | (27.2) | % |
Table Products Quarterly Results
Interactive | ||||||||||||||||
Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019 | ||||||||||||||||
(Amounts in thousands) | Three Months Ended | |||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||||
Interactive segment revenue: | ||||||||||||||||
Social gaming revenue | $ | 829 | $ | 712 | $ | 117 | 16.4 | % | ||||||||
Real-money gaming revenue | 1,112 | 505 | 607 | 120.2 | % | |||||||||||
Total Interactive revenue | $ | 1,941 | $ | 1,217 | $ | 724 | 59.5 | % | ||||||||
Interactive Adjusted EBITDA | $ | 750 | $ | (447) | $ | 1,197 | (267.8) | % |
Interactive Quarterly Results
Liquidity and Capital Expenditures
As of September 30, 2020, we had $113.2 million in total liquidity compared to $43.2 million at December 31, 2019. The total principal amount of debt outstanding, as of September 30, 2020, was $654.3 million, predominantly comprised of $622.7 million in first lien term loans, which mature in 2024, and a revolving credit facility of $30.0 million, which matures in 2022.
As a precautionary measure to increase the Company's cash position and facilitate financial flexibility in light of current uncertainty in the gaming industry resulting from the COVID-19 pandemic, in March the Company borrowed $30.0 million under the revolving credit facility, and in May issued an additional $95.0 million in term loans. In connection with the new term loans, the Company negotiated a financial covenant relief period through December 31, 2020 related to its net first lien leverage ratio financial covenant and implemented a revised calculation of EBITDA to be used in the net first lien leverage ratio for the first three quarters of 2021. In October, as a result of our better-than-anticipated third quarter free cash flow performance and improved comfort level with our resulting liquidity position, we elected to fully repay the $30.0 million previously drawn down on our revolving credit facility.
Total net debt, which is the principal amount of debt outstanding less cash and cash equivalents, as of September 30, 2020 was $541.1 million compared to $520.6 million at December 31, 2019. Our Total Net Debt Leverage Ratio increased from 3.6 times at December 31, 2019, to 6.2 times at September 30, 2020, see Total Net Debt Leverage Ratio Reconciliation below(6).
Capital expenditures decreased by 63.7% year-over-year to $7.1 million in the current period, in line with our plans to conservatively manage the use of our cash and only invest in those projects that will provide the highest return on our investment. The current quarter capital expenditures were primarily comprised of $3.0 million in intangible capital expenditures, including capitalized internal software development costs, and $3.6 million in growth capital expenditures, which reflects costs associated with the placement of additional units into our leased installed base.
(6) Total Adjusted EBITDA and total net debt leverage ratio are non-GAAP measures, see non-GAAP reconciliation below. |
Conference Call and Webcast
On November 5, 2020 at 5 p.m. EST, AGS leadership will host a conference call to present the third quarter 2020 results. Listeners may access a live webcast of the conference call, along with accompanying slides, at AGS' Investor Relations website at http://investors.playags.com/. A replay of the webcast will be available on the website following the live event. To listen by telephone, the U.S./Canada toll-free call-in number is +1 (844) 746-0637 and the call-in number for participants outside the U.S./Canada is +1 (412) 317-5261. The conference ID/confirmation code is "AGS Q3 2020 Earnings Call".
Company Overview
AGS is a global company focused on creating a diverse mix of entertaining gaming experiences for every kind of player. Our roots are firmly planted in the Class II tribal gaming market, but our customer-centric culture and remarkable growth have helped us branch out to become one of the most all-inclusive commercial gaming suppliers in the world. Powered by high-performing Class II and Class III slot products, an expansive table products portfolio, highly rated social casino, real-money gaming solutions for players and operators, and best-in-class service, we offer an unmatched value proposition for our casino partners. Learn more at playags.com.
AGS Investor & Media Contacts:
Brad Boyer, Vice President of Investor Relations, Corporate Development and Strategy
bboyer@playags.com
Julia Boguslawski, Chief Marketing Officer
jboguslawski@playags.com
©2020 PlayAGS, Inc. Products referenced herein are sold by AGS LLC or other subsidiaries of PlayAGS, Inc. Solely for convenience, marks, trademarks and trade names referred to in this press release appear without the ® and TM and SM symbols, but such references are not intended to indicate, in any way, that PlayAGS, Inc. will not assert, to the fullest extent under applicable law, its rights or the rights of the applicable licensor to these marks, trademarks and trade names.
Forward-Looking Statement
This release contains, and oral statements made from time to time by our representatives may contain, forward-looking statements based on management's current expectations and projections, which are intended to qualify for the safe harbor of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding the proposed public offering and other statements identified by words such as "believe," "will," "may," "might," "likely," "expect," "anticipates," "intends," "plans," "seeks," "estimates," "believes," "continues," "projects" and similar references to future periods, or by the inclusion of forecasts or projections. All forward-looking statements are based on current expectations and projections of future events.
These forward-looking statements reflect the current views, models, and assumptions of AGS, and are subject to various risks and uncertainties that cannot be predicted or qualified and could cause actual results in AGS's performance to differ materially from those expressed or implied by such forward looking statements. These risks and uncertainties include, but are not limited to, the ability of AGS to maintain strategic alliances, unit placements or installations, grow revenue, garner new market share, secure new licenses in new jurisdictions, successfully develop or place proprietary product, comply with regulations, have its games approved by relevant jurisdictions, the effects of COVID-19 on the Company's business and results of operations and other factors set forth under Item 1. "Business," Item 1A. "Risk Factors" in AGS's Annual Report on Form 10-K, filed with the Securities and Exchange Commission. All forward-looking statements made herein are expressly qualified in their entirety by these cautionary statements and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized. Readers are cautioned that all forward-looking statements speak only to the facts and circumstances present as of the date of this press release. AGS expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
PLAYAGS, INC. CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share and per share data) | ||||||||
September 30, | December 31, | |||||||
2020 | 2019 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 113,200 | $ | 13,162 | ||||
Restricted cash | 20 | 20 | ||||||
Accounts receivable, net of allowance of $1,961 and $723, respectively | 39,673 | 61,224 | ||||||
Inventories | 30,435 | 32,875 | ||||||
Prepaid expenses | 4,401 | 2,983 | ||||||
Deposits and other | 4,371 | 5,332 | ||||||
Total current assets | 192,100 | 115,596 | ||||||
Property and equipment, net | 79,234 | 103,598 | ||||||
Goodwill | 284,206 | 287,049 | ||||||
Intangible assets | 196,126 | 230,451 | ||||||
Deferred tax asset | 4,048 | 4,965 | ||||||
Operating lease assets | 10,143 | 11,543 | ||||||
Other assets | 12,101 | 9,176 | ||||||
Total assets | $ | 777,958 | $ | 762,378 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 4,682 | $ | 15,598 | ||||
Accrued liabilities | 28,055 | 34,840 | ||||||
Current maturities of long-term debt | 7,061 | 6,038 | ||||||
Total current liabilities | 39,798 | 56,476 | ||||||
Long-term debt | 632,232 | 518,689 | ||||||
Deferred tax liability, non-current | 1,139 | 1,836 | ||||||
Operating lease liabilities, long-term | 9,926 | 11,284 | ||||||
Other long-term liabilities | 31,048 | 40,309 | ||||||
Total liabilities | 714,143 | 628,594 | ||||||
Commitments and contingencies | - | - | ||||||
Stockholders' equity | - | - | ||||||
Preferred stock at $0.01 par value; 50,000,000 shares authorized, no shares issued and outstanding | - | - | ||||||
Common stock at $0.01 par value; 450,000,000 shares authorized at September 30, 2020 and at December 31, 2019; and 35,697,583 and 35,534,558 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. | 357 | 355 | ||||||
Additional paid-in capital | 376,193 | 371,311 | ||||||
Accumulated deficit | (304,093) | (235,474) | ||||||
Accumulated other comprehensive loss | (8,642) | (2,408) | ||||||
Total stockholders' equity | 63,815 | 133,784 | ||||||
Total liabilities and stockholders' equity | $ | 777,958 | $ | 762,378 |
PLAYAGS, INC. | ||||||||
Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Revenues | ||||||||
Gaming operations | $ | 36,299 | $ | 52,522 | ||||
Equipment sales | 12,985 | 26,855 | ||||||
Total revenues | 49,284 | 79,377 | ||||||
Operating expenses | ||||||||
Cost of gaming operations(7) | 8,268 | 10,170 | ||||||
Cost of equipment sales(7) | 3,981 | 13,479 | ||||||
Selling, general and administrative | 10,862 | 16,861 | ||||||
Research and development | 6,180 | 8,671 | ||||||
Write-downs and other charges | 1,932 | 807 | ||||||
Depreciation and amortization | 20,463 | 23,810 | ||||||
Total operating expenses | 51,686 | 73,798 | ||||||
(Loss) income from operations | (2,402) | 5,579 | ||||||
Other expense | ||||||||
Interest expense | 11,330 | 9,320 | ||||||
Interest income | (671) | (42) | ||||||
Loss on extinguishment and modification of debt | - | - | ||||||
Other expense | (311) | (106) | ||||||
(Loss) income before income taxes | (12,750) | (3,593) | ||||||
Income tax (expense) benefit | 1,672 | (1,926) | ||||||
Net (loss) income | (11,078) | (5,519) | ||||||
Less: Net income attributable to non-controlling interests | - | (17) | ||||||
Net (loss) income attributable to PlayAGS, Inc. | (11,078) | (5,536) | ||||||
Foreign currency translation adjustment | 1,375 | (1,273) | ||||||
Total comprehensive (loss) income | $ | (9,703) | $ | (6,809) | ||||
Basic and diluted loss per common share: | ||||||||
Basic | $ | (0.31) | $ | (0.16) | ||||
Diluted | $ | (0.31) | $ | (0.16) | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 35,647 | 35,447 | ||||||
Diluted | 35,647 | 35,447 |
(7) Exclusive of depreciation and amortization. |
PLAYAGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | ||||||||
Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Cash flows from operating activities | ||||||||
Net (loss) income | $ | (68,136) | $ | (12,944) | ||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 66,353 | 69,002 | ||||||
Accretion of contract rights under development agreements and placement fees | 5,643 | 4,550 | ||||||
Amortization of deferred loan costs and discount | 2,538 | 1,426 | ||||||
Stock-based compensation expense | 4,726 | 5,309 | ||||||
Provision (benefit) for bad debts | 1,133 | 183 | ||||||
Loss on disposition of long-lived assets | 2,004 | 1,015 | ||||||
Impairment of assets | 6 | 5,343 | ||||||
Fair value adjustment of contingent consideration | 796 | 501 | ||||||
Benefit for deferred income tax | (518) | 873 | ||||||
Changes in assets and liabilities that relate to operations: | ||||||||
Accounts receivable | 19,391 | (12,136) | ||||||
Inventories | 5,840 | 961 | ||||||
Prepaid expenses | (1,463) | (1,098) | ||||||
Deposits and other | 667 | (3,081) | ||||||
Other assets, non-current | 1,955 | 9,024 | ||||||
Accounts payable and accrued liabilities | (21,216) | (6,447) | ||||||
Net cash provided by operating activities | 19,719 | 62,481 | ||||||
Cash flows from investing activities | ||||||||
Customer notes receivable | (4,690) | - | ||||||
Proceeds from payments on customer notes receivable | 279 | - | ||||||
Business acquisitions, net of cash acquired | - | (54,935) | ||||||
Purchase of intangible assets | (1,414) | (4,926) | ||||||
Software development and other expenditures | (8,004) | (9,957) | ||||||
Proceeds from disposition of assets | 32 | 161 | ||||||
Purchases of property and equipment | (12,196) | (38,760) | ||||||
Net cash used in investing activities | (25,993) | (108,417) | ||||||
Cash flows from financing activities | ||||||||
Repayment of first lien credit facilities | (4,040) | (4,040) | ||||||
Repayment of incremental term loans | (238) | - | ||||||
Payment of financed placement fee obligations | (4,179) | (6,058) | ||||||
Proceeds from incremental term loans | 92,150 | - | ||||||
Borrowing on revolver | 30,000 | - | ||||||
Payment of deferred loan costs | (5,744) | - | ||||||
Payments of previous acquisition obligation | (292) | (1,227) | ||||||
Payments on finance leases and other obligations | (1,012) | (1,043) | ||||||
Repurchase of stock | (483) | (1,133) | ||||||
Proceeds from stock option exercise | 158 | 685 | ||||||
Distributions to non-controlling interest owners | - | (302) | ||||||
Net cash provided by (used in) financing activities | 106,320 | (13,118) | ||||||
Effect of exchange rates on cash and cash equivalents | (8) | 3 | ||||||
Net increase (decrease) in cash and cash equivalents | 100,038 | (59,051) | ||||||
Cash, cash equivalents and restricted cash, beginning of period | 13,182 | 70,804 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 113,220 | $ | 11,753 | ||||
Supplemental cash flow information: | ||||||||
Non-cash investing and financing activities: | ||||||||
Intangible assets obtained under financed placement fee arrangements | $ | - | $ | 39,198 | ||||
Leased assets obtained in exchange for new finance lease liabilities | $ | 426 | $ | 882 | ||||
Leased assets obtained in exchange for new operating lease liabilities | $ | - | $ | 13,048 |
Non-GAAP Financial Measures
To provide investors with additional information in connection with our results as determined by generally accepted accounting principles in the United States ("GAAP"), we disclose the following non-GAAP financial measures: total Adjusted EBITDA, total Adjusted EBITDA margin, total net debt leverage ratio, and Free Cash Flow. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income, operating income, cash flows, or any other measure calculated in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
Total Adjusted EBITDA
This press release and accompanying schedules provide certain information regarding Adjusted EBITDA, which is considered a non-GAAP financial measure under the rules of the Securities and Exchange Commission.
We believe that the presentation of total Adjusted EBITDA is appropriate to provide additional information to investors about certain material non-cash items that we do not expect to continue at the same level in the future, as well as other items we do not consider indicative of our ongoing operating performance. Further, we believe total Adjusted EBITDA provides a meaningful measure of operating profitability because we use it for evaluating our business performance, making budgeting decisions, and comparing our performance against that of other peer companies using similar measures. It also provides management and investors with additional information to estimate our value.
Total Adjusted EBITDA is not a presentation made in accordance with GAAP. Our use of the term total Adjusted EBITDA may vary from others in our industry. Total Adjusted EBITDA should not be considered as an alternative to operating income or net income. Total Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation or as a substitute for the analysis of our results as reported under GAAP.
Our definition of total Adjusted EBITDA allows us to add back certain non-cash charges that are deducted in calculating net income and to deduct certain gains that are included in calculating net income. However, these expenses and gains vary greatly, and are difficult to predict. They can represent the effect of long-term strategies as opposed to short-term results. In addition, in the case of charges or expenses, these items can represent the reduction of cash that could be used for other corporate purposes. Due to these limitations, we rely primarily on our GAAP results, such as net loss, (loss) income from operations, EGM Adjusted EBITDA, Table Products Adjusted EBITDA, or Interactive Adjusted EBITDA, and use Total Adjusted EBITDA only supplementally.
The total Adjusted EBITDA discussion above is also applicable to its margin measure, which is calculated as total Adjusted EBITDA as a percentage of Total Revenue.
The following table presents a reconciliation of total Adjusted EBITDA to net loss, which is the most comparable GAAP measure:
Total Adjusted EBITDA Reconciliation | ||||||||
(Amounts in thousands) | Three Months Ended September 30, | |||||||
2020 | 2019 | |||||||
Net (loss) income attributable to PlayAGS, Inc. | $ | (11,078) | $ | (5,536) | ||||
Income tax (benefit) expense | (1,672) | 1,926 | ||||||
Depreciation and amortization | 20,463 | 23,810 | ||||||
Other expense | (311) | (106) | ||||||
Interest income | (671) | (42) | ||||||
Interest expense | 11,330 | 9,320 | ||||||
Write-downs and other(8) | 1,932 | 807 | ||||||
Other adjustments(9) | 2,413 | (3) | ||||||
Other non-cash charges(10) | 2,415 | 2,426 | ||||||
Legal and litigation expenses including settlement payments(11) | 389 | 1,745 | ||||||
Acquisitions and integration related costs including restructuring and severance(12) | 79 | 481 | ||||||
Non-cash stock-based compensation | 1,733 | 1,959 | ||||||
Total Adjusted EBITDA | $ | 27,022 | $ | 36,787 | ||||
(Amounts in thousands, except Adjusted EBITDA margin) | Three Months Ended September 30, | |||||||
2020 | 2019 | |||||||
Total revenues | $ | 49,284 | $ | 79,377 | ||||
Adjusted EBITDA | $ | 27,022 | $ | 36,787 | ||||
Adjusted EBITDA margin | 54.8 | % | 46.3 | % |
(8) Write-downs and other includes items related to loss on disposal or impairment of long-lived assets, fair value adjustments to contingent consideration, and acquisition costs. |
(9) Other adjustments are primarily composed of professional fees incurred for projects, corporate and public filing compliance, contract cancellation fees, and other transaction costs deemed to be non-operating in nature, as well as costs incurred related to initial public offering, net of costs capitalized to equity and the cost of related secondary offerings. |
(10) Other non-cash charges are costs related to non-cash charges and losses on the disposition of assets, non-cash charges on capitalized installation and delivery, which primarily includes the costs to acquire contracts that are expensed over the estimated life of each contract, and non-cash charges related to accretion of contract rights under development agreements. |
(11) Legal and litigation expenses including settlement payments consist of payments to law firms and settlements for matters that are outside the normal course of business. These costs related to litigation and matters that were not significant individually. |
(12) Acquisition and integration costs primarily relate to costs incurred after the purchase of businesses, such as the purchase of Integrity, to integrate operations and obtain costs synergies. Restructuring and severance costs primarily relate to costs incurred through the restructuring of the Company's operations from time to time and other employee severance costs recognized in the periods presented. |
Total Net Debt Leverage Ratio Reconciliation | ||||||||
The following table presents a reconciliation of total net debt and total net debt leverage ratio: | ||||||||
(Amounts in thousands, except net debt leverage ratio) | September 30, | December 31, | ||||||
2020 | 2019 | |||||||
Total principal amount of debt | $ | 654,267 | $ | 533,727 | ||||
Less: Cash and cash equivalents | 113,200 | 13,162 | ||||||
Total net debt | $ | 541,067 | $ | 520,565 | ||||
LTM Adjusted EBITDA | $ | 87,635 | $ | 146,062 | ||||
Total net debt leverage ratio | 6.2 | 3.6 | ||||||
Free Cash Flow
This schedule provides certain information regarding Free Cash Flow, which is considered a non-GAAP financial measure under the rules of the Securities and Exchange Commission.
We define Free Cash Flow as net cash provided by operating activities less cash outlays related to capital expenditures. We define capital expenditures to include purchase of intangible assets, software development and other expenditures, and purchases of property and equipment. In arriving at Free Cash Flow, we subtract cash outlays related to capital expenditures from net cash provided by operating activities because they represent long-term investments that are required for normal business activities. As a result, subject to the limitations described below, Free Cash Flow is a useful measure of our cash available to repay debt and/or make other investments.
Free Cash Flow adjusts for cash items that are ultimately within management's discretion to direct, and therefore, may imply that there is less or more cash that is available than the most comparable GAAP measure. Free Cash Flow is not intended to represent residual cash flow for discretionary expenditures since debt repayment requirements and other non-discretionary expenditures are not deducted. These limitations are best addressed by using Free Cash Flow in combination with the GAAP cash flow numbers.
The following table presents a reconciliation of Free Cash Flow:
(Amounts in thousands) | Nine Months | Six Months | Three Months | |||||||||
Net cash provided by operating activities | $ | 19,719 | $ | 7,867 | $ | 11,852 | ||||||
Purchase of intangible assets | (1,414) | (925) | (489) | |||||||||
Software development and other expenditures | (8,004) | (5,530) | (2,474) | |||||||||
Purchases of property and equipment | (12,196) | (8,057) | (4,139) | |||||||||
Free Cash Flow | $ | (1,895) | $ | (6,645) | $ | 4,750 | ||||||
(Amounts in thousands) | Nine Months | Six Months | Three Months | |||||||||
Net cash provided by operating activities | $ | 62,481 | $ | 37,675 | $ | 24,806 | ||||||
Purchase of intangible assets | (4,926) | (3,950) | (976) | |||||||||
Software development and other expenditures | (9,957) | (6,299) | (3,658) | |||||||||
Purchases of property and equipment | (38,760) | (23,819) | (14,941) | |||||||||
Free Cash Flow | $ | 8,838 | $ | 3,607 | $ | 5,231 |
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SOURCE AGS
Copyright 2020 PR Newswire
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