AGS reports Q2 2021 results
Company cuts net loss to $3.9m from $7.8m in Q1.
Gaming equipment supplier AGS unveiled its operating results for its second quarter, a three-month period ending June 30.
As has been the case with most companies in the gaming sector reporting results in 2021, AGS noted the pandemic-related closures of casino properties in spring 2020 makes year-over-year comparability of financial metrics difficult, and therefore included results from Q2 2019 to provide more meaningful insight into the trajectory of its various business segments.
The company said its consolidated revenue for this year’s second quarter totaled $66.8m, compared to $16.8m and $74.5m in Q2 2020 and Q2 2019, respectively.
Growth in Table Products and Interactive revenue, as compared to the levels achieved in the 2019 second quarter, was more than offset by a 13.8% decline in EGM segment revenue versus Q2 2019 levels.
Although North American slot replacement demand has meaningfully improved over the past several months, AGS said operators’ aggregated capital spend on new equipment purchases remains below pre-COVID-19 levels.
Gaming operations, or recurring revenue, reached a record $55.0m in Q2 2021, versus $10.2m and $53.6m in Q2 2020 and Q2 2019, respectively.
According to AGS, the growth achieved within its domestic EGM, Table Products, and Interactive recurring revenue businesses, versus the levels reached in Q2 2019, was partially offset by a decline in its international EGM recurring revenue business as its Mexico business continues to navigate Covid-19-related operating restrictions.
In aggregate, recurring revenue accounted for 82.3% of the company’s consolidated revenue, compared to 60.7% in the prior year’s quarter and 71.9% in the 2019 second quarter.
The company said its 2021 second quarter net loss of $3.9m improved as compared to net losses of $42.6m and $7.6m realized in Q2 2020 and Q2 2019, respectively.
AGS said the year-over-year decline in its reported net loss reflects its improved operating performance and lower depreciation and amortization (D&A) expense, partially offset by slightly higher interest expense related to its incremental $95m term loan, which it closed upon in May 2020.
In addition, AGS noted its net loss in the prior year period was negatively impacted by $3.1m in one-time expenses related to the debt financing transaction. The improvement in its reported net loss, as compared to the level reported in Q2 2019, was driven by fewer one-time charges and lower D&A expense, partially offset by slightly higher interest expense.
Total adjusted EBITDA was $32.1m, compared to a $1.2m loss in Q2 2020 and positive $35.7m in Q2 2019.
Interactive and Table Products Adjusted EBITDA increased sharply relative to the levels achieved in Q2 2019, which the company said was supported by successful execution of its ongoing revenue growth initiatives in each of the segments.
EGM adjusted EBITDA decreased 17.1% versus Q2 2019 levels, as the upside from its record Q2 2021 EGM gaming operations performance was more than offset by the impact of the ongoing recovery in the North American slot replacement market from post-COVID-19 lows on its EGM unit sales.
Total adjusted EBITDA margin improved to 48.0% in the second quarter of 2021 compared to negative 6.9% in Q2 2020.
According to officials, AGS’s adjusted EBITDA margin was in line with the level reported in Q2 2019. The company attributed what it termed “strong” Q2 2021 margin performance to a favorable mix of higher-margin recurring revenues and the rate of its revenue recovery from post-COVID-19 lows exceeding the rate of normalization in its operating costs.
“We were able to leverage our over 15,000 unit domestic EGM installed base, our growing premium game footprint, and the revenue strength witnessed throughout the domestic gaming market to establish new company records in both domestic EGM revenue per day (RPD) and domestic EGM gaming operations revenue in the second quarter,” AGS president and CEO David Lopez said in a statement. “Looking ahead, our improved execution and accelerating product momentum across all three of our business segments position us to deliver additional growth and share taking in the coming quarters.”
Kimo Akiona, AGS’chief financial officer, added, “The continuous improvement being achieved as a result of our enhanced game content development execution, upgraded product management capabilities and refined capital deployment processes sets us on a path to deliver more consistent financial performance, improving our capital returns and leverage profile, and, most importantly, strengthening shareholder value over time.”
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