LAS VEGAS, Jan. 18, 2022 /PRNewswire/ -- PlayAGS,
Incorporated (NYSE: AGS) ("AGS" or the "Company") today
announced selected preliminary financial results for the fourth
quarter and full year ended December 31,
2021 in conjunction with the Company's intention to explore
a refinancing of its outstanding revolving credit facility and term
loan credit facilities. A refinancing transaction could include
increasing the size of the Company's revolving credit facility,
extending its debt maturities and reducing its borrowing costs.
Additionally, the Company could look to use a material amount of
cash on the Company's balance sheet that could exceed
$50 million in connection with
such refinancing.
AGS President and Chief Executive Officer David Lopez said, "Our preliminary fourth
quarter 2021 financial results further reflect the operating
momentum we are witnessing across all three segments of our
business. I continue to believe we have the best lineup of new
products in our Company's history and am excited about the
opportunities that lie ahead."
|
Preliminary and
Unaudited Summary of the Three Months and Twelve Months Ended
December 31, 2021 and 2020
|
|
|
(Amounts in
thousands; except Adjusted EBITDA margin)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
Expected
Range
|
|
Actual
Reported
|
|
Expected
Range
|
|
Actual
Reported
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM
|
$
|
63,000
|
|
$
|
65,000
|
|
$
|
42,396
|
|
$
|
237,000
|
|
$
|
239,000
|
|
$
|
151,789
|
|
Table
Products
|
|
3,000
|
|
|
3,200
|
|
|
2,551
|
|
|
11,700
|
|
|
11,900
|
|
|
7,969
|
|
Interactive
|
|
2,400
|
|
|
2,600
|
|
|
1,675
|
|
|
9,900
|
|
|
10,100
|
|
|
7,249
|
|
Total
Revenues
|
$
|
68,400
|
|
$
|
70,800
|
|
$
|
46,622
|
|
$
|
258,600
|
|
$
|
261,000
|
|
$
|
167,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(11,625)
|
|
$
|
(6,075)
|
|
$
|
(17,242)
|
|
$
|
(24,750)
|
|
$
|
(19,200)
|
|
$
|
(85,378)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM
|
$
|
28,000
|
|
$
|
30,000
|
|
$
|
19,696
|
|
$
|
112,000
|
|
$
|
114,000
|
|
$
|
65,877
|
|
Table
Products
|
|
1,900
|
|
|
2,000
|
|
|
1,316
|
|
|
6,350
|
|
|
6,450
|
|
|
3,360
|
|
Interactive
|
|
775
|
|
|
825
|
|
|
287
|
|
|
3,300
|
|
|
3,350
|
|
|
2,432
|
|
Total Adjusted
EBITDA (1)
|
$
|
30,675
|
|
$
|
32,825
|
|
$
|
21,299
|
|
$
|
121,650
|
|
$
|
123,800
|
|
$
|
71,669
|
|
Total Adjusted
EBITDA margin (1)
|
|
44.8%
|
|
|
46.4%
|
|
|
45.7%
|
|
|
47.0%
|
|
|
47.4%
|
|
|
42.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided
by operating activities
|
$
|
22,000
|
|
$
|
25,000
|
|
$
|
16,451
|
|
$
|
76,200
|
|
$
|
79,200
|
|
$
|
36,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
(1)
|
$
|
5,500
|
|
$
|
11,500
|
|
$
|
2,353
|
|
$
|
23,430
|
|
$
|
29,430
|
|
$
|
458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net debt
leverage ratio (1)
|
|
4.3x
|
|
|
4.2x
|
|
|
7.5x
|
|
|
4.3x
|
|
|
4.2x
|
|
|
7.5x
|
|
|
(1) Adjusted EBITDA,
Adjusted EBITDA margin, Free Cash Flow, and Total net debt leverage
ratio are non-GAAP measures; see non-GAAP reconciliation
below
|
|
|
Preliminary and
Unaudited
|
|
|
|
Key Performance
Indicators for the Three Months and Twelve Months Ended December
31,
2021 and 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months
Ended December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
Expected
Range
|
|
|
Actual
Reported
|
|
|
Expected
Range
|
|
|
Actual
Reported
|
|
EGM
Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic installed
base, end of period
|
|
|
15,850
|
|
|
|
15,950
|
|
|
|
16,268
|
|
|
|
15,850
|
|
|
|
15,950
|
|
|
|
16,268
|
|
Domestic revenue per
day
|
|
$
|
29.50
|
|
|
$
|
30.50
|
|
|
$
|
23.26
|
|
|
$
|
29.50
|
|
|
$
|
30.50
|
|
|
$
|
17.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
installed base, end of period
|
|
|
7,550
|
|
|
|
7,650
|
|
|
|
7,985
|
|
|
|
7,550
|
|
|
|
7,650
|
|
|
|
7,985
|
|
International revenue
per day
|
|
$
|
5.40
|
|
|
$
|
5.60
|
|
|
$
|
2.56
|
|
|
$
|
4.40
|
|
|
$
|
4.60
|
|
|
$
|
2.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EGM units
sold
|
|
|
775
|
|
|
|
825
|
|
|
|
283
|
|
|
|
2,350
|
|
|
|
2,400
|
|
|
|
1,343
|
|
Domestic average
sales price
|
|
$
|
19,000
|
|
|
$
|
19,500
|
|
|
$
|
18,035
|
|
|
$
|
18,000
|
|
|
$
|
18,500
|
|
|
$
|
18,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
Installed Base, end of period
|
|
|
4,625
|
|
|
|
4,725
|
|
|
|
4,254
|
|
|
|
4,625
|
|
|
|
4,725
|
|
|
|
4,254
|
|
Average monthly lease
price
|
|
$
|
215
|
|
|
$
|
225
|
|
|
$
|
182
|
|
|
$
|
205
|
|
|
$
|
215
|
|
|
$
|
149
|
|
The information for the fourth quarter and fiscal year ended
December 31, 2021 included in this
release is preliminary, has been prepared by the Company's
management, has not been reviewed or audited by the Company's
auditors and represents the best estimates of management based on
the information available to them as of the date of this release.
The Company is in the process of completing its audit for the
fiscal year ended December 31, 2021
and currently anticipates releasing its 2021 fourth quarter and
full year results on March 10, 2022,
after the market close. As a result, the information for the fourth
quarter and fiscal year ended December 31,
2021 included in this release is subject to adjustments, and
it is possible that the Company's actual reported financial results
may differ from the estimates included in this release due to the
completion of audit procedures and final adjustments that may arise
between now and the time the Company's financial results for the
fourth quarter and fiscal year ended December 31, 2021 are finalized, audited and
reported. The Company cannot provide any assurances to you that
when the estimated financial information for the fourth quarter and
fiscal year ended December 31, 2021
presented in this release is finalized, audited and reported that
such financial information will not be materially different from
the information presented herein.
The Company is sharing these preliminary financial results with
its prospective lenders in connection with a potential refinancing
transaction. The Company has not committed to engage in any
refinancing transaction and the pursuit of any refinancing
transaction is subject to market conditions.
Introducing 2022 Net Leverage Target
Supported by the current operating momentum being witnessed
across all three business segments, the Company is targeting to
reach a net leverage ratio (Net Debt divided by trailing-12
month Adjusted EBITDA) of less than 4.0x by December 31, 2022. The Company's net leverage
ratio target does not contemplate, nor is it dependent upon, a
refinancing of its outstanding indebtedness.
The Company is not providing a quantitative reconciliation of
its target for trailing 12-month Adjusted EBITDA to net income
(loss), which is its corresponding GAAP measure, because this GAAP
measure is difficult to reliably predict or estimate without
unreasonable effort due to its dependence on future uncertainties,
such as the adjustments or items discussed below under the heading
"Non-GAAP Financial Measures." Additionally, information that is
currently not available to the Company could have a potentially
unpredictable and potentially significant impact on its future GAAP
financial results.
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 equipment 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, Senior Vice President Corporate Operations
and Investor Relations
bboyer@playags.com
Julia Boguslawski, Chief Marketing Officer
jboguslawski@playags.com
©2022 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 Statements
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," "targets" 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.
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 on a supplemental
basis.
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:
|
|
Preliminary and
Unaudited Total Adjusted EBITDA Reconciliation
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months
Ended December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
Expected
Range
|
|
|
Actual
Reported
|
|
|
Expected
Range
|
|
|
Actual
Reported
|
|
Net (loss)
income
|
|
$
|
(11,625)
|
|
|
$
|
(6,075)
|
|
|
$
|
(17,242)
|
|
|
$
|
(24,750)
|
|
|
$
|
(19,200)
|
|
|
$
|
(85,378)
|
|
Income tax (benefit)
expense
|
|
|
(1,000)
|
|
|
|
1,000
|
|
|
|
(859)
|
|
|
|
(3,000)
|
|
|
|
(1,000)
|
|
|
|
(5,875)
|
|
Depreciation and
amortization
|
|
|
19,000
|
|
|
|
18,000
|
|
|
|
19,369
|
|
|
|
74,500
|
|
|
|
73,500
|
|
|
|
85,722
|
|
Interest Expense, net
of Interest Income and Other
|
|
|
11,500
|
|
|
|
9,600
|
|
|
|
10,266
|
|
|
|
45,000
|
|
|
|
43,100
|
|
|
|
43,982
|
|
Write-downs and
other
|
|
|
2,000
|
|
|
|
1,500
|
|
|
|
523
|
|
|
|
3,000
|
|
|
|
2,500
|
|
|
|
3,329
|
|
Loss on
extinguishment and modification of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,102
|
|
Other adjustments
(2)
|
|
|
2,500
|
|
|
|
1,400
|
|
|
|
3,266
|
|
|
|
3,400
|
|
|
|
2,300
|
|
|
|
8,618
|
|
Other non-cash
charges
|
|
|
2,300
|
|
|
|
1,900
|
|
|
|
2,245
|
|
|
|
8,600
|
|
|
|
8,200
|
|
|
|
9,712
|
|
Non-cash stock-based
compensation
|
|
|
6,000
|
|
|
|
5,500
|
|
|
|
3,731
|
|
|
|
14,900
|
|
|
|
14,400
|
|
|
|
8,457
|
|
Total Adjusted
EBITDA
|
|
$
|
30,675
|
|
|
$
|
32,825
|
|
|
$
|
21,299
|
|
|
$
|
121,650
|
|
|
$
|
123,800
|
|
|
$
|
71,669
|
|
|
__________
|
|
(2) Other adjustments
are primarily composed of the following:
|
|
|
• Costs and
inventory and receivable valuation charges associated with the
COVID-19 pandemic, professional fees incurred for projects, costs
incurred related to public offerings, contract cancellation fees
and other transaction costs deemed to be non-operating in
nature;
|
|
• Acquisition
and integration related costs related to the purchase of businesses
and to integrate operations and obtain costs synergies;
|
|
• Restructuring and
severance costs, which 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;
and
|
|
• Legal and
litigation related costs, which consist of payments to law firms
and settlements for matters that are outside the normal course of
business.
|
|
|
Preliminary and
Unaudited Total Adjusted EBITDA Margin Reconciliation
|
|
|
|
(Amounts in
thousands, except Adjusted EBITDA margin)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months
Ended December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
Expected
Range
|
|
|
Actual
Reported
|
|
|
Expected
Range
|
|
|
Actual
Reported
|
|
Total
revenues
|
|
$
|
68,400
|
|
|
$
|
70,800
|
|
|
$
|
46,622
|
|
|
$
|
258,600
|
|
|
$
|
261,000
|
|
|
$
|
167,007
|
|
Adjusted
EBITDA
|
|
|
30,675
|
|
|
|
32,825
|
|
|
|
21,299
|
|
|
|
121,650
|
|
|
|
123,800
|
|
|
|
71,669
|
|
Adjusted EBITDA
margin
|
|
|
44.8%
|
|
|
|
46.4%
|
|
|
|
45.7%
|
|
|
|
47.0%
|
|
|
|
47.4%
|
|
|
|
42.9%
|
|
The following table presents a reconciliation of total net debt
and total net debt leverage ratio:
|
|
Preliminary and
Unaudited
|
|
|
|
Total Net Debt
Leverage Ratio Reconciliation
|
|
|
|
(Amounts in
thousands, except net debt leverage ratio)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
Expected
Range
|
|
|
Actual
Reported
|
|
Total principal
amount of debt
|
|
$
|
615,743
|
|
|
$
|
615,743
|
|
|
$
|
622,509
|
|
Less: Cash and cash
equivalents
|
|
|
94,977
|
|
|
|
94,977
|
|
|
|
81,689
|
|
Total net
debt
|
|
$
|
520,766
|
|
|
$
|
520,766
|
|
|
$
|
540,820
|
|
LTM Adjusted
EBITDA
|
|
$
|
121,650
|
|
|
$
|
123,800
|
|
|
$
|
71,669
|
|
Total net debt
leverage ratio
|
|
4.3x
|
|
|
4.2x
|
|
|
7.5x
|
|
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:
|
|
Preliminary and
Unaudited Free Cash Flow Reconciliation
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months
Ended December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
Expected
Range
|
|
|
Actual
Reported
|
|
|
Expected
Range
|
|
|
Actual
Reported
|
|
Net cash provided by
operating activities
|
|
$
|
22,000
|
|
|
$
|
25,000
|
|
|
$
|
16,451
|
|
|
$
|
76,200
|
|
|
$
|
79,200
|
|
|
$
|
36,170
|
|
Purchase of
intangible assets
|
|
|
-
|
|
|
|
-
|
|
|
|
(342)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,756)
|
|
Software development
and other expenditures
|
|
|
(4,500)
|
|
|
|
(3,500)
|
|
|
|
(3,013)
|
|
|
|
(15,830)
|
|
|
|
(14,830)
|
|
|
|
(11,017)
|
|
Purchases of property
and equipment
|
|
|
(12,000)
|
|
|
|
(10,000)
|
|
|
|
(10,743)
|
|
|
|
(36,940)
|
|
|
|
(34,940)
|
|
|
|
(22,939)
|
|
Free Cash
Flow
|
|
$
|
5,500
|
|
|
$
|
11,500
|
|
|
$
|
2,353
|
|
|
$
|
23,430
|
|
|
$
|
29,430
|
|
|
$
|
458
|
|
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SOURCE AGS