AGS Announces Third Quarter 2018 Results

PRNewswire 8-Nov-2018 4:15 PM

LAS VEGAS, Nov. 8, 2018 /PRNewswire/ -- PlayAGS, Inc. (NYSE:AGS) ("AGS", "us", "we", or the "Company") today reported operating results for its third quarter 2018.

AGS Logo (PRNewsfoto/AGS)

AGS President and Chief Executive Officer David Lopez said, "In the third quarter, AGS sold 1,332 EGMs, a 58% jump year-over-year, and a company record. Revenue hit an all-time high of $75.5 million, demonstrating continued demand for our Orion Portrait cabinet and growing momentum for our new Orion Slant, in addition to significant progress in Canada, with 24% of our sold EGMs placed in several Canadian provinces. Our Tables segment posted its best quarter to date, with our innovative progressives contributing to a 30% increase in installs year-over-year.  AGS is still very underrepresented in many markets both domestically and internationally, which presents significant long-term growth opportunities for the Company due to our industry-leading game performance, an expanding suite of cabinet options, best-in-class R&D, and diversified product offerings."

Summary of the quarter ended September 30, 2018 and 2017

(In thousands, except per-share and unit data)



Three Months Ended September 30,


2018

2017

% Change

Revenues






EGM

$

71,784

$

53,331

34.6 %

Table Products


2,052


1,099

86.7 %

Interactive


1,690


2,010

(15.9)%

Total revenue

$

75,526

$

56,440

33.8 %

Operating income

$

10,110

$

9,136

10.7 %

Net income (loss)

$

4,347

$

(4,090)

N/A

Income (loss) per share  

$

0.12

$

(0.18)

N/A







Adjusted EBITDA






EGM

$

34,026

$

29,756

14.4 %

Table Products


428


(232)

N/A

Interactive


(877)


(123)

N/A

Total Adjusted EBITDA(1)  

 $

33,577

$

29,401

14.2 %







EGM units sold


1,332


842

58.2 %

EGM total installed base, end of period


24,184


22,015

9.9 %


(1) Total Adjusted EBITDA is a non-GAAP measure, see non-GAAP reconciliation below.


Third Quarter Financial Highlights

  • Total revenue increased 34% to $75.5 million, a Company record, driven by continued growth of our EGMs in the Class III marketplace, including entry into Alberta, Canada as well as a large sale to a long-standing tribal customer.
  • Recurring revenue grew to $50.7 million, or 18% year-over-year. In addition to the contribution from the EGMs purchased from Rocket Gaming, the increase was driven by our strong domestic revenue per day ("RPD") of $27.14, up $1.70 year-over-year as well as increases in Table Products revenue driven by an increase in Table Product units.
  • EGM equipment sales increased 82% to $24.7 million, another Company record, due to the sale of 1,332 units, of which approximately 24% were sold in Canada and 276 units were sold to a long-standing tribal customer.
  • Net income improved to $4.3 million from a net loss of $4.1 million in the prior year period, primarily due to the increased revenue described above.
  • Total Adjusted EBITDA (non-GAAP) increased to $33.6 million, or 14%, driven by the significant increase in revenue, partially offset by increased adjusted operating expenses of $6.1 million primarily due to increased headcount in SG&A and R&D. Included in that amount was approximately $1.0 million of operating costs from our recently acquired real money gaming ("RMG") content-aggregator Gameiom.(1)
  • Total Adjusted EBITDA margin (non-GAAP) decreased to 44% in the third quarter of 2018 compared to 52% in the prior year driven by several different factors, most notably the increased proportion of equipment sales as part of total revenues, higher-period costs related to manufacturing, and service costs,as well as increased operating costs mentioned above and costs associated with our recently acquired RMG content-aggregator Gameiom.(1)
  • SG&A expenses increased $5.5 million in the third quarter of 2018 primarily due to increased salary and benefit costs of $2.8 million due to higher headcount, and $2.2 million from increased professional fees driven by acquisitions as well as previous securities offerings. The increase was also attributable to costs associated with the recent acquisition of RMG content-aggregator Gameiom.
  • R&D expenses increased $1.4 million in the third quarter of 2018 driven by higher salary and benefit costs related to additional headcount. As a percentage of total revenue, R&D expense was 10% for the period ended September 30, 2018 compared to 11% for the prior year period.

(1) Adjusted EBITDA is a non-GAAP measure, see non-GAAP reconciliation below.

Third Quarter Business Highlights

  • EGM units sold increased to 1,332, a Company record, in the current quarter compared to 842 in the prior year led by sales of the Orion Portrait and Orion Slant cabinets in early-entry markets such as Alberta, Nevada, and Ontario.
  • Domestic EGM RPD increased 7% to $27.14, driven by our new product offerings and the optimization of our installed base by installing our newer higher-performing EGMs.
  • EGM average selling price ("ASP") increased 14% to $18,051, driven by record sales of the premium-priced Orion Portrait cabinet and our newly introduced core-plus cabinet, Orion Slant.
  • Table Products increased 328 units sequentially, or 12%, to 3,065 units, driven by organic growth, most notably the Super 4 Progressive Blackjack and Buster Blackjack side bet.
  • Our ICON cabinet footprint grew 59% year over year to over 6,800 total units in the field.
  • Mexico's installed base increased 645 units year over year and 240 units sequentially to over 8,100 units with over 420   ICON units as of September 30, 2018.
  • The Orion Portrait cabinet ended the third quarter of 2018 with a footprint of over 4,460 total units as compared to 1,123 units in the third quarter of 2017, up 134% from year-end and 298% year-over-year.
  • AGS' new Orion Slant footprint increased to over 780 units by quarter end.

Balance Sheet Review

Capital expenditures increased $5.6 million to $16.1 million in the third quarter, compared to $10.5 million in the prior year  period.  As of September 30, 2018, we had $33.2 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 September 30, 2018, was approximately $476.9 million compared to $648.7 million at December 31, 2017. This substantial reduction was driven by the IPO and related redemption of our HoldCo PIK notes during the first quarter.  In the third quarter, net debt decreased by over $6.9 million due to mandatory principal payments on our term loans and a higher balance of cash and cash equivalents.  As a result of the above transactions and our strong operational performance, our total net debt leverage ratio, which is total net debt divided by Adjusted EBITDA for the trailing 12-month period, decreased from 6.1 times at December 31, 2017, to 3.6 times at September 30, 2018.(2)

(2) Total net debt leverage ratio is a non-GAAP measure, see non-GAAP reconciliation below.

Term Loan Repricing

On October 5, 2018, we entered into an Incremental Assumption and Amendment Agreement No. 2 to reduce the applicable interest rate margin for the Term B Loans by 75 basis point from LIBOR plus 425 bps to LIBOR plus 350 bps, saving nearly $4 million in annual cash interest expense, with an additional 25 basis points potential reduction upon receiving a corporate credit rating of at least B1 from Moody's Investors Service.  In conjunction with the repricing, we secured commitments from lenders for an additional $30 million in terms loans under our existing credit agreement. The net proceeds of the incremental term loans are expected to be used for general corporate purposes and additional capital to accelerate growth.

2018 Outlook

Based on our year-to-date progress and due to our current momentum, we now expect our total Adjusted EBITDA in 2018 to be between $134.0 and $136.0 million. This is an upward revision to the guidance we previously released and is based on our progress executing against our many growth initiatives in the first half of the year and due to our improved visibility for the remainder of the year.

We have not provided a reconciliation of forward-looking total Adjusted EBITDA to the most directly comparable GAAP financial measure, net income (loss), due primarily to the variability and difficulty in making accurate forecasts and projections of the variable and individual adjustments for a reconciliation to net income (loss), as not all of the information necessary for a quantitative reconciliation is available to us without unreasonable effort. We expect that the main components of net income (loss) for fiscal year 2018 shall consist of operating expenses, interest expenses, as well as other expenses (income) and income tax expenses, which are inherently difficult to forecast and quantify with reasonable accuracy without unreasonable efforts. The amounts associated with these items have historically and may continue to vary significantly from quarter to quarter and material changes to these items could have a significant effect on our future GAAP results.

Conference Call and Webcast

Today at 5 p.m. EST management will host a conference call to present the third quarter 2018 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 dial-in number is +1 (866) 270-1533 and the dial-in number for participants outside the U.S./Canada is +1 (412) 317-0797. The conference ID/confirmation code is AGS Q3 2018 Earnings Call.

About AGS

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 and 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 about us at playags.com.

AGS Media Contacts:

Julia Boguslawski, Chief Marketing Officer and Executive Vice President of Investor Relations
jboguslawski@playags.com

Steven Kopjo, Director of Investor Relations
skopjo@playags.com   

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" 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 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 on March 30, 2018. 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.

All ® notices signify marks registered in the United States.

PLAYAGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and per share data)

(unaudited)



September 30,
2018

December 31,
2017

Assets





Current assets





Cash and cash equivalents

$

33,227

$

19,242

Restricted cash


78


100

Accounts receivable, net of allowance of $1,180 and $1,462, respectively


46,082


32,776

Inventories


31,819


24,455

Prepaid expenses


4,638


2,675

Deposits and other


4,275


3,460

Total current assets


120,119


82,708

Property and equipment, net


84,323


77,982

Goodwill


282,731


278,337

Intangible assets


204,801


232,287

Deferred tax asset


1,047


1,115

Other assets


12,489


24,813

Total assets

$

705,510

$

697,242






Liabilities and Stockholders' Equity





Current liabilities





Accounts payable

$

12,094

$

11,407

Accrued liabilities


22,517


24,954

Current maturities of long-term debt


6,223


7,359

Total current liabilities


40,834


43,720

Long-term debt


492,208


644,158

Deferred tax liability - noncurrent


678


1,016

Other long-term liabilities


25,789


36,283

Total liabilities


559,509


725,177

Commitments and contingencies





Stockholders' equity





Preferred stock at $0.01 par value; 100,000 shares authorized, no shares issued and outstanding



Common stock at $0.01 par value; 450,000,000 shares authorized at September 30, 2018 and 46,629,155 at December 31, 2017; and 35,305,479 and 23,208,706 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively.


353


149

Additional paid-in capital


359,819


177,276

Accumulated deficit


(212,058)


(201,557)

Accumulated other comprehensive loss


(2,113)


(3,803)

Total stockholders' equity


146,001


(27,935)

Total liabilities and stockholders' equity

$

705,510

$

697,242

 

PLAYAGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(amounts in thousands, except per share data) (unaudited)



Three months ended September 30,

Nine months ended September 30,



2018


2017


2018


2017

Revenues









Gaming operations

$

50,701

$

42,849

$

152,887

$

125,040

Equipment sales


24,825


13,591


60,317


29,254

Total revenues


75,526


56,440


213,204


154,294

Operating expenses









Cost of gaming operations(1)


10,494


7,344


29,062


21,794

Cost of equipment sales(1)


12,109


6,330


28,919


14,326

Selling, general and administrative


15,284


9,742


47,411


30,368

Research and development


7,894


6,467


23,374


17,912

Write-downs and other charges


667


490


3,282


2,655

Depreciation and amortization


18,968


16,931


57,784


53,598

Total operating expenses


65,416


47,304


189,832


140,653

Income from operations


10,110


9,136


23,372


13,641

Other expense (income)









Interest expense


8,956


12,666


28,253


42,380

Interest income


(89)


(25)


(162)


(80)

Loss on extinguishment and modification of debt




4,608


8,129

Other expense (income)


434


(467)


10,121


(4,805)

Income (loss) before income taxes


809


(3,038)


(19,448)


(31,983)

Income tax benefit (expense)


3,538


(1,052)


8,947


(4,603)

Net income (loss)


4,347


(4,090)


(10,501)


(36,586)

Foreign currency translation adjustment


1,636


(498)


1,690


707

Total comprehensive income (loss)

$

5,983

$

(4,588)

$

(8,811)

$

(35,879)










Basic and diluted earnings (loss) per common share:









Basic

$

0.12

$

(0.18)

$

(0.31)

$

(1.58)

Diluted

$

0.12

$

(0.18)

$

(0.31)

$

(1.58)

Weighted average common shares outstanding:









Basic


35,305


23,208


34,097


23,208

    Diluted     


36,313


23,208


34,097


23,208


(1) exclusive of depreciation and amortization

                                                                                                                                                               

PLAYAGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

(unaudited)



Nine months ended September 30,


2018

2017

Cash flows from operating activities





Net loss

$

(10,501)

$

(36,586)

Adjustments to reconcile net loss to net cash provided by operating activities:





Depreciation and amortization


57,784


53,598

Accretion of contract rights under development agreements and placement fees


3,412


3,459

Amortization of deferred loan costs and discount


1,388


2,315

Payment-in-kind interest capitalized



7,807

Payment-in-kind interest payments


(37,624)


(2,698)

Write-off of deferred loan cost and discount


3,410


3,294

Stock-based compensation expense


9,167


(Benefit) provision for bad debts


(198)


902

Loss on disposition of assets


1,383


2,896

Impairment of assets


1,199


333

Fair value adjustment of contingent consideration


700


(Benefit) provision for deferred income tax


(205)


2,147

Changes in assets and liabilities that relate to operations:





Accounts receivable


(12,277)


(9,649)

Inventories


(3,173)


(453)

Prepaid expenses


(1,958)


(1,119)

Deposits and other


(626)


(276)

Other assets, non-current


13,574


(2,010)

Accounts payable and accrued liabilities


(12,135)


2,333

Net cash provided by operating activities


13,320


26,293

Cash flows from investing activities





Business acquisitions, net of cash acquired


(4,452)


(7,000)

Purchase of intangible assets


(931)


(565)

Software development


(8,794)


(6,334)

Proceeds from disposition of assets


21


171

Purchases of property and equipment


(34,457)


(35,961)

Net cash used in investing activities


(48,613)


(49,689)

Cash flows from financing activities





Proceeds from issuance of first lien credit facilities



448,725

Repayment of senior secured credit facilities


(115,000)


(410,655)

Payments on first lien credit facilities


(3,864)


(1,125)

Payment of financed placement fee obligations


(2,688)


(2,971)

Payments on deferred loan costs



(3,127)

Repayment of seller notes



(12,401)

Payments on equipment long-term note payable and capital leases


(2,108)


(1,832)

Initial public offering cost


(4,160)


(1,203)

Proceeds from issuance of common stock


176,341


Proceeds from employees in advance of common stock issuance



25

Proceeds from stock option exercise


731


Net cash provided by financing activities


49,252


15,436

Effect of exchange rates on cash and cash equivalents and restricted cash


4


8

Increase in cash and cash equivalents and restricted cash


13,963


(7,952)

Cash, cash equivalents and restricted cash, beginning of period


19,342


17,977

Cash, cash equivalents and restricted cash, end of period

$

33,305

$

10,125


Non-GAAP Financial Measures

This press release and accompanying schedules provide certain information regarding total Adjusted EBITDA, total Adjusted EBITDA (margin), and total net debt leverage ratio, which are considered a non-GAAP financial measures 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 or expenses that are deducted in calculating net income and to deduct certain gains that are included in calculating net income. However, these charges and 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 income (loss),  income (loss) from operations, EGM Adjusted EBITDA, Table Products Adjusted EBITDA or Interactive Adjusted EBITDA and use total Adjusted EBITDA only supplementally.

The following table presents a reconciliation of total Adjusted EBITDA to net income (loss), which is the most comparable GAAP measure:

Total Adjusted EBITDA Reconciliation


Three Months Ended September 30, 2018 compared to the Three Months Ended September 30, 2017



Three months ended
September 30,


$

%



2018


2017


Change

Change

Net income (loss)

$

4,347

$

(4,090)

$

8,437

206.3 %

Income tax (benefit) expense


(3,538)


1,052


(4,590)

(436.3)%

Depreciation and amortization


18,968


16,931


2,037

12.0 %

Other expense (income)


434


(467)


901

192.9 %

Interest income


(89)


(25)


(64)

(256.0)%

Interest expense


8,956


12,666


(3,710)

(29.3)%

Write-downs and other(1)


667


490


177

36.1 %

Loss on extinguishment and modification of debt(2)




— %

Other adjustments(3)


893


474


419

88.4 %

Other non-cash charges(4)


1,700


1,551


149

9.6 %

New jurisdictions and regulatory licensing costs(5)



567


(567)

(100.0)%

Legal and litigation expenses including settlement payments(6)


(45)


181


(226)

(124.9)%

Acquisitions and integration related costs including restructuring and severance(7)


746


71


675

950.7 %

Non-cash stock-based compensation(8)


538



538

100.0 %

Total Adjusted EBITDA

$

33,577

$

29,401

$

4,176

14.2 %

Total revenue

$

75,526

$

56,440




Total Adjusted EBITDA margin


44.5%


52.1%






(1)

Write-downs and other include items related to loss on disposal or impairment of long-lived assets, fair value adjustments to contingent consideration and acquisition costs

(2)

Loss on extinguishment and modification of debt primarily relates to the refinancing of long-term debt, in which deferred loan costs and discounts related to old senior secured credit facilities were written off

(3)

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

(4)

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

(5)

New jurisdiction and regulatory license costs relates primarily to one-time non-operating costs incurred to obtain new licenses and develop products for new jurisdictions

(6)

Legal and litigation expenses include payments to law firms and settlements for matters that are outside the normal course of business

(7)

Acquisition and integration costs include restructuring and severance and are related to costs incurred after the purchase of businesses, such as the acquisitions of Rocket and AGS iGaming, to integrate operations

(8)

Non-cash stock-based compensation includes non-cash compensation expense related to grants of options, restricted stock, and other equity awards

 

Nine Months Ended September 30, 2018 compared to the Nine Months Ended September 30, 2017















Nine months ended September 30,


$

%


2018

2017


Change

Change

Net loss

$

(10,501)

$

(36,586)

$

26,085

71.3 %

Income tax (benefit) expense


(8,947)


4,603


(13,550)

(294.4)%

Depreciation and amortization


57,784


53,598


4,186

7.8 %

Other expense (income)


10,121


(4,805)


14,926

310.6 %

Interest income


(162)


(80)


(82)

(102.5)%

Interest expense


28,253


42,380


(14,127)

(33.3)%

Write-downs and other(1)


3,282


2,655


627

23.6 %

Loss on extinguishment and modification of debt(2)


4,608


8,129


(3,521)

(43.3)%

Other adjustments(3)


2,218


2,067


151

7.3 %

Other non-cash charges(4)


4,890


5,462


(572)

(10.5)%

New jurisdictions and regulatory licensing costs(5)



1,304


(1,304)

(100.0)%

Legal and litigation expenses including settlement payments(6)


789


766


23

3.0 %

Acquisitions and integration related costs including restructuring and severance(7)


3,156


899


2,257

251.1 %

Non-cash stock-based compensation(8)


9,167



9,167

100.0 %

Total Adjusted EBITDA

$

104,658

$

80,392

$

24,266

30.2 %

Total revenue


213,204


154,294




Total Adjusted EBITDA margin


49.1%


52.1%






(1)

Write-downs and other include items related to loss on disposal or impairment of long-lived assets, fair value adjustments to contingent consideration, and acquisition costs

(2)

Loss on extinguishment and modification of debt primarily relates to the refinancing of long-term debt, in which deferred loan costs and discounts related to old senior secured credit facilities were written off

(3)

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

(4)

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

(5)

New jurisdiction and regulatory license costs relate primarily to one-time non-operating costs incurred to obtain new licenses and develop products for new jurisdictions

(6)

Legal and litigation expenses include payments to law firms and settlements for matters that are outside the normal course of business

(7)

Acquisition and integration costs include restructuring and severance and are related to costs incurred after the purchase of businesses, such as the acquisitions of Rocket and AGS iGaming, to integrate operations

(8)

Non-cash stock-based compensation includes non-cash compensation expense related to grants of options, restricted stock, and other equity awards

 

Adjusted EBITDA Reconciliation


The following tables reconcile net income (loss) to total adjusted EBITDA:



2017



Q1


Q2


Q3


Q4


YTD

Net loss

$

(12,386)

$

(20,110)

$

(4,090)

$

(8,520)

$

(45,106)

Income tax expense (benefit)


2,233


1,318


1,052


(6,492)


(1,889)

Depreciation and amortization


18,451


18,216


16,931


18,051


71,649

Other (income) expense


(2,809)


(1,529)


(467)


1,867


(2,938)

Interest income


(15)


(40)


(25)


(28)


(108)

Interest expense


15,160


14,554


12,666


13,131


55,511

Write-downs and other(1)


232


1,933


490


1,830


4,485

Loss on extinguishment and modification of debt(2)



8,129



903


9,032

Other adjustments(3)


647


946


474


823


2,890

Other non-cash charges(4)


2,111


1,800


1,551


2,332


7,794

New jurisdictions and regulatory licensing costs(5)


235


502


567


758


2,062

Legal and litigation expenses including settlement payments(6)


399


186


181


(243)


523

Acquisitions and integration related costs including restructuring and severance(7)


647


181


71


2,037


2,936

Non-cash stock based compensation(8)






Total Adjusted EBITDA

$

24,905

$

26,086


29,401


26,449


106,841



(1)

Write-downs and other include items related to loss on disposal or impairment of long-lived assets, fair value adjustments to contingent consideration, and acquisition costs

(2)

Loss on extinguishment and modification of debt primarily relates to the refinancing of long-term debt, in which deferred loan costs and discounts related to old senior secured credit facilities were written off

(3)

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

(4)

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

(5)

New jurisdiction and regulatory license costs relate primarily to one-time non-operating costs incurred to obtain new licenses and develop products for new jurisdictions

(6)

Legal and litigation expenses include payments to law firms and settlements for matters that are outside the normal course of business

(7)

Acquisition and integration costs include restructuring and severance and are related to costs incurred after the purchase of businesses, such as the acquisition of Rocket, to integrate operations

(8)

Non-cash stock-based compensation includes non-cash compensation expense related to grants of options, restricted stock, and other equity awards

                                                                                                                                                   


2017

2018



Q4


Q1


Q2


Q3

LTM
9/30/2018

Net loss (income)

$

(8,520)

$

(9,538)

$

(5,310)

$

4,347

$

(19,021)

Income tax (benefit) expense


(6,492)


(12,436)


7,027


(3,538)


(15,439)

Depreciation and amortization


18,051


19,349


19,467


18,968


75,835

Other expense


1,867


9,232


455


434


11,988

Interest income


(28)


(52)


(21)


(89)


(190)

Interest expense


13,131


10,424


8,873


8,956


41,384

Write-downs and other(1)


1,830


1,610


1,005


667


5,112

Loss on extinguishment and modification of debt(2)


903


4,608




5,511

Other adjustments(3)


823


396


929


893


3,041

Other non-cash charges(4)


2,332


1,574


1,616


1,700


7,222

New jurisdictions and regulatory licensing costs(5)


758





758

Legal and litigation expenses including settlement payments(6)


(243)



834


(45)


546

Acquisitions and integration related costs including restructuring and severance(7)


2,037


1,179


1,231


746


5,193

Non-cash stock based compensation(8)



8,153


476


538


9,167

Total Adjusted EBITDA

$

26,449

$

34,499


36,582


33,577


131,107


(1)

Write-downs and other include items related to loss on disposal or impairment of long-lived assets, fair value adjustments to contingent consideration, and acquisition costs

(2)

Loss on extinguishment and modification of debt primarily relates to the refinancing of long-term debt, in which deferred loan costs and discounts related to old senior secured credit facilities were written off

(3)

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

(4)

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

(5)

New jurisdiction and regulatory license costs relates primarily to one-time non-operating costs incurred to obtain new licenses and develop products for new jurisdictions

(6)

Legal and litigation expenses include payments to law firms and settlements for matters that are outside the normal course of business

(7)

Acquisition and integration costs include restructuring and severance and are related to costs incurred after the purchase of businesses, such as the acquisitions of Rocket and AGS iGaming, to integrate operations

(8)

Non-cash stock-based compensation includes non-cash compensation expense related to grants of options, restricted stock, and other equity awards



 

The following table presents a reconciliation of total net debt and total net debt leverage ratio:




September 30

December 30

2018

2017

Total debt

$

510,083

$

667,968

Less: Cash and cash equivalents


33,227


19,242

Total net debt


476,856


648,726

LTM Adjusted EBITDA


131,107


106,841

Total net debt leverage ratio


3.6


6.1







 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/ags-announces-third-quarter-2018-results-300747100.html

SOURCE AGS

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