Le Lézard
Classified in: Tourism and vacations, Science and technology, Business, Covid-19 virus
Subjects: ERN, ERP

EVERI REPORTS RECORD SECOND QUARTER 2022 RESULTS


All-Time Quarterly Record Revenues of $197.2 Million Drive Second Quarter Net Income of $32.5 Million and Adjusted EBITDA of $94.4 Million

Games and FinTech Segments Each Generate Record Quarterly Recurring Revenues

Highest-Ever Quarterly Sales of 1,957 Gaming Machines and Second Consecutive Quarter with More than $10 Billion in Funds Delivered to Customers' Casino Floors

Repurchased 2.0 Million Shares for $33.3 Million

LAS VEGAS, Aug. 3, 2022 /PRNewswire/ -- Everi Holdings Inc. (NYSE: EVRI) ("Everi" or the "Company"), a premier provider of land-based and digital casino gaming content and products, financial technology and player loyalty solutions, today announced results for the second quarter ended June 30, 2022. Everi also reiterated its full year outlook for Net income, Adjusted EBITDA and Free Cash Flow.

Second Quarter 2022 Financial Highlights

Randy Taylor, Chief Executive Officer of Everi, said, "Our strong operating momentum continued in the second quarter, as we delivered all-time quarterly record revenues, income before income tax, Adjusted EBITDA and Free Cash Flow. These record financial results were driven by another consecutive quarter of record recurring revenues for both our Games and FinTech businesses despite the very challenging year-over-year comparison for these operations, as last year's results included the significant benefit from casino reopening activities and financial stimulus payments provided to consumers.

"Our second quarter Games segment results include our highest-ever quarterly level of gaming machines sold, which increased 40% to 1,957 units; and the 13th consecutive quarterly sequential increase in our installed base of gaming operations units. Our ongoing investments in the development of differentiated cabinets and expansion of our games portfolio continues to drive increases in our installed base, strong Daily Win per Unit, and growth in our ship share of units sold. In particular, the record number of units sold in the quarter reinforces our confidence in our ability to achieve our 15% ship share target over the next several years.

"Our FinTech segment is achieving similar success, as it generated record revenues, operating income and Adjusted EBITDA for the third consecutive quarter. The record quarterly performance was driven by increased revenues from financial access services, which included more than $10 billion of funding delivered to our customers' casino floors for the second consecutive quarter, a record number of kiosk sales, and ongoing organic growth of our Loyalty and RegTech solutions. These results demonstrate our ability to offer industry-leading, integrated solutions that help drive increases in same-store activity and cost efficiencies for our customers. With our planned introductions of additional innovative products to our Digital Neighborhood of integrated solutions, our FinTech business is positioned to deliver consistent growth.

"Our top-line growth and focus on operational excellence continues to result in strong Free Cash Flow generation, which reached $49.5 million in the 2022 second quarter and $101.1 million for the first six months of 2022. We remain focused on allocating our higher Free Cash Flow to further grow the business through prudent investments in product development, as well as with acquisitions of businesses and technologies that continue to expand the scale and scope of our product offerings and/or drive our entry into new product categories and geographical markets. As reflected in the growing contributions of our Loyalty products, our return-focused approach to acquisitions benefits our operating performance. We expect recent acquisitions, which have expanded our addressable market to include opportunities in Australia and Historical Horse Racing gaming devices, will deliver similar benefits over time. Our Free Cash Flow performance, liquidity, and strong balance sheet also enabled us to opportunistically act on our share repurchase program in the second quarter given our view that our current valuation does not fully reflect the strength of our business and our outlook for ongoing growth."

Consolidated Full Quarter Comparative Results (unaudited)


As of and for the Three Months
Ended June 30,


2022


2021


(in millions, except per share amounts)

Revenue

$                    197.2


$                    172.6





Operating income (1)

$                      54.5


$                      54.4





Net income (1)

$                      32.5


$                      36.2





Net earnings per diluted share (1)

$                      0.33


$                      0.36





Weighted average diluted shares outstanding

98.7


100.0





Adjusted EBITDA (2)

$                      94.4


$                      92.5





Free Cash Flow (2)

$                      49.5


$                      39.2





Principal amount of outstanding debt

$                    995.5


$                 1,144.6





Cash and cash equivalents

$                    238.1


$                    340.4





Net Cash Position (3)

$                      93.1


$                    196.6

(1)

Operating income, net income, and net earnings per diluted share for the three months ended June 30, 2022, included $0.7 million for office and warehouse consolidation costs, and $0.9 million in professional fees associated with acquisitions and for non-recurring litigation costs.

(2)

For a reconciliation of net income to Adjusted EBITDA and Free Cash Flow, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided toward the end of this release.

(3)

For a reconciliation of Net Cash Position to Cash and Cash Equivalents, see the Unaudited Reconciliation of Cash and Cash Equivalents to Net Cash Position and Net Cash Available toward the end of this release.



Second Quarter 2022 Results Overview

Revenues for the three-month period ended June 30, 2022 increased 14% to $197.2 million compared to $172.6 million in the second quarter of 2021. Recurring revenues grew 7% to $139.7 million and revenues from non-recurring sales increased 37% to $57.5 million.

Operating income for the 2022 second quarter was $54.5 million compared to $54.4 million in the prior-year period, and net income was $32.5 million, or $0.33 per diluted share, compared to $36.2 million, or $0.36 per diluted share, in the second quarter of 2021. The provision for income taxes increased $9.3 million in the 2022 second quarter related to the reversal of deferred tax asset valuation allowance in the 2021 fourth quarter. Operating margin declined from the prior-year period, reflecting a change in the revenue mix as a result of substantially greater growth in gaming machine and FinTech hardware sales year over year together with a lower margin on machine and hardware sales due to increased supply chain costs, higher operating costs that reflect the additions of acquisitions, and higher research and development expense that supports the Company's focus on increased internal, new product development. Adjusted EBITDA increased to $94.4 million from $92.5 million in the prior-year period.

Free Cash Flow increased to $49.5 million from $39.2 million in the year-ago period, reflecting higher Adjusted EBITDA and lower cash interest paid, partially offset by higher capital expenditures.

Games Segment Full Quarter Comparative Results (unaudited)


Three Months Ended June 30,


2022


2021


(in millions, except unit amounts and prices)

Games revenues




Gaming operations ? Land-based casinos

$                     68.2


$                     69.6

Gaming operations ? Digital iGaming

5.8


3.6

Gaming operations ? Total

74.0


73.2

Gaming equipment and systems

38.3


26.1

Gaming other

?


?

Games total revenues

$                   112.3


$                     99.3





Operating income (1)

$                     28.9


$                     30.6





Adjusted EBITDA (2)

$                     58.7


$                     60.4





Capital expenditures

$                     28.9


$                     21.3





Gaming operations information:




Units installed at period end:




Class II

9,792


9,422

Class III

7,672


6,829

Total installed base at period end (3)

17,464


16,251





Premium units (3)

8,355


6,961





Average units installed during period (3)

17,362


16,088





Daily win per unit ("DWPU") (4)

$                   39.94


$                   45.66





Unit sales information:




Units sold

1,957


1,402

Average sales price ("ASP")

$                 18,800


$                 17,894

(1)

Operating income for the three months ended June 30, 2022, included $0.7 million for office and warehouse consolidation costs and professional fees associated with acquisitions.

(2)

For a reconciliation of net income to Adjusted EBITDA, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP measures provided toward the end of this release.

(3)

The ending and average installed base include all units, whether or not casinos were open and whether or not the games were active.

(4)

Daily win per unit reflects the total of all units installed at casinos, inclusive of casinos closed due to the COVID pandemic and inactive units, where such units would have recorded no revenue and excludes the impact of the direct costs associated with the Company's wide-area progressive jackpot expense.



2022 Second Quarter Games Segment Highlights

Games segment revenues grew 13% to a record $112.3 million compared to $99.3 million in the second quarter of 2021, primarily driven by record sales of gaming machines and ongoing growth in digital gaming revenues.

Operating income was $28.9 million compared to $30.6 million in the second quarter of 2021, reflecting higher revenues from machine sales, offset by lower margins on the machine sales due to increased supply chain costs as well as higher operating expenses, including increased costs associated with acquisitions and higher research and development expense, reflecting an acceleration in games development to support a path to a targeted future 15% ship share of gaming machines sold. Adjusted EBITDA was $58.7 million compared to $60.4 million in the second quarter of 2021. Revenues from the recent acquisitions of Intuicode Gaming and certain assets of Atlas Gaming (Australia) contributed $1.4 million in the 2022 second quarter.

Gaming operations revenues were $74.0 million compared to $73.2 million a year ago, and increased 5% on a quarterly sequential basis.

Gaming equipment and systems revenues generated from the sale of gaming machines and other related parts and equipment increased 47% to $38.3 million in the second quarter of 2022 compared to $26.1 million in the second quarter of 2021.

Financial Technology Solutions Segment Full Quarter Comparative Results (unaudited)


Three Months Ended June 30,


2022*


2021*


(in millions, unless otherwise noted)

FinTech revenues




Financial access services

$                  50.9


$                      44.8

Software and other

19.0


15.6

Hardware

15.0


12.8

FinTech total revenues

$                  84.9


$                      73.2





Operating income (1)

$                  25.7


$                      23.8





Adjusted EBITDA (2)

$                  35.7


$                      32.1





Capital expenditures

$                    7.5


$                        7.9





Value of financial access transactions:




     Funds advanced

$             2,661.1


$                 2,210.9

     Funds dispensed

7,511.0


6,960.1

     Check warranty

439.1


378.8

Total value processed

$           10,611.2


$                 9,549.8





Number of financial access transactions:




     Funds advanced

3.5


3.3

     Funds dispensed

28.6


28.4

     Check warranty

1.2


0.9

Total transactions completed

33.3


32.6

  *

Rounding may cause variances.

(1)

Operating income for the three months ended June 30, 2022, included $0.9 million for professional fees associated with certain acquisitions and non-recurring litigation costs.

(2)

For a reconciliation of net income to Adjusted EBITDA, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided toward the end of this release.



2022 Second Quarter Financial Technology Solutions ("FinTech") Segment Highlights

FinTech revenues for the 2022 second quarter increased 16% to an all-time quarterly record $84.9 million compared to $73.2 million in the 2021 second quarter, reflecting a 14% increase in financial access services, a 22% increase in software and other revenues, and a 17% improvement in revenues from hardware sales. Revenues from the recent acquisition of ecash Holdings (Australia) contributed $4.2 million in the 2022 second quarter.

Operating income increased 8% to $25.7 million in the 2022 second quarter compared to $23.8 million in the prior-year period, reflecting a benefit from higher revenues partially offset by increased research and development expense primarily in support of new and enhanced Loyalty products, the Company's digital CashClub Wallet®, and new RegTech products and software. Adjusted EBITDA rose 11% to $35.7 million compared to $32.1 million in the 2021 second quarter.

Balance Sheet and Liquidity

Outlook

Reflecting the operating performance in the first half of the year and the Company's expectations for continued operating execution over the balance of the year driven by demand for its products, Everi reiterated its full year 2022 guidance for net income of $125 million to $132 million, Adjusted EBITDA of $368 million to $378 million and Free Cash Flow of $187 million to $200 million.

The Company's year-to-date results have not reflected, and its updated guidance does not contemplate, any additional material impact from a pandemic-related setback or other macroeconomic effect, such as recessionary or inflationary influence on consumer spending, a material supply chain disruption, or other changes in global market conditions. A summary and reconciliation of the full year 2022 financial targets are included in a supplemental table at the end of this release.

Investor Conference Call and Webcast

The Company will host an investor conference call to discuss its 2022 second quarter results at 11:00 a.m. EDT (8:00 a.m. PDT) today. The conference call may be accessed live by phone by dialing (201) 689-8471. A replay of the call will be available beginning at 2:00 p.m. ET today and may be accessed by dialing (412) 317-6671; the PIN number is 13730679. A replay will be available until August 10, 2022. The call also will be webcast live and archived on www.everi.com (select "Investors" followed by "Events & Contact").

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, Free Cash Flow, 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 Free Cash Flow 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, operating income, 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, loss on extinguishment of debt, non-cash stock compensation expense, accretion of contract rights, write-downs of inventory, property and equipment and intangible assets, employee severance costs and other related expenses, litigation settlement received net of legal costs, foreign exchange loss, asset acquisition expense, non-recurring professional fees, certain litigation costs, and one-time charges. 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 Free Cash Flow as Adjusted EBITDA less cash paid for interest, cash paid for capital expenditures, cash paid for placement fees, and cash paid for taxes net of refunds.  We present Free Cash Flow as a measure of performance and believe it provides investors with another indicator of our operating performance. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures.

A reconciliation of the Company's net income (loss) per GAAP to Adjusted EBITDA and Free Cash Flow is included in the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided at the end of this release. Additionally, a reconciliation of each segment's operating income to EBITDA and Adjusted EBITDA is also included. On a segment level, operating income per GAAP, rather than net earnings per GAAP, is reconciled to EBITDA and Adjusted EBITDA as the Company does not report net earnings by segment. 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. Forward-looking statements are neither historical facts nor assurances of future performance, but instead are based only on our current beliefs, expectations, and assumptions regarding the future of our business, plans and strategies, projections, anticipated events and trends, the economy, and other future conditions, as of the date this press release is issued. Forward-looking statements often, but do not always, contain words such as "expect," "anticipate," "aim to," "designed to," "intend," "plan," "believe," "goal," "target," "future," "assume," "estimate," "indication," "seek," "project," "may," "can," "could," "should," "favorably positioned," or "will" and other words and terms of similar meaning.  Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which are based only on information currently available to us and only as of the date hereof.

Examples of forward-looking statements include, among others, statements regarding our ability to execute on key initiatives and deliver ongoing operating and financial improvements, including guidance related to 2022 financial and operational metrics; regain or maintain revenue, earnings and Free Cash Flow momentum; sustain our overall growth; drive growth of the gaming operations installed base and DWPU; continue expanding the portions of the gaming floor the Company's games address, including into the Historical Horse Racing category of gaming devices and the Company's overall targeted ship share of gaming machines sold; successfully perform obligations required by acquisition agreements; and create incremental value for our shareholders, as well as statements regarding our expectations for the industry environment and the adoption of our products and technologies.

Forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are often difficult to predict and many of which are beyond our control, including, but not limited to, statements regarding: trends, developments, and uncertainties impacting our business, including our ability to withstand: global supply chain disruption; inflationary impact on supply chain costs; changes in global market, business and regulatory conditions arising as a result of the COVID-19 global pandemic, including any related public health confidence and availability of discretionary spending income of casino patrons, as well as expectations for the re-opening of casinos; product innovations that address customer needs in a new and evolving operating environment; to regain or maintain revenue, earnings, and cash flow momentum, and to enhance shareholder value in the long-term; trends in gaming establishment and patron usage of our products; benefits realized by using our products and services; benefits and/or costs associated with mergers, acquisitions, and/or strategic alliances; product development, including the release of new game features, additional games, and system releases in the future; regulatory approvals; gaming and financial regulatory and legal, card association, and statutory compliance and changes; the implementation of new or amended card association and payment network rules or interpretations; consumer collection activities; competition (including consolidations); tax liabilities; goodwill impairment charges; international expansion; resolution of litigation or government investigations; our dividend policy; new customer contracts and contract renewals; financial performance and results of operations (including revenue, expenses, margins, earnings, cash flow, and capital expenditures); inflationary impact on labor costs and retention; interest rates and interest expense; borrowings and debt repayments; and equity incentive activity and compensation expense.

Our actual results and financial condition may differ materially from those indicated in forward-looking statements, and important factors that could cause them to do so include, but are not limited to, the following: our ability to generate profits in the future and to create incremental value for shareholders; our ability to withstand inflationary and other factors that pressure discretionary consumer spending; our ability to execute on mergers, acquisitions and/or strategic alliances, including our ability to integrate and operate such acquisitions or alliances consistent with our forecasts in order to achieve future growth; our ability to execute on key initiatives and deliver ongoing improvements; expectations regarding growth for the Company's installed base and daily win per unit; expectations regarding placement fee arrangements; inaccuracies in underlying operating assumptions; the impact of the ongoing Coronavirus Disease 2019 ("COVID-19") global pandemic on our business, operations and financial condition, including (i) actions taken by international, federal, state, tribal and municipal governmental and regulatory agencies to contain the COVID-19 public health emergency or mitigate its impact, (ii) the direct and indirect economic effects of COVID-19 and measures to contain it, including directives, orders or similar actions by international, federal, state, tribal and municipal governmental and regulatory agencies to regulate freedom of movement and business operations such as travel restrictions, border closures, business closures, limitations on public gatherings, quarantines and shelter-in-place orders as well as re-opening safety protocols; changes in global market, business, and regulatory conditions arising as a result of the COVID-19 global pandemic; our history of net losses and our ability to generate profits in the future; our leverage and the related covenants that restrict our operations; our ability to withstand unanticipated impacts of a pandemic outbreak of uncertain duration; our ability to withstand the loss of revenue during the closure of our customers' facilities; our ability to generate sufficient cash to service all of our indebtedness, fund working capital, and capital expenditures; our ability to maintain our current customers; expectations regarding customers' preferences and demands for future product and service offerings; the overall growth of the gaming industry, if any; our ability to replace revenue associated with terminated contracts; margin degradation from contract renewals; our ability to comply with the Europay, MasterCard, and Visa global standard for cards equipped with security chip technology; our ability to successfully introduce new products and services, including third-party licensed content; gaming establishment and patron preferences; failure to control product development costs and create successful new products; anticipated sales performance; our ability to prevent, mitigate, or timely recover from cybersecurity breaches, attacks, and compromises; national and international economic and industry conditions; changes in gaming regulatory, card association, and statutory requirements; regulatory and licensing difficulties, competitive pressures and changes in the competitive environment; operational limitations; gaming market contraction; changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; business prospects; unanticipated expenses or capital needs; technological obsolescence and our ability to adapt to evolving technologies; our ability to comply with our debt covenants and service outstanding debt; employee hiring, turnover, and retention; our ability to comply with regulatory requirements under the Payment Card Industry ("PCI") Data Security Standards and maintain our certified status; and those other risks and uncertainties discussed in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2021 (the "Annual Report"). Given these risks and uncertainties, there can be no assurance that the forward-looking information contained in this press release will in fact transpire or prove to be accurate.

This press release should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021, 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's mission is to lead the gaming industry through the power of people, imagination and technology. With a focus on player engagement and helping casino customers operate more efficiently, the Company develops entertaining game content and gaming machines, gaming systems, and services for land-based and iGaming operators. The Company is also a preeminent and comprehensive provider of trusted financial technology solutions that power the casino floor while improving operational efficiencies and fulfilling regulatory compliance requirements, including products and services that facilitate convenient and secure cash and cashless financial transactions, self-service player loyalty tools and applications, and regulatory and intelligence software. For more information, please visit www.everi.com, which is updated regularly with financial and other information about the Company.

Investor Relations Contacts:




Everi Holdings Inc.                                                              


William Pfund

Steven Kopjo

SVP, Investor Relations

Director, Investor Relations

702-676-9513 or [email protected]

702-785-7157 or [email protected]



JCIR


Richard Land, James Leahy


212-835-8500 or [email protected]




Join Everi on Social Media

Twitter:  https://twitter.com/everi_inc 
LinkedIn:  https://www.linkedin.com/company/everi 
Facebook:  https://www.facebook.com/EveriHoldingsInc/ 
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EVERI HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME

(In thousands, except earnings per share amounts)




Three Months Ended June 30,


Six Months Ended June 30,



2022


2021


2022


2021

Revenues









  Games revenues









     Gaming operations


$                 74,035


$                 73,220


$              144,332


$              131,361

     Gaming equipment and systems


38,268


26,090


66,266


44,078

     Gaming other


44


27


85


49

         Games total revenues


112,347


99,337


210,683


175,488

   FinTech revenues









     Financial access services


50,876


44,840


100,755


83,552

     Software and other


18,997


15,604


36,864


32,850

     Hardware


15,002


12,801


24,536


19,805

         FinTech total revenues


84,875


73,245


162,155


136,207

         Total revenues


197,222


172,582


372,838


311,695

Costs and expenses









   Games cost of revenues (1)









     Gaming operations


6,122


5,342


12,117


10,101

     Gaming equipment and systems


23,394


15,248


40,176


25,555

         Games total cost of revenues


29,516


20,590


52,293


35,656

   FinTech cost of revenues (1)









     Financial access services


2,470


1,560


4,645


3,033

     Software and other


886


1,129


1,821


2,133

     Hardware


10,362


7,670


16,303


11,698

         FinTech total cost of revenues


13,718


10,359


22,769


16,864

Operating expenses


55,051


48,178


104,876


86,221

Research and development


14,064


8,766


26,583


17,179

Depreciation


15,678


15,931


30,898


32,108

Amortization


14,646


14,369


28,279


29,084

Total costs and expenses


142,673


118,193


265,698


217,112

Operating income


54,549


54,389


107,140


94,583

Other expenses









Interest expense, net of interest income


12,294


17,760


23,642


36,231

Total other expenses


12,294


17,760


23,642


36,231

Income before income tax


42,255


36,629


83,498


58,352

Income tax provision


9,734


415


19,455


1,604

Net income


32,521


36,214


64,043


56,748

Foreign currency translation (loss) gain


(2,606)


328


(2,026)


107

Comprehensive income


$                 29,915


$                 36,542


$                 62,017


$                 56,855

Earnings per share









          Basic


$                      0.35


$                    0.41


$                     0.70


$                    0.65

          Diluted


$                      0.33


$                    0.36


$                     0.65


$                    0.57

Weighted average common shares outstanding









          Basic


91,710


88,722


91,560


87,858

          Diluted


98,706


100,030


99,249


99,004

(1)

Exclusive of depreciation and amortization.

 

EVERI HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)



At June 30,


At December 31,


2022


2021

ASSETS




Current assets




Cash and cash equivalents

$                238,106


$                302,009

Settlement receivables

59,195


89,275

Trade and other receivables, net of allowances for credit losses of $5,284 and $5,161 at June 30, 2022 and December 31, 2021, respectively

108,726


104,822

Inventory

49,163


29,233

Prepaid expenses and other current assets

38,895


27,299

Total current assets

494,085


552,638

Non-current assets




Property and equipment, net

127,131


119,993

Goodwill

707,258


682,663

Other intangible assets, net

236,112


214,594

Other receivables

20,997


13,982

Deferred tax assets, net

9,475


32,121

Other assets

28,945


19,659

Total non-current assets

1,129,918


1,083,012

Total assets

$             1,624,003


$             1,635,650

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Settlement liabilities

$                204,199


$                291,861

 Accounts payable and accrued expenses

208,200


173,933

 Current portion of long-term debt

6,000


6,000

Total current liabilities

418,399


471,794

Non-current liabilities




Long-term debt, less current portion

973,760


975,525

Other accrued expenses and liabilities

29,215


13,831

Total non-current liabilities

1,002,975


989,356

Total liabilities

1,421,374


1,461,150

Commitments and contingencies




Stockholders' equity




Convertible preferred stock, $0.001 par value, 50,000 shares authorized and no shares outstanding at June 30, 2022 and December 31, 2021, respectively

?


?

Common stock, $0.001 par value, 500,000 shares authorized and 119,109 and 90,761 shares issued and outstanding at June 30, 2022, respectively, and 116,996 and 91,313 shares issued and outstanding at December 31, 2021, respectively

119


117

Additional paid-in capital

516,785


505,757

Accumulated deficit

(77,712)


(141,755)

Accumulated other comprehensive loss

(3,481)


(1,455)

Treasury stock, at cost, 28,348 and 25,683 shares at June 30, 2022 and December 31, 2021, respectively

(233,082)


(188,164)

Total stockholders' equity

202,629


174,500

Total liabilities and stockholders' equity

$             1,624,003


$             1,635,650

 

EVERI HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



Six Months Ended June 30,


2022


2021

Cash flows from operating activities




Net income

$                    64,043


$                    56,748

Adjustments to reconcile net income to cash provided by operating activities:




Depreciation

30,898


32,108

Amortization

28,279


29,084

Non-cash lease expense

2,257


2,399

Amortization of financing costs and discounts

1,427


2,344

Loss on sale or disposal of assets

289


1,486

Accretion of contract rights

4,897


4,637

Provision for credit losses

4,275


3,806

Deferred income taxes

18,548


896

Reserve for inventory obsolescence

468


1,211

Stock-based compensation

10,311


8,452

Changes in operating assets and liabilities:




Settlement receivables

30,041


10,546

Trade and other receivables

(8,888)


(26,297)

Inventory

(15,157)


(4,764)

Prepaid expenses and other assets

(23,892)


(7,146)

Settlement liabilities

(87,607)


20,682

Accounts payable and accrued expenses

14,046


27,326

Net cash provided by operating activities

74,235


163,518

Cash flows from investing activities




Capital expenditures

(60,044)


(49,234)

Acquisitions, net of cash acquired

(33,250)


(15,000)

Proceeds from sale of property and equipment

67


19

Placement fee agreements

(547)


?

Net cash used in investing activities

(93,774)


(64,215)

Cash flows from financing activities




Repayments of new term loan

(3,000)


?

Repayment of prior incremental term loan

?


(625)

Proceeds from exercise of stock options

719


8,703

Treasury stock - restricted share vesting and withholding

(11,582)


(8,612)

Treasury stock - repurchase of shares

(30,298)


?

Payment of contingent consideration, acquisition

?


(9,875)

Net cash used in financing activities

(44,161)


(10,409)

Effect of exchange rates on cash and cash equivalents

(450)


67

Cash, cash equivalents and restricted cash




Net (decrease) increase for the period

(64,150)


88,961

Balance, beginning of the period

303,726


252,349

Balance, end of the period

$                  239,576


$                  341,310





Supplemental cash disclosures




Cash paid for interest

$                    22,259


$                    35,309

Cash paid for income tax, net

87


566

Supplemental non-cash disclosures




Accrued and unpaid capital expenditures

$                      3,587


$                      2,212

Transfer of leased gaming equipment to inventory

4,078


3,715

 

EVERI HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF CASH AND CASH EQUIVALENTS

TO NET CASH POSITION AND NET CASH AVAILABLE

(In thousands)



At June 30,


At December 31,


At June 30,


2022


2021


2021

Cash available






Cash and cash equivalents (1)

$                  238,106


$                  302,009


$                  340,361

Settlement receivables

59,195


89,275


50,111

Settlement liabilities

(204,199)


(291,861)


(193,893)

Net Cash Position

93,102


99,423


196,579







Undrawn revolving credit facility

125,000


125,000


35,000

Net Cash Available

$                  218,102


$                  224,423


$                  231,579

(1)

Cash and cash equivalents does not include $1.5 million, $1.7 million, and $0.9 million of restricted cash at June 30, 2022, December 31, 2021, and June 30, 2021, respectively.

 

EVERI HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES

(In thousands)


Three Months Ended June 30, 2022


Games


FinTech


Total

Net income





$                   32,521

Income tax provision





9,734

Interest expense, net of interest income





12,294

Operating income

$                   28,883


$                   25,666


$                   54,549







Plus: depreciation and amortization

23,801


6,523


30,324

EBITDA

$                   52,684


$                   32,189


$                   84,873







Non-cash stock-based compensation expense

2,815


2,685


5,500

Accretion of contract rights

2,470


?


2,470

Office and warehouse consolidation

678


?


678

Non-recurring professional fees and other

$                          34


$                        868


$                        902

Adjusted EBITDA

$                   58,681


$                   35,742


$                   94,423







Cash paid for interest





(7,820)

Cash paid for capital expenditures





(36,405)

Cash paid for placement fees





(547)

Cash paid for income taxes, net





(128)

Free Cash Flow





$                   49,523

 

EVERI HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES

(In thousands)



Three Months Ended June 30, 2021


Games


FinTech


Total

Net income





$                  36,214

Income tax provision





415

Interest expense, net of interest income





17,760

Operating income

$                  30,589


$                  23,800


$                  54,389







Plus: depreciation and amortization

24,739


5,561


30,300

EBITDA

$                  55,328


$                  29,361


$                  84,689







Non-cash stock-based compensation expense

2,713


2,734


5,447

Accretion of contract rights

2,318


?


2,318

Adjusted EBITDA

$                  60,359


$                  32,095


$                  92,454







Cash paid for interest





(23,283)

Cash paid for capital expenditures





(29,199)

Cash paid for income taxes, net





(763)

Free Cash Flow





$                  39,209

 

EVERI HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES

(In thousands)



Six Months Ended June 30, 2022


Games


FinTech


Total

Net income





$                  64,043

Income tax provision





19,455

Interest expense, net of interest income





23,642

Operating income

$                  56,680


$                  50,460


$                107,140







Plus: depreciation and amortization

46,587


12,590


59,177

EBITDA

$                103,267


$                  63,050


$                166,317







Non-cash stock-based compensation expense

5,286


5,025


10,311

Accretion of contract rights

4,897


?


4,897

Office and warehouse consolidation

678


?


678

Non-recurring professional fees and other

34


1,808


1,842

Adjusted EBITDA

$                114,162


$                  69,883


$                184,045







Cash paid for interest





(22,259)

Cash paid for capital expenditures





(60,044)

Cash paid for placement fees





(547)

Cash paid for income taxes, net





(87)

Free Cash Flow





$                101,108

 

EVERI HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES

(In thousands)



Six Months Ended June 30, 2021


Games


FinTech


Total

Net income





$                  56,748

Income tax provision





1,604

Interest expense, net of interest income





36,231

Operating income

$                  45,865


$                  48,718


$                  94,583







Plus: depreciation and amortization

50,286


10,906


61,192

EBITDA

$                  96,151


$                  59,624


$                155,775







Non-cash stock-based compensation expense

4,172


4,280


8,452

Accretion of contract rights

4,637


?


4,637

Litigation settlement, net

?


(1,107)


(1,107)

Asset acquisition expense, non-recurring professional fees and other

?


84


84

Adjusted EBITDA

$                104,960


$                  62,881


$                167,841







Cash paid for interest





(35,309)

Cash paid for capital expenditures





(49,234)

Cash paid for income taxes, net





(566)

Free Cash Flow





$                  82,732

 

EVERI HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF PROJECTED NET INCOME TO PROJECTED EBITDA AND PROJECTED ADJUSTED EBITDA FOR THE YEAR ENDING DECEMBER 31, 2022

(In thousands)



2022 Guidance Range (1)


Low


High

Projected net income

$                   125,000


$                  132,000

Projected income tax provision @ 23% - 23.5%

37,000


40,000

Projected interest expense, net of interest income

52,000


54,000

Projected operating income

$                   214,000


$                  226,000





Plus: projected depreciation and amortization

121,000


116,000

Projected EBITDA

$                   335,000


$                  342,000





Projected non-cash stock compensation expense

19,000


22,000

Projected accretion of contract rights

12,000


10,000

Projected asset acquisition expense and non-recurring professional fees

2,000


4,000

Projected Adjusted EBITDA

$                   368,000


$                  378,000





Projected cash paid for interest

(50,000)


(52,000)

Projected cash paid for capital expenditures

(130,000)


(124,000)

Projected cash paid for placement fees

(500)


(500)

Projected cash paid for income taxes, net of refunds

(500)


(1,500)

Projected Free Cash Flow

$                   187,000


$                  200,000

(1)

All figures presented are projected estimates for the year ending December 31, 2022.

 

SOURCE Everi Holdings Inc.


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