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.
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
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic EGM unit
sales components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino opening and
expansion units
|
|
|
80
|
|
|
|
175
|
|
|
|
(95)
|
|
|
|
(54.3)
|
%
|
Other
|
|
|
778
|
|
|
|
438
|
|
|
|
340
|
|
|
|
77.6
|
%
|
Total Domestic EGM
units sold
|
|
|
858
|
|
|
|
613
|
|
|
|
245
|
|
|
|
40.0
|
%
|
International EGM
units sold
|
|
|
76
|
|
|
|
-
|
|
|
|
76
|
|
|
|
N/A
|
|
Total EGM units
sold
|
|
|
934
|
|
|
|
613
|
|
|
|
321
|
|
|
|
52.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic average sales
price
|
|
$
|
19,938
|
|
|
$
|
16,902
|
|
|
$
|
3,036
|
|
|
|
18.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM Quarterly Results
Domestic Gaming Operations(3)
- Domestic EGM gaming operations, or recurring revenue, increased
approximately 1% year-over-year to a record $46.2 million. Growth within our domestic EGM
installed base, supported by a near doubling of our premium EGM
units, further execution upon continuous installed base
optimization initiatives and a stable gaming macroeconomic backdrop
drove our improved quarterly revenue performance versus the prior
year. Importantly, we were able to achieve year-over-year revenue
growth despite lapping a challenging Q2 2021 comparison, as the
prior year period benefitted from meaningful fiscal stimulus and
the relaxation of COVID-related casino operating restrictions
throughout the United States.
Domestic EGM recurring revenue accounted for approximately 71% of
our total Q2 2022 domestic EGM revenue.
- Our domestic EGM installed base included 16,027 units at the
end of Q2 2022, representing an increase of 581 units
year-over-year and 112 units versus the prior sequential quarter.
Installed base growth in both the year-over-year and quarterly
sequential periods was paced by our ongoing successful penetration
of the premium EGM segment, as we continue to benefit from our
strong game performance, diverse array of cabinet configurations,
enhanced complement of game mechanics, and deep portfolio of
premium game content.
- Our premium EGM installed base nearly doubled year-over-year,
accounting for 12% of our domestic EGM installed base at the end of
Q2 2022 compared to 6% at Q2 2021 quarter end. Our premium EGM
installed base increased by approximately 15% on a quarterly
sequential basis, marking our tenth consecutive quarter of premium
unit growth.
- Domestic EGM revenue per day ("RPD") of $32.55 increased approximately 6% sequentially,
exceeding $30 for the fifth
consecutive quarter. Outsized premium unit growth, continued
improvement in our core content execution, further fleet
optimization, and a stable gaming macroeconomic environment paced
the sequential strength in our domestic EGM RPD performance.
Domestic EGM RPD decreased approximately 2% year-over-year, as the
prior year period benefitted from significant U.S. fiscal stimulus
and the release of pent up consumer demand as COVID-related
operating restrictions were eased throughout the domestic gaming
market.
Domestic Equipment Sales
- We sold a total of 858 domestic EGM units in Q2 2022, an
increase of 40% compared to the 613 units sold in Q2 2021. The
increased depth and breadth of our core game content catalog, the
strategic broadening of our customer account penetration, continued
success in capturing an outsized share of Historical Horse Racing
("HHR") sales opportunities, and a steady recovery in core North
American replacement unit demand combined to drive our improved
domestic EGM unit sales performance versus the prior year.
- Domestic average sales price ("ASP") was $19,938 versus $16,902 in Q2 2021, topping $19,000 for the third consecutive quarter. Our
improved domestic ASP reflects a greater mix of premium-priced
Orion Curve cabinets, which accounted for over 70% of Q2
2022 total domestic units sold compared to 24% in Q2 2021, and
continued successful implementation of our price integrity
initiative. Domestic ASP increased approximately 4% on a quarterly
sequential basis.
- We sold units into 26 U.S. states and two Canadian provinces
throughout Q2 2022, as we continue to successfully implement
strategic initiatives intended to broaden our customer account
penetration.
International EGM's
- International EGM gaming operations, or recurring revenue,
totaled $4.3 million compared to
$3.5 million in Q2 2021 and improved
approximately 6% over Q1 2022 levels, marking the eighth
consecutive quarterly sequential increase.
- International EGM RPD increased approximately 44%
year-over-year to $6.69 compared to
$4.66 in Q2 2021 and improved
approximately 8% on a quarterly sequential basis relative to the
$6.17 achieved in Q1 2022. An
increase in the number of active playable games in casinos and
Mexico's continued post-COVID-19
macroeconomic recovery paced our improved International EGM RPD
performance in both the year-over-year and quarterly sequential
periods.
- Our international EGM installed base totaled 6,769 units at
June 30, 2022, representing a
quarterly sequential decrease of 428 units. The imposition of a new
gaming tax in one Mexican state paced the quarterly sequential
installed base decline. As previously disclosed, we made a
strategic decision to exit the
Philippines market at the end of calendar year 2021, which,
combined with the Q2 2022 Mexico removals, drove the majority of
the year-over-year decrease within our international EGM installed
base. We estimate approximately 93% of our international EGM
installed base was active and playable as of June 30, 2022 compared to approximately 80% as of
March 31, 2022.
- We sold a total of 76 EGM units internationally in Q2 2022,
bringing our year-to-date international EGM sales to 94 units. We
have identified additional opportunities to further leverage our
GLI-approved EGM products in a variety of international
markets.
Product & Market Highlights
- Our Orion Curve Premium installed base increased by over
65% on a quarterly sequential basis, with growth achieved in both
Class II and Class III jurisdictions. Curve Premium
continues to deliver RPD's nicely above our blended corporate
average in both end markets. Looking ahead, we continue to assemble
a diverse pipeline of new premium game content, complete with
enhanced game play mechanics, and strategically broaden our
portfolio of cutting-edge hardware to support our long-term growth
initiatives within the higher-yielding premium game segment.
- We remain committed to investing in our R&D organization to
strengthen our organizational foundation and support our
longer-term growth initiatives in both Class II and Class III
markets. These investments should allow us to produce a higher
volume of game content with more diverse feature sets, further
exploit key competitive Class II product and scale advantages, and
strategically expand the reach of our game cabinet and content
offerings into new market segments.
- In June 2022, the U.S. Supreme
Court ruled in favor of two Texas
tribes, the Ysleta del Sur Pueblo and Alabama-Coushatta Indian
Tribe of Texas, paving the way for
the tribes to continue exercising their sovereign rights to offer
non-prohibited gaming on tribal lands within the state. The
favorable ruling potentially creates an opportunity for AGS to
further leverage its key Class II competitive advantages, including
its extensive game content portfolio, unique development
capabilities and deeply rooted customer relationships, to
strategically broaden the scope of its Class II business within the
state.
(3) "Domestic"
includes both the United States and Canada.
|
Table
Products
|
|
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
|
|
Table Products
segment revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
$
|
3,499
|
|
|
$
|
2,793
|
|
|
$
|
706
|
|
|
|
25.3
|
%
|
Equipment
sales
|
|
|
15
|
|
|
|
37
|
|
|
|
(22)
|
|
|
|
(59.5)
|
%
|
Total Table
Products revenues
|
|
$
|
3,514
|
|
|
$
|
2,830
|
|
|
$
|
684
|
|
|
|
24.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
Adjusted EBITDA
|
|
$
|
2,021
|
|
|
$
|
1,448
|
|
|
$
|
573
|
|
|
|
39.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products unit
information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products
installed base, end of period
|
|
|
5,765
|
|
|
|
4,458
|
|
|
|
1,307
|
|
|
|
29.3
|
%
|
Average monthly lease
price
|
|
$
|
200
|
|
|
$
|
207
|
|
|
$
|
(7)
|
|
|
|
(3.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Products Quarterly Results
- Gaming operations, or recurring revenue, grew to a record
$3.5 million, surpassing the prior
record of $3.4 million, established
in Q1 2022, by approximately 3%. Recurring revenue has increased
sequentially for eight consecutive quarters, supported by growing
customer demand for our industry-leading progressive products,
greater customer adoption of our all-inclusive site license
offering, the AGS Arsenal, and initial market penetration of
our PAX S specialty game card shuffler.
- Our installed base expanded by over 380 units on a quarterly
sequential basis to a record 5,765 units, led by a more than 12%
increase in our progressive installed base. Our installed base
increased by over 1,300 units year-over-year, supported by growth
in all Table Product categories, including progressives, side bets,
premium games, and shufflers, and the addition of units acquired in
conjunction with the Q1 2022 Lucky Lucky side bet
acquisition.
- Our average monthly lease price ("ALP") decreased approximately
3% year-over-year to $200. The modest
decline in our ALP was predominantly driven by a higher mix of
lower-yielding side bet units resulting from the Lucky Lucky
acquisition.
- Our progressive installed base grew to over 1,975 units at
June 30, 2022 compared to 1,614 units
and 1,757 units at the end of Q2 2021 and Q1 2022, respectively.
The installed base of our highly anticipated and differentiated
Bonus Spin Xtreme ("BSX") progressive more than doubled on a
sequential basis to over 235 units. Demand for BSX remains
robust, supported by casino operators' growing interest in
leveraging the product to activate progressives on latent roulette
tables.
- As of June 30, 2022, we had 45
PAX S specialty game card shufflers installed across ten
different jurisdictions. We continue to receive encouraging
customer feedback on our initial PAX S installs and have
started to see initial product adopters request additional units, a
true testament to the product's consistency, efficiency and
durability. Supported by the receipt of additional jurisdictional
regulatory approvals and the product's successful launch-to-date,
we expect PAX S demand to accelerate in the back half of
2022.
- We were live with 20 AGS Arsenal site licenses at the
end of Q2 2022, a two-fold increase versus the prior year. The
Arsenal's compelling value proposition and our
organizational commitment to investing in Table Product innovation
continues to stimulate interest in our site license offering
amongst our casino operator partners.
- Adjusted EBITDA increased approximately 40% year-over-year to a
record $2.0 million, supported by
year-over-year revenue growth of approximately 24%, which was
accompanied by strong flow through. Adjusted EBITDA margin was
57.5% compared to 51.2% in Q2 2021, with the increase largely
attributable to the operating leverage we are achieving within the
business.
Interactive
|
|
Three Months Ended
June 30, 2022 compared to Three Months Ended June
30, 2021
|
|
(Amounts in
thousands)
|
|
Three Months Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
|
2021
|
|
|
$
Change
|
|
|
%
Change
|
|
Interactive segment
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Social gaming
revenue
|
|
$
|
515
|
|
|
$
|
580
|
|
|
$
|
(65)
|
|
|
|
(11.2)
|
%
|
Real-money gaming
revenue
|
|
|
2,088
|
|
|
|
2,234
|
|
|
|
(146)
|
|
|
|
(6.5)
|
%
|
Total Interactive
revenue
|
|
$
|
2,603
|
|
|
$
|
2,814
|
|
|
$
|
(211)
|
|
|
|
(7.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interactive Adjusted
EBITDA
|
|
$
|
545
|
|
|
$
|
1,202
|
|
|
$
|
(657)
|
|
|
|
(54.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interactive Quarterly Results
- Interactive segment revenue totaled $2.6
million, representing quarterly sequential growth of over 5%
compared to the $2.5 million achieved
in Q1 2022. The positive sequential revenue trend reflects the
growing momentum within our North American RMG business and stable
social gaming revenue performance. Ongoing efforts to strategically
refocus our Interactive resources to better capitalize upon growth
opportunities within the regulated North American RMG market,
including further rationalization and optimization of our
international RMG exposure, has led to anticipated compression in
our rest of world RMG revenue performance, pushing segment-level
revenues slightly lower versus the prior year.
- Real-money gaming revenue increased approximately 7% as
compared to the $2.0 million
delivered in Q1 2022, supported by sequential North American RMG
revenue growth of over 15%. North American-sourced RMG revenues
accounted for approximately 85% of our Q2 2022 total RMG revenue
mix compared to 66% in Q2 2021 and 78% in Q1 2022. Our growing
North American revenue mix reflects early returns from our efforts
to strategically refocus our RMG business on North American growth
opportunities, the strong performance of player-favorite AGS game
themes in the North American RMG channel, distribution of our
content into new North American jurisdictions, and broadening of
our B2C operator partner relationships.
- Social gaming revenue of $515
thousand was relatively consistent with the prior sequential
quarter, as we continue to prioritize stability and profitability
within this segment of our business. The year-over-year revenue
decline reflects the impact of our strategic decision to moderate
player marketing spend, consistent with our profitability focus
within the segment.
- Interactive Adjusted EBITDA was $545
thousand, marking the segment's tenth consecutive quarter of
positive Adjusted EBITDA performance. Adjusted EBITDA was impacted
by a modest increase in our segment-level costs, as we incurred
incremental expense to accelerate the flow of new AGS content into
North American RMG channel. Although we have increased investments
into our RMG operation, we remain fully committed to scaling the
business in an Adjusted EBITDA positive manner.
- We achieved our sixth consecutive top-five supplier slot
indexing ranking in the July 2022
Eilers and Krejcik Online Game Performance Report, with two
AGS game themes achieving a top-20 ranking within the slots
category. Our online game content catalog, consisting of over 30
AGS titles, is live in the majority of the most prominent regulated
North American online jurisdictions, including PA, MI, NJ,
Ontario, and Quebec, and we continue to prepare for
scheduled upcoming launches into additional jurisdictions,
including CT, WV, British
Columbia, and Alberta.
Liquidity and Capital Expenditures
As of June 30, 2022, the
Company had an available cash balance of $38.9 million and $40.0 million of availability under
its undrawn revolving credit facility, resulting in total
available liquidity of $78.9
million.
The total principal amount of debt outstanding, as of
June 30, 2022, was $574.3 million compared to $615.7 million at December
31, 2021. Total net debt, which is the principal amount
of debt outstanding less cash and cash equivalents, was
approximately $535.4 million as
of June 30, 2022, conveying a Total
Net Debt Leverage Ratio of 4.1 times. (4)
Second quarter 2022 capital expenditures totaled $18.7 million, bringing year-to-date capital
expenditures through June 30, 2022 to
$30.3 million. Gaming
equipment-related investments into our EGM and Table Product
installed bases accounted for over 60% of capital expenditures
incurred year-to-date. Driven by the accelerating demand we are
seeing for our high-performing premium EGM products and the
emergence of incremental placement opportunities into the Texas
Class II market following the favorable Supreme Court ruling
in June, we now expect to incur full-year capital expenditures of
$62 to $67
million.
2022 Net Leverage Target
Supported by our solid financial performance through the first
six months of 2022, the product momentum building within multiple
segments of our business, and the consistency we continue to
observe within our day-to-day operations, we remain on pace to
deliver upon our previously issued year-end 2022 net leverage
target of less than 4.0x.
(4) Total Adjusted
EBITDA and Total Net Debt Leverage Ratio are non-GAAP
measures, see non-GAAP reconciliation below.
|
|
Conference Call and Webcast
AGS leadership will host a conference call to review the
Company's second quarter 2022 results on
August 8, 2022, at 5 p.m. EDT. Participants may access a live
webcast of the conference call, along with a slide presentation
reviewing the quarterly results, at the
Company's Investor Relations website
http://investors.playags.com. A replay of the webcast will be
available on the website following the live event. U.S. and
Canadian participants may access the call live by telephone by
calling +1 (844) 200-6205, while international participants should
call +1 (929) 526-1599. The conference call access code
is 403415.
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
investors@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 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)
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2022
|
|
|
2021
|
|
Assets
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
38,854
|
|
|
$
|
94,977
|
|
Restricted
cash
|
|
|
20
|
|
|
|
20
|
|
Accounts receivable,
net of allowance of $2,193 and $1,993, respectively
|
|
|
52,931
|
|
|
|
49,426
|
|
Inventories
|
|
|
37,550
|
|
|
|
27,534
|
|
Prepaid
expenses
|
|
|
7,250
|
|
|
|
4,878
|
|
Deposits and
other
|
|
|
8,218
|
|
|
|
8,240
|
|
Total current
assets
|
|
|
144,823
|
|
|
|
185,075
|
|
Property and
equipment, net
|
|
|
75,426
|
|
|
|
74,916
|
|
Goodwill
|
|
|
287,069
|
|
|
|
285,546
|
|
Intangible
assets
|
|
|
151,421
|
|
|
|
160,044
|
|
Deferred tax
asset
|
|
|
7,499
|
|
|
|
7,333
|
|
Operating lease
assets
|
|
|
12,257
|
|
|
|
12,503
|
|
Other
assets
|
|
|
7,413
|
|
|
|
7,394
|
|
Total
assets
|
|
$
|
685,908
|
|
|
$
|
732,811
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
18,828
|
|
|
$
|
9,439
|
|
Accrued
liabilities
|
|
|
39,210
|
|
|
|
39,165
|
|
Current maturities of
long-term debt
|
|
|
6,146
|
|
|
|
6,877
|
|
Total current
liabilities
|
|
|
64,184
|
|
|
|
55,481
|
|
Long-term
debt
|
|
|
551,825
|
|
|
|
599,281
|
|
Deferred tax
liability, non-current
|
|
|
2,795
|
|
|
|
2,653
|
|
Operating lease
liabilities, long-term
|
|
|
11,556
|
|
|
|
11,871
|
|
Other long-term
liabilities
|
|
|
18,970
|
|
|
|
21,954
|
|
Total
liabilities
|
|
|
649,330
|
|
|
|
691,240
|
|
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 June 30, 2022 and at
December 31, 2021; and 37,121,715 and 36,943,770 shares issued and
outstanding at June 30, 2022 and December 31, 2021,
respectively
|
|
|
371
|
|
|
|
369
|
|
Additional paid-in
capital
|
|
|
397,785
|
|
|
|
392,161
|
|
Accumulated
deficit
|
|
|
(355,951)
|
|
|
|
(344,889)
|
|
Accumulated other
comprehensive loss
|
|
|
(5,627)
|
|
|
|
(6,070)
|
|
Total stockholders'
equity
|
|
|
36,578
|
|
|
|
41,571
|
|
Total liabilities
and stockholders' equity
|
|
$
|
685,908
|
|
|
$
|
732,811
|
|
PLAYAGS,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
(amounts in
thousands, except per share data)
|
|
|
|
Three Months Ended
June 30,
|
|
|
|
2022
|
|
|
2021
|
|
Revenues
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
$
|
56,640
|
|
|
$
|
55,039
|
|
Equipment
sales
|
|
|
19,944
|
|
|
|
11,798
|
|
Total
revenues
|
|
|
76,584
|
|
|
|
66,837
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Cost of gaming
operations(5)
|
|
|
10,868
|
|
|
|
9,677
|
|
Cost of equipment
sales(5)
|
|
|
10,386
|
|
|
|
5,748
|
|
Selling, general and
administrative
|
|
|
15,975
|
|
|
|
16,300
|
|
Research and
development
|
|
|
10,040
|
|
|
|
9,009
|
|
Write-downs and other
charges
|
|
|
342
|
|
|
|
64
|
|
Depreciation and
amortization
|
|
|
19,160
|
|
|
|
18,611
|
|
Total operating
expenses
|
|
|
66,771
|
|
|
|
59,409
|
|
Income from
operations
|
|
|
9,813
|
|
|
|
7,428
|
|
Other expense
(income)
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
8,087
|
|
|
|
11,517
|
|
Interest
income
|
|
|
(214)
|
|
|
|
(276)
|
|
Loss on extinguishment
and modification of debt
|
|
|
-
|
|
|
|
-
|
|
Other expense
(income)
|
|
|
277
|
|
|
|
(181)
|
|
Income (loss) before
income taxes
|
|
|
1,663
|
|
|
|
(3,632)
|
|
Income tax
expense
|
|
|
(121)
|
|
|
|
(251)
|
|
Net income
(loss)
|
|
|
1,542
|
|
|
|
(3,883)
|
|
Foreign currency
translation adjustment
|
|
|
(561)
|
|
|
|
886
|
|
Total comprehensive
income (loss)
|
|
$
|
981
|
|
|
$
|
(2,997)
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
income (loss) per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.04
|
|
|
$
|
(0.11)
|
|
Diluted
|
|
$
|
0.04
|
|
|
$
|
(0.11)
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
36,998
|
|
|
|
36,632
|
|
Diluted
|
|
|
36,998
|
|
|
|
36,632
|
|
(5) Exclusive of
depreciation and amortization.
|
PLAYAGS,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands)
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
2022
|
|
|
2021
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(11,052)
|
|
|
$
|
(11,653)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
38,029
|
|
|
|
37,019
|
|
Accretion of contract
rights under development agreements and placement fees
|
|
|
3,198
|
|
|
|
3,316
|
|
Amortization of
deferred loan costs and discount
|
|
|
1,537
|
|
|
|
2,680
|
|
Write-off of deferred
loan costs and discount
|
|
|
1,586
|
|
|
|
-
|
|
Cash paid for debt
prepayment penalties to prior debt holders
|
|
|
848
|
|
|
|
-
|
|
Stock-based
compensation expense
|
|
|
8,231
|
|
|
|
4,862
|
|
Provision for bad
debts
|
|
|
273
|
|
|
|
205
|
|
Loss on disposition of
long-lived assets
|
|
|
416
|
|
|
|
191
|
|
Impairment of
assets
|
|
|
19
|
|
|
|
653
|
|
Fair value adjustment
of contingent consideration
|
|
|
-
|
|
|
|
(56)
|
|
Provision for deferred
income tax (benefit)
|
|
|
89
|
|
|
|
49
|
|
Changes in assets and
liabilities that relate to operations:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(3,500)
|
|
|
|
(3,844)
|
|
Inventories
|
|
|
(9,143)
|
|
|
|
2,367
|
|
Prepaid
expenses
|
|
|
(2,776)
|
|
|
|
(4,270)
|
|
Deposits and
other
|
|
|
106
|
|
|
|
(1,920)
|
|
Other assets,
non-current
|
|
|
1,787
|
|
|
|
1,706
|
|
Accounts payable and
accrued liabilities
|
|
|
5,256
|
|
|
|
4,588
|
|
Net cash provided by
operating activities
|
|
|
34,904
|
|
|
|
35,893
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Business acquisitions,
net of cash acquired
|
|
|
(4,750)
|
|
|
|
-
|
|
Proceeds from payments
on customer notes receivable
|
|
|
137
|
|
|
|
-
|
|
Software development
and other expenditures
|
|
|
(9,852)
|
|
|
|
(7,210)
|
|
Proceeds from
disposition of assets
|
|
|
8
|
|
|
|
22
|
|
Purchases of property
and equipment
|
|
|
(20,401)
|
|
|
|
(14,191)
|
|
Net cash used in
investing activities
|
|
|
(34,858)
|
|
|
|
(21,379)
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Repayment of prior
first lien credit facilities
|
|
|
(521,215)
|
|
|
|
(2,694)
|
|
Repayment of first
lien credit facilities
|
|
|
(1,438)
|
|
|
|
-
|
|
Repayment of
incremental term loans
|
|
|
(93,575)
|
|
|
|
(475)
|
|
Payment of financed
placement fee obligations
|
|
|
(2,593)
|
|
|
|
(2,444)
|
|
Proceeds from term
loans
|
|
|
569,250
|
|
|
|
-
|
|
Payment of deferred
loan costs
|
|
|
(4,838)
|
|
|
|
-
|
|
Payment of debt
prepayment penalties to prior debt holders
|
|
|
(848)
|
|
|
|
-
|
|
Payments of previous
acquisition obligation
|
|
|
(287)
|
|
|
|
(257)
|
|
Payments on finance
leases and other obligations
|
|
|
(616)
|
|
|
|
(867)
|
|
Repurchase of
stock
|
|
|
(10)
|
|
|
|
(788)
|
|
Net cash used in
financing activities
|
|
|
(56,170)
|
|
|
|
(7,525)
|
|
Effect of exchange
rates on cash and cash equivalents
|
|
|
1
|
|
|
|
10
|
|
Net increase in
cash, cash equivalents and restricted cash
|
|
|
(56,123)
|
|
|
|
6,999
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
|
94,997
|
|
|
|
81,709
|
|
Cash, cash
equivalents and restricted cash, end of period
|
|
$
|
38,874
|
|
|
$
|
88,708
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
|
|
Leased assets obtained
in exchange for new operating lease liabilities
|
|
$
|
956
|
|
|
$
|
3,042
|
|
Leased assets obtained
in exchange for new finance lease liabilities
|
|
$
|
242
|
|
|
$
|
318
|
|
|
|
|
|
|
|
|
|
|
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 (loss), income
from operations, 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 income (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 revenues.
The following table presents a reconciliation of total Adjusted
EBITDA to net loss, which is the most comparable GAAP measure:
Total Adjusted
EBITDA Reconciliation
|
|
|
|
Three Months Ended
June 30,
|
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
|
2021
|
|
|
$
Change
|
|
|
%
Change
|
|
Net income
(loss)
|
|
$
|
1,542
|
|
|
$
|
(3,883)
|
|
|
$
|
5,425
|
|
|
|
(139.7)
|
%
|
Income tax
expense
|
|
|
121
|
|
|
|
251
|
|
|
|
(130)
|
|
|
|
(51.8)
|
%
|
Depreciation and
amortization
|
|
|
19,160
|
|
|
|
18,611
|
|
|
|
549
|
|
|
|
2.9
|
%
|
Interest expense, net
of interest income and other
|
|
|
8,150
|
|
|
|
11,060
|
|
|
|
(2,910)
|
|
|
|
(26.3)
|
%
|
Write-downs and
other(6)
|
|
|
342
|
|
|
|
64
|
|
|
|
278
|
|
|
|
434.4
|
%
|
Other
adjustments(7)
|
|
|
301
|
|
|
|
717
|
|
|
|
(416)
|
|
|
|
(58.0)
|
%
|
Other non-cash
charges(8)
|
|
|
2,108
|
|
|
|
2,053
|
|
|
|
55
|
|
|
|
2.7
|
%
|
Non-cash stock-based
compensation(9)
|
|
|
2,406
|
|
|
|
3,230
|
|
|
|
(824)
|
|
|
|
(25.5)
|
%
|
Total Adjusted
EBITDA
|
|
$
|
34,130
|
|
|
$
|
32,103
|
|
|
$
|
2,027
|
|
|
|
6.3
|
%
|
|
|
|
Three Months Ended
June 30,
|
|
(Amounts in
thousands, except total Adjusted EBITDA margin)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
|
2021
|
|
|
$
Change
|
|
|
%
Change
|
|
Total
revenues
|
|
$
|
76,584
|
|
|
$
|
66,837
|
|
|
$
|
9,747
|
|
|
|
14.6
|
%
|
Total Adjusted
EBITDA
|
|
$
|
34,130
|
|
|
$
|
32,103
|
|
|
$
|
2,027
|
|
|
|
6.3
|
%
|
Total Adjusted EBITDA
margin
|
|
|
44.6
|
%
|
|
|
48.0
|
%
|
|
|
(3.4)
|
%
|
|
(340 bps)
|
|
(6) Write-downs
and other includes items related to loss on disposal or
impairment of long-lived assets and fair value adjustments to
contingent consideration.
|
(7) 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.
|
|
|
(8) 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.
|
(9) Non-cash
stock-based compensation includes non-cash compensation
expense related to grants of options, restricted stock, and other
equity awards.
|
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 total net debt leverage ratio)
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2022
|
|
|
2021
|
|
Total principal amount
of debt
|
|
$
|
574,298
|
|
|
$
|
615,743
|
|
Less: Cash and cash
equivalents
|
|
|
38,854
|
|
|
|
94,977
|
|
Total net
debt
|
|
$
|
535,444
|
|
|
$
|
520,766
|
|
LTM Adjusted
EBITDA
|
|
$
|
131,058
|
|
|
$
|
122,587
|
|
Total net debt
leverage ratio
|
|
|
4.1
|
|
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
Six Months
Ended June 30,
2022
|
|
|
Three Months
Ended March
31, 2022
|
|
|
Three Months
Ended June 30,
2022
|
|
Net cash provided by
operating activities
|
|
$
|
34,904
|
|
|
$
|
7,070
|
|
|
$
|
27,834
|
|
Software development
and other expenditures
|
|
|
(9,852)
|
|
|
|
(3,853)
|
|
|
|
(5,999)
|
|
Purchases of property
and equipment
|
|
|
(20,401)
|
|
|
|
(7,688)
|
|
|
|
(12,713)
|
|
Free Cash
Flow
|
|
$
|
4,651
|
|
|
$
|
(4,471)
|
|
|
$
|
9,122
|
|
|
(Amounts in
thousands)
|
|
Six Months
Ended June 30,
2021
|
|
|
Three Months
Ended March
31, 2021
|
|
|
Three Months
Ended June 30,
2021
|
|
Net cash provided by
operating activities
|
|
$
|
35,893
|
|
|
$
|
9,693
|
|
|
$
|
26,200
|
|
Software development
and other expenditures
|
|
|
(7,210)
|
|
|
|
(3,766)
|
|
|
|
(3,444)
|
|
Purchases of property
and equipment
|
|
|
(14,191)
|
|
|
|
(6,109)
|
|
|
|
(8,082)
|
|
Free Cash
Flow
|
|
$
|
14,492
|
|
|
$
|
(182)
|
|
|
$
|
14,674
|
|
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SOURCE AGS