AGS Announces Third Quarter 2018 Results
LAS VEGAS, Nov. 8, 2018 /PRNewswire/ -- PlayAGS, Inc. (NYSE: AGS) ("AGS", "us", "we", or the "Company") today reported operating results for its third quarter 2018.
AGS President and Chief Executive Officer David Lopez said, "In the third quarter, AGS sold 1,332 EGMs, a 58% jump year-over-year, and a company record. Revenue hit an all-time high of $75.5 million, demonstrating continued demand for our Orion Portrait cabinet and growing momentum for our new Orion Slant, in addition to significant progress in Canada, with 24% of our sold EGMs placed in several Canadian provinces. Our Tables segment posted its best quarter to date, with our innovative progressives contributing to a 30% increase in installs year-over-year. AGS is still very underrepresented in many markets both domestically and internationally, which presents significant long-term growth opportunities for the Company due to our industry-leading game performance, an expanding suite of cabinet options, best-in-class R&D, and diversified product offerings."
Summary of the quarter ended September 30, 2018 and 2017
(In thousands, except per-share and unit data)
Three Months Ended September 30,
2018 2017
% Change
---
Revenues
EGM $
71,784 $
53,331 34.6 %
Table Products 2,052 1,099 86.7 %
Interactive 1,690 2,010 (15.9)%
Total revenue $
75,526 $
56,440 33.8 %
---
Operating income $
10,110 $
9,136 10.7 %
---
Net income (loss) $
4,347 $
(4,090) N/A
===
Income (loss) per share $
0.12 $
(0.18) N/A
Adjusted EBITDA
EGM $
34,026 $
29,756 14.4 %
Table Products 428 (232) N/A
Interactive (877) (123) N/A
Total Adjusted EBITDA(1) $
33,577 $
29,401 14.2 %
---
EGM units sold 1,332 842 58.2 %
EGM total installed base, end of period 24,184 22,015 9.9 %
(1) Total Adjusted EBITDA is a
non-GAAP measure, see non-GAAP
reconciliation below.
Third Quarter Financial Highlights
-- Total revenue increased 34% to $75.5 million, a Company record, driven
by continued growth of our EGMs in the Class III marketplace, including
entry into Alberta, Canada as well as a large sale to a long-standing
tribal customer.
-- Recurring revenue grew to $50.7 million, or 18% year-over-year. In
addition to the contribution from the EGMs purchased from Rocket Gaming,
the increase was driven by our strong domestic revenue per day ("RPD")
of $27.14, up $1.70 year-over-year as well as increases in Table
Products revenue driven by an increase in Table Product units.
-- EGM equipment sales increased 82% to $24.7 million, another Company
record, due to the sale of 1,332 units, of which approximately 24% were
sold in Canada and 276 units were sold to a long-standing tribal
customer.
-- Net income improved to $4.3 million from a net loss of $4.1 million in
the prior year period, primarily due to the increased revenue described
above.
-- Total Adjusted EBITDA (non-GAAP) increased to $33.6 million, or 14%,
driven by the significant increase in revenue, partially offset by
increased adjusted operating expenses of $6.1 million primarily due to
increased headcount in SG&A and R&D. Included in that amount was
approximately $1.0 million of operating costs from our recently acquired
real money gaming ("RMG") content-aggregator Gameiom.((1))
-- Total Adjusted EBITDA margin (non-GAAP) decreased to 44% in the third
quarter of 2018 compared to 52% in the prior year driven by several
different factors, most notably the increased proportion of equipment
sales as part of total revenues, higher-period costs related to
manufacturing, and service costs,as well as increased operating costs
mentioned above and costs associated with our recently acquired RMG
content-aggregator Gameiom.((1))
-- SG&A expenses increased $5.5 million in the third quarter of 2018
primarily due to increased salary and benefit costs of $2.8 million due
to higher headcount, and $2.2 million from increased professional fees
driven by acquisitions as well as previous securities offerings. The
increase was also attributable to costs associated with the recent
acquisition of RMG content-aggregator Gameiom.
-- R&D expenses increased $1.4 million in the third quarter of 2018 driven
by higher salary and benefit costs related to additional headcount. As a
percentage of total revenue, R&D expense was 10% for the period ended
September 30, 2018 compared to 11% for the prior year period.
(1) Adjusted EBITDA is a non-GAAP measure, see non-GAAP reconciliation below.
Third Quarter Business Highlights
-- EGM units sold increased to 1,332, a Company record, in the current
quarter compared to 842 in the prior year led by sales of the Orion
Portrait and Orion Slant cabinets in early-entry markets such as
Alberta, Nevada, and Ontario.
-- Domestic EGM RPD increased 7% to $27.14, driven by our new product
offerings and the optimization of our installed base by installing our
newer higher-performing EGMs.
-- EGM average selling price ("ASP") increased 14% to $18,051, driven by
record sales of the premium-priced Orion Portrait cabinet and our newly
introduced core-plus cabinet, Orion Slant.
-- Table Products increased 328 units sequentially, or 12%, to 3,065 units,
driven by organic growth, most notably the Super 4 Progressive Blackjack
and Buster Blackjack side bet.
-- Our ICON cabinet footprint grew 59% year over year to over 6,800 total
units in the field.
-- Mexico's installed base increased 645 units year over year and 240 units
sequentially to over 8,100 units with over 420 ICON units as of
September 30, 2018.
-- The Orion Portrait cabinet ended the third quarter of 2018 with a
footprint of over 4,460 total units as compared to 1,123 units in the
third quarter of 2017, up 134% from year-end and 298% year-over-year.
-- AGS' new Orion Slant footprint increased to over 780 units by quarter
end.
Balance Sheet Review
Capital expenditures increased $5.6 million to $16.1 million in the third quarter, compared to $10.5 million in the prior year period. As of September 30, 2018, we had $33.2 million in cash and cash equivalents, compared to $19.2 million at December 31, 2017. Total net debt, which is the principal amount of debt outstanding less cash and cash equivalents, as of September 30, 2018, was approximately $476.9 million compared to $648.7 million at December 31, 2017. This substantial reduction was driven by the IPO and related redemption of our HoldCo PIK notes during the first quarter. In the third quarter, net debt decreased by over $6.9 million due to mandatory principal payments on our term loans and a higher balance of cash and cash equivalents. As a result of the above transactions and our strong operational performance, our total net debt leverage ratio, which is total net debt divided by Adjusted EBITDA for the trailing 12-month period, decreased from 6.1 times at December 31, 2017, to 3.6 times at September 30, 2018.((2))
(2) Total net debt leverage ratio is a non-GAAP measure, see non-GAAP reconciliation below.
Term Loan Repricing
On October 5, 2018, we entered into an Incremental Assumption and Amendment Agreement No. 2 to reduce the applicable interest rate margin for the Term B Loans by 75 basis point from LIBOR plus 425 bps to LIBOR plus 350 bps, saving nearly $4 million in annual cash interest expense, with an additional 25 basis points potential reduction upon receiving a corporate credit rating of at least B1 from Moody's Investors Service. In conjunction with the repricing, we secured commitments from lenders for an additional $30 million in terms loans under our existing credit agreement. The net proceeds of the incremental term loans are expected to be used for general corporate purposes and additional capital to accelerate growth.
2018 Outlook
Based on our year-to-date progress and due to our current momentum, we now expect our total Adjusted EBITDA in 2018 to be between $134.0 and $136.0 million. This is an upward revision to the guidance we previously released and is based on our progress executing against our many growth initiatives in the first half of the year and due to our improved visibility for the remainder of the year.
We have not provided a reconciliation of forward-looking total Adjusted EBITDA to the most directly comparable GAAP financial measure, net income (loss), due primarily to the variability and difficulty in making accurate forecasts and projections of the variable and individual adjustments for a reconciliation to net income (loss), as not all of the information necessary for a quantitative reconciliation is available to us without unreasonable effort. We expect that the main components of net income (loss) for fiscal year 2018 shall consist of operating expenses, interest expenses, as well as other expenses (income) and income tax expenses, which are inherently difficult to forecast and quantify with reasonable accuracy without unreasonable efforts. The amounts associated with these items have historically and may continue to vary significantly from quarter to quarter and material changes to these items could have a significant effect on our future GAAP results.
Conference Call and Webcast
Today at 5 p.m. EST management will host a conference call to present the third quarter 2018 results. Listeners may access a live webcast of the conference call, along with accompanying slides, at AGS' Investor Relations website at http:// investors.playags.com. A replay of the webcast will be available on the website following the live event. To listen by telephone, the U.S/Canada toll-free dial-in number is +1 (866) 270-1533 and the dial-in number for participants outside the U.S./Canada is +1 (412) 317-0797. The conference ID/confirmation code is AGS Q3 2018 Earnings Call.
About AGS
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 suppliers in the world. Powered by high-performing Class II and Class III slot products, an expansive table products portfolio, highly rated social casino and 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 about us at playags.com.
AGS Media Contacts:
Julia Boguslawski, Chief Marketing Officer and Executive Vice President of Investor Relations
jboguslawski@playags.com
Steven Kopjo, Director of Investor Relations
skopjo@playags.com
Forward-Looking Statements
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 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 on March 30, 2018. 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.
All ® notices signify marks registered in the United States.
PLAYAGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share and per share data)
(unaudited)
September 30, December 31,
2018 2017
---
Assets
Current assets
Cash and cash equivalents $
33,227 $
19,242
Restricted cash 78 100
Accounts receivable, net of allowance of
$1,180 and $1,462, respectively 46,082 32,776
Inventories 31,819 24,455
Prepaid expenses 4,638 2,675
Deposits and other 4,275 3,460
Total current assets 120,119 82,708
Property and equipment, net 84,323 77,982
Goodwill 282,731 278,337
Intangible assets 204,801 232,287
Deferred tax asset 1,047 1,115
Other assets 12,489 24,813
Total assets $
705,510 $
697,242
---
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $
12,094 $
11,407
Accrued liabilities 22,517 24,954
Current maturities of long-term debt 6,223 7,359
Total current liabilities 40,834 43,720
Long-term debt 492,208 644,158
Deferred tax liability -noncurrent 678 1,016
Other long-term liabilities 25,789 36,283
Total liabilities 559,509 725,177
Commitments and contingencies
Stockholders' equity
Preferred stock at $0.01 par value; 100,000
shares authorized, no shares issued and
outstanding
Common stock at $0.01 par value;
450,000,000 shares authorized at September
30, 2018 and 46,629,155 at December 31,
2017; and 35,305,479 and 23,208,706 shares
issued and outstanding at September 30,
2018 and December 31, 2017, respectively. 353 149
Additional paid-in capital 359,819 177,276
Accumulated deficit (212,058) (201,557)
Accumulated other comprehensive loss (2,113) (3,803)
Total stockholders' equity 146,001 (27,935)
Total liabilities and
stockholders' equity $
705,510 $
697,242
---
PLAYAGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(amounts in thousands, except per share data) (unaudited)
Three months ended September 30, Nine months ended September 30,
---
2018 2017 2018 2017
Revenues
Gaming operations $
50,701 $
42,849 $
152,887 $
125,040
Equipment sales 24,825 13,591 60,317 29,254
Total revenues 75,526 56,440 213,204 154,294
Operating expenses
Cost of gaming operations(1) 10,494 7,344 29,062 21,794
Cost of equipment sales(1) 12,109 6,330 28,919 14,326
Selling, general and administrative 15,284 9,742 47,411 30,368
Research and development 7,894 6,467 23,374 17,912
Write-downs and other charges 667 490 3,282 2,655
Depreciation and amortization 18,968 16,931 57,784 53,598
Total operating expenses 65,416 47,304 189,832 140,653
Income from operations 10,110 9,136 23,372 13,641
Other expense (income)
Interest expense 8,956 12,666 28,253 42,380
Interest income (89) (25) (162) (80)
Loss on extinguishment and modification of debt 4,608 8,129
Other expense (income) 434 (467) 10,121 (4,805)
Income (loss) before income taxes 809 (3,038) (19,448) (31,983)
Income tax benefit (expense) 3,538 (1,052) 8,947 (4,603)
Net income (loss) 4,347 (4,090) (10,501) (36,586)
Foreign currency translation adjustment 1,636 (498) 1,690 707
Total comprehensive income (loss) $
5,983 $
(4,588) $
(8,811) $
(35,879)
===
Basic and diluted earnings (loss) per common share:
Basic $
0.12 $
(0.18) $
(0.31) $
(1.58)
Diluted $
0.12 $
(0.18) $
(0.31) $
(1.58)
Weighted average common shares outstanding:
Basic 35,305 23,208 34,097 23,208
Diluted 36,313 23,208 34,097 23,208
(1) exclusive of depreciation
and amortization
PLAYAGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
(unaudited)
Nine months ended September
30,
2018 2017
---
Cash flows from operating activities
Net loss $
(10,501) $
(36,586)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 57,784 53,598
Accretion of contract rights under
development agreements and placement fees 3,412 3,459
Amortization of deferred loan costs and
discount 1,388 2,315
Payment-in-kind interest capitalized 7,807
Payment-in-kind interest payments (37,624) (2,698)
Write-off of deferred loan cost and
discount 3,410 3,294
Stock-based compensation expense 9,167
(Benefit) provision for bad debts (198) 902
Loss on disposition of assets 1,383 2,896
Impairment of assets 1,199 333
Fair value adjustment of contingent
consideration 700
(Benefit) provision for deferred income
tax (205) 2,147
Changes in assets and liabilities that
relate to operations:
Accounts receivable (12,277) (9,649)
Inventories (3,173) (453)
Prepaid expenses (1,958) (1,119)
Deposits and other (626) (276)
Other assets, non-current 13,574 (2,010)
Accounts payable and accrued liabilities (12,135) 2,333
Net cash provided by operating activities 13,320 26,293
Cash flows from investing activities
Business acquisitions, net of cash
acquired (4,452) (7,000)
Purchase of intangible assets (931) (565)
Software development (8,794) (6,334)
Proceeds from disposition of assets 21 171
Purchases of property and equipment (34,457) (35,961)
Net cash used in investing activities (48,613) (49,689)
Cash flows from financing activities
Proceeds from issuance of first lien
credit facilities 448,725
Repayment of senior secured credit
facilities (115,000) (410,655)
Payments on first lien credit facilities (3,864) (1,125)
Payment of financed placement fee
obligations (2,688) (2,971)
Payments on deferred loan costs (3,127)
Repayment of seller notes (12,401)
Payments on equipment long-term note
payable and capital leases (2,108) (1,832)
Initial public offering cost (4,160) (1,203)
Proceeds from issuance of common stock 176,341
Proceeds from employees in advance of
common stock issuance 25
Proceeds from stock option exercise 731
Net cash provided by financing activities 49,252 15,436
Effect of exchange rates on cash and cash
equivalents and restricted cash 4 8
Increase in cash and cash equivalents and
restricted cash 13,963 (7,952)
Cash, cash equivalents and restricted
cash, beginning of period 19,342 17,977
Cash, cash equivalents and
restricted cash, end of period $
33,305 $
10,125
===
Non-GAAP Financial Measures
This press release and accompanying schedules provide certain information regarding total Adjusted EBITDA, total Adjusted EBITDA (margin), and total net debt leverage ratio, which are considered a non-GAAP financial measures 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 or expenses that are deducted in calculating net income and to deduct certain gains that are included in calculating net income. However, these charges and 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 (loss) from operations, EGM Adjusted EBITDA, Table Products Adjusted EBITDA or Interactive Adjusted EBITDA and use total Adjusted EBITDA only supplementally.
The following table presents a reconciliation of total Adjusted EBITDA to net income (loss), which is the most comparable GAAP measure:
Total Adjusted EBITDA Reconciliation
Three Months Ended September 30, 2018 compared to the Three Months Ended September 30, 2017
Three months ended
$ %
September 30,
---
2018 2017 Change Change
Net income (loss) $
4,347 $
(4,090) $
8,437 206.3 %
Income tax (benefit) expense (3,538) 1,052 (4,590) (436.3)%
Depreciation and amortization 18,968 16,931 2,037 12.0 %
Other expense (income) 434 (467) 901 192.9 %
Interest income (89) (25) (64) (256.0)%
Interest expense 8,956 12,666 (3,710) (29.3)%
Write-downs and other(1) 667 490 177 36.1 %
Loss on extinguishment and
modification of debt(2) - %
Other adjustments(3) 893 474 419 88.4 %
Other non-cash charges(4) 1,700 1,551 149 9.6 %
New jurisdictions and regulatory
licensing costs(5) 567 (567) (100.0)%
Legal and litigation expenses
including settlement payments(6) (45) 181 (226) (124.9)%
Acquisitions and integration related
costs including restructuring and
severance(7) 746 71 675 950.7 %
Non-cash stock-based
compensation(8) 538 538 100.0 %
Total Adjusted EBITDA $
33,577 $
29,401 $
4,176 14.2 %
===
Total revenue $
75,526 $
56,440
Total Adjusted EBITDA margin 44.5% 52.1%
(1) Write-downs and other include items
related to loss on disposal or
impairment of long-lived assets, fair
value adjustments to contingent
consideration and acquisition costs
(2) 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
(3) 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
(4) 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
(5) 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
(6) Legal and litigation expenses include
payments to law firms and settlements
for matters that are outside the normal
course of business
(7) Acquisition and integration costs
include restructuring and severance and
are related to costs incurred after the
purchase of businesses, such as the
acquisitions of Rocket and AGS iGaming,
to integrate operations
(8) Non-cash stock-based compensation
includes non-cash compensation expense
related to grants of options,
restricted stock, and other equity
awards
Nine Months Ended September 30, 2018 compared to the Nine Months Ended September 30, 2017
Nine months ended September 30,
$ %
2018 2017 Change Change
Net loss $
(10,501) $
(36,586) $
26,085 71.3 %
Income tax (benefit) expense (8,947) 4,603 (13,550) (294.4)%
Depreciation and amortization 57,784 53,598 4,186 7.8 %
Other expense (income) 10,121 (4,805) 14,926 310.6 %
Interest income (162) (80) (82) (102.5)%
Interest expense 28,253 42,380 (14,127) (33.3)%
Write-downs and other(1) 3,282 2,655 627 23.6 %
Loss on extinguishment and modification
of debt(2) 4,608 8,129 (3,521) (43.3)%
Other adjustments(3) 2,218 2,067 151 7.3 %
Other non-cash charges(4) 4,890 5,462 (572) (10.5)%
New jurisdictions and regulatory
licensing costs(5) 1,304 (1,304) (100.0)%
Legal and litigation expenses including
settlement payments(6) 789 766 23 3.0 %
Acquisitions and integration related
costs including restructuring and
severance(7) 3,156 899 2,257 251.1 %
Non-cash stock-based compensation(8) 9,167 9,167 100.0 %
Total Adjusted EBITDA $
104,658 $
80,392 $
24,266 30.2 %
Total revenue 213,204 154,294
Total Adjusted EBITDA margin 49.1% 52.1%
(1) Write-downs and other include items
related to loss on disposal or
impairment of long-lived assets, fair
value adjustments to contingent
consideration, and acquisition costs
(2) 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
(3) 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
(4) 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
(5) New jurisdiction and regulatory license
costs relate primarily to one-time
non-operating costs incurred to obtain
new licenses and develop products for
new jurisdictions
(6) Legal and litigation expenses include
payments to law firms and settlements
for matters that are outside the normal
course of business
(7) Acquisition and integration costs
include restructuring and severance and
are related to costs incurred after the
purchase of businesses, such as the
acquisitions of Rocket and AGS iGaming,
to integrate operations
(8) Non-cash stock-based compensation
includes non-cash compensation expense
related to grants of options,
restricted stock, and other equity
awards
Adjusted EBITDA Reconciliation
The following tables reconcile net income (loss) to total adjusted EBITDA:
2017
Q1 Q2 Q3 Q4 YTD
Net loss $
(12,386) $
(20,110) $
(4,090) $
(8,520) $
(45,106)
Income tax expense (benefit) 2,233 1,318 1,052 (6,492) (1,889)
Depreciation and amortization 18,451 18,216 16,931 18,051 71,649
Other (income) expense (2,809) (1,529) (467) 1,867 (2,938)
Interest income (15) (40) (25) (28) (108)
Interest expense 15,160 14,554 12,666 13,131 55,511
Write-downs and other(1) 232 1,933 490 1,830 4,485
Loss on extinguishment and
modification of debt(2) 8,129 903 9,032
Other adjustments(3) 647 946 474 823 2,890
Other non-cash charges(4) 2,111 1,800 1,551 2,332 7,794
New jurisdictions and regulatory
licensing costs(5) 235 502 567 758 2,062
Legal and litigation expenses
including settlement payments(6) 399 186 181 (243) 523
Acquisitions and integration
related costs including
restructuring and severance(7) 647 181 71 2,037 2,936
Non-cash stock based
compensation(8)
Total Adjusted EBITDA $
24,905 $
26,086 29,401 26,449 106,841
===
(1) Write-downs and other include items
related to loss on disposal or
impairment of long-lived assets, fair
value adjustments to contingent
consideration, and acquisition costs
(2) 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
(3) 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
(4) 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
(5) New jurisdiction and regulatory license
costs relate primarily to one-time
non-operating costs incurred to obtain
new licenses and develop products for
new jurisdictions
(6) Legal and litigation expenses include
payments to law firms and settlements
for matters that are outside the normal
course of business
(7) Acquisition and integration costs
include restructuring and severance and
are related to costs incurred after the
purchase of businesses, such as the
acquisition of Rocket, to integrate
operations
(8) Non-cash stock-based compensation
includes non-cash compensation expense
related to grants of options,
restricted stock, and other equity
awards
2017 2018
Q4 Q1 Q2 Q3 LTM
9/30/2018
Net loss (income) $
(8,520) $
(9,538) $
(5,310) $
4,347 $
(19,021)
Income tax (benefit)
expense (6,492) (12,436) 7,027 (3,538) (15,439)
Depreciation and
amortization 18,051 19,349 19,467 18,968 75,835
Other expense 1,867 9,232 455 434 11,988
Interest income (28) (52) (21) (89) (190)
Interest expense 13,131 10,424 8,873 8,956 41,384
Write-downs and
other(1) 1,830 1,610 1,005 667 5,112
Loss on extinguishment
and modification of
debt(2) 903 4,608 5,511
Other adjustments(3) 823 396 929 893 3,041
Other non-cash
charges(4) 2,332 1,574 1,616 1,700 7,222
New jurisdictions and
regulatory licensing
costs(5) 758 758
Legal and litigation
expenses including
settlement payments(6) (243) 834 (45) 546
Acquisitions and
integration related
costs including
restructuring and
severance(7) 2,037 1,179 1,231 746 5,193
Non-cash stock based
compensation(8) 8,153 476 538 9,167
Total Adjusted EBITDA $
26,449 $
34,499 36,582 33,577 131,107
(1) Write-downs and other include items
related to loss on disposal or
impairment of long-lived assets, fair
value adjustments to contingent
consideration, and acquisition costs
(2) 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
(3) 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
(4) 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
(5) 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
(6) Legal and litigation expenses include
payments to law firms and settlements
for matters that are outside the normal
course of business
(7) Acquisition and integration costs
include restructuring and severance and
are related to costs incurred after the
purchase of businesses, such as the
acquisitions of Rocket and AGS iGaming,
to integrate operations
(8) Non-cash stock-based compensation
includes non-cash compensation expense
related to grants of options,
restricted stock, and other equity
awards
The following table presents a
reconciliation of total net debt and
total net debt leverage ratio:
September 30 December 30
---
2018 2017
--- ---
Total
debt $
510,083 $
667,968
Less: Cash and
cash
equivalents 33,227 19,242
Total net debt 476,856 648,726
LTM Adjusted
EBITDA 131,107 106,841
Total net debt
leverage ratio 3.6 6.1
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SOURCE AGS
