EVRI - Earnings call transcript Q4 2017

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Operator

Good day, everyone, and welcome to the Everi Holdings Inc’s Fourth Quarter 2017 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mark LaBay, Senior Vice President, Strategic Development and Investor Relations. Please go ahead, sir.

Mark LaBay

Thank you, and welcome to the call.

Leader, President and Executive Taylor; and Chief President Games are Executive Mike Executive Chief today our and President and Ko. Vice Financial Business Legal me Officer, and Vice Officer, Chief Rumbolz; Vice new Harper Joining Executive Ehrlich; President Dean Officer, Randy

remind I'd and Safe our that Harbor covers disclaimer Before we everyone documents call begin, in this like to the our public webcast.

subject cause of assume and to no be our do should and made statements. and during call differ assumptions the results and that they to those not of statements are filings, all future but contained comments not be intend update forward-looking to including, to corporate posted of could materially an considered Some those performance. which section Relations in risks statements website. not of These Investor SEC contain We uncertainties, this indication to, actual are forward-looking forward-looking limited the any within described events obligation from in our our

cautioned standard. call to statements revenue ASC At XXXX. which today. follow reliance only undue throughout fiscal speak noted not otherwise standard revenue accounting place on forward-looking is the of fiscal statements start new accounting Everi our the which forward-looking has calls as XXX, of XXXX, and adopted any with Unless today's the current are will You consistent

comparability EBITDA in and the to our to uses margin. periods and this refer management trends manage understanding measures, EBITDA In as to provide adjusted and may investor to of business call years. adjusted reference non-GAAP enhance the addition, part, better business measures in these between certain We in different them, because underlying non-GAAP such

based, in includes adjusted us comply measured with consolidated our certain leverage make substantially EBITDA. And performance secured a similar part, performance as on EBITDA. requires our to also facility metrics ratio credit to We that compensation by adjusted operating decisions

our available our earnings Investors. please release measures have of the with are captioned both within For of which website to filed and these been on reconciliation GAAP X-K, corporate non-GAAP and a related see results, section full SEC the

Finally, webcast has the be Chief included and the to that, and of call I this to section our Rumbolz. Investor call a Mike replay link a with introduce website am archived. our corporate also will webcast, is the of Executive being been With Relations Officer, pleased President

Michael Rumbolz

operating good afternoon, for and Mark, reported afternoon, joining with and to XXXX we This XX% to performance. quarter you, you million increased XXXX EBITDA concluded that Thank and strong adjusted million. rose us. revenue thank and everyone, another $XXX.X quarter X% We financial of fourth $XX.X

$XXX.X $XXX.X above the important our adjusted EBITDA revenue milestone Everi. which For the improved EBITDA adjusted XXXX just to X.X% marked full-year rose high end to million for and range. XX% an of million guidance is

year-over-year both EBITDA XX% Operational in meaningful Our our to XXXX. our clearly returned than of in compared increases more XXXX profile has adjusted revenue to growth that Games company. achievements and included in sold in segment, unit improvement in a

price an average over selling $XX,XXX unit. We also per maintained

unit growth importantly, base invested units and modest has our This unit in that of game our focus removals it’s growth an to in net cabinet types condition This quality for The with age date market. growth a XX,XXX can casino our to overcome form is step hardware has With to in declining prior and our of base removals we previous number consistently of quarter addition footprint. we discussed third-party daily that win need today's quantity investment we the to Additionally included sufficiently game more One have significant footprint. creating the our of our factor expanding in replaced been installed performance. continue were we and was the believed capital the calls to for we trend in cabinet our on our consistent Games of on an to own achieve per base. have capital units, to we era that in the engaging our reported time began theme our of daily replacements, a business. a necessary on sell customers in and The to in an was invest quarters. not game since first base. the offerings is new product differentiating have to continue contributing critical have important and we offering, our eight exciting the our installed offering up stabilized able new studios we so Most fourth and XXXX, better our Even and during content. and grow been innovative and over factor to installed spend installed focused of installed win

looking designs top gaming boxes and newest attractive base and patrons. to modern Our are are both cabinet

introduced along Classic the HDX of base unit. and position with have now games with core are strong screen we existing foundation our the Empire single with cabinet. our follow to being today Mechanical with developed for Our developers on our variety We well, even Reel content in growth We them by our These new placements. hold customers future. us the for offerings XXXX technology on of supporting us XXXX, that up a cabinets a which play quality installed of solid provide capable win these with expand in options, cabinet. In together continued EXX high is original to we the created per provide daily in of our both our that believe form Player MPX and factors or that

top new separate solid jackpot three progressive customers. and of operation, link wide-area for actually first design are returns. our also to Class local Last our we jurisdictions first progressive’s payouts in the generate content III year, introduced game have area into investments beginning XX Our II Through progressive our on Class we wide-area link. had months

under for both to-date but our $X Our player, life and changing progressive largest their jackpot is value driving platform certainly success that for a proves which customers just million, and is is players. also wide-area our that payout was

We first our titles licensed based have also themes. on introducing begun

content game created product Premium entry opportunity accelerated into an within new segment Games for segment. and this our have Our growth our new

agreement for premium unit to up year-over-year With going increased year provide of in premium XX% to in newer XXXX over that from secure The XXXX. this with count which in of we unit year-end category the in evidence daily we a customers long-term to our that contributes the win the expect forward. and the of growth we fourth Our win our are for our available in was quarter agreement a XX% over generate XXXX. investments the report units reported placement major we to to expect business investment pipeline a and that July, higher to We are unit together daily long-term the all for with video positioned that in is this gaming with Games per to development that customer per our agreement allowed and number robust In form continued introduced state. being we our have our base. we XXXX, commitment new us highly October This that innovations our also exciting installed with game cabinet central factors in very ever additional profitable his units evidence games I continuing additional in is form content, hardware We've making finished successful more expect see in the year segment of more other new segment to result by resonate XXXX. last long-term extending investments operating with determinant as tangible premium factors become new seen across Games our our In in GXE believe terminals our York focus, business. content yield results. we system and had customers that XXXX, lottery most meaningful successes Lottery of growth our growth the New and successful for segment. and a a

sector has and quarters the of was revenue several Payments accomplishments as of those growth. four least and double-digit EBITDA Our notable adjusted consecutive well not in XXXX achieved

increased our casinos majority XXXX. new million XX% opened that XXXX. Compliance in revenue won full-year contracts we position performance for market the of we In leading Adjusted fact, since the highest as Payments extended the our and in our casino represented $XX.X further EBITDA of full-year almost for annual payments

is takeouts. a meet across our was across Payments their Solutions access our to continuing for had we of guests, United different help level with wins also high than even to of the innovate of have These net of to direct commitment the company of more portfolio guests the ability how than States a product provide burden across great customers optimize a funds our end the result and XXXX, gaming them our one competitive casinos Everi At before. ever from their the accomplishments We obligations. entertainment in a regulatory at least growing had Canada are to floor had and in it casino very order year-ago. we

If II only Class with product. Oklahoma source a supplier, come little opportunity back games and than tournament Washington in a that, now from provider We of our offering becoming long comprehensive Games full service real growth are even product has you a business further equipment a go being a a compelling niche and is way more of portfolio. unique

continue extremely product. proud all on are to improve are going TournEvent to we and this We of

the well have in singular While slot past are tournament it Today, the product. addresses product on convincingly is system floor. broad array modern slot of evolved the the most successful that categories needed we Everi that market,

new ever before Company's new history. have underway products and innovations We than our more in

than of access the that, installed and proud just sales our we Our provider industry. the to continue Payments ship of largest to unit expect operations and as for share simply today were our far casino of having in the fleet increase represent base. units systems more Payments business, we grow we to cash are And large services our continues when said

offerings. are products still While used we most depth of the the industry the cash the in services today, also product access our industry our lead casino in

add continue solution We to into integrate our set. new and products

new with casino impact along base make software environment products Xpress, a Our innovative innovations more our CashClub Module efficient to patrons. Jackpot it cash operating experience and products their our and Everi and communities. positively to like recyclers, costs the of like better Concierge, and compliance partner customers their information provide while allowing casino Giving patrons with lower their Other a guest our enable customers to Cares

asked gaming casino often are about only step technology next their Today both patrons We our that is many in CashClub adoption and cashless change next Payments of this the systems are believe systems offerings. that are wagering believe and such But as in as our and shifts, ticket-out we starts remain gaining Payments of ticket-in, innovation. very to accept slowly move the and and we continuing are once like it traction quickly. change. it evolution that forefront customers technology at major gaming. may the We I the e-Wallet, adopt the With will are leader demonstrate

given we are many not believe Games ourselves technology that the For especially financial a segments, distinct have roof. made many we I think enterprise. is gaming peers. report on see to opportunities we We to and under with you In and larger growth reporting, two value which Everi dissimilar process this companies company of led from don't the our that way, as are across is of executing. us two of one of Everi multiple types equipment gaming industry way, we Payments. this

to Defining a casinos helps solutions America. operational the a gaming gaming are our and technology to casino We entertainment industry. management systems products, provider be industry this force. execution We for manner drive vision provide our in and systems, transformational throughout ourselves North leading Payments of

drive unit we average sell these year-over-year base, will year, our As this to installed year. press business. we our execute our win release, daily our last afternoon’s in per EBITDA as units improvements our growth we price, on announced between drive expectation to year million To additional continue each growth Today, this maintain quarter and targets, noted of million. $XXX in vision, than reach adjusted achieving in we and in this generate expect incremental more selling $XXX this

well our our cabinet. as core and newest expect EXX as We cabinet, established newer EXXXX as contributions will HDX from such from also our products

portion We address of of larger performing expand also unit progressive opportunity for some In base the from on by our will growth we Premium our the and premium expenditures recognized the higher Of and of our progressive will number Games installed long-term continued we premium our base. of come capital more footprint that segment. footprint, aging portion rapid anticipate XXXX base. to in XXXX, installed will games our result all local our principally wide-area in core refresh using units focused area was much in growth the

the While in and have a cabinet has our yesterday new addressed new with theme we premium have introduced; EXXXX modernize together or will a be and past, the now the will fact, base. with told cabinet introduced HDX to EXX This new premium the Bunch. Brady it been be core today our core that our used offering. In EXX unit The

our team includes installed our these us while our units. lower well a operations capital on business our performing a better improving units. our on This efforts managing prudent dedication our the We profitability performance This of yield has to yield gaming operating Our focus to and as about to of make helps expenditures per improve intend capital to basis. manage the performance. base decisions machine spend evaluating installed as base expand the a to singular

we units in XXXX. And installed similar year growth take for expectation majority steps additional a in openings. another we of of base and toward have of our stated achieving anticipated XX,XXX with unchanged longer-term our Our double-digit casino the remain this and share segment in new Payments will wins ship of targets a

again compliance throughout installations our the net which Compliance Cash Jackpot takeouts. Everi a I competitive expect and new will continue in will as we is expand once from grow a that explain of Cage renewals software to and Recyclers, revenue cash Xpress, and in-site and add year achieve contract also Cash with continue our to We second Solutions. wins our kiosk product placements just IQ to core more

are year our related core same be habits improving a key ecosystem experience. system with aligned the operating efficiency experience player this data on spending casino for financial creates customers powerful patron of The spending. the or tool time their operating while This patrons assist for entire focus maximizing Payments costs. customers, solutions to gaming on provide future that patron our together in-sites preferences for enhanced focused deeper an Payments priorities from creating at in Our customers patrons This ability reducing to can patrons to and our is the with activity accumulate our across actionable loyalty. data operating

Everi we cash set our their as deliver patron. on opportunity tool assist the developed newly Information in-site our powerful growth Product customers provides new IQ within focus to Our with a in segment a analytical

on products activities monitoring. place customers AML to will our analytic tools Our also core as regulatory for provide be compliance offering. surrounding cash in benefits expanded operating other intelligence our Opportunities patron more focus

access improvements the also take e-Wallet expect a other operators floor mobile newly across like fashion. We of that transactions on during cost efficiencies of in this products believe create our our these our the to footprint This we $XX CashClub capital for expected structure we Combined and million lowered the savings overall completed will and almost annualized and interest Concierge introduced at and earnings current operators. a our CashClub basis. a our we with the will free this by our improve rates year, cash acceleration and set services XXXX. the flow Also an of annual retail placement core flow casino our cash operating quarterly conclude third year experience drive patron for series in higher refinancing improved XXXX, once the our structure fees debt of free stage quarter significant cash and in will our cash capital

believe, this we flow place Our and goal. we cash to debt our is priority reduce this for free the to growing right foundation achieve in put

Now let me close today with thoughts. these

is our give result employees the dedicated technology corporate growing effort all to of proud commitment. that our for tremendous Today provider. solutions hard team I two achieved gaming work of basis. their the and we years. of a have This who maximum continuing achieve daily We direct have is on them consistently over is a a progress enough extremely The last Everi employees thus am far direct thank their work I cannot goals. result achieved success with to a

somewhat progress While also is of our our believe our underappreciated. investments the and growth tangible I currently are notable, results

We will our the appreciated to our believe continue position in for and demonstrate and earnings, inflection our better are ongoing point industry be growing progress business at valued. our accomplishments within our and we and business as an we

We achieve that business are we I'd growth turn like value we have for our with creation shareholders our both that, Randy. will in continued expectation focused of call the those. to and and over on And every to

Randy Taylor

afternoon, Thank and everyone. good you, Mike,

my changes began reporting financial in quarterly me our I result accounting you the of standard. to the normal Before discussion expected results, new a on let as revenue made to filing make alert the related to X-K sure of the we implementation our today that

discussion practice the but quarter. fourth part have for on to the remarks, reporting my will results our the I more in refer We of the prepared expected will my of changes first regarding later discussion detailed a for operations historical

For revenues. in X% and $XX million revenue the when the in by TournEvent approximately of the fourth $XXX.X quarter quarter. $XXX.X million Payments year-over-year. Games revenues fourth Timing were increased of XX% to comprised increased at Champions Games year this of million revenue, segment quarter total $X.X million revenues compared of and fourth year-over-year XXXX, segment approximately Payments approximately prior year the revenue benefited

million year-ago to the EBITDA In $XX Champions to revenue $X.X million Excluding quarter up million $X.X this Adjusted million segment was prior for adjusted revenue, of event. or increase year-over-year of XXXX EBITDA year. Games $XX.X year. $XX.X revenue $XX.X for TournEvent compared with Payments to the operations X% X% and the last the adjusted segment the EBITDA Games segment a the for increased million to due million; primarily $XX.X Games compared to fourth gaming segment, of to our approximately million $XX.X compared was our was timing million, increased

XX,XXX fourth favorably win $XX.XX the base per of compared to year-ago. year-end year-over-year increased XXXX while quarter to daily $XX.XX at a unit installed Our units XX

quarter footprint, XX% benefiting this X,XXX units, increase first WAP win in unit eight the year-over-year year. units. to win as Mike daily which unit quarters unit an that in is noted, XXX This or premium the placements higher year-over-year our yielding included the a compared of to from terms improvement. Daily is we XXX generated prior in per per rose total zero In

our to base, a per XXXX. our are improvements non-premium XX we expect daily each win to These quarter rose impact yields sequential positively quarterly win basis, year-over-year. increases daily expecting continue unit We will the units. also grow see to which On year-over-year along XXX we base will installed game continue per in expand was in our non-Oklahoma with as unit units of up installed

Our Premium of installed increased XXX added units XXX or that were base the quarter. X% Games units, including in WAP

We per expect Premium Games to of be daily area an win unit terms installations of in going forward. ongoing growth and

Because the Premium a the to Arena half bank result segment in the certain products lines. compact units XXX part our in additions base the that growth second For portion first in Premium with and Renegade growth will product should by Casino of in new of to Empire significant Four offset between and approximately our the we a as placement in net These like are plus we installed early introduce in second X% our units XXX of expected of quarter come expect we another be plan unit new XXXX, open grow due some the Winds changes, solutions declines that at in of installed California of initially Units coming of Oklahoma quarter. to a out XXXX. In some base to from and year. still seeing in XXXX, of X% expect units opening the Indiana strong the we was this casino

an compared with fourth XXX portion XXX were base this return. be so in of this prioritizing installed ASP units for we last appropriate to line to a period. focused an the our are $XX,XXX that of a our base delivers efforts in ASP year at over the quarter sold sales growth Revenues do our the achieve sold of will game the $XX.X installed fourth XXXX full-year, the year from electronic best current manner overall We in management an million units on essentially expect quarter, also We significant of year, while prior year $XX,XXX. at in

full-year sales approximate the For or of X,XXX units XXXX, XX%. were an unit increase

in XX% expect see fourth of ASP. we XXXX, and XXXX, compared For XX% expect unit segment in XXXX. Adjusted the material to we in any will the don't sales quarter was Games for EBITDA margin to the of quarter change approximately fourth increase XX%

segment benefited marked competitive advance agreements fourth grew from to as growth fully consecutive quarter both adjusted takeouts. several consecutive EBITDA ATM further check from customers openings the services and XXXX. of related ATM million from Canada. cash increases several corporate For a kiosks. into in The and quarter result for and Payments double-digit revenue revenue Cash surcharge quarter the growth growth service advance ATM quarter transactions includes of and experienced and in in of expansion initiated seventh growth year-over-year the revenues, XX% revenue and casino casino equipment of to strong by integrated new ATM revenue, the quarter and and same-store our of X% revenue The large sales in our XX dollars a revenue new fourth increase both processed. services also from $XXX.X

sales of includes revenue as compliance single-digit result and the quarter, which segment, compared products, a grew XXXX. fourth to the the Other our quarter Payments For service, XXXX the primarily quarter XX.X%, our fourth from revenues adjusted and XX.X% mid we are XXXX, our integrated margin Payments EBITDA X% for segment of in kiosks. strong Adjusted fourth EBITDA from equipment sales growth was compared forecasting to XXXX. of for

expect our service in equipment kiosks revenue amounts products compliance from continue from will our sales and integrated and XXXX. to grow reported revenues exceed we and the XXXX, For

from want filing all on new parties we I out week, covering standard of expected assist of X-K our and also costs the revenue before of In with the adoption our periods. reporting The the as standard. press periods revenue in January of filed Form XXXX, of historical for our the to the contracts and we our effective X, require a filings to our On expectation standard. became in interested of investors current expect have Before future understanding a a moving the disclosure to Form from the result filings. other impact annual the certain standard X-K discussed file the afternoon's release our will highlight to this reporting Today XX-K implementation customers rather and we and to throughout sheet, be interim end gross of of revenue quarterly XXXX on balance cash expected annual than netted that of accounting reclassified cost not operating against revenue – revenue changes to EBITDA revenue adjusted are EBITDA rather or flow or impact current income These to reported measures. other loss, or presentation. and

in adjusted EBITDA, the an adjusted reported without positively revenues with However, margins will impacted. impact be on EBITDA reduction our

For revenue segment, and consistent recognition Games the our expect cost current we practices. be of of revenues our to with revenues

Jackpot recording However, associated differs wide-area This offering progressive the of we games net launched separately to will against cost direct which with respect the from of our with revenues. progressive revenues. practice costs these our it required in to games amounts XXXX, existing be to

XXXX, impact of to the be $X.X is nature. reclassification amount segment the more revenues revenues significant our is impacted year this change, total approximately For this and cost much of by million. Payments expected to only in The

lines. our recognition to our be current revenue expect We for product with practices consistent

our reporting current on the of gross in these do access revenues significant reporting of net cash relate and to basis. cost business. revenues our revenues core we for versus changes These changes of expect a specifically However,

of related results to revenue the access are will that company the have collected decrease guidance, report Under will The XXXX, of where associated practice ended costs reported approximately cash reported recording by I in the reported XXXX new any revenues. historic and net reiterate expected offset and Our in revenues expenses the the being services are other for the loss, they of in million of cost the million historically XX, these will cash respectively. of revenues. $XXX which of our service a revenues flows income costs direct and EBITDA on none or and as result third-party XXXX and of direct any reclassification adjusted have and previously want items recognized commissions, we interchange for these cost processing the net effect reported December revenues revenues to amounts to million, current loss, against for as nor the $XXX cost $XXX required fees years certain access on incurred timing operating periods. those changes impact cash

Finally, I would point any continue will and changes. changes. have identify may the out we deeper you from included and where significant I continue XX-Qs Form our evaluation we prior recommend this also impacts on that you completed our of we other XX-K update review as we implementation assessment not the guidance and understanding these to would Form information our in X-K, yet of

we our approximately completed of weighted The XXXX. at had was facility average in Moving December sheet obligations on to XX, was under outstanding no revolving debt as debt rate the billion year-end and transactions amounts XXXX, long-term outstanding repricing $X.XX our balance and reflecting and the interest refinancing credit X.X%.

paid required we loan. repayments approximately During the fourth million quarter, on our term $X.X in

ATM utilized Fargo XXXX Solutions Cash by Wells cash approximately As balance was of outstanding Agreement our us $XXX.X from of XX, December the million.

times senior Our consolidated X.X ratio at to was adjusted EBITDA leverage leverage secured compared a year-end of times. maximum five

unit. XXXX, For Capital the approximately amortization million costs. $X $XX $XX of Agreement trial in expect and of installed units of a million not interest we were was $XX.X imputed in million capitalized $X converted million million new million approximately sold CapEx the quarter of $XX which either replacement into was Full-year base respectively. approximately of Vault units $XXX.X in includes the installed segment segment $XX.X interest we new million to million, interest in interest for and with XXXX, base be on fourth million which segment. was units million Station between base million unit million CapEx expenditures approximately which and Player million full-year non-cash of segment Games yet our and and trial associated $X.X approximately units Cash the of $XX.X installed Payments expense was between expansion replacement for fees. or Games million and forecast and In in fourth $XXX $XX.X $X.X million were which quarter full-year. currently for of million replacement expenditures for capital Games the and quarter $XXX for will million $XXX the base, installed $XX was approximately total on or CapEx our $XX.X the

million relates million $XX.X fees related related to interest. $X.X Agreement Station We to to Player which our $XX.X expect of to imputed placement million pay in Payments are and

fees XXXX, remain the placement which will additional reminder, in at years installed of another after a base related As fees. our quarter unit quarterly for impact the X.X without third placements CapEx placement through least will

we able we our to other with amounts As not material. expect this to that customer, also expand may additional Payments have secure those we some be are placements do to footprint

noted expected back as assist million that, record which of and to this now to to expected $XXX million of that finally of growth of operator approximately $XX of we will be payments $X approximately items established With the other press tax expense tax provision other we release, million As $XX $XXX Depreciation underlying follows. million. million. modeling afternoon’s to for to be $X a $XX adjusted you our for million XXXX, already in is the outlook few revenue call to year-over-year million I the approximately million. may questions. in XXXX, for turn $X income between to expect which our approximately million expense includes cash outlook in $XX and your XXXX our Amortization many for includes and I’ve discussed are EBITDA expectations metrics is and

Operator

Jefferies. first Please ahead. hear from We’ll Instructions] [Operator go with Katz David

David Katz

Hi. Good everyone. afternoon,

Michael Rumbolz

Hey, David.

David Katz

little why to was be? just bit around Games the [indiscernible]. I segment. margin EBITDA than And wanted I a to that lower specifics know would about The the wanted ask

Randy Taylor

a having hard really it. David, time understanding

something sentence. sorry Say hearing it’s but So understanding, I the it hearing. Games and the know not EBITDA, I’m the but segment on you. hear didn't again. it's I last

David Katz

in Why lower – normal. was the Sorry, was EBITDA that? the Games margin segment a the than little bit margin

Randy Taylor

Yes.

year quarter million fourth they was itself, GXE it's also cost in hit – lower. show $X.X GXE cost items the is So one of costs it's Champions TournEvent was revenue, quarter, TournEvent fourth in in of the as probably the with margin two as of Champions costs that major the those last where there well, where the in much in hit of the in the didn't but about things, associated well

is comparable because quarter XXXX quite couple of fourth XXXX those a items. the of So to not

So out, had we've the – think just compared the moved I GXE cost you XX%. to the been around margin XX%

comparable. the third where just costs fourth year. It's So quarter this quarter versus pretty hit in last year it's

David Katz

it. Got

is run specifically way thinking segment, margins a the about to Gaming we going of thinking XX% if reasonable about north should So we’re be on it? a think in rate forward,

Randy Taylor

That's correct. yes. I correct. mean, That's

David Katz

million CapEx assume Okay. a $XX it $XX And with the a maybe guidance, Is higher to fair a –also million placements function it's anything the respect it’s is but game lot, than or been, that not than to little more else? been. bit just bit it’s of higher than

Randy Taylor

which going say side, to Payments million A they’re I there's $X where to to and continue $X we're probably the in a would associated few with dollars couple the generally ATMs things. invest the around million we into – products talks as of capitalized will we're moving Canada costs ATM about, as on side, own. be lot the that a well Mike are

well XXXX little a started we bit really, one yes, there's is piece the and on other in South placements Bend opening. the So with off the there and

manage range, some really we is to to it, say So continue as we're requirements. monitor going CapEx again, base to but trying that to believe the installed we and give grow that to a take going

David Katz

II working progressive you to Class if good The quite last can and And that, Anyway I appreciate. Got one which it. the on that you gave be just earnings one and don't some mind. they’re costly, color seems you is placement those but of wise more and there of around whether than magnitude obviously are us and help more other that? accretive more order games addition they accretive calibrate well

Randy Taylor

it couple new standpoint costly our jackpot better really want depends stay better off the unit. Again, to of So to we per you starting it's the with up products. unit, do generally hard have the and coming the more were location in they’re much I how show different away people but I themselves of jackpot, in and pin our what's things. kind think to is. it and the from pay kind Those lift of I to actual they're the to that of but is, win units really want how it – much are are pre-day units out don't from say we because know perform what with on down line the

So think to to focusing right direction And what's we're unit. increase I those. is on at that I it talked per our why leave premium the we're that, guess That's footprint win Mike about Premium going where the drive I'll pre-day just in in but we think that's continue Units. headed

David Katz

I XXXX unusual to would what think I but I'm of is I I assuming obviously consider out Payments think which sorry, last this for is a what normal that is year appropriate, we business. Payments want Great. saw year more bit guidance more laid for will the on modest, guidance And don't historically you've rather your year upside on it you, to add, and more the historically the than but a one characterize one we what was for an XXXX?

Randy Taylor

Yes.

single-digit we mid very XXXX. good think and – And out we to with for products XXXX the let Payments. really year feel we some think growth products very of about coming the just as of was macro is I we new I we still achievable out, the have some on. think terrific a going – that look at and But economics obviously what's want new

I'm good right we but XXXX. think feel we anybody year hey yes, to it on growth that type really So I of in want the see counting it happen, the I EBITDA had that we But – it. same to we're don't to anybody for not would to going now. want really love don't have about

David Katz

Understand. Thanks very much.

Michael Rumbolz

David. Thanks

Randy Taylor

Thanks David.

Operator

next Please [Operator go will George Craig-Hallum. you. from We with Thank Sutton Instructions] hear ahead.

George Sutton

Thank you. And unit daily congratulations win first on per long-time… the turn,

Michael Rumbolz

Thanks George.

George Sutton

started cross-sell success there with what's a a leading are solutions discussions decision, have behind just position curious they as what's that that? talking to you're customers you’ve provider. the a kind about business a been curious than the gaming seeing? Is a I that that focused are of being behind previously So – bit Mike more you way I'm that think in to are having little you there conclusion, strategic

Michael Rumbolz

that. is exactly Yes. Actually it

a the solution our to margin complete provide Payments, We sales, from seeing solid we're a seeing from the cross customer for to our Systems, a Games, are provides our that from ability our business.

centered And that are that have our so as to all we customer sure increase converge those a can we to the we to we space see margins. that lines seemed a as appropriate be larger hold expect these casino with of people and in business, in they're it lines should as multiple understand able but around we very customer, similar that discussions, continuing and single competitors business of make we and or to

George Sutton

months digest GXE had the least curious comments, attention? or Brady to costs few few detail a more you think little what sort post attention? go most You've most I at that had a you got specifically mentioned We’ve what months digest, Bunch have a Gotcha. to into bit of The was customers can and and on the

Michael Rumbolz

hear think is I Dean it him. to straight would but here and you'd want from can, We

George Sutton

Perfect.

Dean Ehrlich

so is really out EXXXX wonderful. excited week that’s in our mentioned about The which – as So going just I’ll on this is tell launching Brady Bunch live, you new Mike

Arena you products of if So the out, new product XX roadmap goes factor an that got additional looked EXXXX But if Renegade the extraordinary look just content and year new differentiated well. And you also XXXX. GXE add the top that's factors on throughout then all top at which aligns we've coming the in took the form box, new a form we out of have. coming at the one licensed

of chest So that's really the it.

Randy Taylor

I'd I George our you Dean that new to said, say that our on in-site, And add that including what both I out GXE say, forget don’t think segments about at because don't brought cash and would Concierge showed our would just CashClub nice – say I some products the forget to products really for Payments Wallet.

well all they were on both think received I sides.

Michael Rumbolz

would That IQ. Everi with be cash in-site

George Sutton

Actually driver deterrent? a question being revenue see that you have At the revenue there what as – on I where point one revenue while to that a and for a meaningful offerings. relative new more that see we're point new theme, you a do cashless you is

Michael Rumbolz

it some value believe preferred – it Yes. will It's when method cash significant casino. speed will of casino to as adopt which difficult our the revenue answer the floor driver built-in. be. the a the adopt that in customers for around gauge their moving us. are and lies I become of with truly patrons Part a for There value

casinos in totally are the define first success a my XXXX you seeing expect us to to – wagering find but from anonymous. and as quickly happen. throughout there's are to uptakes industry incentives really we going think would up for view in it's I casino a to successful cashless personal think because to cash, start the or be which for always in and difficult in be cash see should either operator taken I But allows those is to cash a going to away that casino you'll want move how

George Sutton

Thank guys. it. Appreciate you,

Randy Taylor

Thanks George.

Michael Rumbolz

George. you, Thank

Operator

Hargreaves David to We’ll Thank with move you. Financial. next Stifel Please go ahead.

David Hargreaves

gaining trial? Because little sequentially and available you what sure you game grow quarter. you specifically in game deployed love talk how titles want during & ship start? know doing And bit are could about see timing? evolving Could everything you a in it question. the to how ahead And that's have on to I’d the share of. still I off where you share lies can talk What's And And to the not then that available Hi. had Teller’s Thank had I to you. speak – just to what Payments your we a side? are I'm about Penn

Dean Ehrlich

Okay.

take that I'll one. So

factors. now. the it X.X% and various a I year Our all started ship range share you last in around would how at we're north about at out right different depending X% range X%, say look a on of

share, most up hitting other year was launched very performing in well and doubling. across doing mid deploy in and last This well. country. fall well. side replacement on started initially We're Nevada. close that Teller, & recently as Penn to about right the jurisdictions other the of So I’m is Roll And we purely ship then what pretty now. It’s we're point in question. a your answer doing a is to very terms talking

the heard Slayer of exact before what is or The in and form out, time Brady Nelson hitting the hitting that's Buffy that we Bunch, most excited coming fits and of we you towards month, out factor, the and titles got even as on just have around launched follow-up Renegade summer Arena. on. not Park on And Vampire but about, end Some we're South that Willie just the coming Empire The our we launched

that see too pent-up go tend that just So specific going what you I've I launch this product that very demand given that much dates to roadmap got these solid has because of get basically dates think anticipated do, you with date. months to looking more it's we're move. But out a amount than product to what don’t other given to the tremendous to there the into want you are I've forward with

we that. very about So good feel

David Hargreaves

Could what you give quarters commentary Mike? customer demand some and high level about the of

Michael Rumbolz

pent-up into we're is exact for that say, launching. would I'm demand there. that backlog on to products I would So you not tell in I the yes. there And pretty a amount answer customer our units the go But exact demand, are prepared detail that of significant

Randy Taylor

as gave David, guidance. some said mean I we we

Our we're a this in unit year. looking expectation growth sales XX% for is

sales feel pretty with right we good think I Dean, in So now, we really talk our growth side. don’t about on about a mean I what unit XXXX backlog that is but

David Hargreaves

side, people and in in how Rollover that are seen renewals, sales have the Any help you're we've acceleration been X-in-X in talk process the on Okay that thought business leading about to the and contract could emerging any you strengths And selling to Does have topline. the there with that Payments and expiration? receiving? up the expiration? do how of

Michael Rumbolz

non-event. run year, contracts year won the of off first majority the it Rollover competitive let segment. nothing a Rollover, me Company. Yes, into the sector coming has new openings the we our up just new we to takeouts public last had you non-event X-in-X a respect I that to That do with for renewals all, for tell in of that contributed patent on had last Rollover. casino mean with The and which to growth was the been our and well rolled

Randy Taylor

that. And I think we only that overlook it's – sometimes things people

We our with got going if it drive do casino to like come think Now and think will out our customers have we products casino we rollover. help product we that floor the for enhancement to something, competitors We fine. we've floor. away. with more it's continue We think great still and that's best. a that at But there

renewal far our so And on discussions and track wise, we're come hasn't in really up on renewals. it

David Hargreaves

they the to materiality of Okay, and the to point? the talk just offering? lastly, I about products how curious are as could are results significant you this compliance you am if guys at

Randy Taylor

of side, Greenfield an but specific, I and that. think it's talked there still Payments topline from total to about given $XX very it's before it's there – to revenue I But us. on small. It's grow grow We a it's a excess on are But still and very us. profitable for business million very we've got think standpoint the think a think it's the room that out overall. ability a to a and we profitable it's

Michael Rumbolz

margin large high It’s very very with Greenfield.

Randy Taylor

Xpress. product Jackpot the that showed there that we And put GXE we've extensions things like out

products that beyond. in been and to business take over great established that’s the years are those couple a that core think add-on I XXXX how has is forward move last it and

David Hargreaves

on you much and Thank so congratulations your progress.

Michael Rumbolz

Thanks David.

Randy Taylor

Thanks David.

Operator

you. Thank

ahead. go Please Bryerman from Our come Capital. with next question will Howard PENN

Howard Bryerman

Yes, thank you for taking my question.

before number have asking. your you at in of goods explain well. that you on what up as clarify Payments number? gone look significantly because XX% were to the David follow-up the the Just Can accounting if a do cost you Does to that's trying increase with help sold revenue was change me that

So is at increase XX% the this am just looking for or accounting responsible I reclassification incorrectly? is this that

Randy Taylor

XXXX sure reporting we're has I mean the No, I I think can way have that I through clarify make changed. historically not

has been the business going benefited that seen XXXX. up growth number a XX% Payments consistent been what with the growth we've of transactions been same-store the been on. picked XXXX full-year it's we really just and a late It's items. increased where in in for It's more is casinos So our lot

revenues compliance business We XXXX our up and increased. Canada also picked in kiosk and

really forward on accounting all and So hits – those Payments revenue it’s a cylinders pay because – casino in as it's XXXX factors. increased said this been hitting revenues just has as with been of lot on of our we fairly point, four customers is number a of to a consistently The back to going year, changes – you the revenues cost doing the that really your commissions.

require now with us them. to associated that. costs interchanged literature would have net We The

will going those well. be cost quarter EBITDA, will It's revenues down as in just a come all cash come change. metrics that revenues loss, our flow dramatically But our required of don't income dramatically, operating the So forward. and down will reclassification first but

Michael Rumbolz

typically I’d a ATM portfolio cash and than with of of sorry. lot the say addition our I’m lower the remember Canada, access our the ATM core just rest margins other are products. in

So that to those revenue in going add cost and commissions there, faster grow when you than is the revenue little of the revenue.

Howard Bryerman

Fair Okay. enough.

on then? XXXX So a will basis be reported net

Randy Taylor

correct. is That

Howard Bryerman

So XXXX? to same to is dead then the horse not being is just the here or comparison also a reported here, and but way XXXX years XXXX beat follow-up the

Randy Taylor

correct. That’s

Howard Bryerman

so Okay, I’m that comparing apples-to-apples.

Michael Rumbolz

re-classed, are revenues we down come it income change. down, the comes are. income you filed doesn't the of same cost right of it it's come will and your you historical cost but operating back And and X-K, at you down, will revenues see then loss, to operating but you'll or revenue adjusted filings the if the so how the show – how look Yes,

Howard Bryerman

the Right, flows even a the but very X% only EBITDA healthy or X% confusion is was what there's so line was guess I it to to in would revenue, increase tied increase.

the what margins that So in that business? this difference is Is in it is?

Michael Rumbolz

net. growth I Yes, mean versus

Randy Taylor

better costs Yes, and we lower or it's no gross so bit gross and gross the But lean don’t net. the I a before Yes, X% than little margin X% if question. margins, all the revenue versus that. showed

you'll Now but the better, same. that will the net true look margins will be dollars at the

Howard Bryerman

number If waste for it's try nice versus consolidated fall only in more EBITDA EBITDA I a of isn’t No, I Payment more that XX% any look XXXX to just I down number XXXX, won't that. at more very the The by number? increase one I'll your understand then revenue time what and increased X%, is healthy number. time. the the

Mark LaBay

very of and ATM I Canada mean nature kind it's large – portfolio trying the margin a when acquired of higher low that's was commission the business especially I your what to is, cash again example, of illustrate access business revenue side much for we there.

So dollars revenues. low the margin that numbers we of in dollars, but the cost is larger pick can absolute relatively that revenue net be up than

Michael Rumbolz

produce EBITDA customer but of other bottom where item increase an explain smaller. is any another charged amount our and [indiscernible] that completely surcharge to And commission surcharge revenue much will is standpoint And back casino of is, in Mark's There's ATM lower maybe that get of the and revenue that to which to our kind that generally one that why it the who by not point of more customer. customers is that's though we're the line the surcharge on paid increase casino transaction our our most revenue, is we increase, customers the drops our bigger to from much which because surcharge. than source the the of is revenue going have that they get

Howard Bryerman

barraged Okay messages instant fine. here. nasty with I'm getting also

that the I'm just one So getting not obviously here. it

flow obviously as and debt maybe – a intellectual. one cash at cash just your said intuitive, would would I statement, free bit to a going So a little bit and flow see. U.S. what question will that active holder debt mean you be I more of reduce last more be used this to I'm little forward that's looking like

operations in at much that big look working obviously, statement operating flow tax income out your do with washed. cash the number. though here And turnaround, so expenditures, deferred – pretty amounts If capital income is from you has cash higher by capital to washed from

look a because So metric that's I I flow as and how do don't again. look it's like going in to and adjusted forward? at adjusted at this EBITDA adjusted cash

a How If much flow look at going do that cash at look forward? statement, we you pretty your wash. it's

Randy Taylor

work, a that back long be is sheet statement transactions and because We a I for Payments way cash that I cash even end flow casino. Well, our in business the collect and quickly to days capital as cash to or neck tough the my back don't and as is impact for can about two we the the – longer it change it the then our which at working cash our balance the pay collect or of remember, flow is fairly big to pay week three casino. take thing

work you there's you have know take change but which this big like our to EBITDA, not not take really it's business, because offset best receivables its I I in a EBITDA, of our working are really capital. and swings, that settlement is the me because So liabilities huge settlement it. for There – but you kind may

So take I you your look at and EBITDA. it say,

You your cash look at interest.

available that's we're You my debt. down going and capital cash to what cash pay my taxes have look at and to

cash our to maintain that's pay statement, to go sounds we got generate much that's like you’re want debt EBITDA but you down cash flow through as flow growth more So the CapEx. traditional more it's it in and to what more really

Howard Bryerman

capital to working cash going cash our how out forget needs, investment of forward? timing changes, you I that cash and look figure of you that just if working grow get or use debt. usually the a have like the it’s of if one then free it flows, bring bankers continue reason there's down by that That's That's flow free maybe at all. flow pay cash capital up. I differences kind your to of cash. here that. But and only use to not And absorbed to will that's is, flow your changes about And components free the working capital

Randy Taylor

our it always customers. offline of through with way in – I’m it. be cash that to to call, the able it our can because position we I struggle to you on help but use not honest we're will always to we be a and try might sure with you positive I walk this take business

Howard Bryerman

you enough. your patience. right. Thank Fair All Okay. for much so

Randy Taylor

you. Thank

Michael Rumbolz

You’re welcome.

Operator

go ahead. Katz. We’ll follow-up take question from David you. Thank a Please

Michael Rumbolz

Hey David.

David Katz

at [Indiscernible] Thanks been you. asking very much.

Michael Rumbolz

Okay. Q&A Great. End of

Operator

question-and-answer over or closing will turn I’d back any session like Randy to for to today. conclude Taylor That call our comments. additional for the

Randy Taylor

like joining next to everyone couple we look an for today in for to We thank – us a updated would QX forward months. and

Michael Rumbolz

Thanks everyone.

Operator

conference. Thank may again you today's will once That participation your for you. conclude now and Thank you disconnect. all

Everi (EVRI) 13 Mar 182017 Q4 Earnings call transcript