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Everi Holdings Inc.$5.45($.11)(1.98%)

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 Everi Reports 2018 Third Quarter Results
   Tuesday, November 06, 2018 4:05:00 PM ET

Revenues of $120.3 Million, Net Income of $2.1 Million or $0.03 per Diluted Share and Adjusted EBITDA of $58.3 Million

Ninth Consecutive Quarter of Consolidated Revenue and Adjusted EBITDA Growth

LAS VEGAS, Nov. 06, 2018 (GLOBE NEWSWIRE) -- Everi Holdings Inc. (NYSE:EVRI) (“Everi” or the “Company”) today reported financial results for the third quarter ended September 30, 2018

Michael Rumbolz, President and Chief Executive Officer of Everi, commented, “Our third quarter results reflect the ongoing progress we are achieving through the execution of key initiatives, including the successful introduction of new products for our Games and Financial Technology Solutions (“FinTech”) businesses which are driving consistent growth. We generated our ninth consecutive quarter of year over year revenue and Adjusted EBITDA growth, with revenue increasing 17.3% to $120.3 million and Adjusted EBITDA rising 9.6% to $58.3 million.  We also generated our third consecutive quarter of positive net income and earnings per share. Both business segments are contributing to this growth, with quarterly record FinTech revenue and Adjusted EBITDA of $54.5 million and $26.5 million, respectively, and Games revenue and Adjusted EBITDA of $65.8 million and $31.8 million, respectively, each reaching their second highest ever quarterly level.  As a result of the continuing strength in both lines of business, we remain on track to achieve our outlook for full year Adjusted EBITDA of $228 million to $231 million and to deliver on our expectation for near-term acceleration in free cash flow generation.”  



Consolidated Full Quarter Comparative Results (unaudited)

  Three Months Ended September 30, 
  2018  2017 
  (in millions, except per share amounts) 
Revenues (1) $120.3  $102.6 
         
Operating income $21.5  $19.8 
         
Net income (loss) $2.1  $(4.3)
         
Net earnings (loss) per diluted share $0.03  $(0.06)
         
Diluted shares outstanding  74.6   66.9 
         
Adjusted EBITDA (2) (3) $58.3  $53.2 
         
  1. Revenues for the three months ended September 30, 2017 are presented on a comparable basis to retrospectively reflect a net versus gross reporting of revenues under ASC 606, which primarily impacts the Company’s Financial Technology Solutions business. This has no impact on the Company’s operating income, net loss, net loss per diluted share, or Adjusted EBITDA. For further discussion, see the Net Versus Gross Impacts on Revenues and Cost of Revenues disclosure at the end of this release.
  2. Adjusted EBITDA for the three months ended September 30, 2018 excludes the benefit of approximately $0.6 million related to an adjustment to certain purchase accounting liabilities related to the Company’s acquisition of certain compliance assets in 2015.
  3. For a reconciliation of net income (loss) to Adjusted EBITDA, see the Unaudited Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA and Adjusted EBITDA Margin provided at the end of this release.

Mr. Rumbolz added, “Growth in our Games segment continues to be driven by the successful introduction of new products.  Electronic gaming machine unit sales rose 43% to 1,165 units, our largest quarterly total since we acquired the Games business. The primary driver of the unit sales growth was success with our E43 and mechanical reel games which both achieved their highest ever level of quarterly unit sales. Our mechanical reel product remains a key driver of unit sales growth given our position as an industry-leading provider for this segment of the slot floor. Our installed base rose 901 units year over year and our emphasis on introducing new, higher-yielding premium games and form factors, including our E43, while also expanding placements beyond our historical core market continues to drive growth in our gaming operations. Quarter-end premium unit placements, including our highest ever level of wide-area progressive placements of 535 units, now represent 20.1% of our total installed base, as compared to 17.8% a year ago. Growth in premium unit placements and the increase in unit placements in higher yielding markets drove a significant improvement in daily win per unit, which rose $2.32, or 8.6%, year over year.

“Our FinTech business continues to grow and expand on its market leading position with our focus on innovation driving further penetration of our solutions. We continue to provide our customers with a wide range of products that efficiently deliver the most cash to their gaming floor and provide them with actionable data that helps them manage their operations more proactively.  Our differentiated and integrated products address all of our customers’ FinTech needs and have been a critical factor in our ability to grow our market share. FinTech results in the third quarter benefited from the ongoing strength in the domestic casino market and new market wins.  This drove an increase in nearly all of the segment’s key performance metrics including growth in core cash access revenue, growth in transaction volumes, growth in overall dollars processed, and our highest level of kiosk sales and service revenue in twelve quarters. We also continue to work with several customers on trials of CashClub™ Wallet, our new digital wallet product. This is an important first step in the evolution of digital payments in the gaming industry, which we believe positions our FinTech business for future market success.

“It is clear that the investments we have made in our Games and FinTech portfolios have led to the creation of the new products that are helping drive consistent growth in our operating results. As we demonstrated at G2E last month, we have established a product development roadmap that will further expand the number of markets and segments of the casino floor our Games business can address, while we maintain and grow our FinTech market leadership. As a result, we continue to strengthen our foundation for growth and are confident in our ability to achieve our targets for revenue, Adjusted EBITDA and free cash flow growth going forward.  We believe this will lead to significant improvements in our leverage profile. We are generating notable growth now and we are confident that we have the right plan in place to achieve even more success going forward as we continue to unlock value in the business.”

Third Quarter 2018 Results Overview
Revenues are presented herein on a comparable basis (see the Net Versus Gross Impacts on Revenues and Cost of Revenues disclosure at the end of this release for a reconciliation of 2017 amounts as reported to as adjusted).

Revenues for the third quarter of 2018 increased 17.3% to $120.3 million from $102.6 million in the third quarter of 2017.  Revenues from the Games and FinTech segments were $65.8 million and $54.5 million, respectively, for the third quarter of 2018.  The Company reported operating income of $21.5 million for the third quarter of 2018, compared to operating income of $19.8 million in the third quarter of 2017.

Everi recorded income before income tax of $1.4 million in the third quarter of 2018 compared to a loss before income tax of $3.6 million in the third quarter of 2017. The Company reported net income of $2.1 million, or $0.03 per diluted share, for the third quarter of 2018 compared to a net loss of $4.3 million, or a diluted loss per share of $(0.06), in the prior-year period.

Adjusted EBITDA for the third quarter of 2018 increased approximately 9.6%, or $5.1 million, to a third quarter record $58.3 million from $53.2 million in the third quarter of 2017.  Games and FinTech segment Adjusted EBITDA for the three months ended September 30, 2018 were $31.8 million and $26.5 million, respectively.  Games and FinTech segment Adjusted EBITDA for the three months ended September 30, 2017 were $29.4 million and $23.8 million, respectively.

Games Segment Full Quarter Comparative Results (unaudited)

   Three Months Ended September 30, 
  2018   2017 
  (in millions, except unit amounts and prices) 
Revenues (1) $65.8   $55.3 
         
Operating (loss) income $(0.7)  $1.8 
         
Adjusted EBITDA (2) $31.8   $29.4 
         
Unit sales:        
Units sold  1,165    817 
Average sales price ("ASP") $17,005   $17,251 
         
Gaming operations installed base:        
Average units installed during period:        
Average units installed  14,233    13,098 
Approximate daily win per unit (3) $29.45   $27.13 
         
Units installed at end of period:        
Class II  9,478    8,837 
Class III  4,638    4,378 
Total installed base  14,116    13,215 
         
Installed base - Oklahoma  6,598    6,684 
Installed base - non-Oklahoma  7,518    6,531 
Total installed base  14,116    13,215 
         
Premium units  2,840    2,348 
          
  1. Revenues for the three months ended September 30, 2017 are presented on a comparable basis to retrospectively reflect a net versus gross reporting of revenues under ASC 606, which was not material for the Games operating segment.
  2. For a reconciliation of net income (loss) to Adjusted EBITDA, see the Unaudited Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA and Adjusted EBITDA Margin provided at the end of this release.
  3. Approximate daily win per unit excludes the impact of the direct costs associated with the Company’s wide-area progressive jackpot expense.

2018 Third Quarter Games Segment Highlights
On a comparable revenue basis, Games segment revenues were $65.8 million in the third quarter of 2018 compared to $55.3 million in the third quarter of 2017.

  • Revenues from gaming operations increased 15.4%, or $5.8 million, to $43.5 million in the third quarter of 2018 compared to $37.7 million in the prior-year period.  The increase reflects year-over-year growth in both the installed base and estimated daily win per unit (“DWPU”).

    • The installed base at September 30, 2018 increased 901 units year over year to 14,116 units and premium units increased 21%, or 492 units, year over year.

    • DWPU in the third quarter of 2018 increased 8.6%, or $2.32, to $29.45, compared to $27.13 in the prior-year period. The increase reflects, in part, improvements in the unit performance following capital investments in new cabinets and games to update a portion of the installed base and an increase in the premium unit placements including wide-area progressive games.  This was the fourth consecutive quarter of year-over-year growth in DWPU.

    • Interactive revenue was $0.5 million in the third quarter of 2018 compared to $0.2 million in the prior-year period.

    • Revenues from the New York Lottery business, which are included in gaming operations revenue, were $4.7 million in the third quarter of both 2018 and 2017.
     
  • Revenues generated from the sale of gaming units and other related parts and equipment totaled $21.1 million in the third quarter of 2018 compared to revenues of $16.3 million in the prior-year period.  Gaming unit sales increased 43% to 1,165 units in the third quarter of 2018 compared to 817 units in the prior-year period.
     
  • Other gaming revenues, which include revenues from TournEvent of Champions qualifying events, generated $1.2 million in revenue in the third quarter of 2018 compared to $1.3 million in the prior-year period.  

Financial Technology Solutions Segment Full Quarter Comparative Results (unaudited)

   Three Months Ended September 30, 
  2018  2017 
  (in millions, unless otherwise noted) 
Revenues (1) $54.5  $47.3 
         
Operating income $22.2  $18.0 
         
Adjusted EBITDA (2) (3) $26.5  $23.8 
         
Aggregate dollar amount processed (in billions):        
Cash advance $1.8  $1.6 
ATM $4.9  $4.5 
Check warranty $0.3  $0.3 
         
Number of transactions completed (in millions):        
Cash advance  2.8   2.4 
ATM  23.4   21.6 
Check warranty  0.9   0.9 
         
  1. Revenues for the three months ended September 30, 2017 are presented on a comparable basis to retrospectively reflect a net versus gross reporting of revenues under ASC 606, which primarily impacts the Company’s FinTech business. This has no impact on the Company’s operating income or Adjusted EBITDA. For further discussion, see the Net Versus Gross Impacts on Revenues and Cost of Revenues disclosure at the end of this release.
  2. Adjusted EBITDA for the three months ended September 30, 2018 excludes the benefit of approximately $0.6 million related to an adjustment to certain purchase accounting liabilities related to the Company’s acquisition of certain compliance assets in 2015.
  3. For a reconciliation of net income (loss) to Adjusted EBITDA, see the Unaudited Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA and Adjusted EBITDA Margin provided at the end of this release.

2018 Third Quarter Financial Technology Solutions Segment Highlights
On a comparable revenue basis, FinTech revenues increased approximately 15.2% to $54.5 million in the third quarter of 2018 compared to $47.3 million in the prior year period.  

  • Revenues from cash access services, which include ATM, cash advance and check services, increased 8.0% or $2.9 million to $39.4 million in the third quarter of 2018 as compared to $36.5 million in the third quarter of 2017.  The core cash access revenue growth was the result of increased same store transactions and dollars processed, as well as the benefits from new customer wins from competitive bid processes and new casino openings.
     
  • Equipment Sales revenues increased 140% or $4.2 million to $7.2 million in the third quarter of 2018 as compared to $3.0 million in the third quarter of 2017.  This increase is the result of higher sales of fully integrated kiosks in the third quarter of 2018 as compared to the prior-year period.
     
  • Revenues from information services and other, which includes compliance products, Central Credit and other service revenue, increased $0.1 million to $7.9 million in the third quarter of 2018 as compared to $7.8 million in the third quarter of 2017.

Reiterated 2018 Outlook
Everi today reiterated its expectation for 2018 full year Adjusted EBITDA to be in a range of $228 million to $231 million.  The Company continues to expect full year capital expenditures and placement fees of $125 million to $130 million, reflecting capital expenditures of approximately $104 million to $109 million and placement fee payments of approximately $21 million.

For a reconciliation of projected net income to projected Adjusted EBITDA, see the Reconciliation of Projected Net Income to Projected EBITDA and Projected Adjusted EBITDA provided at the end of this release.

New Revenue Recognition Standard
In May 2014, the Financial Accounting Standards Board issued a new standard related to revenue recognition, commonly referred to as ASC 606. The Company adopted the new standard effective January 1, 2018. 

Revenues for the three and nine month periods ended September 30, 2017 have been presented on a comparable basis to retrospectively reflect a net versus gross reporting of revenues under ASC 606, which primarily impacts the Company’s Financial Technology Solutions business. This has no impact on the Company’s operating income, net income (loss), net earnings (loss) per diluted share or Adjusted EBITDA. For a reconciliation of the as adjusted to as reported amounts, see the Net Versus Gross Impacts on Revenues and Cost of Revenues disclosure at the end of this release.

Investor Conference Call and Webcast
The Company will host an investor conference call to discuss its 2018 third quarter results at 5:00 p.m. ET today.  The conference call may be accessed live over the phone by dialing (888) 394-8218 or for international callers by dialing (323) 701-0225.  A replay will be available beginning at 8:00 p.m. ET today and may be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers; the PIN number is 2679513.  The replay will be available until November 13, 2018. The call will be webcast live from the Company’s website at www.everi.com (select “Investors” followed by “Events & Presentations”).

Non-GAAP Financial Information
In order to enhance investor understanding of the underlying trends in our business, our cash balance and cash available for our operating needs, and to provide for better comparability between periods in different years, we are providing in this press release Adjusted EBITDA, Adjusted EBITDA Margin, net cash position and net cash available, which are not measures of our financial performance or position under United States Generally Accepted Accounting Principles (“GAAP”). Accordingly, Adjusted EBITDA and Adjusted EBITDA Margin should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP.  These measures should be read in conjunction with, our net earnings (loss), operating income (loss), basic or diluted earnings (loss) per share and cash flow data prepared in accordance with GAAP. With respect to net cash position and net cash available, these measures should be read in conjunction with cash and cash equivalents prepared in accordance with GAAP.

We define Adjusted EBITDA as earnings (loss) before interest, taxes, depreciation and amortization, non-cash stock compensation expense, accretion of contract rights, the adjustment to certain purchase accounting liabilities and the write-off of certain inventory and fixed assets. We present Adjusted EBITDA as we use this measure to manage our business and consider this measure to be supplemental to our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA; and our current credit facility and existing senior unsecured notes require us to comply with a consolidated secured leverage ratio that includes performance metrics substantially similar to Adjusted EBITDA. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenues.

A reconciliation of the Company’s net income (loss) per GAAP to Adjusted EBITDA and Adjusted EBITDA Margin is included in the Unaudited Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA and Adjusted EBITDA Margin provided at the end of this release. Additionally, a reconciliation of each segment’s operating income (loss) to Adjusted EBITDA is also included. On a segment level, operating income (loss) per GAAP, rather than net earnings (loss) per GAAP, is reconciled to Adjusted EBITDA as the Company does not report net earnings (loss) by segment. In addition, Adjusted EBITDA Margin is provided on a segment level. Management believes that this presentation is meaningful to investors in evaluating the performance of the Company’s segments.

We define (i) net cash position as cash and cash equivalents plus settlement receivables less settlement liabilities and (ii) net cash available as net cash position plus undrawn amounts available under our revolving credit facility. We present net cash position because our cash position, as measured by cash and cash equivalents, depends upon changes in settlement receivables and the timing of payments related to settlement liabilities. As such, our cash and cash equivalents can change substantially based upon the timing of our receipt of payments for settlement receivables and payments we make to customers for our settlement liabilities.  We present net cash available as management monitors this amount in connection with its forecasting of cash flows and future cash requirements. 

A reconciliation of the Company’s cash and cash equivalents per GAAP to net cash position and net cash available is included in the Unaudited Reconciliation of Cash and Cash Equivalents to Net Cash Position and Net Cash Available provided at the end of this release.

Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “goal,” “target,” “future,” “estimate,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “project,” “may,” “should,” or “will” and similar expressions to identify forward-looking statements. Examples of forward-looking statements include, among others, statements the Company makes regarding (a) its ability to lower its annual cash interests costs and accelerate free cash flow generation; continue expanding the segments of the gaming floor the Company’s games address; continue product innovation; drive growth for the Company’s installed base and its DWPU, and in the Company’s annual ship share over the next several years; create incremental value for its shareholders; and improve its financial profile; and (b) its guidance related to 2018 financial and operational metrics, including Adjusted EBITDA, unit sales, the installed base size and placements, DWPU, revenue and anticipated levels of capital expenditures, depreciation expense, amortization expense, cash interest expense, and income tax benefit, including cash tax payments.

The forward-looking statements in this press release are subject to additional risks and uncertainties, including those set forth under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our periodic reports filed with the Securities and Exchange Commission (the “SEC”), including, without limitation, our Annual Reports on Form 10-K and quarterly reports on Form 10-Q, and are based on information available to us on the date hereof.

These cautionary statements qualify our forward-looking statements and you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement contained herein speaks only as of the date on which it is made, and we do not intend, and assume no obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This press release should be read in conjunction with the Form 10-K or Form 10-Q to which it relates, and with the information included in our other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand our reported financial results and our business outlook for future periods.

About Everi
Everi is a leading supplier of technology solutions for the casino gaming industry. The Company Powers the Casino Floor® by providing casino operators with a diverse portfolio of products including innovative gaming machines  and casino operational and management systems that include comprehensive, end-to-end financial technology solutions, critical intelligence offerings, and gaming operations efficiency technology. Everi also provides proven, tier one land-based game content to online social and real-money markets via its Remote Game Server and operates social play for fun casinos. Everi’s mission is to be a transformative force for casino operations by facilitating memorable player experiences, delivering reliable protection and security, and striving for customer satisfaction and operational excellence. For more information, visit www.everi.com .

Contacts
Investor Relations
Richard Land, James Leahy
JCIR
212-835-8500 or evri@jcir.com

EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except earnings (loss) per share amounts)

  Three Months Ended September 30, Nine Months Ended September 30,
  2018 2017 2018 2017
Revenues        
Games revenues        
Gaming operations $43,540  $37,820  $126,618  $111,219
Gaming equipment and systems 21,068  16,292  63,499  52,574
Gaming other 1,231  1,340  1,887  2,039
Games total revenues 65,839  55,452  192,004  165,832
         
FinTech revenues        
Cash access services 39,406  181,104  117,364  528,279
Equipment 7,155  3,011  16,338  9,008
Information services and other 7,930  7,755  24,307  23,970
FinTech total revenues 54,491  191,870  158,009  561,257
         
Total revenues 120,330  247,322  350,013  727,089
         
Costs and expenses        
Games cost of revenues        
Gaming operations 4,607  4,045  13,000  11,216
Gaming equipment and systems 11,907  8,568  34,693  26,544
Gaming other 1,059  1,207  1,618  1,743
Games total cost of revenues 17,573  13,820  49,311  39,503
         
FinTech cost of revenues        
Cash access services 2,234  147,078  6,910  428,184
Equipment 3,846  1,887  9,786  5,518
Information services and other 949  873  3,146  2,402
FinTech total cost of revenues 7,029  149,838  19,842  436,104
         
Operating expenses 35,419  29,463  105,176  87,235
Research and development 5,407  4,545  14,313  13,706
Depreciation 17,304  12,539  43,830  34,765
Amortization 16,088  17,322  48,943  52,086
Total costs and expenses 98,820  227,527  281,415  663,399
         
Operating income 21,510  19,795  68,598  63,690
            


  Three Months Ended September 30, Nine Months Ended September 30,
  2018 2017 2018
 2017
Other expenses        
Interest expense, net of interest income 20,160  23,368  62,589  72,306 
Loss on extinguishment of debt     166  14,615 
Total other expenses 20,160  23,368  62,755  86,921 
         
Income (loss) before income tax 1,350  (3,573) 5,843  (23,231)
         
Income tax (benefit) provision (719) 716  (2,310) 3,623 
Net income (loss) 2,069  (4,289) 8,153  (26,854)
Foreign currency translation (9) 602  (744) 1,710 
Comprehensive income (loss) $2,060  $(3,687) $7,409  $(25,144)
Earnings (loss) per share        
Basic $0.03  $(0.06) $0.12  $(0.40)
Diluted $0.03  $(0.06) $0.11  $(0.40)
Weighted average common shares outstanding        
Basic 69,750  66,897  69,217  66,449 
Diluted 74,594  66,897  73,712  66,449 
             

The results for the three and nine month periods ended September 30, 2018 reflect the adoption of ASC 606.

EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 Nine Months Ended September 30,
 2018 2017
Cash flows from operating activities   
Net income (loss)$8,153  $(26,854)
Adjustments to reconcile net income (loss) to cash provided by operating activities:   
Depreciation and amortization92,773  86,851 
Amortization of financing costs and discounts3,969  4,567 
Loss on sale or disposal of assets687  1,580 
Accretion of contract rights6,299  5,845 
Provision for bad debts8,342  7,946 
Deferred income taxes(2,804) 3,174 
Write-down of inventory and fixed assets2,575   
Reserve for obsolescence1,386  46 
Loss on extinguishment of debt166  14,615 
Stock-based compensation6,117  5,125 
Adjustment of certain purchase accounting liabilities(550)  
Changes in operating assets and liabilities:   
Settlement receivables1,703  1,569 
Trade and other receivables(23,856) 2,767 
Inventory(4,824) (5,314)
Prepaid and other assets(1,146) (3,145)
Settlement liabilities(12,889) (41,799)
Accounts payable and accrued expenses6,281  12,981 
Net cash provided by operating activities92,382  69,954 
Cash flows from investing activities   
Capital expenditures(78,545) (70,057)
Proceeds from sale of fixed assets83  4 
Placement fee agreements(15,300) (13,132)
Net cash used in investing activities(93,762) (83,185)
Cash flows from financing activities   
Proceeds from current credit facility  820,000 
Repayments of prior credit facility  (465,600)
Repayments of secured notes  (335,000)
Repayments of credit facilities(6,150) (2,050)
Debt issuance costs and discounts(1,276) (19,748)
Proceeds from exercise of stock options9,529  4,046 
Purchase of treasury stock(57) (21)
Net cash provided by financing activities2,046  1,627 
Effect of exchange rates on cash(432) 1,365 
Cash, cash equivalents and restricted cash   
Net increase (decrease) for the period234  (10,239)
Balance, beginning of the period129,604  119,439 
Balance, end of the period$129,838  $109,200 
        

EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED NET VERSUS GROSS IMPACTS ON REVENUES AND COST OF REVENUES
(In thousands)

 Three Months Ended September 30,
 2018 2017 2017 2017
 As reported As adjusted Adjustments As reported
Revenues       
Games revenues       
Gaming operations$43,540 $37,677 $143 $37,820
Gaming equipment and systems21,068 16,292  16,292
Gaming other1,231 1,340  1,340
Games total revenues65,839 55,309 143 55,452
FinTech revenues       
Cash access services39,406 36,484 144,620 181,104
Equipment7,155 3,011  3,011
Information services and other7,930 7,755  7,755
FinTech total revenues54,491 47,250 144,620 191,870
Total revenues$120,330 $102,559 $144,763 $247,322
Costs and expenses       
Games cost of revenues       
Gaming operations$4,607 $3,902 $143 $4,045
Gaming equipment and systems11,907 8,568  8,568
Gaming other1,059 1,207  1,207
Games total cost of revenues17,573 13,677 143 13,820
FinTech cost of revenues       
Cash access services2,234 2,458 144,620 147,078
Equipment3,846 1,887  1,887
Information services and other949 873  873
FinTech total cost of revenues7,029 5,218 144,620 149,838
Total cost of revenues$24,602 $18,895 $144,763 $163,658
            

Revenues for the three month period ended September 30, 2017 are presented on a comparable basis to retrospectively reflect a net versus gross reporting of revenues under ASC 606, which primarily impacts the Company’s FinTech business.

EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED NET VERSUS GROSS IMPACTS ON REVENUES AND COST OF REVENUES
(In thousands)

 Nine Months Ended September 30,
 2018 2017 2017 2017
 As reported As adjusted Adjustments As reported
Revenues       
Games revenues       
Gaming operations$126,618  $110,941  $278  $111,219 
Gaming equipment and systems63,499  52,574    52,574 
Gaming other1,887  2,039    2,039 
Games total revenues192,004  165,554  278  165,832 
FinTech revenues       
Cash access services117,364  107,193  421,086  528,279 
Equipment16,338  9,008    9,008 
Information services and other24,307  23,970    23,970 
FinTech total revenues158,009  140,171  421,086  561,257 
Total revenues$350,013  $305,725  $421,364  $727,089 
Costs and expenses       
Games cost of revenues       
Gaming operations$13,000  $10,938  $278  $11,216 
Gaming equipment and systems34,693  26,544    26,544 
Gaming other1,618  1,743    1,743 
Games total cost of revenues49,311  39,225  278  39,503 
FinTech cost of revenues       
Cash access services6,910  7,098  421,086  428,184 
Equipment9,786  5,518    5,518 
Information services and other3,146  2,402    2,402 
FinTech total cost of revenues19,842  15,018  421,086  436,104 
Total cost of revenues$69,153  $54,243  $421,364  $475,607 
                

Revenues for the nine month period ended September 30, 2017 are presented on a comparable basis to retrospectively reflect a net versus gross reporting of revenues under ASC 606, which primarily impacts the Company’s FinTech business.

EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF CASH AND CASH EQUIVALENTS
TO NET CASH POSITION AND NET CASH AVAILABLE
(In thousands)

 September 30, 2018 December 31, 2017
Cash available   
Cash and cash equivalents$128,722  $128,586 
Settlement receivables225,210  227,403 
Settlement liabilities(304,594) (317,744)
Net cash position 49,338   38,245 
    
Undrawn revolving credit facility 35,000   35,000 
    
Net cash available$84,338  $73,245 
        

EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN ON AS COMPARABLE BASIS
(In thousands)

 Three Months Ended September 30, 2018 Three Months Ended September 30, 2017
 Games FinTech Total Games FinTech Total
Net income (loss)    $2,069      $(4,289)
Income tax (benefit) provision    (719)     716 
Interest expense, net of interest income    20,160      23,368 
            
Operating (loss) income$(746) $22,256  $21,510  $1,787  $18,008  $19,795 
            
Plus: depreciation and amortization29,636  3,756  33,392  25,333  4,528  29,861 
            
EBITDA$28,890  $26,012  $54,902  $27,120  $22,536  $49,656 
            
Non-cash stock compensation expense771  1,041  1,812  403  1,242  1,645 
Accretion of contract rights2,121    2,121  1,936    1,936 
Adjustment of certain purchase accounting liabilities  (550) (550)      
            
Adjusted EBITDA$31,782  $26,503  $58,285  $29,459  $23,778  $53,237 
            
Total revenues (1)$65,839  $54,491  $120,330  $55,309  $47,250  $102,559 
            
Adjusted EBITDA Margin48% 49% 48% 53% 50% 52%
                  
  1. Revenues for the three month period ended September 30, 2017 are presented on a comparable basis to retrospectively reflect a net versus gross reporting of revenues under ASC 606, which primarily impacts the Company’s FinTech business.

EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN ON AS COMPARABLE BASIS
(In thousands)

 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017
 Games FinTech Total Games FinTech Total
Net income (loss)    $8,153      $(26,854)
Income tax (benefit) provision    (2,310)     3,623 
Loss on extinguishment of debt    166      14,615 
Interest expense, net of interest income    62,589      72,306 
            
Operating income$5,914  $62,684  $68,598  $9,300  $54,390  $63,690 
            
Plus: depreciation and amortization80,280  12,493  92,773  72,159  14,692  86,851 
            
EBITDA$86,194  $75,177  $161,371  $81,459  $69,082  $150,541 
            
Non-cash stock compensation expense2,075  4,042  6,117  1,441  3,684  5,125 
Accretion of contract rights
6,299    6,299  5,845    5,845 
Adjustment of certain purchase
accounting liabilities
  (550) (550)      
Write-off of inventory and fixed assets2,575    2,575       
            
Adjusted EBITDA$97,143  $78,669  $175,812  $88,745  $72,766  $161,511 
            
Total revenues (1)$192,004  $158,009  $350,013  $165,554  $140,171  $305,725 
            
Adjusted EBITDA Margin51% 50% 50% 54% 52% 53%
                  
  1. Revenues for the nine month period ended September 30, 2017 are presented on a comparable basis to retrospectively reflect a net versus gross reporting of revenues under ASC 606, which primarily impacts the Company’s FinTech business.

EVERI HOLDINGS INC. AND SUBSIDIARIES
RECONCILIATION OF PROJECTED NET INCOME TO PROJECTED EBITDA
AND PROJECTED ADJUSTED EBITDA
FOR THE YEAR ENDING DECEMBER 31, 2018
(In thousands)

 2018 Adjusted EBITDA Guidance
Range(1)
 Low High
Projected net income$7,450  $1,950 
Projected income tax benefit(3,000) (5,000)
Projected interest expense, net of interest income82,900  86,800 
Projected loss on extinguishment of debt100  200 
    
Projected operating income$87,450  $83,950 
    
Plus: projected depreciation and amortization122,000  130,000 
    
Projected EBITDA$209,450  $213,950 
    
Projected non-cash stock compensation expense8,000  7,000 
Projected accretion of contract rights8,500  8,000 
Projected inventory and fixed assets write-off2,600  2,600 
Projected adjustment to certain purchase accounting liabilities(550) (550)
    
Projected Adjusted EBITDA$228,000  $231,000 
        
  1.     All figures presented are projected estimates for the year ending December 31, 2018.

Everi logo

Source: Everi Holdings Inc.


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