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| 8-K - 8-K - Everi Holdings Inc. | evri-20210804.htm |
Exhibit 99.1
EVERI REPORTS RECORD RESULTS FOR THE 2021 SECOND QUARTER
Broad-based Strength in Games and FinTech Segment Operating Performance
Provides Full Year 2021 Guidance, including Net Income of $87 Million to $95 Million and Adjusted EBITDA of $332 Million to $342 Million
Las Vegas – August 4, 2021 - 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 loyalty solutions, today reported record financial results for the second quarter ended June 30, 2021. The 2021 second quarter revenue, net income, Adjusted EBITDA and Free Cash Flow are all slightly above the respective ranges the Company provided on June 21, 2021. The results are a quarterly sequential improvement from the 2021 first quarter, reflecting continued strength in casino patron demand, while still reflecting an ongoing, but reduced, impact of the COVID-19 pandemic.
Second Quarter 2021 Financial Highlights Compared to the Second Quarter 2019
Because second quarter 2020 financial results were severely impacted by casino closures related to the COVID-19 pandemic, the Company believes it is more meaningful to compare 2021 second quarter results to those of the 2019 second quarter. Financial results for the 2021, 2020 and 2019 second quarter periods are presented in the Consolidated, Games and Financial Technology Solutions highlight tables below.
•Revenues rose 33% to a quarterly record $172.6 million, compared to $129.7 million in the 2019 second quarter.
•Net income improved 560% to a quarterly record $36.2 million, or $0.36 per diluted share, compared to $5.5 million, or $0.07 per diluted share, in the 2019 second quarter.
•Adjusted EBITDA, a non-GAAP financial measure, increased 44% to a quarterly record $92.5 million, compared to $64.1 million in the 2019 second quarter.
•Free Cash Flow, a non-GAAP financial measure, increased 462% to $39.2 million, compared to $7.0 million in the 2019 second quarter.
•Revenue, net income, Adjusted EBITDA and Free Cash Flow are all slightly above the respective ranges the Company provided on June 21, 2021.
•Subsequent to quarter-end, completed a successful refinancing that reduced total debt to $1.0 billion, decreased cash interest costs and extended maturities.
Michael Rumbolz, Chief Executive Officer of Everi, said, “The record 2021 second quarter results reflect the substantial benefit of our execution of our ongoing growth initiatives, as well as improvement in
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industry trends. The strong momentum to-date this year in revenues, earnings and cash flow is being driven by consistent improvements in our Games and FinTech segment operating performance, demonstrating yet again the substantial demand that exists for our high-value products.
"A key highlight of our significant growth compared to pre-pandemic periods is the strength of our recuring revenue streams, which comprise an increased percentage of our overall business mix. This revenue is a significant contributor to our growing Free Cash Flow, which in turn has allowed us to dramatically lower our net leverage,” added Rumbolz. “Accordingly, we are favorably positioned to prudently invest in both internal product innovation and complementary, high-return, accretive acquisitions that will support our future growth.”
Mark Labay, Chief Financial Officer of Everi, said, “Our improved performance positioned us to obtain a strong response from the capital markets for our recent debt refinancing, including credit rating agency upgrades of all our newly issued debt instruments. This resulted in lower borrowing rates and extended debt maturities. Upon completion of this successful refinancing, at current interest rates our annualized cash interest costs will now be approximately $23 million less than at June 30, 2021. We expect our lower annual interest will contribute to the sustainability and further growth of our Free Cash Flow.”
Consolidated Full Quarter Comparative Results (unaudited)
| As of and For the Three Months Ended June 30, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||||
| Consolidated revenue | $ | 172.6 | $ | 38.7 | $ | 129.7 | |||||||||||
Operating income (loss) (1) | $ | 54.4 | $ | (52.7) | $ | 24.9 | |||||||||||
Net income (loss) (1) | $ | 36.2 | $ | (68.5) | $ | 5.5 | |||||||||||
Net earnings (loss) per diluted share (1) | $ | 0.36 | $ | (0.80) | $ | 0.07 | |||||||||||
Diluted shares outstanding (2) | 100.0 | 85.1 | 79.2 | ||||||||||||||
Adjusted EBITDA (3) | $ | 92.5 | $ | 3.3 | $ | 64.1 | |||||||||||
Free Cash Flow (3) | $ | 39.2 | $ | (26.7) | $ | 7.0 | |||||||||||
Principal amount of outstanding debt (4) | $ | 1,144.6 | $ | 1,180.9 | $ | 1,147.2 | |||||||||||
Cash and cash equivalents (4) | $ | 340.4 | $ | 257.4 | $ | 123.8 | |||||||||||
Net Cash Position (5) | $ | 196.6 | $ | 133.2 | $ | 36.7 | |||||||||||
(1) Operating loss, net loss, and net loss per diluted share for the three months ended June 30, 2020, included $14.8 million of pre-tax charges, including $11.0 million of business reorganization costs, $2.7 million of employee severance costs, $0.6 million non-recurring professional fees, and $0.5 million in other one-time charges. Operating income, net income and net earnings per diluted share for the three months ended June 30, 2019 included approximately $0.8 million for certain non-recurring professional fees and related costs and expenses associated with the acquisition of certain player loyalty assets and a non-cash charge of $0.8 million for the write-off of inventory related to certain legacy cabinets.
(2) In December 2019, the Company completed a public offering of 11.5 million shares of common stock. Weighted average basic shares outstanding were 88.7 million, 85.1 million, and 71.5 million shares for the periods ended June 30, 2021, 2020, and 2019, respectively.
(3) For a reconciliation of net income (loss) to Adjusted EBITDA and Free Cash Flow, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided at the end of this release.
(4) Subsequent to quarter-end, the Company reduced its total outstanding debt to $1.0 billion through the successful issuance of $400 million of 5.000% senior unsecured notes due 2029 and $600 million of senior secured term loan at a rate of LIBOR plus 250 basis points with a
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LIBOR floor of 50 basis points due 2028, along with a $125 million revolving credit facility that is currently undrawn. In completing the transactions on August 3, 2021, the Company used cash on hand to pay the transaction fees and expenses and reduce the total debt by $144.6 million from the June 30, 2021 reported amount.
(5) 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 at the end of this release.
Second Quarter 2021 Results Overview
Results for the three-month period ended June 30, 2021 reflect the continued, albeit lesser, impact of the COVID-19 pandemic. Results for the 2020 second quarter reflect the impact of the COVID-19 pandemic and results for the 2019 second quarter were unimpacted by the pandemic.
Randy Taylor, Everi’s Chief Operating Officer, said, “Our record quarterly revenue was up 33% over the pre-COVID 2019 second quarter, primarily driven by the strength in our recurring revenue operations in both our Games and FinTech segments. Our Games segment momentum reflects the continued growth in our installed base of gaming operations units, particularly increased placements of our higher-earning premium units that drove the increase in daily win per unit. In addition, slot machine sales increased by 49% sequentially from the 2021 first quarter, reflecting what we believe is another quarter of higher ship share of replacement units. Second quarter unit sales also benefited from a larger share of shipments to new casino openings and expansions than we have historically achieved together with a greater number of new casino openings and expansions than typically experienced in a quarter.
“Our FinTech segment continues to benefit from our comprehensive, integrated financial access services and RegTech software solutions, as well as our newer loyalty products such as our updated and upgraded self-service loyalty kiosks. Our strong FinTech industry position enables Everi to benefit from the widespread increase in casino player activity, which drove mid-teens percentage growth in the number of financial access transactions we processed as compared to 2019 second quarter volumes; a rate that was significantly above our historical rate of growth.
“The operating performance of our two segments, together with a continued focus on operating expenses, led to net income of $36.2 million, or $0.36 per diluted share, record quarterly Adjusted EBITDA of $92.5 million, up more than 40% over the comparable 2019 period, and Free Cash Flow generation of $39.2 million.
“Additionally, we continue to see a high level of interest by casino operators in our cashless digital wallet solution and our iGaming slot content. These are two important growth initiatives in which we’ve invested over a number of years given our expectation that they can both be additive to our core business momentum in the near- and long-term.”
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Games Segment Full Quarter Comparative Results (unaudited)
Three Months Ended June 30, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (in millions, except unit amounts and prices) | |||||||||||||||||
| Games revenues | |||||||||||||||||
| Gaming operations | $ | 73.2 | $ | 13.9 | $ | 45.6 | |||||||||||
| Gaming equipment and systems | 26.1 | 7.0 | 23.4 | ||||||||||||||
| Gaming other | — | — | 0.4 | ||||||||||||||
| Gaming total revenues | $ | 99.3 | $ | 20.9 | $ | 69.4 | |||||||||||
Operating income (loss) (1) | $ | 30.6 | $ | (41.8) | $ | 2.6 | |||||||||||
Adjusted EBITDA (2) | $ | 60.4 | $ | 3.0 | $ | 34.7 | |||||||||||
| Gaming operations information: | |||||||||||||||||
| Units installed at period end: | |||||||||||||||||
| Class II | 9,422 | 8,971 | 9,205 | ||||||||||||||
| Class III | 6,829 | 5,967 | 4,489 | ||||||||||||||
Total installed base at period end (4) | 16,251 | 14,938 | 13,694 | ||||||||||||||
| Premium units | 6,961 | 5,796 | 3,413 | ||||||||||||||
Average units installed during period (4) | 16,088 | 14,854 | 13,624 | ||||||||||||||
Daily win per unit ("DWPU") (3) | $ | 45.66 | $ | 9.84 | $ | 32.26 | |||||||||||
| Unit sales information: | |||||||||||||||||
| Units sold | 1,402 | 381 | 1,270 | ||||||||||||||
| Average sales price ("ASP") | $ | 17,894 | $ | 18,044 | $ | 17,338 | |||||||||||
(1) Operating loss for the three months ended June 30, 2020, included $11.3 million of pre-tax charges, including $9.2 million of business reorganization costs, $1.6 million of employee severance costs and $0.5 million of other one-time charges. Operating income for the three months ended June 30, 2019 included approximately $0.3 million for certain nonrecurring professional fees and related costs and a non-cash charge of $0.8 million for the write-off of inventory related to certain legacy cabinets.
(2) For a reconciliation of net income (loss) to Adjusted EBITDA, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP measures provided at the end of this release.
(3) Daily win per unit reflects the total of all units installed at casinos, inclusive of closed casinos 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.
(4) The ending and average installed base for all three periods includes all units, whether or not casinos were open and whether or not the games were active.
2021 Second Quarter Games Segment Highlights
Games segment revenues increased to a quarterly record $99.3 million compared to $20.9 million in the 2020 second quarter and was up 43% over the $69.4 million in the 2019 second quarter. This reflects strong gaming operations performance as well as higher shipments of gaming machines.
Operating income increased to $30.6 million, compared to an operating loss of $41.8 million a year ago and operating income of $2.6 million in the second quarter of 2019. The increase in the 2021 second quarter operating income over the prior-year periods reflects the benefit of higher revenues, a greater proportion of higher-margin gaming operations revenue in the overall mix, the Company’s cost
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containment efforts, and lower amortization. Adjusted EBITDA increased to a quarterly record $60.4 million, from $3.0 million and $34.7 million in the second quarter of 2020 and 2019, respectively.
Gaming operations revenue grew to a quarterly record $73.2 million, compared to $13.9 million and $45.6 million in the second quarter of 2020 and 2019, respectively.
•Reflecting the player popularity of the latest games and the growth in higher-earning premium unit placements, Daily Win per Unit (“DWPU”) rose to a quarterly record $45.66 in the second quarter of 2021, compared to $9.84 and $32.26 in the second quarter of 2020 and 2019, respectively.
•The installed base as of June 30, 2021 increased by 9%, or 1,313 units, year over year and by 302 units on a quarterly sequential basis to a record 16,251 units.
•The premium portion of the installed base increased by 20%, or 1,165 units, year over year and by 264 units on a quarterly sequential basis to 6,961 units. Growth was driven primarily by incremental placements of the strong-performing The Vault™ game theme and premium mechanical reel games, as well as the continued solid performance of other themes including Smokin' Hot Stuff Wicked Wheel® and Shark Week®. Premium units represented 43% of the total installed base at quarter-end compared to 39% a year ago and 25% as of June 30, 2019. Wide-area progressive (“WAP”) units, a subcategory of premium units, grew by 114 units year over year to 1,082 units as of June 30, 2021, partly reflecting the launch of the new Monsterverse™ game on the Empire DCX® cabinet and the installation of the first WAP into commercial casinos in Nevada and New Jersey.
•Digital revenue more than doubled to $3.6 million in the second quarter of 2021 compared to $1.5 million a year ago and increased 50% on a quarterly sequential basis, partially reflecting a full quarter of revenue from Michigan. Digital revenue growth also reflects increased B2B revenue from the expanded base of iGaming operator sites featuring the Company’s games – including in West Virginia, British Columbia and Manitoba that went live during the quarter – along with a growing library of available slot content.
•Revenues from the New York Lottery system business were $6.3 million in the second quarter of 2021, compared to $4.9 million in the second quarter 2019. There was no revenue in the second quarter of 2020 due to the impact of the COVID-19 pandemic.
Gaming equipment and systems revenues generated from the sale of gaming units and other related parts and equipment totaled $26.1 million in the second quarter of 2021, compared to $7.0 million and $23.4 million in the second quarter of 2020 and 2019, respectively.
•The Company sold 1,402 units, including several hundred units for new casino openings and expansions, at an average selling price (“ASP”) of $17,894 in the second quarter of 2021. This is an increase compared with 381 units at an ASP of $18,044 in the second quarter of 2020 and 1,270 units at an ASP of $17,338 in the second quarter of 2019.
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Financial Technology Solutions Segment Full Quarter Comparative Results (unaudited)*
Three Months Ended June 30, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (in millions, unless otherwise noted) | |||||||||||||||||
| FinTech revenues | |||||||||||||||||
| Financial access services | $ | 44.8 | $ | 10.0 | $ | 39.7 | |||||||||||
| Software and other | 15.6 | 4.4 | 12.8 | ||||||||||||||
| Hardware | 12.8 | 3.4 | 7.8 | ||||||||||||||
| FinTech total revenues | $ | 73.2 | $ | 17.8 | $ | 60.3 | |||||||||||
Operating income (loss) (1) | $ | 23.8 | $ | (10.9) | $ | 22.3 | |||||||||||
Adjusted EBITDA (2) | $ | 32.1 | $ | 0.3 | $ | 29.4 | |||||||||||
| Value of financial access transactions: | |||||||||||||||||
| Funds advanced | $ | 2,210.9 | $ | 531.3 | $ | 1,878.2 | |||||||||||
| Funds dispensed | 6,960.1 | 1,403.4 | 5,328.7 | ||||||||||||||
| Check warranty | 378.8 | 67.0 | 353.0 | ||||||||||||||
| Total value processed | $ | 9,549.8 | $ | 2,001.7 | $ | 7,559.9 | |||||||||||
| Number of financial access transactions: | |||||||||||||||||
| Funds advanced | 3.3 | 0.9 | 2.9 | ||||||||||||||
| Funds dispensed | 28.4 | 6.3 | 24.8 | ||||||||||||||
| Check warranty | 0.9 | 0.2 | 0.9 | ||||||||||||||
| Total transactions completed | 32.6 | 7.4 | 28.6 | ||||||||||||||
* Rounding may cause variances.
(1)Operating loss for the three-month period ended June 30, 2020, included $3.5 million of pre-tax charges, including $1.8 million of business reorganization costs, $1.1 million of employee severance costs and $0.6 million of non-recurring professional fees. Operating income for the three months ended June 30, 2019 included the impact of approximately $0.5 million for certain non-recurring professional fees and related costs and certain expenses associated with the acquisition of certain player loyalty assets.
(2)For a reconciliation of net income (loss) to Adjusted EBITDA, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided at the end of this release.
2021 Second Quarter Financial Technology Solutions Segment Highlights
FinTech revenues for the 2021 second quarter increased to a record $73.2 million, compared to $17.8 million in the 2020 second quarter and were up 21% over the $60.3 million in the 2019 second quarter. The growth over both years reflects an increase in revenues from financial access services, lower-margin hardware sales and software and other.
Operating income in the 2021 second quarter rose to $23.8 million, compared to an operating loss of $10.9 million a year ago and operating income of $22.3 million in the 2019 second quarter. The increase primarily reflects the benefit of higher revenues partially offset by an increase in research and development expense as a result of an acceleration of new product development efforts, including development of new and enhanced loyalty products and the Company’s CashClub Wallet® digital technology offering. Adjusted EBITDA was $32.1 million, compared to $0.3 million and $29.4 million in the second quarter of 2020 and 2019, respectively.
•Financial access services revenues, which include both cashless and cash dispensing debit and credit card transactions and check services, increased 16% on a quarterly sequential basis to
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$44.8 million, reflecting continued improvements in casino activity, and grew 13% from the second quarter of 2019.
◦Throughout the 2021 second quarter, growth in transactional activity on a same-store basis was up at a consistent mid-teens rate compared to the second quarter of 2019.
•Software and other revenues, which include loyalty and regulatory compliance (RegTech) software, product subscriptions, kiosk maintenance services, and other revenue, were $15.6 million, of which approximately 80% were of a recurring nature. This compares to total revenue of $4.4 million in the second quarter of 2020, of which 79% were of a recurring nature, and $12.8 million in the second quarter of 2019, of which 66% were of a recurring nature.
•Hardware sales revenues were $12.8 million, inclusive of significant shipments of self-service kiosks and other loyalty and financial access equipment for new casino openings and major expansions, in the second quarter of 2021, compared to $3.4 million and $7.8 million in the second quarter of 2020 and 2019, respectively.
Balance Sheet and Liquidity
•Subsequent to the 2021 second quarter-end, the Company entered into a series of refinancing transactions that reduced interest cost, extended debt maturities and resulted in $1.0 billion of total indebtedness. The new total debt comprises $600.0 million of senior secured term loan priced at LIBOR plus 2.50% with a LIBOR Floor of 50 basis points due 2028, $400.0 million of 5.000% senior unsecured notes due 2029, and a $125.0 million revolving credit facility due 2026 which is undrawn. At current market interest rates, the refinancing resulted in annual cash interest savings of approximately $23 million compared to June 30, 2021.
•As of June 30, 2021, the Company had $340.4 million of cash and cash equivalents. Pro forma for the debt repayment, early redemption fees and transaction costs of the refinancing transactions completed in the third quarter, the Company had cash and cash equivalents of $155.1 million.
•In the 2021 second quarter, the Company paid $9.9 million in total earned contingent consideration for its 2019 acquisition of certain assets of Atrient and paid the remaining $5.0 million purchase price installment related to the 2019 acquisition of certain assets of Micro Gaming Technology.
Outlook
With industry conditions stabilizing, and assuming that conditions continue to trend without additional setbacks due to pandemic or other macro-economic effects, Everi is providing annual guidance of selected expected financial results, a practice consistent with its custom prior to the onset of the COVID-19 pandemic in 2020. For the full year 2021, the Company expects revenue of $615 million to $635 million, net income of $87 million to $95 million, Adjusted EBITDA of $332 million to $342 million, and Free Cash Flow of $168 million to $177 million. Factors considered in Everi’s 2021 outlook include:
•Capital expenditures (inclusive of placement fees) will be $105 million to $113 million;
•The Company expects to incur a loss on extinguishment of debt of approximately $32 million to $35 million in the 2021 third quarter, in conjunction with the early redemption of its 7.50% senior unsecured notes due 2025, the repayment of the incremental term loan and the refinancing of its senior secured credit facility due 2024, including the revolving credit facility due 2022. Approximately $11 million to $14 million is expected to be non-cash related to the write-off of existing debt issuance costs and unamortized discount on the existing borrowings; and
•Shipments for new casino openings and expansions in the 2021 second half are expected to be lower, reflecting fewer new opening and expansions compared to the first half of 2021.
•Assumes no significant change or reversal of the Company's deferred tax asset valuation allowances during the year.
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•The Company’s 2021 full year outlook does not contemplate any additional meaningful potential impact from any macroeconomic or pandemic-related setback; but does reflect the likelihood of receding government stimulus benefits and an increase in pressure on consumer discretionary spending.
A summary and reconciliation of the financial targets is included as 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 2021 second quarter results at 11:00 a.m. ET (8:00 a.m. PT) 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 3:00 p.m. ET today and may be accessed by dialing +1 (412) 317-6671; the PIN number is 13721158. A replay will be available until August 11, 2021. The call 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-down 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, 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
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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,” "indication," “future,” “assume," "estimate,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “project,” “may,” “should,” “can,” “designed to,” ” “favorably positioned,” “will provide,” or “will” and similar expressions to identify forward-looking statements. These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of timing, future events, or performance. Actual results may differ materially from those contemplated in these statements, due to risks and uncertainties. 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 2021 financial and operational metrics; regain revenue momentum; sustain our overall growth; generate Free Cash Flow; improve the Company’s capital structure; drive growth of the gaming operations installed base and DWPU; continue expanding the portions of the gaming floor the Company’s games address; 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 neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are often difficult to predict and many of which are beyond our control. Our actual results and financial condition may differ materially from those indicated in forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, without limitation, the impact of the ongoing COVID-19 global pandemic on our business, operations and financial condition, our history of net losses and our ability to generate profits in the future; our debt leverage and the related covenants that restrict our operations; our ability to generate sufficient cash to service all of our indebtedness and fund working capital and capital expenditures; 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 maintain our current customers; our ability to compete in the gaming industry; our ability to execute on mergers, acquisitions and/or strategic alliances, including the timing and closing of acquisitions and our ability to integrate and operate such acquisitions consistent with our forecasts; our ability to access the capital markets to raise funds; expectations regarding our existing and future installed base and win per day; expectations regarding development and placement fee arrangements; inaccuracies in underlying operating assumptions; expectations regarding customers’ and gaming patrons’ preferences and demands for future services and product offerings; the overall growth of the gaming industry, if any; our ability to replace revenue associated with terminated customer contracts; margin degradation from contract renewals; technological obsolescence; our ability to comply with the Europay, MasterCard and Visa global standard for cards equipped with security chip technology; our ability to introduce new and enhanced products and services, including third-party licensed content; our ability to prevent, mitigate or timely recover from cybersecurity breaches,
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attacks and compromises; the level of our capital expenditures and product development; anticipated sales performance; employee turnover; national and international economic conditions; changes in global market, business and regulatory conditions arising as a result of the COVID-19 global pandemic; changes in gaming regulatory, card association and statutory requirements; regulatory and licensing difficulties that we may face; competitive pressures in the gaming and financial technology sectors; the impact of changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; unanticipated expenses or capital needs and those other risks and uncertainties discussed in our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 15, 2021. 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. 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 speak only as of the date hereof.
This press release should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020, 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. JCIR
William Pfund Richard Land, James Leahy
SVP, Investor Relations 212-835-8500 or evri@jcir.com
702-676-9513 or william.pfund@everi.com
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10
EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(In thousands, except earnings (loss) per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Games revenues | |||||||||||||||||||||||
| Gaming operations | $ | 73,220 | $ | 13,859 | 131,361 | 59,545 | |||||||||||||||||
| Gaming equipment and systems | 26,090 | 6,983 | 44,078 | 18,566 | |||||||||||||||||||
| Gaming other | 27 | 11 | 49 | 32 | |||||||||||||||||||
| Games total revenues | 99,337 | 20,853 | 175,488 | 78,143 | |||||||||||||||||||
| FinTech revenues | |||||||||||||||||||||||
| Financial access services | 44,840 | 10,034 | 83,552 | 47,007 | |||||||||||||||||||
| Software and other | 15,604 | 4,424 | 32,850 | 17,118 | |||||||||||||||||||
| Hardware | 12,801 | 3,404 | 19,805 | 9,756 | |||||||||||||||||||
| FinTech total revenues | 73,245 | 17,862 | 136,207 | 73,881 | |||||||||||||||||||
| Total revenues | 172,582 | 38,715 | 311,695 | 152,024 | |||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
Games cost of revenues(1) | |||||||||||||||||||||||
| Gaming operations | 5,342 | 1,681 | 10,101 | 6,226 | |||||||||||||||||||
| Gaming equipment and systems | 15,248 | 4,071 | 25,555 | 10,895 | |||||||||||||||||||
| Gaming other | — | 456 | — | 456 | |||||||||||||||||||
| Games total cost of revenues | 20,590 | 6,208 | 35,656 | 17,577 | |||||||||||||||||||
FinTech cost of revenues(1) | |||||||||||||||||||||||
| Financial access services | 1,560 | 511 | 3,033 | 4,066 | |||||||||||||||||||
| Software and other | 1,129 | 324 | 2,133 | 1,198 | |||||||||||||||||||
| Hardware | 7,670 | 2,014 | 11,698 | 5,904 | |||||||||||||||||||
| FinTech total cost of revenues | 10,359 | 2,849 | 16,864 | 11,168 | |||||||||||||||||||
| Operating expenses | 48,178 | 41,603 | 86,221 | 80,501 | |||||||||||||||||||
| Research and development | 8,766 | 5,193 | 17,179 | 13,924 | |||||||||||||||||||
| Depreciation | 15,931 | 16,294 | 32,108 | 32,537 | |||||||||||||||||||
| Amortization | 14,369 | 19,295 | 29,084 | 38,619 | |||||||||||||||||||
| Total costs and expenses | 118,193 | 91,442 | 217,112 | 194,326 | |||||||||||||||||||
| Operating income (loss) | 54,389 | (52,727) | 94,583 | (42,302) | |||||||||||||||||||
| Other expenses | |||||||||||||||||||||||
| Interest expense, net of interest income | 17,760 | 19,822 | 36,231 | 37,321 | |||||||||||||||||||
| Loss on extinguishment of debt | — | 80 | — | 7,457 | |||||||||||||||||||
| Total other expenses | 17,760 | 19,902 | 36,231 | 44,778 | |||||||||||||||||||
| Income (loss) before income tax | 36,629 | (72,629) | 58,352 | (87,080) | |||||||||||||||||||
| Income tax provision (benefit) | 415 | (4,148) | 1,604 | (5,145) | |||||||||||||||||||
| Net income (loss) | 36,214 | (68,481) | 56,748 | (81,935) | |||||||||||||||||||
| Foreign currency translation | 328 | 304 | 107 | (1,654) | |||||||||||||||||||
| Comprehensive income (loss) | $ | 36,542 | $ | (68,177) | $ | 56,855 | $ | (83,589) | |||||||||||||||
(1) Exclusive of depreciation and amortization.
11
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Earnings (loss) per share | |||||||||||||||||||||||
| Basic | $ | 0.41 | $ | (0.80) | $ | 0.65 | $ | (0.97) | |||||||||||||||
| Diluted | $ | 0.36 | $ | (0.80) | $ | 0.57 | $ | (0.97) | |||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Basic | 88,722 | 85,122 | 87,858 | 84,873 | |||||||||||||||||||
| Diluted | 100,030 | 85,122 | 99,004 | 84,873 | |||||||||||||||||||
12
EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
At June 30, | At December 31, | ||||||||||
| 2021 | 2020 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
Cash and cash equivalents | $ | 340,361 | $ | 251,706 | |||||||
Settlement receivables | 50,111 | 60,652 | |||||||||
Trade and other receivables, net of allowances for credit losses of $4,790 and $3,689 at June 30, 2021 and December 31, 2020, respectively | 95,705 | 74,191 | |||||||||
Inventory | 31,373 | 27,742 | |||||||||
Prepaid expenses and other current assets | 24,904 | 17,348 | |||||||||
| Total current assets | 542,454 | 431,639 | |||||||||
| Non-current assets | |||||||||||
| Property and equipment, net | 113,256 | 112,323 | |||||||||
| Goodwill | 681,992 | 681,974 | |||||||||
| Other intangible assets, net | 195,084 | 214,627 | |||||||||
| Other receivables | 13,482 | 14,620 | |||||||||
| Other assets | 19,247 | 21,996 | |||||||||
| Total non-current assets | 1,023,061 | 1,045,540 | |||||||||
| Total assets | $ | 1,565,515 | $ | 1,477,179 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
| Current liabilities | |||||||||||
| Settlement liabilities | $ | 193,893 | $ | 173,211 | |||||||
| Accounts payable and accrued expenses | 146,786 | 145,029 | |||||||||
| Current portion of long-term debt | 1,250 | 1,250 | |||||||||
| Total current liabilities | 341,929 | 319,490 | |||||||||
| Non-current liabilities | |||||||||||
| Long-term debt, less current portion | 1,129,627 | 1,128,003 | |||||||||
| Deferred tax liability, net | 20,852 | 19,956 | |||||||||
| Other accrued expenses and liabilities | 15,607 | 17,628 | |||||||||
| Total non-current liabilities | 1,166,086 | 1,165,587 | |||||||||
| Total liabilities | 1,508,015 | 1,485,077 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity (deficit) | |||||||||||
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and no shares outstanding at June 30, 2021 and December 31, 2020, respectively | — | — | |||||||||
Common stock, $0.001 par value, 500,000 shares authorized and 115,559 and 89,908 shares issued and outstanding at June 30, 2021, respectively, and 111,872 and 86,683 shares issued and outstanding at December 31, 2020, respectively | 116 | 112 | |||||||||
| Additional paid-in capital | 483,762 | 466,614 | |||||||||
| Accumulated deficit | (237,872) | (294,620) | |||||||||
| Accumulated other comprehensive loss | (1,084) | (1,191) | |||||||||
Treasury stock, at cost, 25,652 and 25,190 shares at June 30, 2021 and December 31, 2020, respectively | (187,422) | (178,813) | |||||||||
| Total stockholders’ equity (deficit) | 57,500 | (7,898) | |||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 1,565,515 | $ | 1,477,179 | |||||||
13
EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net income (loss) | $ | 56,748 | $ | (81,935) | |||||||
| Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | |||||||||||
| Depreciation | 32,108 | 32,537 | |||||||||
| Amortization | 29,084 | 38,619 | |||||||||
| Non-cash lease expense | 2,399 | 2,195 | |||||||||
| Amortization of financing costs and discounts | 2,344 | 1,941 | |||||||||
| Loss on sale or disposal of assets | 1,486 | 101 | |||||||||
| Accretion of contract rights | 4,637 | 3,170 | |||||||||
| Provision for credit losses | 3,806 | 4,981 | |||||||||
| Deferred income taxes | 896 | (5,392) | |||||||||
| Reserve for inventory obsolescence | 1,211 | 1,021 | |||||||||
| Write-down of assets | — | 11,033 | |||||||||
| Loss on extinguishment of debt | — | 7,457 | |||||||||
| Stock-based compensation | 8,452 | 7,123 | |||||||||
| Other non-cash items | — | 456 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Settlement receivables | 10,546 | 35,998 | |||||||||
| Trade and other receivables | (26,297) | 12,202 | |||||||||
| Inventory | (4,764) | (9,880) | |||||||||
| Prepaid expenses and other assets | (7,146) | 1,437 | |||||||||
| Settlement liabilities | 20,682 | (75,566) | |||||||||
| Accounts payable and accrued expenses | 27,326 | (25,908) | |||||||||
| Net cash provided by (used in) operating activities | 163,518 | (38,410) | |||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures | (49,234) | (30,134) | |||||||||
| Acquisitions, net of cash acquired | (15,000) | (15,000) | |||||||||
| Proceeds from sale of property and equipment | 19 | 86 | |||||||||
| Placement fee agreements | — | (875) | |||||||||
| Net cash used in investing activities | (64,215) | (45,923) | |||||||||
| Cash flows from financing activities | |||||||||||
| Proceeds from incremental term loan | — | 125,000 | |||||||||
| Repayment of incremental term loan | (625) | — | |||||||||
| Proceeds from revolving credit facility | — | 35,000 | |||||||||
| Repayments of existing term loan | — | (13,500) | |||||||||
| Repayments of unsecured notes | — | (89,619) | |||||||||
| Fees associated with debt transactions | — | (11,128) | |||||||||
| Proceeds from exercise of stock options | 8,703 | 2,113 | |||||||||
| Treasury stock | (8,612) | (589) | |||||||||
| Payment of contingent consideration, acquisition | (9,875) | — | |||||||||
| Net cash (used in) provided by financing activities | (10,409) | 47,277 | |||||||||
| Effect of exchange rates on cash and cash equivalents | 67 | (1,732) | |||||||||
| Cash, cash equivalents and restricted cash | |||||||||||
| Net increase (decrease) for the period | 88,961 | (38,788) | |||||||||
| Balance, beginning of the period | 252,349 | 296,610 | |||||||||
| Balance, end of the period | $ | 341,310 | $ | 257,822 | |||||||
14
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, | A June 30, | ||||||||||||||||||||
| 2021 | 2020 | 2020 | 2019 | ||||||||||||||||||||
| Cash available | |||||||||||||||||||||||
Cash and cash equivalents (1) | $ | 340,361 | $ | 251,706 | $ | 257,430 | $ | 123,845 | |||||||||||||||
| Settlement receivables | 50,111 | 60,652 | 33,833 | 244,183 | |||||||||||||||||||
| Settlement liabilities | (193,893) | (173,211) | (158,075) | (331,291) | |||||||||||||||||||
| Net Cash Position | 196,579 | 139,147 | 133,188 | 36,737 | |||||||||||||||||||
| Undrawn revolving credit facility | 35,000 | 35,000 | — | 35,000 | |||||||||||||||||||
| Net Cash Available | $ | 231,579 | $ | 174,147 | $ | 133,188 | $ | 71,737 | |||||||||||||||
(1) Cash and cash equivalents does not include $0.9 million, $0.6 million, $0.4 million, and $1.9 million of restricted cash at June 30, 2021, December 31, 2020, June 30, 2020, and June 30, 2019, respectively.
15
EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED LONG-TERM DEBT AND ESTIMATED ANNUAL INTEREST COSTS
Interest Rate(1) | Maturity Date | Pro Forma At Close of Refinancing(2) | At June 30, 2021 | At March 31, 2021 | At December 31, 2020 | |||||||||||||||||||||||||||||||||
| New Long-term debt, principal face amount | ||||||||||||||||||||||||||||||||||||||
| Senior Secured Term Loan - $600 million | LIBOR+2.50% With 0.50% LIBOR Floor | 2028 | $ | 600,000 | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||
| Senior Secured Revolving Credit Facility - $125 million | LIBOR+2.50% With 0.50% LIBOR Floor | 2026 | — | — | — | — | ||||||||||||||||||||||||||||||||
| Unsecured Notes - $400 million | 5.000% | 2029 | 400,000 | — | — | — | ||||||||||||||||||||||||||||||||
| Existing Long-term debt, principal face amount | ||||||||||||||||||||||||||||||||||||||
| Senior Secured Term Loan - $820 million | LIBOR+2.75% With 0.75% LIBOR Floor(3) | 2024 | — | 735,500 | 735,500 | 735,500 | ||||||||||||||||||||||||||||||||
| Senior Secured Incremental Term Loan - $125 million | LIBOR+10.50% With 1.00% LIBOR Floor | 2024 | — | 123,750 | 124,063 | 124,375 | ||||||||||||||||||||||||||||||||
| Senior Secured Revolving Credit Facility - $35 million | LIBOR+4.50% With 1.00% LIBOR Floor | 2022 | — | — | — | — | ||||||||||||||||||||||||||||||||
| Unsecured Notes - $375 million | 7.500% | 2025 | — | 285,381 | 285,381 | 285,381 | ||||||||||||||||||||||||||||||||
| Total Debt | $ | 1,000,000 | $ | 1,144,631 | $ | 1,144,944 | $ | 1,145,256 | ||||||||||||||||||||||||||||||
Approximate annual interest expense (4)(5) | $ | 38,625 | $ | 61,552 | $ | 61,588 | $ | 63,463 | ||||||||||||||||||||||||||||||
| Effective annualized rate on total debt | 3.86 | % | 5.38 | % | 5.38 | % | 5.54 | % | ||||||||||||||||||||||||||||||
(1) The effective 1-month USD LIBOR was approximately 10 bps at June 30, 2021. For comparability purposes between periods, it is assumed this rate will be compared against the LIBOR floor for all periods presented.
(2) Pro Forma for the close of the new Unsecured Notes on July 15, 2021 and the closing of the new Senior Secured Credit Facility on August 3, 2021.
(3) In February 2021, the Company repriced its $735.5 million First Lien Term Loan under its Credit Agreement. Under the amended Credit Agreement, the Base Rate floor of the interest rate applicable to the First Lien Term Loan was reduced by 25 basis points to 0.75% from 1.00%. Annualized interest at December 31, 2020 assumes a 1% Base Rate Floor.
(4) Represents approximate annual interest costs on debt instruments only (excludes non-cash interest costs, cash usage fees, interest on vault cash and other interest costs) using rates in effect at that time.
(5) Includes commitment fees on Revolving Credit Facilities of 0.50%. Both the new and existing Revolving Credit Facilities have commitment fees that range from 0.50% - 0.375% based on the Company's Consolidated Secured Leverage Ratio.
16
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 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 | |||||||||||||||
17
EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES
(In thousands)
Three Months Ended June 30, 2020 | |||||||||||||||||
| Games | FinTech | Total | |||||||||||||||
| Net loss | $ | (68,481) | |||||||||||||||
| Income tax benefit | (4,148) | ||||||||||||||||
| Loss on extinguishment of debt | 80 | ||||||||||||||||
| Interest expense, net of interest income | 19,822 | ||||||||||||||||
| Operating loss | $ | (41,848) | $ | (10,879) | $ | (52,727) | |||||||||||
| Plus: depreciation and amortization | 30,159 | 5,430 | 35,589 | ||||||||||||||
| EBITDA | $ | (11,689) | $ | (5,449) | $ | (17,138) | |||||||||||
| Non-cash stock compensation expense | 2,402 | 2,238 | 4,640 | ||||||||||||||
| Accretion of contract rights | 1,000 | — | 1,000 | ||||||||||||||
| Write-down of inventory, property and equipment and intangible assets | 9,232 | 1,801 | 11,033 | ||||||||||||||
| Employee severance costs and other expenses | 1,578 | 1,122 | 2,700 | ||||||||||||||
| Non-recurring professional fees | 30 | 582 | 612 | ||||||||||||||
| Other one-time charges | 456 | — | 456 | ||||||||||||||
| Adjusted EBITDA | $ | 3,009 | $ | 294 | $ | 3,303 | |||||||||||
| Cash paid for interest | (22,101) | ||||||||||||||||
| Cash paid for capital expenditures | (7,627) | ||||||||||||||||
| Cash paid for placement fees | (290) | ||||||||||||||||
| Cash paid for income taxes, net | (26) | ||||||||||||||||
| Free Cash Flow | $ | (26,741) | |||||||||||||||
18
EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES
(In thousands)
Three Months Ended June 30, 2019 | |||||||||||||||||
| Games | FinTech | Total | |||||||||||||||
| Net income | $ | 5,486 | |||||||||||||||
| Income tax benefit | (1,040) | ||||||||||||||||
| Interest expense, net of interest income | 20,433 | ||||||||||||||||
| Operating income | $ | 2,552 | $ | 22,327 | $ | 24,879 | |||||||||||
| Plus: depreciation and amortization | 28,093 | 4,855 | 32,948 | ||||||||||||||
| EBITDA | $ | 30,645 | $ | 27,182 | $ | 57,827 | |||||||||||
| Non-cash stock compensation expense | 736 | 1,650 | 2,386 | ||||||||||||||
| Accretion of contract rights | 2,197 | — | 2,197 | ||||||||||||||
| Write-down of inventory, property and equipment and intangible assets | 843 | — | 843 | ||||||||||||||
| Non-recurring professional fees | 298 | 519 | 817 | ||||||||||||||
| Adjusted EBITDA | $ | 34,719 | $ | 29,351 | $ | 64,070 | |||||||||||
| Cash paid for interest | (27,079) | ||||||||||||||||
| Cash paid for capital expenditures | (23,489) | ||||||||||||||||
| Cash paid for placement fees | (6,319) | ||||||||||||||||
| Cash paid for income taxes, net | (201) | ||||||||||||||||
| Free Cash Flow | $ | 6,982 | |||||||||||||||
19
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 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 | |||||||||||||||
20
EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES
(In thousands)
| Six Months Ended June 30, 2020 | |||||||||||||||||
| Games | FinTech | Total | |||||||||||||||
| Net loss | $ | (81,935) | |||||||||||||||
| Income tax benefit | (5,145) | ||||||||||||||||
| Loss on extinguishment of debt | 7,457 | ||||||||||||||||
| Interest expense, net of interest income | 37,321 | ||||||||||||||||
| Operating (loss) income | $ | (47,241) | $ | 4,940 | $ | (42,302) | |||||||||||
| Plus: depreciation and amortization | 60,472 | 10,684 | 71,156 | ||||||||||||||
| EBITDA | $ | 13,231 | $ | 15,624 | $ | 28,854 | |||||||||||
| Non-cash stock compensation expense | 3,688 | 3,435 | 7,123 | ||||||||||||||
| Accretion of contract rights | 3,170 | — | 3,170 | ||||||||||||||
| Write-down of inventory, property and equipment and intangible assets | 9,232 | 1,801 | 11,033 | ||||||||||||||
| Employee severance costs and other expenses | 1,578 | 1,122 | 2,700 | ||||||||||||||
| Foreign exchange loss | 83 | 1,199 | 1,282 | ||||||||||||||
| Non-recurring professional fees | 30 | 932 | 962 | ||||||||||||||
| Other one-time charges | 456 | — | 456 | ||||||||||||||
| Adjusted EBITDA | $ | 31,468 | $ | 24,113 | $ | 55,580 | |||||||||||
| Cash paid for interest | (32,956) | ||||||||||||||||
| Cash paid for capital expenditures | (30,134) | ||||||||||||||||
| Cash paid for placement fees | (875) | ||||||||||||||||
| Cash refunded for income taxes, net | 52 | ||||||||||||||||
| Free Cash Flow | $ | (8,333) | |||||||||||||||
21
EVERI HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES
(In thousands)
| Six Months Ended June 30, 2019 | |||||||||||||||||
| Games | FinTech | Total | |||||||||||||||
| Net income | $ | 11,346 | |||||||||||||||
| Income tax benefit | (1,428) | ||||||||||||||||
| Interest expense, net of interest income | 40,833 | ||||||||||||||||
| Operating income | $ | 5,656 | $ | 45,095 | $ | 50,751 | |||||||||||
| Plus: depreciation and amortization | 55,249 | 8,785 | 64,034 | ||||||||||||||
| EBITDA | $ | 60,905 | $ | 53,880 | $ | 114,785 | |||||||||||
| Non-cash stock compensation expense | 1,293 | 2,867 | 4,160 | ||||||||||||||
| Accretion of contract rights | 4,318 | — | 4,318 | ||||||||||||||
| Write-down of inventory, property and equipment and intangible assets | 843 | — | 843 | ||||||||||||||
| Non-recurring professional fees | 484 | 790 | 1,274 | ||||||||||||||
| Adjusted EBITDA | $ | 67,843 | $ | 57,537 | $ | 125,380 | |||||||||||
| Cash paid for interest | (39,549) | ||||||||||||||||
| Cash paid for capital expenditures | (45,683) | ||||||||||||||||
| Cash paid for placement fees | (11,648) | ||||||||||||||||
| Cash paid for income taxes, net | (293) | ||||||||||||||||
| Free Cash Flow | $ | 28,207 | |||||||||||||||
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EVERI HOLDINGS INC. AND SUBSIDIARIES
RECONCILIATION OF PROJECTED NET INCOME TO PROJECTED EBITDA AND PROJECTED ADJUSTED EBITDA FOR THE YEAR ENDING DECEMBER 31, 2021
(In thousands)
2021 Guidance Range (1) | |||||||||||
| Low | High | ||||||||||
| Revenues | $ | 615,000 | $ | 635,000 | |||||||
| Projected net income | 87,000 | 95,000 | |||||||||
| Projected income tax provision | 3,000 | 4,000 | |||||||||
| Projected loss on extinguishment of debt | 35,000 | 32,000 | |||||||||
| Projected interest expense, net of interest income | 65,000 | 62,000 | |||||||||
| Projected operating income | $ | 190,000 | $ | 193,000 | |||||||
| Plus: projected depreciation and amortization | 120,000 | 123,000 | |||||||||
| Projected EBITDA | $ | 310,000 | $ | 316,000 | |||||||
| Projected non-cash stock compensation expense | 15,000 | 17,000 | |||||||||
| Projected accretion of contract rights | 8,000 | 10,000 | |||||||||
| Projected asset acquisition expense and non-recurring professional fees | 100 | 100 | |||||||||
| Projected litigation settlement, net | (1,100) | (1,100) | |||||||||
| Projected Adjusted EBITDA | $ | 332,000 | $ | 342,000 | |||||||
| Cash paid for interest | (55,000) | (51,000) | |||||||||
| Cash paid for capital expenditures | (105,000) | (110,000) | |||||||||
| Cash paid for placement fees | — | (3,000) | |||||||||
| Cash paid for income taxes, net of refunds | (4,000) | (1,000) | |||||||||
| Projected Free Cash Flow | $ | 168,000 | $ | 177,000 | |||||||
(1) All figures presented are projected estimates for the year ending December 31, 2021.
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