Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - PlayAGS, Inc. | ex991.htm |
| 8-K - 8-K - PlayAGS, Inc. | a2018q1earningsrelease.htm |
May 2018
Social Casino
Table Games
Premium EGMs
Orion
Core EGMs
ICON
Specialty EGMs
Big Red
Table Equipment
Q1 2018 Results Presentation
Exhibit 99.2
2
This presentation and information contained herein constitutes confidential information and is provided to you on the condition that you will hold it in strict
confidence and not reproduce, disclose, forward or distribute it in whole or in part, other than to your directors, officers and employees who have a need to know such
information, without the prior written consent of AGS.
This presentation contains statements that constitute forward-looking statements which involve risks and uncertainties, including such risks and uncertainties
described in the Annual Report on Form 10-K of PlayAGS, Inc. (“AGS”) for the fiscal year ended December 31, 2017 filed with the Securities and Exchange Commission.
These statements include descriptions regarding the intent, belief or current expectations of AGS or its officers with respect to the consolidated results of operations
and financial condition, future events and plans of AGS. These statements can be recognized by the use of words such as "expects," "plans," "will," "estimates,"
"projects," or words of similar meaning. Such forward-looking statements are not guarantees of future performance and actual results may differ from those in the
forward-looking statements as a result of various factors and assumptions. These statements are subject to risks, uncertainties, changes in circumstances, assumptions
and other important factors, many of which are outside management’s control, that could cause actual results to differ materially from the results discussed in the
forward-looking statements. You are cautioned not to place undue reliance on these forward looking statements, which are based on the current view of the
management of AGS on future events. We undertake no obligation to publicly update or revise any forward-looking statement contained in this presentation, whether
as a result of new information, future events or otherwise, except as required by law. In light of the risks, uncertainties and assumptions, the forward-looking events
discussed in this presentation might not occur, and our actual results could differ materially from those anticipated in these forward-looking statements.
This presentation also contains references to Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA and other measures that are
non-GAAP financial measures. Management believes that EBITDA and Adjusted EBITDA and related measures are commonly reported by companies and widely used
by investors as indicators of a company’s operating performance. There are other non-GAAP financial measures which should be considered only as a supplement to,
and not as a superior measure to, financial measures prepared in accordance with GAAP. Please refer to the last slide of this presentation for a reconciliation of certain
non-GAAP financial measures included in this presentation to the most directly comparable financial measure prepared in accordance with GAAP.
Unless otherwise noted, information included herein is presented as of the dates indicated. This presentation is not complete and the information contained herein
may change at any time without notice. Except as required by applicable law, we do not have any responsibility to update the presentation to account for such
changes.
Certain information in this presentation is based upon management forecasts and reflects prevailing conditions and management’s views as of this date, all of which
are subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all
information available from public sources or which was provided to us by third parties. The information contained herein is subject to change, completion or
amendment and we are not under any obligation to keep you advised of such changes. We make no representation or warranty, express or implied, with respect to
the accuracy, reasonableness or completeness of any of the information contained herein, including, but not limited to, information obtained from third parties.
The information contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
3
SUMMARY OF Q1 AND FY 2018 FINANCIAL PERFORMANCE
Revenue Adjusted EBITDA
($ in mm) ($ in mm)
Tables: ($0.2)
Interactive: ($0.1)
Tables: $0.2
Interactive: $0.01
Table: ($0.3
Interactive: ($0.6)
Table: $0.2
Interactive: ($0.1)
Tables 1 4)
2 8
Tables: ($0.2)
3
Note: 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.
Recurring
Revenue
$49.6
Recurring
Revenue
$179.5
4
Q1 2018 BUSINESS HIGHLIGHTS
Achieved ~6% ship share(1)
Record adjusted EBITDA of $34.5 million, 39% year-over-year
Record recurring revenue of $49.6 million, 23% year-over-year
Record quarterly EGM equipment sales revenue of $15.2 million, 108% year-
over-year
838 EGMs sold in Q1 2018 vs 453 in Q1 2017, 85% year-over-year
Optimized 314 legacy EGM units in Q1 2018
Continued success of Orion Portrait premium cabinet; ended the quarter with over
2,830(2) units in the field
Orion Slant on trial at several locations – initial game performance ~2x HA
Record Table Products revenue of $1.7 million, 164% year-over-year
Table Products segment positive adjusted EBITDA in Q1 2018, 205% year-over-
year
Interactive segment positive adjusted EBITDA in Q1 2018, 108% year-over-year
(1) Q1 EILERS – FANTINI Quarterly Slot Survey
(2) Includes leased, trial and sold units
5
EGM PERFORMANCE OVERVIEW
EGM Installed Base
24,033
leased
EGMs
EGM Revenue and Adj. EBITDA
51%
Huge Growth in Sold EGMs
Achieved ~ 6% ship
share in Q1 18 vs. ~3%
in Q1 17
31%
13%
Steady Ramp in Number of Leased EGMs
~100% recurring business; ~80% gross profit margin(1)
+18%
+26%
+4%
Y-o-Y Growth
High
recurring
revenue
Strong
relationships
Stable
business
5%
Note: All financial figures include contribution of Cadillac Jack following acquisition in May 2015.
(1) Gross Profit Margin for leased units = EGM gaming operations revenue less EGM cost of gaming operations, divided by EGM gaming operations revenue for Q12018
(2 ) Gross Profit Margin for sold units defined as EGM equipment sales revenue less cost of equipment sales, divided by EGM equipment sales revenue for Q12018
($ in mm)
Recurring
Revenue $144.5 $158.3 $166.7
14.6%
CAGR
($ in mm)
838
Units Sold
in Q1 18
~50% gross profit margin(2)
6
Premium Leased Domestic Game Performance(1)Casino-Owned Domestic Game Performance(1)
Over 99% of customer trial Orion Portrait units resulted in conversion to a lease or sale
AGS casino-owned games generated win per day that was ~1.7x the house average, leading the
industry by a significant margin(1)
AGS premium leased games generated win per day that was ~2.4x the house average, second only
to Aristocrat(1)
Two large R&D studios in premier locations that continually produce top-performing game titles
EGM GAME PERFORMANCE OVERVIEW
(1) Q1 EILERS – FANTINI Quarterly Slot Survey
7
Table Products Installed Base and ALP
TABLE PRODUCTS PERFORMANCE OVERVIEW
~70% Side Bets
~25% Progressives
~5% Premium
Table Revenue Adj. EBITDA
($ in mm) ($ in mm)
ALP $194 $167 $220
Over 30 different products, including premium table
games (poker and blackjack derivatives), side bets,
progressive systems, card shufflers, and table
signage
170 Bonus Spin units in the field
More than quadrupled Buster Blackjack installed
base since acquisition in September 2015; 1,231
units as of Q1 18
Adjusted EBITDA positive in Q1 18
~100%
Recurring
$5.1
8
B2C - continued focus on optimizing marketing
spend by decreasing user acquisition fees
B2B focus presents new growth channel in 2018 and
beyond
Adjusted EBITDA positive in Q1 2018, 108%
year-over-year
Recently won an RFP with large operator to provide
Social WLC
INTERACTIVE PERFORMANCE OVERVIEW
Interactive Revenue Adj. EBITDA
($ in mm) ($ in mm)
9
12/31/17 3/31/18 Rate Maturity
Capitalization
Cash $19 $26
$30 million existing revolver – – L + 4.25% 6/6/2022
First lien term loan 513 511 L + 4.25% 2/15/2024
Other 3 2 Various –
Total first lien debt $515 $514
HoldCo PIK notes $153 – 11.25% 5/28/2024
Total debt $668 $514
Total net debt $649 $488
Capitalization
($ in mm)
CAPITAL STRUCTURE UPDATE
AGS priced its IPO on January 25th (NYSE: AGS)
• 10,250,000 shares offered at $16.00 per share
• Day 1 trading performance ( 15.6%), 38%+ since IPO(1)
• Greenshoe option was exercised on February 27, 2018
Repricing overview:
• On February 6, 2018, AGS repriced its existing $512.6 million term loan due February 2024
• Reprice from L + 550 bps to L + 425 bps, saving over $6 million in annual interest expense
(1) Closing price as of 5/2/18.
10
1. Continued Penetration of the Orion Portrait Cabinet and Securing Additional Banks of ICON
Opportunity to grow footprint in NV, Canada, CA, OH, MS, LA, MD, etc.
+15 unique new titles for Orion Portrait to launch in 2018
Orion Slant, Orion Portrait and ICON will help achieve 5% market share
2. New Market Entry for EGMs and Table Products
AGS obtained its gaming license in Ohio in Q1 2018
Prospective: MA, Canada, PA, CO
3. New Products to Drive Growth
Orion Slant official launch in Q2 2018; “Core Plus” cabinet
• +20 new titles for Orion Slant to launch in 2018
STAX multi-level progressive jackpot system and DEX S card shuffler
• B2B Social WLC and RMG opportunities
4. International Expansion Opportunities
Alora video bingo cabinet touched ground in Philippines in Q1 2018; anticipated go live in Q2
If legalization of regulated gaming is passed, Brazil presents additional upside
STRATEGIC INITIATIVES TO DRIVE GROWTH
11
Market
Stage Jurisdiction
Estimated Total
Units in State(1)
AGS Estimated
Current Market
Share
Established /
Class II
Texas 4,107 41.6%
Alabama 6,527 42.3%
Oklahoma 74,787 9.5%
Ramping
Florida 21,160 9.3%
Montana 17,684 3.3%
California 72,850 1.9%
Early Entry
Indiana 18,924 1.9%
Mississippi 30,347 0.9%
New York 35,132 0.8%
New Mexico 20,545 0.7%
Michigan 31,486 0.6%
Iowa 19,248 0.6%
Nevada 161,484 0.5%
Louisiana 41,837 0.5%
Ontario 22,834 0.2%
Alberta 20,495 0.0%
Ohio 18,733 0.0%
Quebec 17,400 0.0%
Other(2) 241,904 1.7%
Prospective Other(3) 105,207 0.0%
Total 982,691 2.3%
SIGNIFICANT WHITESPACE OPPORTUNITY
7%
6%
20%
AGS Q1 ship share
of ~6%
demonstrates path
to further market
share growth(1)
(1) Q1 EILERS – FANTINI Quarterly Slot Survey
(2) Other Early Entry jurisdictions include AZ, CT, DE, ID, IL, KS, MD, MN, ND, NE, NJ, NC, OR, SD, WA, WI, WY and the Canadian provinces of Manitoba and
Saskatchewan
(3) AGS is not currently licensed in U.S. states of AK, AR, CO, KY, ME, MA, MO, PA, RI, WV and Canadian provinces of British Columbia, New Brunswick,
Newfoundland & Labrador, Nova Scotia, and Prince Edward Island
Solid recurring revenue base and
market leadership in core markets of
TX, AL and OK
AGS has aggressively secured licenses
in, and begun to penetrate, key
Class III markets (e.g., NV, Canada, MS)
Orion Portrait and ICON are driving the
growth in early-entry markets
Recent ship share gains far in excess of
current market share; goal of 5%
AGS is not dependent on the
replacement cycle to grow
1% market share when excluding
established markets
4%
12
FY REVISED 2018 OUTLOOK
The Company expects to generate adjusted EBITDA, a non-GAAP financial measure defined below,
of $126 - $131 million in 2018, representing growth of approximately 18%-23% compared to the
prior year period.
AGS expects 2018 capital expenditures to be in the range of $55 - $60 million, compared to the
prior year period, reflecting an expectation for a continued increase in its installed base in both
existing and new markets.
($ in mm)
2017
Revised
2018 Guidance
Adj. EBITDA $106.8 $126 - $131
Capex $57.5 $55 - $60
APPENDIX
14
COMPREHENSIVE OPERATIONAL SUMMARY
($ in mm, except RPD, ASP, ALP and ARPDAU)
Operational and other data 2016 Q1 Q2 Q3 Q4 2017 Q1 LTM 3/31/18
Revenues by segment
EGM $156.4 $45.0 $47.4 $53.3 $54.2 $199.9 $61.3 $216.2
Table products 2.7 0.6 0.7 1.1 1.6 4.1 1.7 5.1
Interactive 7.7 2.1 2.0 2.0 1.9 8.0 1.9 7.8
Total revenue $166.8 $47.8 $50.1 $56.4 $57.7 $212.0 $64.9 $229.0
Adjusted EBITDA by segment
EGM $91.7 $25.2 $26.5 $29.8 $26.3 $107.8 $34.3 $116.9
% margin 58.6% 56.0% 55.9% 55.8% 48.6% 53.9% 56.0% 54.1%
Table products (1.7) (0.2) (0.3) (0.2) 0.2 (0.5) 0.2 (0.2)
Interactive (4.7) (0.1) (0.1) (0.1) (0.1) (0.4) 0.0 (0.3)
Total Adjusted EBITDA $85.3 $24.9 $26.1 $29.4 $26.4 $106.8 $34.5 $116.4
% margin 51.2% 52.1% 52.1% 52.1% 45.9% 50.4% 53.2% 50.8%
EGM segment
Total installed base units 20,851 21,204 21,479 22,015 23,805 23,805 24,033 24,033
Total revenue per day $19.78 $19.93 $19.99 $19.65 $19.95 $19.88 $20.94 $19.88
EGM units sold 465 453 574 842 696 2,565 838 2,950
Average sales price $14,897 $15,695 $15,840 $15,890 $17,676 $16,329 $17,758 $16,833
Table products segment
Table products install base 1,500 1,691 1,754 2,350 2,400 2,400 2,631 2,631
Average monthly lease price $194 $128 $125 $167 $226 $167 $220 $190
Interactive segment
Average MAU 209,840 192,560 183,912 194,239 200,628 192,835 224,183 200,741
Average DAU 41,478 38,534 37,191 36,906 37,536 37,542 40,720 38,088
ARPDAU $0.48 $0.57 $0.58 $0.59 $0.54 $0.57 $0.51 $0.55
15
2
Write downs and other includes items related to loss
on disposal or impairment of long lived assets, fair
value adjustments to contingent consideration and
acquisition costs
Loss on extinguishment and modification of debt
primarily relates to the refinancing of long-term debt,
in which deferred loan costs and discounts related to
old senior secured credit facilities were written off
Other adjustments are primarily composed of
professional fees incurred for projects, corporate and
public filing compliance, contract cancellation fees
and other transaction costs deemed to be non-
operating in nature
Other non-cash charges are costs related to non-cash
charges and losses on the disposition of assets, non-
cash charges on capitalized installation and delivery,
which primarily includes the costs to acquire contracts
that are expensed over the estimated life of each
contract and non-cash charges related to accretion of
contract rights under development agreements
New jurisdiction and regulatory license costs relates
primarily to one-time non-operating costs incurred to
obtain new licenses and develop products for new
jurisdictions
Legal & litigation expenses include of payments to
law firms and settlements for matters that are outside
the normal course of business
Acquisition and integration costs include
restructuring and severance and are related to costs
incurred after the purchase of businesses, such as the
acquisitions of Cadillac Jack and RocketPlay, to
integrate operations
Non-cash stock compensation are expenses related to
the value of stock options held by employees of
Cadillac Jack
1
2
3
4
5
6
7
3
4
5
6
7
1
TOTAL ADJUSTED EBITDA RECONCILIATION
($ in mm)
Adj. EBITDA reconciliation Q1
LTM
3/31/18
Net income ($9.5) ($42.3)
Income tax (benefit) expense (12.4) (16.6)
Depreciation and amortization 19.3 72.5
Other expense (income) 9.2 9.1
Interest income (0.1) (0.1)
Interest expense 10.4 50.8
Write downs and other 1.6 5.9
Loss on extinguishment and modification of debt 4.6 13.6
Other adjustments 0.4 2.6
Other non-cash charges 1.6 7.3
New jurisdiction and regulatory licensing costs – 1.8
Legal & litigation expenses including settlement payments – 0.1
Acquisition & integration related costs 1.2 3.5
Non-cash stock compensation 8.2 8.2
Adjusted EBITDA $34.5 $116.4
2
3
4
5
6
7
1
($ in mm)
Adj. EBITDA reconciliation Q1 Q2 Q3 Q4 2017
Net income ($12.4) ($20.1) ($4.1) ($8.5) ($45.1)
Income tax (benefit) expense 2.2 1.3 1.1 (6.5) (1.9)
Depreciation and amortization 18.5 18.2 16.9 18.1 71.6
Other expense (income) (2.8) (1.5) (0.5) 1.9 (2.9)
Interest income (0.0) (0.0) (0.0) (0.0) (0.1)
Interest expense 15.2 14.6 12.7 13.1 55.5
Write downs and other 0.2 1.9 0.5 1.8 4.5
Loss on extinguishment and modification of debt – 8.1 – 0.9 9.0
Other adjustments 0.6 0.9 0.5 0.8 2.9
Other non-cash charges 2.1 1.8 1.6 2.3 7.8
New jurisdiction and regulatory licensing costs 0.2 0.5 0.6 0.8 2.1
Legal & litigation expenses including settlement payment 0.4 0.2 0.2 (0.2) 0.5
Acquisition & integration related costs 0.6 0.2 0.1 2.0 2.9
Adjusted EBITDA $24.9 $26.1 $29.4 $26.4 $106.8
8
8
16
Unless otherwise indicated or the context otherwise requires, the following terms in this presentation have the
meanings set forth below:
Adjusted EBITDA: 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
Average Monthly Lease Price (ALP): Average monthly lease price is calculated by dividing (a) total revenues recognized and directly
attributable to Table Products by (b) the number of Table Products Installed Base and by (c) the number of months in such period
Average Revenue per Daily Active User (ARPDAU): ARPDAU is calculated by dividing (a) daily revenue by (b) the number of Daily
Active Users
Average Sales Price (ASP): Average sales price is calculated by dividing (a) total revenues recognized and directly attributable to
EGM unit sales in a period by (b) the number of EGM units sold over that same period
Daily Active Users (DAU): DAU is a count of daily unique visitors to a site
EGM Installed Base: EGM Installed Base is the number of recurring revenue EGM units installed on a specified date
Electronic Gaming Machine (EGM): EGMs include but are not limited to slot machines, Class II machines, video poker and video
lottery machines
Monthly Active Users (MAU): MAU is a count of monthly unique visitors to a site
Recurring Revenue: Equal to the Gaming Operations Revenue line of our audited financial statements
Revenue Per Day (RPD): RPD is calculated by dividing (a) total revenues over a specified period recognized and directly attributable
to units on lease (whether on a participation or daily fee arrangement) by (b) the number of units installed over that period and by
(c) the number of days in such period
Ship Share: Ship Share is the share of all slots sold in a specified period
Table Products Installed Base: Table Products Installed Base is the number of recurring revenue table products installed on a
specified date
TERMS USED IN THIS PRESENTATION
CONNECT WITH US