With interactive the only one of three reporting segments, alongside EGM and table products, to track declines through Q2, AGS noted progress to further leverage game content and partnerships to “significantly grow our share of the North American RMG market”.

David Lopez, AGS President and Chief Executive Officer, believes that Q2 2022 merely “provided a glimpse” of where AGS’ RMG business is heading. 

“As with the land-based business, we continue to be encouraged by the strong performance and AGS game content in the online channel,” he said.

“Moving forward, as we execute upon initiatives to accelerate the flow of AGS content, broaden our B2C operator partner relationships and expand our reach into untapped North American jurisdictions, we believe we will see a material acceleration of growth within our interactive business in the quarters ahead.”

Speaking in a Q2 earnings call, Lopez first cast glances back one year to the sentiment being expressed through 2021 and the emerging trends being witnessed across the US gaming industry.

“we continue to search for strategic opportunities capable of transforming the long-term growth trajectory”

“The stars all aligned for our casino operator partners in Q2 of 2021, resulting in record setting gaming revenue for nearly every operator in the major US markets.

“At the time, though we were able to leverage the strength in the broader market to establish some new records of our own, I was fairly confident Q2 2021 did not reflect peak performance for AGS. 

“Our 2022 second quarter results validated those views from one year ago as we were able to build upon several records established last year.”

This includes Q2 2022 domestic EGM revenue hitting a new high of $46.2m as well as its installed base of premium products doubling. 

Furthermore, the group’s table products division is also reported as continuing to “fire on all cylinders,” with revenues and adjusted EBITDA securing fresh records in the quarter.

However, Lopez stressed a belief that AGS can “significantly build upon our recent success moving forward,” with encouragement stressed by both the financial performance and direction of the company.

“Our recent success clearly demonstrates the power of having our R&D team work in concert with the front end of the business to allow our products to reach a broader subset of key customers,” he commented.

“In addition to our execution led growth catalysts, we continue to search for strategic opportunities capable of transforming the long-term growth trajectory of our business. 

“Recent examples of these types of opportunities include our successful expansion into the historical horse racing or HHR market and continued exploration of avenues to accentuate growth outside of our core North American markets.

“We have witnessed no meaningful change in July trends as compared to our strong June”

“Additionally, we continue to look for opportunities to further leverage key competitive advantages, including our extensive game content portfolio, unique development capabilities and deeply rooted customer relationships to strategically broaden our class II business.”

This latter point includes efforts that have “extended well beyond the borders of our largest class II markets,” with AGS ready to “benefit from a favourable June Supreme Court ruling to execute growth opportunities presented to us within the Texas market”. 

Acknowledging the region as one the firm has been “steadfastly supporting for a very long time,” AGS is buoyed by the decision.

“While it’s still too early to put hard numbers around what the Supreme Court ruling will mean for us in terms of incremental revenue or EBITDA in the long run, we believe our historical support of tribal operators within the state could present us with meaningful growth opportunities as our customers elect to expand the scale and scope of their existing class II operations,” it is added.

To close, Lopez stressed excitement at the “incredible consistency demonstrated” through Q3 thus far, despite the ongoing economic uncertainty around the world.

“We have witnessed no meaningful change in July trends as compared to our strong June results,” he ended.

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Publishing its preliminary and unaudited financial results for the fourth quarter and full year, AGS reported potential total revenue earnings in the region of $68.4m and $70.8m through Q4. This upper boundary would represent an increase on 2020’s results of $46.66m.

Of that total figure, electronic game machines generated $63m-$65m; table products provided $3m-$3.2m and interactive totalled $2.4m-$2.6m.

Sitting alongside the company’s Q4 results was its expected total revenue for the whole of 2021, ending December 31, which is expected to be around $258.6m-$261m, an increase from the previous year which totalled $167m

Of this predicted 12 month total, an expected $237m to $239m was generated from electronic gaming machines, with table products offering $11.7m-$11.9m while $9.9m-$10.1m was generated by its interactive vertical. 

David Lopez, AGS president and chief executive officer, said: “Our preliminary fourth quarter 2021 financial results further reflect the operating momentum we are witnessing across all three segments of our business. 

“I continue to believe we have the best lineup of new products in our company’s history and am excited about the opportunities that lie ahead.”

The company’s adjusted EBITDA for the Q4 2021 period is anticipated to fall in the region of $30.67m-$32.82m compared to 2020’s $21.29m. Within its full year figures, its expected range is between $121.65m and $123.8m, up from 2020’s $71.66m.

The release of a selected preliminary financial results for the fourth quarter and full year ended December 31, 2021, is in conjunction with the company’s intention to explore a refinancing of its outstanding revolving credit facility and term loan credit facilities. 

A refinancing transaction could include an increase to the size of PlayAGS’ revolving credit facility, extending its debt maturities and reducing its borrowing costs. Additionally, the company could also consider using a material amount of cash on its balance sheet that could exceed $50m in connection with such refinancing.

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A slight upwards nudge across both total and recurring revenue is offset by a decrease in adjusted EBITDA and a slight enlargement of the firm’s net loss.

Total revenue for the period grew 2.3 per cent to $74.5m (2018: $72.8m), driven by increases in two of the firms three key market segments.

Electronic gaming machines and table products rose 2.4 per cent and 30 per cent to $70.9m (2018: $69.3m) and $2.4m (2018: $1.7m) respectively, with interactive falling 35.1 per cent from $1.7m to $1.1m.

Net loss of $7.6m was up year-over-year from $5.3m and includes an impairment of goodwill of $3.5m, as well as an impairment of intangible assets of $1.3m related to AGS’ real money gaming business.

Total adjusted EBITDA decreased 2 per cent to $35.7m, driven by increased EGM-related headcount costs in SG&A and R&D, a rise in EGM service costs of $0.5m associated with a larger installed base and a $0.2m increased loss in interactive adjusted EBITDA.

David Lopez, president and chief executive officer of AGS, commented: “Results in the second quarter were mixed, with 2 per cent year-over-year growth in both total and recurring revenue offset by a slight decrease in Adjusted EBITDA.

“The decrease was related to increased operating expenses as we continue to invest in strategic areas of our business, particularly in R&D, to capitalise on the vast white-space in front of us. 

“With our many upcoming product launches, including the orion upright and three new slot innovations which we’ll showcase at G2E, we remain confident in the many opportunities for sustainable growth in the back half of 2019 and beyond.”

Based on year to date progress thus far the organisation has also reigned in annual adjusted EBITDA guidance from a previously expected 17-20 per cent growth reaching $160m-$164m, to between a 6-10 per cent increase to $145m-$150m, related to:

• Decreased gaming operations revenue in our EGM segment, largely due to product under performance in Oklahoma. 
• Decreased gaming operations revenue in our interactive segment caused by delayed entry into New Jersey, as well as select markets in Europe and Latin America. 
• Decreased sales revenue from our EGM segment due to anticipated softness from certain corporate customers.  

AGS also stresses that it continues to expect 2019 capital expenditures to be in the range of $65m–$69m, compared to $66.2m in 2018, reflecting an increase in EGM installed base in existing markets.

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Seeing a group revenue rise of 12.6 per cent reach $73m (2018: $64.8m), it was the 13.7 per cent boost within EGM’s that contributed the lion’s share of $69.6m, as contrasted to the previous year’s $61.2m.

AGS stressed that the primary factor responsible for this boost is “sold units in early-entry markets such as Michigan, Saskatchewan, Pennsylvania and Massachusetts, as well as continued penetration into ramping markets such as Florida and California in addition to the contribution of leased EGMs acquired from Integrity Gaming”.

Table products saw a 29.1 per cent rise to $2.1m ($1.6m), however AGS’ interactive segment fell 36.2 per cent to finished on $1.2m (2018: $1.9m) for the period.

Total adjusted EBITDA increased five per cent to $36.3m, driven by the increase in revenue, offset by increased adjusted operating expenses, primarily due to headcount related costs in SG&A and R&D, as well as an additional $1m of operating costs from igaming.

David Lopez, AGS’ chief executive officer, explained on the Q1 performance: “I’m pleased to report another solid quarter of growth for AGS, with total revenue of $73m up 13 per cent year-over-year, driven by double-digit gains in EGMs and tables.

“Sold EGM units grew 22 per cent year-over-year and our tables products segment reported its strongest quarter to date, driven by our award-winning progressive platforms. Our EGM recurring revenue installed base grew 14 per cent year-over-year to 27,308 units, driven by the inclusion of 2,500 EGMs from the Integrity acquisition, which we closed in February of this year.

“With numerous levers to build momentum — including strategic investments in R&D to continue building a strong, diversified, and expanded product portfolio, as well as many new and underpenetrated domestic and international markets — AGS is well-positioned for continued long-term, meaningful growth.”

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Agreeing terms ahead of the signing of a new long-term contract renewal effective from this month, the Chickasaw Nation has secured an AGS installed base of approximately 3,200 recurring revenue games, across the tribal gaming operator’s 22 casinos in the Sooner State.

“We are pleased to renew our long-standing relationship with AGS and look forward to furthering our partnership,” commented Bill Lance, Chickasaw Nation secretary of commerce.  

Under the terms of the deal AGS is to install a significantly larger base of class II games than it previously had, across the Chickasaw Nation’s extensive gaming enterprise.

Prior to this agreement alongside the 13th largest federally recognised tribe, the Las Vegas headquartered developer, manufacturer and supplier of casino games, systems and technology drafted Mark DeDeaux as senior director of slot products.

David Lopez, AGS president and chief executive officer, added: “We are appreciative of our 14 year relationship with the Chickasaw Nation, this opportunity to renew our business with them, and their confidence in AGS.”

Earlier this month AGS released its financial report for the past year, in which it praised its 2019 acquisition of Integrity Gaming Corporation, in addition to new market entries, as the company reports rising revenues, largely thanks to continued growth in its electronic gaming machine segment.

Completing the $49m Integrity purchase last month, with included repaying $35m of the company’s outstanding debt, AGS has also lauded imminent entry into the Philippines.

Completing the necessary regulatory requirements, initial units of AGS’ Alora video bingo cabinet are now live, as it was stressed that “the Philippines video bingo market comprises approximately 70,000 machines currently, and we are confident that our content and innovative cabinet will be a competitive market addition.”

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Completing the $49m Integrity purchase last month, with included repaying $35m of the company’s outstanding debt, AGS has also lauded imminent entry into the Philippines.

Completing the necessary regulatory requirements, initial units of AGS’ Alora video bingo cabinet are now live, as it was stressed that “the Philippines video bingo market comprises approximately 70,000 machines currently, and we are confident that our content and innovative cabinet will be a competitive market addition.”

David Lopez, CEO of AGS, explained: “We kicked off 2019 with the close of our acquisition of Integrity Gaming Corp, which bolsters our recurring revenue footprint and provides long-term optimisation opportunities.  

“With new product and content launches, further penetration of both new and early-entry markets, and international expansion, AGS is positioned for another high-growth year in 2019.”

A 25 per cent revenue boost to $72m from $57.6m, driven by EGM boosts primarily in early-entry markets such as Ontario, Mississippi and Nevada as well as continued penetration into growing markets such as California and Florida, pushed full year figures along to $285.2m, rising 34.6 per cent from $211.9m.

EGM’s Q4 growth of 26.7 per cent to $68.6m (2017: $54.1m), pushing FY revenue to $271m, up 35.6 per cent from ($199.9m), whilst AGS’ table products also grew 31.7 per cent and 88.2 per cent to $2.1m (2017: $1.6m) and $7.6m (2017: $4m) respectively.

However, the organisations interactive division fell 30.2 per cent for the quarter to $1.2m (2017: $1.8m), whilst for the 12 month period a 16.8 per cent decrease came in at $6.6m (2017: $7.9m).

Gaming operations revenue saw a Q4 increase to $48.9m, up eight per cent from $45.2m, driven by EGM’s purchased from Rocket Gaming, which pushed its FY revenue along 18.5 per cent to $201.8m (2017: $170.2m).

Adjusted EBITDA for the quarter rose 19 per cent to $31.5m (2017: $26.4m), and increased 27.4 per cent for the year to $136.2m from $106.8m.

Lopez added: “We ended our first year as a public company with a solid fourth quarter and 35% growth in annual revenue.

“Our continued top line growth, increased operating cash, and free cash flow generation reflects the industry-leading performance of our products and AGS’ unique position, given how underrepresented we are in the market.  

“These two factors contributed to our phenomenal growth in electronic gaming machines, ending the year with more than 4,300 sold units, a 71% increase from fiscal 2017.

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Set to be based in the company’s Gibraltar office, Bullen is to focus on supporting AGS’ existing licensed operations in the real-money gaming space within that region, in addition to expanding AGS Interactive’s growth into various regulated markets across Europe.

Matt Reback, executive vice president of AGS, said of the appointment: “We are thrilled to have Glen join our AGS Interactive team, and look forward to leveraging his broad-based knowledge of the online gaming industry, and his proven track record of establishing and maintaining strategic partnerships and delivering best-in-class solutions.”

Amongst his lengthy history within the online gaming industry, Bullen has held a plethora of senior B2B commercial roles, including chief commercial officer at Code Factory Group, sales manager of EveryMatrix and vice president of B2B at Lottoland, in addition to further roles at CyberArts, Chartwell Technology, and WagerWorks.

Bullen added: “I’m very excited to be a part of the AGS Interactive team. I’ve known the principals behind the AGS core platform for a number of years, and I’ve always admired them both personally and for the success they so quickly achieved.

“I’ve never met a more knowledgeable, experienced, and passionate group of people than those at AGS, with such a clear focus on making a major impact in the online gaming space in a very short time.”

AGS, who recently secured record third quarter revenues before appointing ex-AGA CEO Geoff Freeman to its board of directors, recently spoke to CasinoBeats to discuss launches, link-ups and licence agreements across the United States and beyond.

To read more on a variety of topics from David Lopez, president and chief executive officer of AGS, click HERE.

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Coming in the aftermath of securing record third quarter financial results, Freeman is also president and CEO of the Grocery Manufacturers Association, “the leading representative of the $2.1trn food, beverage and consumer products industry”.

David Lopez, AGS president and chief executive officer, commented: “We are excited to welcome Geoff as a new independent director to the AGS board. Not only does he have a proven track record of effecting significant positive change in our industry, he is a recognised and respected business leader who brings deep strategic, operational and market development experiences that span across multiple industries.

“Geoff is an extraordinary executive and a great cultural fit, who brings a new perspective to our board and will be invaluable to the continued growth and success of AGS.”

During his five year AGA tenure, Freeman led the company a number of successes, including expanding its membership by 200 per cent, leading the firm through the overturning of PASPA, significantly improving relationships between tribal and commercial gaming operators and heading up the ‘Get to Know Gaming’ campaign aimed at focusing on the economic benefits gaming brings.

Freeman added: “I’m honoured to join the AGS board of directors at such an exciting time in the company’s growth journey.

“Having worked closely with David Lopez and the entire AGS leadership team on numerous initiatives, including their annual GameON customer summit, I’m excited to help this passionate, experienced, innovative and intelligent team take the company to the next level.

“I have tremendous respect for the AGS Board, and I look forward to working with them to help AGS continue its momentum.”

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Record quarterly revenue of $75.5m saw a 34 per cent year-on-year Q3 increase from $56.4m, driven by continued growth of electronic gaming machines in the class III marketplace, including entry into Alberta, as well as a large sale to a long-standing tribal customer.

This also resulted in net income of $4.3m, recovering from a loss of $4.1m, whilst total adjusted EBITDA grow 14 per cent to $33.6m (2017: $29.4m), partially offset by increased adjusted operating expenses of $6.1m, primarily due to increased headcount in SG&A and R&D.

David Lopez, AGS’ President and chief executive officer, said of his organisation’s performance: “In the third quarter, AGS sold 1,332 EGMs, a 58% jump year-over-year, and a company record. Revenue hit an all-time high of $75.5 million, demonstrating continued demand for our Orion Portrait cabinet and growing momentum for our new Orion Slant, in addition to significant progress in Canada, with 24% of our sold EGMs placed in several Canadian provinces.

“Our tables segment posted its best quarter to date, with our innovative progressives contributing to a 30% increase in installs year-over-year.  

“AGS is still very underrepresented in many markets both domestically and internationally, which presents significant long-term growth opportunities for the company, due to our industry-leading game performance, an expanding suite of cabinet options, best-in-class R&D and diversified product offerings.”

Based on its current year-to-date progress, and current momentum being enjoyed, AGS expects total adjusted EBITDA in 2018 to be between $134.0 and $136.0 million.

This is an upward revision to guidance previously released by the company, and is based on progress executing against many growth initiatives in the first half of the year, as well as improved visibility for the remainder of the year.

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GVC and PokerStars are two such entity’s to utilise the firms provisions, whilst a partnership with its home town NHL franchise the Vegas Golden Knights has been hailed as “monumental” with entry into Pennsylvania opening up more opportunities further still.

David Lopez, president and CEO of AGS, has been speaking to CasinoBeats addressing all these issues, as well as casting glances further afield at markets which could yield more promise.

“AGS is unique in that we still have so many opportunities to expand our business”

CasinoBeats: A number of new developments have been detailed in recent times, including entry into Pennsylvania, how key was that for the expansion strategies of AGS?

David Lopez: Receiving our Pennsylvania license for not only slot machines, but table games, was a huge milestone for AGS. Pennsylvania has 12 casinos, and this gives us the ability to market our high-performing games and table products to those gaming operators.

AGS is unique in that we still have so many opportunities to expand our business and our customer base into established gaming jurisdictions where we are not yet licensed, or we have just been recently licensed, two examples of which are Pennsylvania and Ohio.

Our overall market share in North America is less than half of our recent ship share numbers, which indicate that AGS is still considerably under-penetrated. The whitespace opportunity for AGS across North America is significant.

CB: What benefits are to be brought from gaining those two licenses within the state, and subsequently being able to supply its 12 casinos?

DL: Pennsylvania’s casinos are primarily repeat-player markets, which is definitely AGS’ forte. Our games tend to offer higher volatility, meaning they deliver the chance for bigger and more frequent payouts, and an experience that keeps players entertained and in their seats, anticipating a big win.

In a locals’ market like most of Pennsylvania, where you have players visiting their favourite casino three times a week, for example, players tend to seek these types of experiences.

“Our multi-year partnership with the Vegas Golden Knights has generated tremendous excitement”

Pennsylvania is also a big table game market; 2017 marked the seventh straight year that table game revenues in Pennsylvania increased. We have a large portfolio of proprietary table games that also deliver a more volatile experience, including blackjack, poker, baccarat, and craps variants.

Our table game progressives and side bets have also proven to perform on the East Coast, and we expect our products like STAX, Bonus Spin, and our new Bonus Spin Xtreme to do really well in Pennsylvania.

CB: Another recent key manoeuvre saw an alignment made with Vegas Golden Knights, how important was it to form a link-up with the home-town franchise?

DL: Our multi-year partnership with the Vegas Golden Knights has generated tremendous excitement with our employees, and many of our customers. The team had a magical inaugural season, and truly captured the heart and soul of the Las Vegas community.  We’re leveraging the partnership in several different ways.

We sponsor the Play of the Game, which gives us great exposure at every home game on the jumbotron as our vibrant AGS play button pops up, followed by the replay of the key moment from that game. We are placing Vegas Golden Knights-branded roulette signage in casinos around Las Vegas. Players love the way we’ve animated the Knights’ helmet to run around the roulette wheel as the wheel spins.

And at G2E, we showcased a promotional Vegas Golden Knights-themed Big Red spinning-reel game; we’re exploring opportunities to commercialise it through partnership with the National Hockey League.

From an employee standpoint, we are able to send nearly 90 percent of our Las Vegas employee base to a Golden Knights game, along with hosting other events at T-Mobile Arena and their City National Arena practice facility.

And to support our commitment to the Las Vegas community, we’ll work with the Golden Knights to bring the excitement of hockey to an underprivileged school that we’ve adopted.

“We feel a true kinship with the Golden Knights”

AGS is the first gaming equipment manufacturer to partner with the Vegas Golden Knights, and for us, it just made good business sense. We feel a true kinship with the Golden Knights; like the team, we are relatively new players in the gaming supplier space; we have been underestimated; both AGS and the Knights formed strong teams, came together quickly under a set of unique core values; and have never lost sight that winning is about a great culture, cohesive team, and strong character.

CB: How do you leverage your brand presence at sporting events etc via this partnership, into engaging interest in AGS? 

DL: Although our global corporate headquarters are in Las Vegas, we are still developing our brand presence in the Las Vegas community. So with our sponsorship of the Play of the Game and our increasing market share in Nevada, we are increasing our brand exposure in the Las Vegas Valley and forming stronger relationships with the commercial Las Vegas-based operators, many of whom are also Vegas Golden Knights sponsors and supporters, including MGM Resorts, Caesars Entertainment, Station Casinos, and The Cosmopolitan of Las Vegas, to name a few.

The exposure we get with these operators is notable as we expand our presence from being a primarily Class II supplier to a much larger, global supplier to commercial and tribal casinos. We also welcome the opportunities to bring our customers to the Vegas Golden Knights games; it’s a great way to engage and develop an even stronger relationship in a laid-back social setting.

“Canada offers great potential for AGS”

CB: Looking further ahead, what markets, both in the US and beyond, are you particularly targeting?

DL: As I mentioned earlier, we have significant white-space opportunities. Canada offers great potential for AGS. We are making good headway in Alberta, where we had a successful field trial and are now installing our games throughout the province.

The British Columbia Lottery Corporation (BCLC) recently pre-qualified us to place product into their jurisdiction, so it won’t be long until we have games throughout that region. Our ship share in the second quarter was 7 percent, and we led the industry in win-per-day for casino-owned games, so that combination of performance and increased penetration opens up even more opportunities in established, ramping, and early-entry markets.

Outside of North America, we’re excited about continued growth in Mexico, where we just launched our ICON and Orion platforms. And we have a video bingo cabinet, Alora, with a library of video bingo games, that we designed specifically for the Philippines, Mexico, and Brazil markets.

There’s been a lot of excitement and customer interest in that product since G2E and we feel confident it will deliver an exceptional player experience. It’s got an illuminated foot pedal with play action that is unique, giving players a hands-free experience.

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