Earnings call transcript Q4 2022

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Operator

Hello everyone. Thank you for standing by and welcome to the Everi Holdings 2022 Fourth Quarter and Year-End Earnings Conference Call.

During today’s presentation, all parties will be in a listen-only mode. [Operator Instructions] As a reminder, this call is being recorded.

Now, let me go ahead and turn the call over to Bill Pfund, Senior Vice President, Investor Relations. sir. ahead, go Please

Bill Pfund

operator. you, Thank

actual me and everi.com. begin in reliance disclaimer, are forward-looking our Harbor call. Because could reminder that to those materially corporate discussed in SEC include, filings, with other today and covers not limited today's but a in our cause risks, that which uncertainties, our contains potential potential risks to the place that to statements. of those call are differ of contained the involve from posted you risks Safe These and in Let website results uncertainties and not section statements at our on earnings release cautioned Investors which are webcast forward-looking undue

any today, are only We do not X, intend March and update statements, as made forward-looking assume of to no XXXX. which obligation

as to We non-GAAP can the cash of today's and found the in EBITDA, webcast reconciliation as link release investors the A and of such adjusted and and as today, our be A replay a free measures is these description adjusted financial net GAAP cash on measure of directly each well comparable This be flow, X-K measures related section recorded. position. will in EPS, found the being and webcast our website. to call our website. can earnings of Investors refer call non-GAAP most section certain in to

years on like Leader; has Relations. Executive as Darren analyst, to Taylor, and would an ranging Mark Counsel; as introduce Officer; Randy the our buy Chief IR Jennifer Business Chief Ehrlich, also Hills, to Lowenhar-Fisher, Officer; and Dean sell experience Everi several recently opportunity FinTech to joined transition wide the this made Leader. Simmons, call side and ago. Vice are Investor today Business On General Kate take President, Jennifer who Labay, both our I Games Financial

[our great learn as to the extensive exciting the willing industry] here she long-term experience meet will coming have you [ph] prospects well of in and on months, the as IR we on and many has She quickly Everi, today. call at

departure the not While transitioning over set I I coming Jennifer the a will be months. responsibilities day-to-day date, to have increasingly yet firm

to of time, some plan but family remain year. a role this Everi limited the advisory later I part starting for more in

Additionally, Steve Kopjo, to in promoted during continuing is the years Vice working FP&A been to acquisitions IR with who full-time from President and has Labay Mark last the to been with everything assist has financial to IR. on few

you to for So, responsibilities. welcome wishes and your added Jennifer Steve best

turn Randy. call will to the I over Now,

Randy Taylor

pleasure thank and to Thank up Good IR transition intend stepped joining Bill look our I Bill. experience. a thank you, long a together. and He welcome seamless been leverage of I'd Bill. morning and us. a here, I work we game to you to to personal keep with. has you saying to as I'm not to in years ensure as possible his and my to as a goodbye very Jennifer, successful like huge journey to all also like forward for add add would

on at business Now, to the hand.

strengths a X%. Against balance and mobile growing last strong operating year, Our XXXX fourth loyalty, comp and X%, diverse the increased our fourth performance increased EBITDA across fintech, our adjusted games, reflects quarter gaming, digital capabilities. operations, and quarter and income our

with additional equivalent flow contributing we and organic X% to over the which of per capping in fourth up revenues XX XX% a which free X%. just is cash $X.XX in in generated revenue million XXX earnings quarter quarter, year in share. drove Total increased and million an for acquisitions an diluted flow, record all-time revenues improvement Our the operating cash free year-over-year,

the quarter. represented revenues or Revenues XXX streams our of XX% from revenue in approximately our high-margin million total recurring

usual to incremental discipline, growth our While we benefit several initiatives priorities will XXXX from in continue Everi. to we execute for new provide growth expect opportunities with on that our

cash steady leveraged six last and have growth flow the initiatives into we tuck-in increases in internal quarters, attractive Over acquisitions. our new investments product for

investments and these this growth adjusted and generate collectively the to further course in of both over revenues in EBITDA even benefits beyond. expect year We XXXX and

the the development added The a acquisition, efforts. accelerated development of historical this With talented horse internal addition Intuicode platform team we of HHR team nuances with well-seasoned technology racing. our

library expect benefit of Everi's cabinets market and the time. new the into our and growing new entree that ship quarter. quarterly first Intuicode's HHR machines proprietary give our of launch expansion first gaming the initial toward we end content our will We us of of to the category share a addressable onto This will expand deep expect over

with asset game to foundation the us the into provided a new Atlas Australia, the Atlas after for studio Australia. expansion geographic also slot development Gaming world's market a base to a second a U.S. largest form in established Acquiring

to anticipated GXE game fall sometime launch games from first at the studio Our to the expect we XXXX. debut U.S. into Australian for market themes and in market new this are this

In lineup category, the Vue cabinets. gaming we begin new remain the particularly is second of The Vue new video Dynasty next-generation our unit where ship the share, is in another to the It to underpenetrated. growing our quarter, step we first shipping in continue key cabinet. expect video efforts in our

the grow video giving is category, for rail Xx to Importantly, the of plenty share. estimated Xx our be us of mechanical runway the size replacement slots to market to

efforts entrance new GXE. the a market American in over Dynasty North Dynasty XXXX. Currently, Vue, include to VLT investors, may XXXX cabinets the planned expect line also development early debut but be in I out the point into would for additional most our at horizon Beyond we that

portfolio. launch themes iGaming game along additional and steady operations. the revenue prepared expect appear to with sites jurisdictions our no year-over-year content expansion of we legalize of Casino our iGaming as operator to digital near iGaming term, Sportsbook recent While achieve such benefit to further Caesars from to This on the of in our the in reflect platform, growth XXXX the be will iGaming

library less the our of to leverage in Furthermore, We our successful total historical addition is international mature take increased studios. global will of internal our market, markets. introductions X% titles to U.S. continue more new development and portion iGaming content our player-driven a of than from land-based us currently into effort positioning development the larger with to representing

to adding our end the be us and operators. of lead features. Within our the products layers expand in live expect should FinTech customers the Spark toward in We which allow financial iGaming enhanced in our U.K. Remote integration of in U.K. months, with begin focused leveraging strength new licensed to neighborhood, we being This then our to the to have first this our of with Gaming coming process Server on segment, our access strategy year. the digital would

cost efficiencies such have incremental MetersXpress. opportunities Xpress, products improving casino by We PitXpress, Jackpot sales with and operators' as created

are growing effort placing heavy our platform. on We mobile-first also loyalty including and and mobile rewards emphasis CashClub applications, ongoing state-of-the-art Wallet our

strategy and mobile-first entertainment, on preference improve self-service and spend gaming, view, consumers' dining. Our From helps them our costs. and to sports, and of leverages on more loyalty with point devices productivity their customers' their increasingly save other labor time favorite mobile information including to engage actions engagement for access mobile

already efforts for and entertainment experience floor is very skills, space, concert gaming complementary Venuetize internal enable integrations. to with the beyond a including established XXX us will such acquisition sports fit of into gaming third-party development Venuetize capabilities, about venues Our a mobile-first app our bring arenas. the broad base as of with added and

entertainment, products sports betting first hospitality sports such of gaming moving we And ever-widening venues the sports business. markets For mobile for loyalty and adjacent extend license, technologies are loyalty the and reach also intersection addressable Everi's new our sports, wallet as wallet, time, now market a like and basis. on the gaming payments global and betting, our toward products of into with

move we combination the up additional Venuetize into expect growth new of and and worldwide. through XXXX As a Everi avenues of will we open XXXX,

at we've with of success solutions as access We Northern Everi operators cross-selling have providing full Casino the some slot opportunities a believed suite greater its evidence can Sky than we and our River in as products clear generate previously loyalty rewards, California the products. by of compliance always and and RegTech services, new shared synergies is of that financial our

another white-label we're and proud loyalty of Sky included highlight their so development and to technologies. successful, notable of part expansion element our success, River's wall is like they patron to our been embedding has which which of for also River app, Sky mobile plans I'd story. are be our success making already exciting

opportunity acquisition our for the Games While our growth business. I Atlas acquisition for Australia, growth in ecash for supporting provides also mentioned FinTech our initial segment

for smaller market, provide us pubs mainstay the which a Their in avenue and facilities, kiosks growth are of the with Australian new the U.S. clubs

VLTs, U.S. ecash smaller such VGTs, distributed second half of the machines we stops in gaming or operators into who other route in truck placed VGTs that which expect high-frequency kiosk in market, includes Illinois. the gaming will We Pennsylvania and locations, as in launch XXXX,

with to point ecash bring an cashless AML also entry us our market. into Australian solutions the provides and

We products The acquisitions markets. underlying that expanded have an up in development system, scale positive underpenetrated capabilities plugging drive respective their and into to last core a of principle number and we enter our new very that product acquisitions opportunity distribution results. leading a respective is represent completed leverage have product our the our with few years is marketplace. us over to allowed expertise of to each these By capabilities they solution these that

levers exciting macroeconomic on prospects the current capabilities business tempered lines, to integrating industry. and an them long-term flow product cash but gaming over ROI innovation. way, provide be include and are these its In must and our results those Obviously, These incremental attractive uncertainty growth. possible growth we drive we positive against very into impact product scaling of this the the also conditions will for generate confident up multiple

than has other that a not us more consumer While historically tells around. this crystal industries, been the time do dynamic ball gaming have that will we be resilient similar that spending industry discretionary

generate, and strength initiatives. with uniquely foundation the Fintech, macroeconomic recurring balanced and we all the of a balance through sheet high solid and strong us change flow in to Games very improved businesses, percentage loyalty with generation, revenues iGaming, any and provide mobile, However, our of manage cash coupled effectively our

opportunities. proved we uncertain industry the This success the believe with an the economic new rebounded depths may as from and achieved COVID, we with provide even of us environment, out

generation. recurring free Given track balance our expectations flow we significant solid base and revenue our are continued cash in for confident our record, sheet, successful our

cash tuck-in will of free production such prioritize opportunistic new with stock continue attractive our build-to-suit as internal capital and to development the product along under on high-value facility and initiatives construction, efficient We acquisitions, projects our flow use repurchases.

Now, more into turn call our will insight expectations to over Mark, the for me XXXX. provide who let

Mark Labay

and on today. Randy, to call the Thanks, everyone hello

year briefly of highlighting is we sheet, by release, start guidance than Before our ever. and outlook provided the which the turning I'll current balance to earnings our strength in our better

our progress de-lever. X.Xx Today, our our operating measured continued have the leverage execution, growth ongoing EBITDA. Over you through efforts for years, our consistent our adjusted of high-return many prospects total because is of to and investments, trailing net

range throughout With XXXX. leverage should growth combined periodic total an with currently below that remain our below at range target and in debt or expectation earnings, our principal we payments our for

quarter As the you $X.XX you year's valuation per review asset fourth in included or million our income deferred allowances. net benefit from that certain I XX share last fourth would income reversal statement, of a tax remind quarter tax non-cash

share. earnings better year, if per one-time fourth benefit, exclude diluted $X.XX quarter For have in that last been would the current comparability non-cash you year's tax

NOLs We We was to net million. remaining loss income XXXX. carryforwards. end continue a tax our our the early to of And gross federal XXXX, expect pretax XXXX should and for at operating continue provide into cash the shield this of value in approximately believe $XXX to our possibly utilize

on Moving our outlook. to

a release, due growth range our higher expense amortization XXXX million we in and purchase non-cash an rising is from our earnings of be to the net This of noted down within net in and income expected recent XXXX, in expect interest our XXX and As XX the income million. business with depreciation in associated to accounting acquisitions. the impact rates increase interest from our to

$XXX adjusted which million, X% $XXX of to for range growth over approximately EBITDA XXXX. X% million to represents Our is

expense of flow interest of that This XXXX XXXX, and million to throughout facility. million. build-to-suit between XX higher per shares approximately We the improvements for million reduction cost share. outstanding Using and expect $XXX warehouse million diluted diluted includes to $X.XX our to expected $XX $XXX production cash new cash from free the generate impact of tenant approximately for $X.XX approximately equates and

the the of current streamlined facilities quarter lease new one This the and machines operation fintech kiosks the consolidate third anticipate in and the transition will of building warehouse in costs this assembly in most our but projections, Based most Vegas. begin fourth we quarter, here year. will will on into likely of slot our occur

cash also spend projects $XX million XXXX. approximately incremental planned in in to related We capital for discrete have

focused data systems. largely remains we gaming projects a as portions more well our of comparable of our These what growing in maintaining our infrastructure, install-base. certain ERP double and budget largest are IT portion as on center The internal than projects operations spent on is for and focused upgrading little This our capital expenditure XXXX.

while games capital sources highlight is XXXX, of despite and mobile. our last With across machines a expected that years. the to gaming than revenue-generating comparable by digital more three loyalty, will is be balanced for fintech, or operations base I gaming gaming, this over our X,XXX growth spending installed increasing XX% an additional and to our

variable category, confidence to launches offset uniqueness our of in us is gains the to growth growth be expect XXXX. ability our revenue by business the one timing category. total grow the line overall gaming the our slower growth another to may impacted total is in extent of in top But see This We revenues. continued product reinforces of model for industry. a the in in growth due by Obviously, our

gaming pre-COVID our machine rebounds and Similar sales our fintech will hardware operators FinTech growth capital a operations total ship and hardware expect levels, mix the than and to on our of from machines towards financial higher machines sales revenue pre-COVID spending trend we as and XXXX, will gaming levels. bit growth harbor share of outpace to gaming expect Due that the improved access in services. we gaming

fourth in therefore, the should mix mix of in with in-line revenue the revenue we Our XXXX, quarter experienced XXXX. be

the racing, [ph] in for by spending the full-year customers. capital will games new cabinet] expect the We increases of sale by machines guidance of in-store and growth launch that in the casino gaming driven [video of our new our be course overall introduction

Lottery the growth revenues revenue installed New includes and our gaming gaming of from operations. in gaming, machines, the expect digital We York online operations. our This base or

growth While upwards financial revenues. the tracking we the in same-store this of a quarter the growth of currently balance to of to basis growth XXXX, in access on transactions are industry's year correlate expect first the the gaming would

continued expect high Wallet in demand XXXX. our and locations we regarding our digital ongoing rollout interest their the in discussions label see the technology CashClub of white customer cashless new to Given continued wallet, to

software products steady new by and remains expect from to purchase our evidenced continued AML of market solutions by see and recently as also We upcoming installation the expansion demand British growth our RegTech as for these solution Columbia.

fourth to range Similar XXXX, expense to the levels we R&D in revenues the third X.X% our in the of XXXX. to of quarters total in remain and X% expect of

expenses half of higher to our percentage We of average the XXXX, initiatives. rising and compared inflation, This expenses to a be added impact the labor, of from XXXX. slightly of other the second expect the total as as operating reflects our cost price growth in acquisitions, overall of the revenue

XXXX expect XXXX. and We XX% percentage average than the to in lower experienced this

annual items housekeeping additional of couple related a guidance. have to also I our XXXX

and the to the on to a As end largely our rise. which purchase noncash accounting acquisitions, amortization of amortizing and impact expect price our of we therefore, depreciation the reflects purchase expense. This increases allocates earnings amortization the noted intangible portion significant release, of at assets our

Again, of for prior provision this the year. the large the net is loss of information we expect With record for interest to will release consistent today, we XX% similar expect XXXX. income in remain supplemental XXXX. to tax of purposes taxes on we paid included press pretax to In balance the range in cash our minimal, And XXXX carryforwards, XX% also income. with operating expense GAAP

agreements ATMs locations. certain interest the costs make interest to commercial includes parties our third note both on customer cash and contracted we certain that debt the provide this in with associated for where I would

for And and with that, the conclude turn remarks that call will now operator over prepared our the to questions.

Operator

Instructions] from comes with Please Our question proceed your David Riley with [Operator Securities. question. first B. Bain

David Bain

Awesome. you. Thank

listed detail. Actually with know with game Mark, XXXX, to has ops, balanced call multiple HHR, X,XXX flat growth, And on I buying growth date? and we a guidance, Vue, nice that I look replacements look International year-over-year, Randy, in on First, I [ph] that all industry for seems the help for go to start domestically. but and standpoint? low a your trends on And perhaps. of kind but units execution if end? XQ you with conservatively I thank you drivers the midpoint? your low at Can for super ecash, while. I it Australia, front, growth like a it you for over online, can again. video should larger [loan] be end bit starting look can't. and I all But understand the mean, despite little base an essentially I more us Is the of the you TournEvent decreased at know sort macro there's factors, how from GGR, just the does at

Randy Taylor

even Yes, the flat I sure, yes, release that assume overall the does David. talked we low-end I the about full-year. mean, for in think

of be part unit last So, might might flattish suggest year. which guidance, that to that sales is that compared again

you're a right, I flat year. more that think of reading So,

so far but a the to crystal we understand industry, go. the rest year couple ball don't will of this things positive together, again, I as the for seem first have the how months, to as put we of

to we're do doing, development as look, we very the other to items I some we're some with On team high-end think these have I'm that say, all we execute have seeing, But to the I and I guess, we we what right. going I reputation. upside, given the and now, even think integrations it get is, can, acquisitions, part have David. think we on upside never to to from have comfortable number. think conservative, things, – a But that's right away the I my of And that of we are

Atlas, to not got revenue this generate We've year. that's new going

side. So offsets on bit the that a little acquisition

So, that I the settled. I Mark, that kind tell of we've, that I do if really have good could feel better range we can't know, than could, because range. we don't at add? this think I about but anything the I that's point, you think you to

Mark Labay

I think covered it. you No,

David Bain

some very the some Perfect. Okay. maybe the any [ph] and Can [Penn] with my offer and volume of And about think, across your cashless. terms spectrum follow-up gave know fintech. maybe, to David, sort proliferation, of you Casinos some terms happened, a points of providers or own of with would [ph] you, I on your or of some point to our that's if at I in demographic will? like gave headwind existing do been what's commentary, of Darren And headwinds be then demographic? perspective, approved. expanding of encouraging now if [Penn] And bit you casinos being in deciding going what that – from that, have seemingly data the getting tech, jurisdictions little our the with land the this they're of a CMS anything. closer lay

David Bain

the strategy very are there's look, many I about wallet sort things our largely of, and that we growth times, mean, evolutionary is of very doing. what revolutionary as I we're expected. this said that Yes. are things

locations good of our feel the we launched six new fact about that terms this we So, have in year. trajectory

major week [trial] launched got just actually. – a [ph] We this just

now. that range, – XXX,XXX in jurisdictions to we're XX more slots connected probably to locations, that close XX So, than around

their way. But visitation strip more tribal strategy. think I all see regional lot might sort sort thinking markets, about of frequent we more of maybe think the and, of and greater again, that obviously growth you locals, look, how of which So, the they're in, a

our payments of we space in think product look, concerned, any if aspects the I'm it, and good have, that think which aspects as necessarily And I which think And trajectory. headwind. aspects leading is because I on there's the the loyalty It's robust big of and AML it, unparalleled. of are it, we we track of the the as don't so, feel about far I know

David Bain

great. you so much. Thank Okay,

Operator

Jonas question. comes Barry question Truist with proceed with from Securities. next Our Please your

Barry Jonas

as some start if for also wanted to in issues of how mix nicely, just with supply really that's and or I XXXX? more just on curious the And you. successfully are little related outlook then how Maybe up trending your pricing? that Thanks. of pushing with into color late ASPs margin feeds you a are that, chain. QX Thank were

Randy Taylor

bit like job We maybe take I'll Dean through in the we're one improvement think believe Barry. but team it we that. we managing ASP. that great a and back in Sure, – feel the But on know not our then supply seeing did push XXXX. challenges first in and issues chain an look, for team the our feel, of little to a

through Some of year. that this should come

have get we're proactive think But costs. to to freight So, need. shoots we're being of we and able some starting I think, see less what acquire green we just parts also, that being to you'll

to So, better but side, overall, to manage are cost still will think well. of be because costs able pretty other the I the that increasing, be going there's that margin we're through

margin So, I pricing. don't in that huge in of going think a change to any see you're exclusive changes

the on why So, in just cost we the little good had spot of to from on on improvements a bit Dean happened a I what but pretty the ASP? quarter And us not seeing maybe slightly that concerns over ASP, anything, and talk again, better a turn supply of it because that I the think think about those think I chain, standpoint. anything if I'll at nice to side, some we're

Dean Ehrlich

Thanks, Randy.

matched side, last our of that driven of years, sure. QX let's On some say in couple deployed deployments TournEvent, of over the we terms literally TournEvent units of orders in of the by ASP best overall for amount the

as driver [indiscernible] well. little So, is Also, see Classic more to Signature shape Empire pretty take our good a fully well. that. merchandised of starting to with Player our be a Flex bit seem look a package to And I bigger as

in, say, reason factors increase. you've blend major you an is seen all ASP if the why I'd So, those

Randy Taylor

newer great footprint for it. to as comes Barry, and refresh, out we look, would put I we for up enhance in think that the that there, TournEvent just associated continue product products that's try us, it then being say, sometimes to newer And and I systems the with units people and a that forget

future. that's So, us really another we the benefit again, think in area should that

Barry Jonas

it. And the in little a follow-up on touch win to the just if quarter. Got could. daily per I gaming unit I more wanted

was it was I third think the it down year-on-year. quarter consecutive

You much mix with that underlying sort And on of noted lease some apples-to-apples is how more also on related explanation more those, maybe the seasonality, about an of but growth talk sequential longer-term basis. units? just

Randy Taylor

to is, I'd daily always we've we revenue What say at, data point one at unit look look as we per base. that can and this win really installed managed the overall from generate

exactly At XXXX, and we think, than places where right. of XXXX, XXXX say, – nice I we more the end had early you're So, yields placements our and premium the have are in our lower in I'll XXXX units. with than some

manage does But lost we've portfolio that about numbers over this per period growth really from, think period now. installed installed that I'll sometimes capital added But we it's I base in it units. that continue the us – XXXX to outlay units So in had a X,XXX as well. XX% win gets overall. till XXXX, impact daily of in a and say, we unit that the since we've our And

we this that coming that. we we try themes very feel year. to I out would And the games about for say, good So, manage and look, have

out come later cabinets couple a will that the year. have in We

unfolds So, good in XXXX. and just it overall, is the will at, installed year depend where base how feel I our on really

Barry Jonas

for got thanks it. well it, that. it. Alright, Appreciate Got

Operator

question. from next Stifel. your with Jeff Our Please with proceed Stantial comes question

Jeff Stantial

that this adjusted to recognizing start good walk and out Randy, puts on and through typically that. And the of I taking EBITDA relative out year how trends? being, deferring of EBITDA, on the I'll that by historical we takes for long big for, roles. as seasonality you on kind some on the Steve questions. Jennifer off appreciate quarterly Thanks and congrats you Bill the possible time holding guidance, kind definitely a for just but Starting bye for guys see to, thanks new don't to could, as was qualitatively of here you off guide hoping playing

Randy Taylor

that come fourth you're is that's Again, don't the seasonality a But I we our do trying angle. quarter [Indiscernible] know [quarterly] around [ph] another know why period give to or guidance. we look, standpoint. But seasonality. time is from from think slower a I there

that good in happened the were unit what and consistent also there quarter, last year. sales, We with saw fourth that's

in of right And so, be some some inclined I what to if those to you're really year saw similar just I'm cadence XXXX now, would [indiscernible] hard quarterly so. kind give it's at to not think last Jeff, when looking you really of do that of

if as I [indiscernible] to So, can. that's know And don't you. as I’m you much, I giving glad what am given but I much that's

Jeff Stantial

that still mix been or would That's fair. I sequential any be date? versus forward for there the bit non-premium the we've That's of should in and to expect math the of my the to premium to more on healthy, follow-up, quarters. continue recently rate it to premium percentage, some recently you. what growth in typical install to you've just appreciate more color it. below Is lumpiness business, still Thank does helpful. we moving averaging games, just kind trend look GameOps recent quarterly but And Just moving site based versus kind then running helpful. like the seen, growth a in base

Randy Taylor

Jeff. Sure, Sure.

expect So look, given large I It I to that some would we it but grow say, placements we won't it it in XXXX. like the expect view, grow had. install in XXXX, in the did don't our to of grow still could, base

of a of placements. nice had we placements know, couple share a in and You those Delaware where one

There XXX you grow a really units lumpy, little, be historically quarter if year to units very maybe quarter, of in back, kind where the could it depends hits. those few we've the when XXX right? on but – have pull and years we opening would So, that's that be and a can going we said back,

think think base we at grow good in did see us what to than And operators We comfortable XX%, you're XX% in XXXX. where cabinets still bread feel installed units a and mix still premium I could, – XXXX, is don't butter call we're don't big say, to I I'll then I I good that. we standard, going in investments premium to about at feel about it would a either. and like not is grow mix. at make very expect because but we more our So, the that on premium pretty want at all but I return XX% think that

look some So, I would at comfortable think you're level. if think we're say, I doing pretty I that there,

don't at we So, premium the that, higher installed than I of our will number this we not grow but time see base, anyway, Jeff. if units, the grow growing substantially percentage

Jeff Stantial

Understood. just to that be installs is year-on-year decline in or else And year-on-year with or CapEx, the coming about bit talked looking That's GameOps basis? pretty clear, a a other of to just you on just consider everything more anything guided much in factors pace supply there is chain the helpful. the in little

Randy Taylor

I No, think right. you're

always I by that think get do it think the add right doing this will, we that lift. smaller we the capital at and versus one is the year. units lift lower replace to look just we do, a would And spending as units we have when to get we

Jeff Stantial

Very helpful. understand. Okay, Thank you.

Operator

your from are David, take Katz Please Macquarie. from question. Our there? you Please David proceed with next question. Chad with Jefferies. question with proceed your Okay. Beynon We'll comes

Chad Beynon

you've of medium-term about know are that Day, about for below, today. slightly Mark, in number I afternoon. some it's you highlighted leverage now? believe those Good thinking tuck-ins, leverage. X.Xx guys kind right some your and you about target. taking particularly Investor at GXE effective talked my Thanks talked of XXXX, I questions. your How you

are some tuck-ins bolster there's free thinking cetera? Given fintech, of potential your et guidance, about to, Thanks. headwinds know small but cash you I flow, kind loyalty, on how more

Mark Labay

gave were we I paying and again, in we've And that we of essentially, higher terms we the midterm kind down, tremendous helps growth. well we target were leverage our high, EBITDA than cutting think, some as and that, had down your – when and growth. Look, of ratio obviously Yes.

from a where borrowings, I at perspective a you, pretty So, good tell capital I structure and would we're we are. of absolute total level think

return that then to do business and and So, as use cash to more should down, in to number that can we earnings first generate cash grow, that and shareholders extent opportunistically invest the so. come we'll we'll our to leverage look

We always prowl us into we looking help find bring this existing acquisitions. the new we're better good things to more to try think to and the markets can for that take help and customers of products those grow be market tuck-in in efficient or their on our new kind that we find to perform growth products accelerate and into have there operations. I

all think on I still table. of So, those the are

a target we think I'd we're at now it. now level. a the have you below that the zone leverage more instead I right is and is target comfort a X.X of tell profile good

shareholders. deploy earnings in think below our for and now. rise, stay most repayments. possible continue means use comfortably capital debt our look we'll it And scheduled have I We'll we're our to below comfortably to we as efficient it and normal the

Chad Beynon

some what swim a new But opportunities, just products Okay. you then, it's on particularly kind a into an really out about from units game should when really the Thanks. And back Thank is of video. to to pie believe piece I expect you. this open to And bigger offering? like to and or just the respect of is Vue, lane if of sales, trying we XXXX, of extension these completely the said the just, of if year. up it you're with thinking kind figure for currently Dynasty the kind going take in cabinets your

Randy Taylor

item Yes, for venue – to and add Dean follow-up Chad. we Look, the any in material expect I for the on look, the until have I'll uniqueness one mean swim don't QX. sales lanes. Vue let But

is can it thoughts in add new on and you a your Dean, So, swim what QX lane or then, kind And you're thinking? really maybe forward. of

Dean Ehrlich

it an look swim additional Chad, video lane. would as at cabinet I

know value That want but for it there screen at who say, be got what cabinet, with GXE, a would our about. customers that that the, greater space cabinet I I'm profile those profiled seen of larger have talking portrait lower to but sidelines. proposition significant more arsenal, will with continue obviously part the So, Vue, it's a we the then will gives to

on We some this on So, with where going it, is really cabinets backlog we're solid to begin of it. The seeing the pent-up it. these the Randy QX thing side got front-end that's roll-out. solid demand excited mention, very a I about spot of and you're on start would to

it. forward look So, to

Chad Beynon

Appreciate color. additional the for Thanks it. Excellent.

Operator

with next Our question David your with from comes Katz Jefferies. question. proceed Please

David Katz

for to love the a for why for question. and same Apologies out. consolidation, factory the spending on now? And and color I question my investment morning. for little IT and thanks the just why taking the about you've I more and that the wanted the of good suppose sort part touch that's earlier what just of now? laid consolidation Hi, IT factory I'd

Randy Taylor

David. Thanks,

the consolidate, always like of I'll a the there not those some since So, the production synergies but here that the time been we it, first. if Multimedia manufacturing kiosks, point you same the could XXXX. quarter, David, would in in games one, take kiosks build obviously, you I've expected to felt items. slow know of consolidation as And utilize if we couple acquisition there, the I'll games. in although exactly were had, you people call warehouses, always say, to the I of had at were

And having the where of distribute the [ph] location from a think here we assemblies in Las from manufacturing [just] shipping overall talent having little do a games much just of there's efficiencies better. we'll a to it's probably out Vegas, in everyone standpoint, same I anywhere. place a think as And central

to like obviously year and when probably was we we hold. we it. So, be do was year, at it a on XXXX thought to to had But end do great thought of felt we this, this the going XXXX put the

in could I over a Difficulty] savings X it, you that we there's million And little long-term and one really of expect nature lot same say, [Technical makes – million things other say, as plus, would come probably to of know X a from I parts we're And lot place, of finally the David. purchasing expect a power, sense. that grow, putting that off look, to we

very we facility think bigger efficient we do is and to a So, a way this overall, it. need

shouldn't sometimes and the lose, maintain but it insignificant. fintech is, it I at well, day-to-day, people is lose we side our is, IT what a sure equipment have from uptime that we network the and we we're is that The process the make to second say I one not think – amount of that transactions

– over over. gets it hardware can time that And

think to our upgrading midst have we We're system, of replace also is So, important. the it. we which in ERP

but extra growing, have the think, cash So, this to the it's is nobody company flow likes necessary, to it's again, and we capital, it. spend as the time, do we right

a planning But can is year. consolidation item. know, and hit stuff say but be We IT would so, is we it. you but ERP we're will will for the know we And don't – changes, changeable all this I the the for planned something If what somehow – all XXXX? pivot, not can, hit this in

hopefully, gives you information. that So, enough

Mark Labay

David, one more I would add just And here. thing

capital at much judicious their suggesting the back If we several you like spent our in very us. our we look years, were with in last were what in we're judicious spend customers expenditures spend with

really within value infrastructure of embedded customers our is some is internal making to had more little network and on propositions casino one the we of because where this keep we're we catching bit that's really this we network of our So, staying have need environment. be the with that and a us spending sure current to that key of

possible want we current that to as going. So, keep that and make as

a bit out] think to need and ahead we [spending So, hard] of be little deferred partially and stay as it [ph] just [stay competition. of too [ph] spend that of

David Katz

it. you Appreciate Thank very Understood. much.

Operator

proceed Engel with your Roth Please question from comes next with Edward Our question. MKM.

Edward Engel

you top your and gave. core congrats OpEx on my gave OpEx, in guess Hi, XXXX, Appreciate kind kind color I record so the costs guidance R&D just kind all question growing year. you, XXXX. thanks looks for the you another revenue of than of and – guidance of the for on I you, on like, mean, again, kind have it of taking the faster

of revenues wondering costs. R&D this actually of your longer-term expense kind prior with business some than at actually after maybe a where do these Just normalizing you in-line to years? a some some outpace I actually lapping what of XXXX, mean, that kind below? start grows and like, where transition revenues M&A of year, of fixed point kind this rather Is is core you Or OpEx underinvestment in think some

Randy Taylor

happened well in a Look, think Ed. of kind from expenses. what XXXX, standpoint question, and XXXX great XXXX cost were we XXXX, in R&D growth and of operating in I year catch-up a a really, from we and mode the had It's great revenues,

we, kind higher throughout the year, hire when the so you base a off And think believe of, got those to be. level got want you've we've you're of. you so I And people working to start XXXX, we we

about as of think area. the that So, that, in his Mark X% is to R&D we put right discussion, X.X%

[annualized] the start, it I was XXXX. let's to as has, be expect I getting R&D know and you you that And than say, going significantly payroll won't know And revenue expenses grow bit so, that, are XXXX a it to in I but operating that, faster a because is important. full of [ph] little think

because the that's hopefully, some we that this and also as We when this Australia hopefully XXXX VLT XXXX. impact stuff, yet, well of added, in goes some of revenues is in, just some into from R&D not but we will really also results Atlas, we'll operating Atlas expenses generating have – think

we're at little bag, a on but mixed of R&D it's those percentages. and So, in think bit a settled OpEx I do

Edward Engel

of the HHR throughout you I appreciate kind happening kind about growth of it iGaming, year, of Great. drivers, but the talked and kind And back-end feels color. the of more like like kind then some things weighted.

guess, not least than be guess, of guidance, quarterly second the I I the half? you're a at kind more your bit of I we to So, the know first half EBITDA assume of give that year going but could might

Randy Taylor

Yes.

just steadily. agree growing iGaming you. that's think reasonable HHR into get been starting pretty I with to assumption. a has I

be would throughout. is our So, that expectation growing

assumption, that is little half to So, better than I'm be expect the comfortable a back half. with we the which do front

Operator

proceed question. Our your next Sutton Craig-Hallum. with question George with comes Please from

George Sutton

construct could against ship that Can your out? Sky believe knowing we if ship talk you continued growth River you wondered for pretty where where ship pretty under aggressive share think and out I was relative call your out share good. you. just we guidance of the it to laid comes goals your about Thank at the share up look and Dean's there guidance some

Randy Taylor

not ship we as But as is bit. going little will that something happen XX%. we a add I that into say, get around Dean VLT, this let look, But is long-term time. would was goal. still I'll over George, again, to a I those into And overnight. Sure. think And we HHR, add, share get It's our think

of it's very a comfortable Dean long-term I And goal So, I what think we're ours, that. said. and know that's with

So, him I'll it. to to it over turn for anything add to

Dean Ehrlich

introduce your in continue – to kind another the they're come chance strong, it goals we're mean, get gives I looking as which say the get long-term. I'd our increase cabinets broadens to currently the is, out is, R&D investment best are we what, know new XX% the you to add of thing our to where those that cabinets. is at. reality And point. only to and to talked I've portfolio, new And overall about, from, us we're

out, see on start come early, Expect the that's product yes well to new beyond it Vue. October really absolutely. this and cumulatively, pretty other these spoiler the to Randy's also GXE, all you incredible at into you're cabinets But lot are point, getting at adjacent predicated is with a alert in coming QX So, we markets when going want and some look it I of to even see don't to Vue. give but new a that cabinets

George Sutton

the you're in opportunities. new provide that you're mentioned have environment you you. with you I'm some if I breath, new more script said Got of your opportunities, you could it M&A put than Randy, And it wondering see someone an but those to else? and starting assume then anything finally, under uncertain and may to referring

Randy Taylor

what as high that values waiting maybe people on for. time, things seeing out things. down, really I looking think at come still right? do Look, we're We've well we're looked in we're have George. at I Yes, to start always point very That's think pricing some them. at

we the do. to price, So, opportunity pick right what is some if look of that's there up type at something to

if And you're think of what a making amount CapEx flow the cash investments the facility. I still So, in the comments Mark happens. all But this year reading we've got as free just in correctly. see fair – about, after we're talked new we'll

hopefully, makes there sense. looking out And that still things and so, we'll we're find a few

Operator

Our Davis last with comes John your with from Raymond proceed James. question. question Please

John Davis

I I mix XXXX. first, to expect that in quarter what heard Mark, guys. just wanted I the to morning similar be you good to you business the clarify said fourth think was Hi,

should mean, kind we margins, of just you about, mid-XXs sure So, kind I full-year. want so correctly. the of I I similar also to make that for think assume heard

Mark Labay

that's Yes, I right. think

lose QX. largest bit don't fact I more GXE, a our think [indiscernible] sight of in that you little the remember, of gaming so OpEx got QX, share in

probably see you'd QX to the So, a a bit little in game early but that better little comes side fintech of kind high-ish on those both the I and level, margin, more keeps mid-ish of and think down that [indiscernible] back EBITDA business XXs. sales to on

John Davis

Okay. Thanks. And then to want clarify. free cash just I flow,

million, enhancements. half of kind and those projects the I you – facility IT on of the about that year usually, kind special spending out called we're So, on you're IT projects. said, you about between manufacturing And $XX type or spending spent this you think

on in way? a all the as spending we see million more reoccur like projects of flow of rate. of cash that back $XX kind a your to free else goes kind thinking in So, million I $XX in about not equal, bump those XXXX IT to capital should the right normal should Am

Bill Pfund

already. You're there thinking XXXX about

John Davis

Yes. Yes.

Bill Pfund

were that's kind think of what I we trying convey. to

Randy Taylor

Yes, spot on, John.

John Davis

Appreciate guys. Thanks Alright. Okay. it.

Operator

to Mr. for the turn call session. question-and-answer closing like his Taylor our concludes to This I'd now back remarks. over

Randy Taylor

joining numbers. appreciate shall us just we Thanks be interest to in to again. again in today. Everi. first And May talking We'd for everybody thank early quarter your our you We like for

Operator

This conference. concludes today's

this your your disconnect at time. participation. you lines for Thank may You

Everi (EVRI) 1 Mar 232022 Q4 Earnings call transcript