AGS - Earnings call transcript Q3 2018

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Operator

Good day, and welcome to the AGS Q3 2018 Earnings Call and Webcast. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Julia Boguslawski. Please go ahead.

Julia Boguslawski

Thank you, and good afternoon, everyone. Quarter Conference Third AGS' to XXXX Call. Earnings Welcome Lopez, Kimo Akiona, me today and David are With CFO. CEO; be quarter posted We a which Relations third financial slide key our can website, XXXX, investors.playags.com. our operational presentation and for highlights found Investor on reviewing the addition to in our call XXXX is regarding QX you provide Today's financial information outlook. with our performance, to conference This call includes forward-looking statements. projections on a refers expectations, of today. including financial characterizations forward-looking projections future is conditions, based other Any or or to market statement assumptions that statement future events, Actual to results from materially those expressed and we in statements, may differ disclosures. these make update forward-looking no obligation our

For risks forward-looking cause titled statements, may in on report described more today particularly release actual from to refer differ issued the our earnings the documents annual materially factors these information XX-K, section please of about Form Risk that as results in well that Factors. we to as

Our provides to Reconciliations be investors substitute commentary that, reported the results information I'd include and Please like to isolation these that in financial With also between ongoing not evaluating These of CEO, non-GAAP and with metrics the for or as financial our from, Lopez. additional in for, non-GAAP believe We our operating trends. an measures non-GAAP filings measures. over today our use David to refer in prepared accordance will earnings should financial considered release tool in measures use a to for SEC results information. for more GAAP. found be today. can GAAP our issued with call the turn

David Lopez

earnings you, AGS' thank and joining Julia, QX you, call. for Thank everyone,

quarter, After gains primarily year-over-year. These last double-digit cabinet, of new quarter products providing Orion I'm core-plus of start XX% on our third of highlights, our with with year. I'll quarter brief against revenue initiatives. turn performance fueled in volume For year-over-year, the a segment, color to resulting those penetration our please overview QX demand ongoing solid financial slide high-performing to overview using balance underscored Kimo, Slide driven were steady early And Orion by Total X,XXX the pleased Portrait opening as the our of $XX.X another adjusted reported a EGMs call a result be was which and close cabinet by progress and new million, to continued as by approximately momentum XX% from XX% growth over of for sales year-over-year X family the Orion August. finally, our revenue $XX.X EBITDA to Slide of date, and share both to the of our year. meaningful revenue placements and driven success ramping table million recurring and well early up entry new Alberta grew EBITDA markets, shows best that Tables by of was announce some at in we by cabinets Mexico contributor, products. our that $XX.X our the of a into X. MGM history. most was continues bolstered driven and outlook along its and in million, various market Springfield, sold, operational the by launch record, company's in the reported I'll our grew Slant. in exceptional the our orders up by deck, the EGM Ontario. in at follow-on

that, XXXX. of continued an the and the second acquisitions Icon strategic placements Rocket benefited quarter. update Additionally, on I'll our performance inclusion assets of the Invent With and in half third segment provide now from quarter for the performance the Gaming from

products cabinet, release that Portrait EGM successful being and mix. to Orion Orion by Orion percentage by Slant our a segment, revenue Orion the its X, of the new sales Portrait tremendous the the EGM the our growth higher-priced fact overall our strong performance comprising of to growth and the be Turning Slide like fueled bolstered engine of effort with sold continues segment, Portrait on units in Approximately was games major highlighting XX% were year. this

Our titles, by with XX library a XX more Portrait includes plan Orion add now XXXX. to QX

the and provinces. were the new driven we're Like greater still are XX with operators saying Roughly units our floors placements pleased Orion now good Orion states Slants even XX several even field, an available. customer the and have had trials, few demonstrating We by on momentum to XXX came cabinet, States, underrepresented acceptance of existing strong a portion Slant, forward rebuys we well are content after as titles of very placed, for as last EGM sales the builds. Orion across been nearly where footprint. placements rollout different And performance with Canadian over in from only nearly United look calls, XX as across five very With our growth. we've with months driving our with XX% library including

tribal XX% Corporate entry This marked early XX% of reported EGM sales from of the as progress in quarter base the as approximately provinces XX% each orders quarter in into comprised recurring Ontario. year-over-year. Canada, as sale of third up such a one units, sold quarter Alberta, performance sales XX,XXX of We Overall, Canadian came total customer units well other solid year. EGM benefited quarter. of who our historically XXX revenue EGM units from third also the in large Canada. to purchases

XX units the to products, recurring expansions months. In the well and growth EGMs, as bolstered of Rocket was the as openings new by Gaming inclusion addition over past

because times contract. the also options of average, takes transitioning per to $XX.XX. the under VLT end approximately performing about positive recurring end-of-lease $XX have one financial of expectations of we to Texas VLTs from are recurring base redeploy or our on RPD, North figure consideration such the units Despite last this into units positive year will far to modest as per to we down average and to on units removal our a in increase. voluntarily Texas, the annual net revenue where XXX quarter, been This removal units, redeployments, the addition are an in net think important domestic the of thinking we refurbish across the are for removed timings Over on As units. day install them of out lead shipping Sequentially, the confident and of America. our the Illinois to it's time, total we the we're albeit the quarter business, day, in size. about working in we distributor When pursuant its XXX below buyout these recurring base, underperforming quality call, and in earnings mentioned related fourth

positively So impacting on will we part the XXXX, RPD. while a for it's capital highest of ongoing over for in our recurring be our of the up optimization mix is look and return This equipment. better our strategy, we invested units always slightly with will units

this We than make progress good XXX more continue to legacy strategy, machines with upgrading year-to-date. of our

yield. stages which improved grew of strategic optimization, the new our the that goal the units. on with than overall unit, to country our approval. growing initial new revised based and added of the Icons of swiftly the can introduction year-over-year final have We've units call tribal our result optimization our Halo helped timeline, and is quarter, our footprint cabinet, to some recent in of market the and new recurring more product we overall gain regulatory $XX.XX. Mexico, core revenue to year-over-year, grew well on placements by in Orions, mentioned live XXX of a of as XXX last efforts the on install us in high-performing a go update We done we as approval now with A units in on Mexico, cabinet. recurring recurring which QX, end, our driven markets, to in XX% the everything year. placements we to Philippines In providing market, incremental Icon secondary due health the our by quick once RPD the As $X.XX the for have cabinet by in this our We floor continued share. with strong move Icon this end I we're domestic

for of feature, pedal we at as Based had is its response well showing cabinet GXE. to bingo and good foot targeted as market, video strong Philippines Alora the and feel very customer a the Brazil, Our about innovative library on eventually the Mexico the games XXXX. new very which in and content prospects

more we with As on trial. of had and installed, XX% cabinets sold, lease than X,XXX on X% QX, Orion Portrait XX%

maintaining our on hold at result its all game units. our to highlighted fast house continues XX%, a with of X, Slot casino-owned performance AGS's times rate leading X%, shown Orion approximately stat Survey, considering on truly average just rate position, The EILERS-FANTINI approaching X,XXX impressive Slide suppliers. is install under removal base industry-leading QX conversion X.X the trial Our

consecutive seventh that quarter the position. we marks that held quarter This

only operations, domestic the the more important title these was which game results route pleased just recent and that Our our and in performance performing survey entire was just XXX most house the leased trailing second that ship these numbers; higher or with average. of than placements attained not share includes XX-month to X% X about are average points X.X that quarter, of the market basis Aristocrat. indicative better. at times X.X have survey to than times not for These we reflected What's had AGS average, stats different driving titles it's performance is eight note house We're market.

to we the shipments Florida ship our Alabama, marketplace. as in path highlights domestically, momentum However, trend see with continue believe we our in to the notable Slide and California share quarter. kind this market gains of XX demonstrates we share recent continue X% achieve the Nevada, Canada,

on overall our our XX% in record X. high-performing have Table XXX were and Springfield City, revenue to both Ocean's table our the achieved very pleased new Slide such as products. $X.X MGM demonstrating the In our of we Club million, We growth to with outfit to Rock and due Hard addition Atlantic floor, nearly openings live third to on up table Springfield the Moving to in ability pit of on and placements products casino progressives. quarter, year-over-year, strong segment, fully MGM in

our quarter quarter that adjusted Tables This EBITDA. marks positive reported fourth has

drove be product, more Our an and footprint grew recent growth Table Bonus to than and across placements our entry nine Super of the The Blackjack installeds Buster X Products growing inclusion games continues in-bet X,XXX with units. including year-over-year, into with base states, Table install fastest XXX XX% Spin performance. Nevada. of of

contribute weeks has significant reported progressive we a will contributor month. several X, be QX. of was in We beyond. GLI footprint In our to DexS BXB more had $X.X shuffler, a on BXC million which of as Interactive with Table of in year-over-year. continued which million back money $X this track with recurring our last recently received decline and business total units loss of We revenue was or interactive our commercialize year-end, strategy content gaming EBITDA for with social the the DexS is segment. was than revenue production The milestone XXX million integration other as XXXX the half million acquisition quarter, Table announced all ago to contributed on that due such money remain quarter. from our in by would and in $X gaming line which believe real social XX% $X decline we segment, available a Our for units to nearly in and EBITDA The call. EBITDA real We meaningful the real the which segment pivoting aggregator, down roughly the is Slide that approval Interactive the the We year-over-year. money $XXX,XXX a year, indicated and loss our stated on we models as associated in to the acquired to decrease primarily also to gaming,

quarter We progress more more X content XXX suppliers, made signing online operators, more dozen games, the pipeline. continue than with and the such as on GVC, XX than by in to more we approximately distribute with from in

market launch also we on favorable content As economics. track We early the gaming money real AGS demand which provide we call pent-up hard with With continue that, Kimo. will platform, to our the to us content remain to over are partner supplier in turn and relationships, our and working AGS XXXX. with the I'll to own expand more offer operators most on address markets

Kimo Akiona

everyone. Thanks, good afternoon, and David,

quarter provides results operational David appendix the truly impressive, As Slide earlier, the our XX summary. for mentioned in a comprehensive and were

which in Table EGM For were $XX.X primarily the revenues increase by $X.X from as total in well which million, was Products improved EGMs, and $X.X to record third early sales, of year-over-year, from as factors. in markets Nevada, from XX%, in and performance our million revenues growth entry Interactive. RPD. our by up quarter, $XX.X The were equipment million million notable mentioned several business was domestic the driven our recurring Canada operations driven a David such with revenue as in gaming increase

First, the contribution Gaming. purchased EGMs Rocket of from

increase cabinets XXX cabinets Portrait in the X,XXX Portrait an Second, on year ended quarter year-over-year. on Orion We Orion up in lease almost prior from the with third period. lease,

offset And our the in was quarter, strong Total earlier. equipment and of performance service; mentioned domestic compared approximately million to progressives install openings RPD a revenues of of period, XXX grew was adjusted businesses. partially increased $XX gaming income million to salary increased decreased, costs a $X.X total EBITDA the operating of $X.X SG&A that manufacturing driven longstanding to margin net up approximately R&D. to increased and year operation fourth, EGM revenues; costs third, an were million, factors: of units as XXX-unit costs XX%, proportion operating and period, Product Third, lesser prior fifth, adjusted customer. up Net million higher sales base million, mentioned; several amount $X.X from the and that Table expenses of side bets. continued impact Gameiom; the previously fourth, increased period extent, costs from primarily to the Gameiom, a adjusted and the sale international XX% in our and million, over with from of year and primarily on assets, benefit Total second, benefit EGM costs the improved to by by was our operating in-bet which in by success of David the related and of loss to to third new tribal due EBITDA associated and an $X segment, increased prior units driven in margin first, salary Included year-over-year, by million. due lease, $X.X $X.X

XXXX, the year down For XX%, year-to-date September prior the from was period XX, EBITDA margin XX% in adjusted ended period.

equipment XX% current units segment, period. to EGM compared the year So year-over-year, EGM sale XXX our due sales turning in million, in X,XXX the the $XX.X to quarter, increased to prior as of to

Orion Our $XX,XXX, increase Slant premium-priced to to Orion Portrait and cabinet contributed average of our approximately introduced or continues our XX%. our price cabinet and momentum in newly sales drive selling

market acquisition of units family the rather penetrating to driven contribute buy, Our customers from lease, to Domestic ongoing in prefer our December approximately Rocket by at Gaming many base X,XXX which Icon EGM XXXX. and EGMs. year-over-year, than to Orion continued cabinets EGMs the success grew Class from of III in install X,XXX over primarily

in EGM our to by increased, offerings underserviced is markets increased to RPD Texas, the also for driven product for optimization new Florida, in by compared share markets and name international to also $XX.XX, by increases ongoing driven to current with $X.XX, third primarily RPD increased, XXXX, $X.XX, compared attributable XXX install a certain and Washington, quarter Domestic the base. $X.XX, of units, few. current gains EGMs. the to to the like Mexico. our base California base market of optimization install seen the the of were our quarter through quarter XXXX, of Our International third Notable by which our quarter our install by industry-leading within Oklahoma,

of from to due monthly in units, the increased premium the premium table the X,XXX each in install Now increased signage X,XXX increase driven growth year-over-year, which by higher-priced year, to The our up also our prior grew base, to to The by million progressives, by due prior XX% average of Revenues $X turning our primarily year. is sales. Products. side to or $XXX, was bets price, lease units roughly Table increase was in and XX% ALP, progressives driven offerings. which an and product games, increase categories: revenue compared

nearly due revenues user the optimization $X EBITDA new an $X.X of million a business from costs decreased, $X.X BXC to of the recent million row, continued For increase business. from in quarter for $X.X Revenues acquisition our segment EBITDA, a our of quarter with was $X.X the quarter, social third quarter of slightly of RMG the our Table additional the mainly acquisition million in positive Interactive declined Gameiom. XXXX. over to to adjusted in which in third due adjusted Interactive million million. fourth contributed spend operating was Product

in SG&A SG&A previous our Gameiom, to Turning the SG&A expenses, million increase shuffler, $X.X to relate The to of amount compared in is to offerings. development well primarily $X.X $X.X in the our stock-based third fees growing to DexS the approximately increased respectively. of million Orion and acquisition products period. both $X remaining in operating as professional and and of integration prior Upright increase expenses as next-generation the due of R&D such costs year the in the $XXX,XXX quarter, R&D associated driven increased well The compensation, with securities well as by support as the as and increase by as and as headcount million, in primarily business noncash as

quarter. over $X.X and driven related a on payments term principal our Moving HoldCo is mandatory as decreased reduction and to to $XXX was was cash equivalents. net This higher $XXX.X IPO total redemption our September less by third cash at X, structure debt, equivalents, due on debt XX, capital first the which the XXXX. substantial In update, and of XX, our of amount XXXX, December of quarter, PIK balance cash million principal compared net total and million million, of during notes loans the the cash by Slide on to debt

net secured to debt trailing net Moody's XX-month term an and As The with from EBITDA December million are leverage performance, corporate times divided the XXXX, strong transactions of X.X to approximately $XX decreased million above which the at our total upgrade at XXXX. X, additional XXX expenditures to LIBOR under over times period, ratio, result for which September XX, million conjunction from our adjusted were we points $XX.X quarter turn loans credit to agreement. existing receiving XX, for XXXX, loans purposes the total In XXX, with CapEx, CapEx, On October interest million plus remarks. of commitments X.X comprised is by our basis third a operational to the also debt an proceeds spread net used our additional re-pricing, additional machine for nearly of expected closing B points, the the from rate re-priced points Capital $X back upon basis capital for by in existing plus cash expense, XXXX, in David With $XX basis reduced we XX $X.X interest an Term Service. general reduction annual call and LIBOR and potential million XX Investor be accelerate growth intangible growth. $X.X of CapEx. CapEx of million will million maintenance $X now that, I for for and corporate for saving

David Lopez

is you, a as our in results delivering and almost first the of very company. year team I'm in XXXX public books, Thank the proud for strong such Kimo.

quarter. integrate If $XXX takes business money range negative that and roughly $XX $XXX a you million are million around and prepare million we in to turn LTM to that our mentioned improved as real in our million. impact million of the EBITDA GXE related for previously QX range to we We $XX for to million. in Slide $XX to $X which Interactive This to expenses to the XXXX. guidance $X performance and consideration numbers our which scale XX, operations range adjusted in this, EBITDA you'll anticipate historically at profitability, our related about QX, our Gameiom for CapEx for within invest, loss to visibility range million into are maintain due online fourth We addition to see our we tightening expect

into GXE, last through month, that and Just business for we with showing AGS. many our a traffic new materialized enjoyed at strong booth meetings considerable

Table new games new of shortlisted Innovation Game for extremely including LAN-based showed the annual gold to Australia Awards. couple well, straight for and been Supplier in development are taking Portrait Technology as & of Best the Year proud our the Orion have Gaming from celebrating medal STAX We as Gaming Several studio. of annual Slant Global titles a for well our Awards the game

screens Official offer to launch portfolio and its cabinet modern During the to also Upright popular the language new Upright. Orion This the on will innovative with the LED The design display. the platform, with dual build game a show, Icon along in titles addition cabinet's leverages and multiple cabinet Orion newest with unveiled provides footprint. product QX XXXX, helps of Orion the titles. broaden we has more our options XX-inch operators our their XX Upright strongest AGS family,

at even our one, unveiling are excited Spin to see innovative player-attracting not in also three that and Bonus offers of We after table but community GXE, more the Spin wheels momentum bonus next-generation progressives Extreme features. Bonus

us strong as GXE, segment, I Better objective. and encourage our we The if in down tuck-in hosted Orion entering X% momentum $XXX Slant, million that the investor Philippines customer acquired market look M&A segment, XXXX. newly $XXX achieve you and shuffler are the Pennsylvania new and during to presentation as for IR in already. how position within the in growth download of EBITDA, is target. a not million demand objective will to can and As highlight operate several each contributions years. and new license always available DexS in and specific our aligns may markets products, share presentation market investor the presentation the slides of pent-up believe we five The Canada we demand with and our puts breaks in than factor achieve three such and have cover new anticipated into well our as events, be potential what it the website, how to There each EGM and that an from drivers take is plans to our on you to next outlining notably EBITDA most within

aggregation for well releasing scale customers, as will licenses gaming continue onto suppliers as we as business. our and space money growth online platform, help content new the new content AGS new game the third-party our fuel in platform, real Additionally, obtaining to

about drivers more outlook. talk QX color our on on as these we to expect the call provide We XXXX

we'll his the We're significant operators. of to as CEO to Before at effort our commercial AGA Manufacturers betting the portion provide for to Gaming a move next has to AGS, record oversight and thank want the as level. positive welcome With to the U.S. their to currently Association. our move Geoff AGS delivering five-year newest tribal most of impressive our effecting strides directors, Q&A, and industry, to the to that, AGA's unify the Freeman. confidence we its team of President another change support, quarter. the PASPA, continued Geoff Q&A and tenure, I addition our Geoff the which shareholders, to as Association spearheading hats American grew gaming for investment Grocery partners help have and proven served want overturn by the the customers Geoff of wears recently AGS both those and XXX% board of track We his take such substantial in led sports in membership in and honored and to as Under well legalized entire made call.

Operator

with first from We Stifel. session. will [Operator now begin Brad comes the Please question ahead. Boyer, Our go Instructions] question-and-answer

Brad Boyer

taking for on another congrats questions thanks solid my quarter guys. And Hey here.

what Obviously, exceptional quarter. is were what's everyone's that top in the for. little A probably on First of around sales unit than of some I looking driven assume mind. lighter mix is question given just folks margins. the that's bit the

of curious fairly But revenue mix would just Just be in could here. going we get if we around obviously helpful. It to keeping to forward, if wanted thinking get while is better mind color a role a should we about how sense play can see margins, be big that that. going some

Kimo Akiona

Brad, Hi this Kimo. Yes. is

impacts think we to of quarter, that couple this out specifically. So just a script in it the point tried things I

manufacturing to of production in our have costs charge margin. well. COGS One hit so some otherwise the would a periods, just gaming that We in and related in been that them, and period, had – other operations specifically, as

impacted that $X.X million. about So us by

our it to think would what was that, back ops you QX-ish. you I if game in closer look margin normalize to at be

Another around that in you thing that I did the color a the we impacted large some think, sale we gave quarter. quarter, that heard us in

than sale So less that the normally carried margin as side slightly experience, we on large sale well.

of kinds are quarter. that So the in discrete items those hit us two

move gave you to some when related around think to we expenses I we EBITDA or we that – Gameiom. margin, think I talk color expenses incurred operating

I And you around and people saw. about given what $X color expect we quarter what think another in we've said expect. QX; that's million should we expect that that that's as million about in operating QX, last in well; should $X costs

we margin. to fast at nine-month look could the range margin, we in in So the total of the for And feel QX, I helpful. you XX% towards remind I at fairly the year that margin, higher more that's would about year-to-date look confident at in to But think to and something EBITDA something we that's saw nine-month EBITDA kind hope being if you XX%. full for comparable you QX. forward what always that you look for margins be to

Brad Boyer

Yes, you a when put David, very everyone a And up just but for question helpful. that's then loves recurring you, we it X,XXX-unit obviously, revenue. also quarter, love

So just push they doing to games of there's as doing get it's I to that you're base? sort you're anything are lease as But hard – install are, grow leases; help when the well anything performing curious if it.

David Lopez

Brad. Good Thanks, question.

of a guys bit with always about of that out some, that move Texas. we really call again – on talked as focused you the did guys base. we we're units We bold you talk the as now. about Something when even those about moved lease install we a how We on talked quarter last

So those and Mexico. for the we additional in can U.S. installs just and optimization use

healthy is it's say getting talk we really hard our just we RPD. good to not sales that about focused where the you jurisdictions it's out that getting And I And in today, of talked part know the know, think work. and we on RPD and out we good And about and just remarks what prepared talk lease RPD, are predominantly we big getting there, on a again in it call, every we of but is course, lift. hard as really guys can lease-only comes about optimization getting work. get down there road,

to continue that. We committed stay to

there all the and it's about getting going So jurisdictions. out to

You healthy jurisdiction. units and but and in we look But it's we in continues penetration focused. to mostly. we know of Mexico, Canada in be look a market stay the Oklahoma, what corner U.S., every add strong that continue we a And Oklahoma, our for to It they at units having know wherever at lease We're Oklahoma. are, us. you

So we a that. on QX going that stay look to at to we're stay that be focus just huge focused exactly and obviously and XXXX when in going on. focused something we beyond It's

Brad Boyer

thoughts but of capital just allocation extent look people free offset next And spend a curious obviously the there's out of a amount and an Philippines, short cash your strip business. the your and reinvesting your the then in pretty the around itself, generated the healthy lastly, beyond term there's at mindful Obviously, above Okay. CapEx interest cash the in lease, to fact CapEx and little coming I that sales obviously, costs. bit. in guys to current I when hear flow being you year that some prefer to latest around capital probably If over of quarter

David Lopez

here. flip So I'll I'll to it then start Kimo and

about going talked in we're business. to reinvest that So I as the think we've

asked You lease space. just about me

to committed there. stay continue we obviously, So

the Philippines move look we shortly As to here. to

that he's sort when the has A of at like that might year. now president folks in at you think into Brazil of are lot a coming office a you pro-gaming. Brazil other of in positive the elected the place, beginning neutral to As about guy move were how and here look

playing sort president fashion, neutral of classic lottery the And maybe Although in not at think all it big going he be Brazilian gaming, would a other barbershop said numbers. to fan I same he's the to the that the the was or a of numbers. he states. he's day the at time And turn over said

again, So something. definitely neutral he's that's to to to positive. very – find it going be, We do

we focused as in they're the to sales jurisdictions. quarter, and require be only. capital. because because of All these in those lease going Philippines, There's Brazil we're we last will look little about require capital at talked this They to jurisdictions it will in zero

road about mix So that talked space. in there. on road growing growing to lease $XXX the far focused will some on as the going XXX million to in EBITDA, the to We business. the goes, activity as Focused there's that M&A be

I'll So cash, bit talk to as our those flip far after then I Kimo And keep then cash to we'll maybe there, well. all we'll uses as need need obviously things, that about dry powder it exhaust we we think a and uses. and little as of other

Kimo Akiona

down part highest able excluding ex-that debt. I I tuck-ins opportunities again think David or and Brazil a is next why probably will at we'd I think Gameiom. of large type most other any again covered But point we've opportunity. we obviously. to paying that looking sort that's But have think after an And is those year start Rocket, of of inflection exhaust recently ROI of proven Because have be of any it. things you it, bluebird kind and had, like ex-Brazil, where that kind be hit

think R&D. our maybe mention to I commitment didn't David was thing X the

to our have, continue invest some and as we'll So takes R&D capital, like that we team in well.

Brad Boyer

the for Thanks guys. Perfect. help

Kimo Akiona

Brad. Thanks

David Lopez

you. Thank

Operator

Our next Suisse. Cameron McKnight, question Credit from comes with

BenCombes

on call. for for Cameron. actually taking Ben, is my Thanks This

could you resigning if update of wondering on the Chickasaw an Just agreement? provide

David Lopez

sort are some in on really We us to investors. into it's of this we've like So us, Chickasaw ready to know agreement, think year, focus a for especially on agreement, into little news been for it's the well to still the very renew hard. a or We but our third for early future. that I quarter. stretches that we'll offer But the next probably be fourth it near quarter that renew – probably need working

a Nation country, our great get have all We're for calls, deal obviously our our guys them. As and like. negotiated across wrapped I've relationship I've you about on in deal the we'll concerns investors, getting the but It's up, as with that have confident concerns with tribes us, of in but the the some Oklahoma relationships renewed, Chickasaw news soon. for ability tribal and with that especially and probably just Very to not no no I about anything on that confident. obviously terms said said to or

Ben Combes

that wondering year. at R&D great. the last Okay, And that was product spend how quantify this you into I went product the then just showed if much you could showed year GXE you versus

David Lopez

efficiencies, year-to-year, a quantifying it get consistent. So pretty think on giving you cost spend say R&D speaking, I think though. not say we've done Without about When we that it's to a generally you some per-cabinet basis I'd Orion Portrait, the something is number date. that all “x”. I'd

lot the percentage you bit cost about when using I'm reduce the same “x”. the infrastructure lighting. because that you of we're but think technology a a a talking XX%, think could and Slant, not of the and Orion I about it cost you're again Upright, technology. many button the favorite is the the been talking of done. lot same which I Orion lighting now has same because technology, cabinet, looking just of now my already at And new A love panel the about work little you're

deal. sort it's a of just structural So

last than So was even it's year. cheaper a the Slant little bit

efficiencies R&D. we specific from So some get you as family. a efficiencies giving cabinet get numbers, to move cabinet we some there do we our cabinet Without within

Ben Combes

Fantastic. update. the Thanks, for very much thanks

David Lopez

Thanks.

Kimo Akiona

you. Thank

Operator

comes next Please Bank. Deutsche from with Our ahead. go question Santarelli, Carlo

Carlo Santarelli

to question you ask I Great, a a earlier. follow-up David, guys. asked thank wanted hey to

model, preference? your Shuffle model a a a here for-sale decisions down of participation more, take your acknowledging that of that to use of Master it model apply you obviously of the lease to clearly relative having bit to kind what you more, will to You certainly the the customer lot boil time kind spent a sale but business, versus model, and different from there experience did at little lease

David Lopez

that more getting percentage They're business. part a short-term give love about They're wonderful leases our do, a really indifferent is Yes, our to want it's – sale. indifferent. do it's to always us we're this Carlo, to to they'd a We and out what we're there. lease We we versus But whatever of say like do. say revenue. pop. like of we like to Sales

to or sales you away climb But take our continue the put we you there, from As said, whole boxes see, that to work R&D will. for the us. what on I very of a stay Shuffle at look quarter necessity lease to long term, days things. to term think my long way make for the out is not of that out That's is Converting company, side. team, testament the if a We shareholders. the very the focused at

we there's can that If into met we it. unit place there guys every units when five discounts the out we get when where customers out focused, The in nation, get is that week. dialed ask had them they I in question, and end our are that, – a for sort actually meetings at up that that the there's So about coming of go certain at our keep Brad's go think discount high-quality out talk efficiencies that and get vendors can nontribal, there going not good purchases,” and jurisdictions our some in. in every can look still units going sales two are of just tribal, big prices, out commercial, back to “hey, and get We get that. Because us an corner there them to They end mentioned to of That this you sort in stay something to something And we're the do Nebraska, lease the off with not don't are we focused going We every do quarter. those. opportunity casinos quarter. it's average of best there, that's on means we're capital go them. some with the which keep get yield of doing. done. why work class, at when of And there

this to don't and call, yes, that end the of always at the So there's long focused, it's some lessons I think I say term. other deals probably but do the quarter, think – won't share on

Carlo Santarelli

in if Super of could, of In just kind including on one recent Alora conservative kind helpful. follow-up. a of of for how bit little your Is that most to had kind targeting you anything kind range? you GXE, then that are prior have Thank or would the guys $XX. RPD more range interim guys, I more that's cabinet. narrowed decks, approach opportunity? at learned the wider that presentations, the the we Or you're you. less, to taking X And just there you a presumably of Philippines model in think In

David Lopez

talking range you're of placements? about the Now

Carlo Santarelli

range, yes. RPD the Sorry,

David Lopez

there excited I get of installed. is get We're I the first the key and the key think So in think opportunity there. for the all, us over – Philippines units about to our

a assumptions a our market. be off honest fresh cabinet I that learn to nice And the days to in going think in in market in first cabinet. our you, get lot we'll more now. there. be are think We'll it's one that we've those XX things to I new XX right the got of with We're

It's are new understand at you math sort If got units strip to what I that were We would representative the it's a think look that that not you in think you like. you business you while and of look at our there, nothing got sort going We've can anything too. cabinets cabinet with that in malls food, your new like the market. I looked of of these say, new gas to games. like Philippines the we've and we're is pedal going do as this the proven. a to beautiful cabinet. bet present. And to We've We got eat what

we've bit So got a everything. of little

But think the market XX that our our belt. time, XX, under days you be and the into to think first instructing the we'll a – that I get we be lot guys range get want I same more we we conservative. at as

Carlo Santarelli

you sir. Perfect, thank

David Lopez

Thanks.

Operator

is question from with Please next ahead. Macquarie. Chad Our go Beynon,

Chad Beynon

taking for thanks my questions. afternoon Good

this were a pent-up being of demand of different there. XX% players large is EGM just lot sales, market, into you of there it them up in mentioned in like the lot you a quarter was there. to part the sold able Canada. of sounds Big, and Regarding sell And

market should near Pennsylvania this think we with the about new should Ohio. assuming, of and in Or that licenses operators types you not conversations in I same how there? some we guess, ahead announced but any of talk and also And be term? opportunities early about success, can getting you've ourselves had You

David Lopez

Hey thanks.

start probably of not ourselves. yes, with, ahead So let's get it's good to

some I just pent-up Canada, even at, any representative think the going in be these demand. we're are of don't the you that good look demand. news that approvals. know particularly of is in There pent-up sales getting is I to

those Some second find we XXXX, even first might of round proxy of orders. look orders that want it say I'd than any We as could future. is first first a don't we to be order. the for as bigger of But orders just don't into we use a that And know.

representative pent-up could it demand. of of be Some

Some the water of later. in it could dipping toe of be representative with coming and then orders back sort of larger their

our operators, operators be on Pennsylvania the us But think a us be our I done same. there. up far the better Those than key see really in and little little say always know will of When bit the Canadian units to because Pennsylvania that get what's think product always not and bit aren't demand a we've known with little pent-up think I orders, that and well I I'm so there, the because I performance. of a really numbers. our think going We'll product the of be getting we're performing as amazingly they're They've been Alberta then rock star there great will Pennsylvania, far. indicative jurisdiction, feedback initial reorders, so we bit and think our that both far in as they to Canada of is what just that. every it's reorder. betting

or so rebuys far. been have the reorders fantastic Our

I they'll the real pent-up they'll initial any they So that numbers order. some I that you that like, how refer how and give think in our could a initial and I demand about represent order I at is then represent, as come know some, look units. They'll of there didn't would buy then how rebuy, but that's the it trial what the think with to you do might just order see to the also but necessarily, trial, the

Chad Beynon

Or acquisition, multiple of that then you. here. at And that base it has the anything do installed there there? kind thank into Great, working RPD that been in quarter portfolio the Rocket the to attractive an opportunity optimization an are XXXX? purchased perfected… Is on fourth like Gaming and that efforts left Is you and sounds or

David Lopez

Right, No, question, no, Chad. no. good though,

like at the out obviously like our in we've those of it's process. base. but all it's not say, that totality not of We and I great It's the think Bridge. and a market, got this maybe just I a analogy, Golden there like Gate painting is units domestically. the XX,XXX But install over Julia's to number look – as So favorite

You just at other pick the to you go the At year start other on side. and end bucket you of one then back the your end. finished you're the right end up and paint

an of entire and our over better quote-unquote, footprint it's our for b) we and done, process out when And But preserve a) we're, start we: over again, get AGS. base, time. to footprint; ongoing so optimize we RPD and install over Rocket both a time. that's re-optimize it the at And how

There's more So rest install just it Rocket. yes, our base. of with there an is some process, do. the optimization It's to ongoing like part done we've of

Chad Beynon

Thanks David. I the appreciate color.

David Lopez

Thanks.

Operator

next Robinson Humphrey. Jonas, go comes ahead. from question Our SunTrust with Please Barry

Barry Jonas

guys, just a Hey couple.

double-digit So another quarter of growth. strong ASP

ASPs about year, how Thanks. and will into good what's lot get you go-forward as QX comp on tougher, a think curious Just a next trend a gets way to the basis?

David Lopez

out. be little as Orion might will Well Icons family fully into of more – our bit see we me, excuse the – a more that of I Orion, overall think get you rollout of sort lift rolled because

Orion. So fewer Icons, more

You get lift some there. natural

things, to our round now – learned pricing. to then question not we're and to are and right. sort Those look we And a your That's Shuffle, being beyond As beyond of discounts. time. big stick figure lift obviously offer about going ASPs. when into conversation, part of we'd get lifting Orion earlier sort asked at now we all going We're staying when Orion a in cabinetry things next I the our we that of over of to all committed continue to go aspirational from we're – this when said Carlo that going

and the the number? see, to work quality it's do R&D how hey, to down press down we cabinetry. come come of just, to to going to all down our come can it's to high games, regard our but we'll great in on it's Aspirational Well, going that to mix, guys going

Barry Jonas

planned, color Thanks. which Arkansas the expansions sure mentioned just some Great. any And one, market. boost potentially tax just little can you risks potential hoping there's high-level flip I in not maybe the that more casinos I'm on side, Class see II. you changes that give with earlier potential on could some I'm And market. know the Oklahoma then a then coming. if you for a growth

David Lopez

the going do as it'd up just the think Arkansas to that states will. out they – in there the in far we I'd the risk also So I they're finest the and going to about early as operators of Oklahoma players their and; to: country, that sure very the state a) our customer players do and because if words b) say yet, continue it going Oklahoma other goes, in anything going from to, that do to and sort Arkansas. they talk game risk some what Oklahoma. I casinos see don't anything be borders, don't president, how of we in will we in well. could they're And has very secure you of see to don’t their stay think they They're make the draw

growth modest always goes, Class in and growth I as say upside modest in those – in II modest that but think Oklahoma. as specific, So far jurisdictions, we nothing and growth

are do coming online. they some have that Now projects

numbers arenas expansions sort to they we'll market other in online. what some if new tribe some haven't will, projects we're our Chickasaw that and have published obviously of as and but continue in And going expands, of to Oklahoma as share, do well. those coming fair the yet, We expand they every do on are get as you

Barry Jonas

Thanks so much.

David Lopez

Thanks.

Operator

time over for no the to are [Operator At Lopez further question-and-answer concludes questions. turn back this conference This would any to David our I like there Instructions] remarks. session. closing

David Lopez

call. And talk do to for again. our Thanks out everyone, calling in. great Thanks, close months and we'll number you we we of Thanks. in full a when year XXXX

Operator

presentation. you has today's attending now for Thank conference concluded. The

disconnect. now may You

PlayAGS (AGS) 12 Nov 182018 Q3 Earnings call transcript