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AGS REPORTS SECOND QUARTER 2022 RESULTS

·6 min read

Second Quarter 2022 Highlights:

  • Domestic EGM Recurring Revenue Increased 1% Y/Y to a Record $46.2 Million

  • Premium EGM Installed Base Nearly Doubled Y/Y and Grew by 15% Sequentially

  • Domestic EGM RPD Increased 6% Sequentially; Topped $30 for the Fifth Consecutive Quarter

  • Generated $1.5 Million of Net Income; First Net Profit Since Q4 2019

  • Adjusted EBITDA Increased 6% Y/Y to $34.1 Million

  • Table Products Adjusted EBITDA Reached a Record $2 Million

  • On Pace to Achieve Year-End 2022 Net Leverage Target of less than 4.0x

LAS VEGAS, Aug. 8, 2022 /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 operating results for the second quarter ended June 30, 2022.

AGS Logo (PRNewsfoto/AGS)
AGS Logo (PRNewsfoto/AGS)

In addressing the Company's second quarter financial performance, AGS President and Chief Executive Officer David Lopez said, "Our second quarter results reflect the growing returns we are realizing as a result of the significant investments made into our R&D, sales and product management teams over the past 24 months. These investments have accelerated the operating momentum we are seeing within the business, as reflected by the material year-over-year growth in our reported Q2 2022 net revenues, net income and Adjusted EBITDA."

Mr. Lopez continued, "Despite swirling uncertainty over the health of the consumer and the direction of the global economy, we have been encouraged by the incredible consistency demonstrated within our business through July. Ultimately, our recurring-revenue focused business model and strong liquidity position fortify the underlying resiliency within our business."

Summary of the Three Months Ended June 30, 2022 and 2021

(In thousands, except per-share and Adjusted EBITDA margin data)




Three Months Ended June 30,





















2022



2021



$ Change



% Change


Revenues:

















EGM


$

70,467



$

61,193



$

9,274




15.2

%

Table Products



3,514




2,830




684




24.2

%

Interactive



2,603




2,814




(211)




(7.5)

%

Total revenues


$

76,584



$

66,837



$

9,747




14.6

%

Income from operations


$

9,813



$

7,428



$

2,385




32.1

%

Net income (loss)


$

1,542



$

(3,883)



$

5,425




(139.7)

%

Income (loss) per share


$

0.04



$

(0.11)



$

0.15




(137.9)

%


















Adjusted EBITDA:

















EGM


$

31,564



$

29,453



$

2,111




7.2

%

Table Products



2,021




1,448




573




39.6

%

Interactive



545




1,202




(657)




(54.7)

%

Total Adjusted EBITDA(1)


$

34,130



$

32,103



$

2,027




6.3

%

Total Adjusted EBITDA margin(2)



44.6

%



48.0

%



(3.4)

%


(340 bps)


















Second Quarter 2022 Financial Results

  • Total revenue reached $76.6 million, representing a year-over-year increase of approximately 15%. Revenue growth within the EGM segment outpaced the broader company average, supported by continued successful execution of our premium game growth initiative, realization of early-stage returns on recent R&D investments, continued recovery in North American replacement unit demand, and further improvement in the Mexico macroeconomic environment. Table Product revenues advanced approximately 24% year-over-year to a record $3.5 million, reflecting outsized growth within our progressive installed base, initial installs of our PAX S single-deck card shuffler, a doubling of our AGS Arsenal site license customer account penetration, and the Q1 2022 Lucky Lucky side bet acquisition. Interactive revenues declined modestly year-over-year as we continue to strategically refocus our resources to better capitalize upon growth opportunities in the North American real-money gaming ("RMG") market. Total revenue improved approximately 5% over the $72.9 million delivered in Q1 2022, with revenues increasing sequentially in all three business segments. Q2 2022 marked the sixth consecutive quarter in which we were able to achieve quarterly sequential revenue growth.

  • Gaming operations, or recurring revenue, increased to $56.6 million versus $55.0 million and $53.2 million in Q2 2021 and Q1 2022, respectively. Despite facing a challenging prior-year comparison that benefitted from considerable fiscal stimulus and the broad-based easing of COVID-related casino operating restrictions throughout the United States, domestic EGM gaming operations revenue increased approximately 1% year-over-year to a record $46.2 million. Table Products recurring revenue of $3.5 million also reached a new record, supported by organic growth throughout the installed base and Q1 2022 acquisition activity. In aggregate, recurring revenue accounted for approximately 74% of our consolidated Q2 2022 revenue.

  • We generated $1.5 million of net income in Q2 2022 compared to a net loss of $3.9 million in the prior year period. The year-over-year increase in our reported net income reflects our improved operating performance and interest expense savings resulting from our Q1 2022 comprehensive debt refinancing. Q2 2022 marked the first quarter in which we were able to generate positive net income since Q4 2019.

  • Total Adjusted EBITDA (non-GAAP)(1) increased approximately 6% year-over-year to $34.1 million compared to $32.1 million in Q2 2021. Year-over-year Adjusted EBITDA growth within the Table Products and EGM segments of approximately 40% and 7%, respectively, was partially offset by a decline within the Interactive segment, as we elected to incur modest incremental expense in order to accelerate the flow of new AGS game content into the North American RMG channel. Adjusted EBITDA increased approximately 4% on a quarterly sequential basis versus the $32.8 million delivered in Q1 2022.

  • Total Adjusted EBITDA margin (non-GAAP)(1) was 44.6%, relatively consistent with the 45.0% achieved in Q1 2022 and slightly below the 48.0% reached in Q2 2021. The year-over-year compression in our Adjusted EBITDA margin was predominantly driven by a greater mix of EGM unit sales revenues, which carry a lower gross margin as compared to EGM gaming operations revenues, and higher costs related to global supply chain and logistics disruption.

(1) Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures, see non-GAAP reconciliation below.

(2) Basis points ("bps").

 

EGM


Three Months Ended June 30, 2022 compared to Three Months Ended June 30, 2021 


(Amounts in thousands, except unit data)


Three Months Ended June 30,





















2022



2021



$ Change



% Change


EGM segment revenues:

















Gaming operations


$

50,538



$

49,432



$

1,106




2.2

%

Equipment sales



19,929




11,761




8,168




69.4

%

Total EGM revenues


$

70,467



$

61,193



$

9,274




15.2

%


















EGM Adjusted EBITDA


$

31,564



$

29,453



$

2,111




7.2

%


















EGM unit information:

















Class II



11,233




11,317




(84)




(0.7)

%

Class III



4,794




4,129




665




16.1

%

Domestic installed base, end of period



16,027




15,446




581




3.8

%

International installed base, end of period



6,769




7,879




(1,110)




(14.1)

%

Total installed base, end of period



22,796




23,325




(529)




(2.3)

%


















Installed base - Oklahoma



7,880




8,054




(174)




(2.2)

%

Installed base - non-Oklahoma



8,147




7,392




755




10.2

%

Domestic installed base, end of period



16,027




15,446




581




3.8

%


















Domestic revenue per day


$

32.55



$

33.11



$

(0.56)




(1.7)

%

International revenue per day


$

6.69



$

4.66



$

2.03




43.6

%

Total revenue per day


$

24.79



$

23.47



$

1.32




5.6

%