Supplier News
US – Cashless and higher slot sales drive record quarter for Everi
By Phil - 5 August 2021
Everi Holdings reported record financial results for the second quarter ended June 30, 2021 ‘reflecting continued strength in casino patron demand, while still reflecting an ongoing, but reduced, impact of the COVID-19 pandemic.’
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 per cent to a quarterly record $172.6m, compared to $129.7m in the 2019 second quarter.
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 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 recurring 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 $23m 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.”
Randy Taylor, Everi’s Chief Operating Officer, said: “Our record quarterly revenue was up 33 per cent 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 per cent 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 $36.2m, or $0.36 per diluted share, record quarterly Adjusted EBITDA of $92.5m, up more than 40 per cent over the comparable 2019 period, and Free Cash Flow generation of $39.2m.
“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.”
Games segment revenues increased to a quarterly record $99.3m compared to $20.9m in the 2020 second quarter and was up 43 per cent over the $69.4m in the 2019 second quarter. This reflects strong gaming operations performance as well as higher shipments of gaming machines.
Operating income increased to $30.6m, compared to an operating loss of $41.8m a year ago and operating income of $2.6m 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 containment efforts, and lower amortization. Adjusted EBITDA increased to a quarterly record $60.4m, from $3m and $34.7m in the second quarter of 2020 and 2019, respectively.
Gaming operations revenue grew to a quarterly record $73.2m, compared to $13.9m and $45.6m 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 nine per cent, 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 per cent, 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 per cent of the total installed base at quarter-end compared to 39 per cent a year ago and 25 per cent 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 Monstervers; 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 $3.6m in the second quarter of 2021 compared to $1.5m a year ago and increased 50 per cent 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 $6.3m in the second quarter of 2021, compared to $4.9m 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 $26.1m in the second quarter of 2021, compared to $7m and $23.4m 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.
FinTech revenues for the 2021 second quarter increased to a record $73.2m, compared to $17.8m in the 2020 second quarter and were up 21 per cent over the $60.3m 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.
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.
