PlayAGS Inc (AGS) Reports Record Q4 and Full-Year 2023 Results
Revenue Growth: Total revenue surged 15% year-over-year to a record $94.2 million in Q4.
EGM Sales: Record global EGM unit sales of 1,519, marking over 30% growth for the third consecutive quarter.
Net Income: Achieved a net income of $67 thousand, despite a significant increase in interest expense and income tax.
Adjusted EBITDA: Total Adjusted EBITDA climbed to a record $42.8 million, with margins exceeding 45%.
Free Cash Flow: Free cash flow reached $11.0 million in Q4, contributing to a strong full-year performance.
Debt Reduction: Net leverage ratio improved to 3.2x, with a target to reduce further to between 2.75x to 3.00x by year-end 2024.
On March 5, 2024, PlayAGS Inc (NYSE:AGS), a leading designer and supplier of gaming products and services, announced its financial results for the fourth quarter and full year ended December 31, 2023. The company reported an impressive year-over-year revenue increase of 15% to a record $94.2 million in the fourth quarter, marking the eleventh consecutive quarter of double-digit growth. This performance was driven by robust sales across all operating segments, with Electronic Gaming Machines (EGM), Table Products, and Interactive segments all setting new quarterly records. The full details of the earnings can be found in the company's 8-K filing.
Financial Highlights and Operational Performance
PlayAGS's EGM segment saw a 14.1% increase in revenue, reaching nearly $86 million, while Table Products and Interactive revenues grew by 24.1% and 34.4%, respectively. The company's income from operations rose by 19% to $16 million, and net income totaled $67 thousand, affected by higher interest expenses and a swing in income tax expense. Adjusted EBITDA for the EGM segment grew by 12.2%, contributing to the company's record total Adjusted EBITDA of $42.8 million, a 14.7% increase from the previous year.
PlayAGS's financial achievements are particularly significant given the competitive nature of the gaming industry. The company's ability to consistently grow its revenue and Adjusted EBITDA demonstrates the strength of its product offerings and operational efficiency. The record-setting EGM unit sales underscore the company's successful product development and market penetration strategies.
Balance Sheet and Cash Flow Insights
The company's balance sheet shows a healthy cash balance of $50.9 million, with total available liquidity exceeding $90 million. The total principal amount of debt outstanding was reduced to $566.8 million, down from $571.4 million the previous year. This reduction in net leverage to 3.2x from 3.8x reflects the company's commitment to improving its financial position.
Capital expenditures for the fourth quarter totaled $15.4 million, leading to full-year expenditures of $61.9 million. These investments are crucial for maintaining and expanding the company's EGM and Table Product installed bases, as well as for funding research and development efforts.
Management's Perspective
AGS President and CEO David Lopez commented on the company's performance, stating,
The strength in our fourth quarter results was broad-based, with all three operating segments setting new quarterly records for revenue and Adjusted EBITDA. The quality and consistency of our recent financial performance is a true reflection of our incredibly talented and focused team, increasingly deep and diverse product offering across all three segments, and the improving efficiency and effectiveness of our execution."
Chief Financial Officer Kimo Akiona added,
We exited 2023 with a total net debt leverage ratio of 3.2 times, down from 3.8 times at the start of the year. Supported by our consistent operating momentum and execution, heightened focus on efficient and effective working capital management, continued capex deployment discipline, and anticipated cash interest savings from our recent debt repricing and repayment, a path to below 3.0 times remains well within our sight."
Looking Ahead
With a strong end to 2023, PlayAGS Inc (NYSE:AGS) is well-positioned for continued success in 2024. The company's focus on product innovation, market expansion, and operational efficiency, combined with its strategic initiatives to manage debt and improve free cash flow, set the stage for sustained growth and profitability. Investors and stakeholders can look forward to AGS's progress towards achieving its net leverage target and further strengthening its market position in the gaming industry.
For a more detailed analysis of PlayAGS Inc (NYSE:AGS)'s financial results, including income statements and cash flow statements, please visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from PlayAGS Inc for further details.
This article first appeared on GuruFocus.
