PlayAGS(US:AGS)2024-08-07 20:54Revenue Performance - For the six months ended June 30, 2024, approximately 65% of total revenue was generated through recurring contracted lease agreements [150]. - EGM segment represented 91% of total revenue for the six months ended June 30, 2024, with over 550 proprietary game titles available [154]. - Total revenues for the three months ended June 30, 2024, increased by 7.7% to $96.739 million compared to $89.832 million in the prior year [163]. - Total revenues for the six months ended June 30, 2024, increased by 11.4% to $192,712,000 compared to $173,007,000 in the prior year [177]. - Gaming operations revenue rose by 4.9% to $125,499,000, driven by a $3.7 million increase in the domestic Interactive segment and a $1.6 million increase in the EGM segment [178]. - Equipment sales revenue surged by 25.9% to $67,213,000, attributed to the sale of 2,821 EGM units, an increase of 441 units year over year [179]. - The EGM segment's total revenues for the three months ended June 30, 2024, increased by 5.7% to $87,383,000 compared to $82,681,000 in the prior year [199]. - Gaming operations revenue increased by 1.5% to $108,377,000 for the six months ended June 30, 2024, compared to $106,763,000 in the prior year [205]. - Total EGM revenues increased by 9.7% to $174,634,000 for the six months ended June 30, 2024, compared to $159,239,000 in the prior year [205]. - Total Interactive revenue for the six months ended June 30, 2024, was $8,963,000, reflecting a 69.8% increase from $5,278,000 in the prior year [226]. Operating Expenses - Operating expenses increased by 11.0% to $82.964 million for the three months ended June 30, 2024 [163]. - Operating expenses increased by 8.9% to $159,137,000, with significant contributions from selling, general and administrative expenses rising by 10.7% to $40,885,000 [177]. - Research and development expenses increased by 3.9% to $22,602,000, driven by higher salaries and professional fees [183]. - Research and development expenses rose by 32.6% to $2,760,000 for the six months ended June 30, 2024, compared to $2,082,000 in the same period last year [238]. - Research and development costs for Table Products increased by 17.4% to $1,167,000 for the six months ended June 30, 2024, compared to $994,000 in the prior year [216]. Profitability - Net income for the six months ended June 30, 2024, was $4,785,000, a substantial increase of 825.5% compared to $517,000 in the prior year [177]. - The effective income tax rate for the three months ended June 30, 2024, was 19.6%, down from 36.3% in the prior year [175]. - The effective income tax rate for the six months ended June 30, 2024, was an expense of 13.8%, contrasting with a benefit of 375.0% in the prior year [188]. - EGM Adjusted EBITDA increased by 8.3% to $76,759,000 for the six months ended June 30, 2024, compared to $70,889,000 in the prior year [205]. - Table Products Adjusted EBITDA rose by 8.8% to $4,913,000 for the six months ended June 30, 2024, compared to $4,514,000 in the prior year [216]. - Interactive Adjusted EBITDA surged by 424.1% to $2,479,000 for the three months ended June 30, 2024, compared to $473,000 in the same period last year [221]. Cash Flow and Liquidity - As of June 30, 2024, the company had $44.2 million in cash and cash equivalents and $40.0 million available under its revolving credit facility [242]. - The company expects to finance its liquidity requirements through cash on hand, additional financing, and cash flows from operating activities [240]. - As of June 30, 2024, net cash provided by operating activities increased to $57.973 million, up from $29.872 million in the same period of 2023, representing a change of $28.101 million [244]. - The net decrease in cash, cash equivalents, and restricted cash was $6.745 million for the six months ended June 30, 2024, compared to a decrease of $2.874 million in the same period of 2023 [244]. - The increase in cash used in investing activities was primarily due to a $7.7 million increase in purchases of property and equipment and a $1.3 million increase in software development expenditures [246]. - Cash used in financing activities increased by $20.0 million, primarily due to a voluntary payment of $15.0 million in debt principal and $4.4 million in stock repurchases related to employee equity awards [247]. Market Presence and Expansion - The table products segment had placed 5,483 products as of June 30, 2024, indicating a strong market presence [157]. - The interactive segment focuses on a B2B game aggregation platform, catering to the growing online RMG sector [159]. - The company plans to consider expansion opportunities into underserved markets and may incur additional debt or issue equity for strategic growth [241]. - The total installed base of EGM units reached 23,142 as of June 30, 2024, an increase of 600 units or 2.7% from 22,542 units in the prior year [205]. - The installed base of Table Products increased by 226 units or 4.3% to 5,483 units as of June 30, 2024 [216]. Financial Controls and Reporting - There were no required financial covenants for the company's debt instruments as of June 30, 2024 [243]. - The company does not maintain any off-balance sheet transactions or arrangements that could materially affect its financial condition [249]. - There were no material changes to the company's critical accounting policies during the six months ended June 30, 2024 [250]. - The company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2024 [253]. - There were no changes in internal control over financial reporting that materially affected the company's financial reporting as of the end of the fiscal quarter [254].