Everi Holdings Inc.

EVERI REPORTS SECOND QUARTER 2023 RESULTS

August 9, 2023 Published by Roboticulized.com

Everi Holdings Inc. (NYSE: EVRI) (“Everi” or the “Company”), today announced results for the second quarter ended June 30, 2023.

Revenues increased 6% to $208.7 million from $197.2 million a year ago
- FinTech segment revenues grew 13% to $95.6 million, reflecting a 26% increase in software and other revenues, a 9% rise in financial access revenues and a 6% increase in hardware revenues
- Games segment revenues rose 1% to $113.1 million, reflecting a 5% rise in gaming operations partially offset by an 8% decline in gaming equipment and systems sales revenues
- Recurring revenues grew 9% to $151.6 million and represented 73% of total revenues; non-recurring revenues declined 1% to $57.1 million
Operating income of $53.3 million declined 2% from $54.5 million in the prior year; net income decreased 16% to $27.4 million, or $0.29 per diluted share, compared to $32.5 million, or $0.33 per diluted share, in the 2022 second quarter, primarily due to higher net interest costs of $7.8 million in the second quarter of 2023
Adjusted EPS, a non-GAAP financial measure, was $0.41 per diluted share compared with $0.48 per diluted share in the prior year
Adjusted EBITDA, a non-GAAP financial measure, increased 2% to $96.1 million compared with $94.4 million in the 2022 second quarter
Free Cash Flow, a non-GAAP financial measure, was $47.7 million compared with $49.8 million in the 2022 second quarter
Repurchased 2.7 million shares for $40.0 million in the 2023 second quarter under the $180 million share repurchase authorization, with $140.0 million available to repurchase
Revised 2023 outlook, including net income range of $98 million to $106 million, Adjusted EBITDA range of $380 million to $386 million and Free Cash Flow range of $147 million to $153 million

Randy Taylor, Chief Executive Officer of Everi, said, “Our second quarter results include 6% year over year revenue growth. Revenues for both our FinTech and Games segment grew as we continue to benefit from our investments in new product development as well as from several tuck-in acquisitions we completed since the beginning of 2022. Importantly, despite the impact from higher interest rates and inflationary pressures, we continued to generate strong Free Cash Flow, which positions the Company to invest in our growth initiatives and return capital to shareholders through share repurchases.

“Our FinTech segment continued to generate strong year-over-year gains across all of our product categories as revenue rose 13% to an all-time quarterly record, with operating income increasing 13% and Adjusted EBITDA growing 6% compared to the year-ago period. Player funding reached an all-time quarterly record of $11.7 billion, exceeding $11 billion for the second quarter in a row, which drove growth in financial access services revenues. We also achieved strong year-over-year growth in hardware sales, as well as software and other revenues.

“While Games segment revenue continued to grow, gaming operations revenues and unit sales were impacted by near-term challenges during a transition period as we roll-out new cabinets and content. Following several consecutive years of growth in our installed base and increased unit shipments, we expect our Games segment revenue will be flat to slightly down in the second half of the year as compared to the second half of 2022. With the expected launch of several new cabinets in the back half of this year and first half of 2024, we expect our Games segment will return to an attractive growth profile.

“We continue to generate strong Free Cash Flow and are on track to deliver approximately $150 million of Free Cash Flow in 2023. We expect to continue to invest in development initiatives to sustain longer-term growth while remaining active in share repurchases. We are confident that we have the right product strategies and capital allocation priorities in place to continue creating value for shareholders.”

Consolidated Full Quarter Comparative Results (unaudited)
	As of and for the Three Months Ended June 30,
	2023	2022
	(in millions, except per share amounts)
Revenues	$ 208.7	$ 197.2

Operating income ⁽¹⁾	$ 53.3	$ 54.5

Net income ⁽¹⁾	$ 27.4	$ 32.5

Net earnings per diluted share ⁽¹⁾	$ 0.29	$ 0.33

Adjusted EPS ⁽²⁾	$ 0.41	$ 0.48

Weighted average diluted shares outstanding	93.5	98.7

Adjusted EBITDA ⁽³⁾	$ 96.1	$ 94.4

Free Cash Flow ⁽³⁾	$ 47.7	$ 49.8

Cash and cash equivalents	$ 210.6	$ 238.1

Net Cash Position⁽⁴⁾	$ 28.4	$ 93.1

⁽¹⁾	Operating income, net income, and net earnings per diluted share for the three months ended June 30, 2023, included $1.2 million for employee severance costs and related expenses, $0.6 million for non-recurring professional fees associated with acquisitions, litigation and the debt amendment, and $0.2 million for office and warehouse consolidation costs. Operating income for the three months ended June 30, 2022, included $0.7 million for office and warehouse consolidation costs and $0.9 million for non-recurring professional fees and other.
⁽²⁾	For a reconciliation of net earnings per diluted share to Adjusted EPS, see the Unaudited Reconciliation of net earnings per diluted share to Adjusted EPS provided toward the end of this release.
⁽³⁾	For a reconciliation of net income to Adjusted EBITDA and Free Cash Flow, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided toward the end of this release.
⁽⁴⁾	For a reconciliation of Net Cash Position to Cash and Cash Equivalents, see the Unaudited Reconciliation of Cash and Cash Equivalents to Net Cash Position and Net Cash Available provided toward the end of this release.

Second Quarter 2023 Results Overview

Revenues for the three-month period ended June 30, 2023 increased 6% to $208.7 million compared to $197.2 million in the year-ago quarter. Organic revenues rose 3% over the prior year, while revenues from acquisitions completed since July 1, 2022 contributed $5.3 million in the quarter. Recurring revenues increased 9% to $151.6 million from $139.7 million in the prior-year period driven by growth in both the Games and FinTech segments. Revenues from one-time sales declined 1% to $57.1 million from $57.5 million a year ago, driven by an 8% decrease in gaming equipment and systems sales partially offset by a 6% increase in FinTech hardware and one-time software sales.

Operating income of $53.3 million declined 2% from $54.5 million in the prior-year period as a result of higher costs. The year-over-year increases in operating expenses, research and development expense, and depreciation reflect higher labor costs, higher development costs and investment in growth initiatives.

Lower operating income and higher interest expense drove a 16% decline in net income to $27.4 million, or $0.29 per diluted share, compared to $32.5 million, or $0.33 per diluted share, in the second quarter of 2022. Higher interest expense partially offset by a lower provision for income tax and fewer weighted average diluted shares outstanding resulted in Adjusted EPS of $0.41 per diluted share compared with $0.48 per diluted share in the prior year.

Adjusted EBITDA increased 2% to $96.1 million from $94.4 million in the prior-year period.

Free Cash Flow was $47.7 million compared with $49.8 million in the year-ago period, primarily reflecting higher net cash interest paid and cash taxes, partially offset by lower capital expenditures.

Outlook

Everi revised its full year 2023 guidance today. Net income guidance is revised upward as a result of lower expected depreciation and amortization and income tax expense and is now expected to be in a range of $98 million to $106 million compared to the prior range of $92 million to $100 million. Adjusted EBITDA is now expected to be in a range of $380 million to $386 million compared to the prior outlook range of $384 million to $396 million, primarily due to lower gaming equipment sales in the second half of 2023 as compared to the second half of 2022. Free Cash Flow is now expected to be in a range of $147 million to $153 million compared to the prior range of $150 million to $160 million. Earnings per diluted share is now expected in the range of $1.05 to $1.13 compared to the prior expectation of $0.97 to $1.06 and Adjusted EPS is now expected to be in a range of $1.62 to $1.67 compared to the prior expectation of between $1.58 to $1.66, with the new range inclusive of the higher net income and a lower-than-previously expected diluted share count.

A summary and reconciliation of the full year 2023 financial targets are included in a supplemental table at the end of this release.

Games Segment Full Quarter Comparative Results (unaudited)
	Three Months Ended June 30,
	2023	2022
	(in millions, except unit amounts and prices)
Games revenues
Gaming operations – Land-based casinos	$ 70.8	$ 68.2
Gaming operations – Digital iGaming	7.0	5.8
Gaming operations – Total	77.8	74.0
Gaming equipment and systems	35.3	38.3
Games total revenues	$ 113.1	$ 112.3

Operating income ⁽¹⁾	$ 24.4	$ 28.9

Adjusted EBITDA ⁽²⁾	$ 58.1	$ 58.7

Research and development expense	$ 11.2	$ 9.5

Capital expenditures	$ 23.9	$ 28.9

Gaming operations information:
Units installed at period end:
Class II	10,552	9,792
Class III	7,260	7,672
Total installed base at period end	17,812	17,464

Average units installed during period	17,855	17,362

Daily win per unit (“DWPU”) ⁽³⁾	$ 37.22	$ 39.94

Unit sales information:
Units sold	1,597	1,957
Average sales price (“ASP”)	$ 20,512	$ 18,800

⁽¹⁾	Operating income for the three months ended June 30, 2023, included $0.3 million for employee severance costs and related expenses, $0.3 million for non-recurring professional fees associated with acquisitions, and $0.2 million for office and warehouse consolidation costs. Operating income for the three months ended June 30, 2022 included $0.7 million for office and warehouse consolidation costs.
⁽²⁾	For a reconciliation of net income to Adjusted EBITDA, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP measures provided toward the end of this release.
⁽³⁾	Daily win per unit excludes the impact of the direct costs associated with the Company’s wide-area progressive jackpot expense.

2023 Second Quarter Games Segment Highlights

Games segment revenues increased 1% to $113.1 million compared to $112.3 million in the second quarter of 2022, reflecting a 5% increase in gaming operations revenues, inclusive of digital gaming operations, partially offset by an 8% decrease in revenues from gaming equipment and systems sales. The recent acquisition of Video King contributed $4.1 million in revenues in the 2023 second quarter.

Operating income was $24.4 million compared to $28.9 million in the second quarter of 2022, reflecting higher operating expenses including research and development expenditures, primarily due to higher labor costs, as well as increased depreciation and amortization associated with acquisitions. Adjusted EBITDA was $58.1 million compared with $58.7 million in the second quarter of 2022.

Gaming operations revenues increased 5% to $77.8 million compared to $74.0 million a year ago.

The installed base grew by 2% to 17,812 units from 17,464 units in the prior year. The premium portion of the installed base remained relatively flat at 48% when compared to the prior period.
Daily Win per Unit (“DWPU”) was $37.22 in the second quarter of 2023 compared to $39.94 in the second quarter of 2022.
Revenues from digital gaming rose 21% to $7.0 million compared to $5.8 million in the second quarter of 2022. The increase reflects new customer sites, including going live in Alberta, Canada, as well as the growth in the library of available slot content.

Gaming equipment and systems revenues generated from the sale of gaming machines and other related parts and equipment, declined 8% to $35.3 million compared to $38.3 million in the second quarter of 2022.

The Company sold 1,597 gaming machines at an average selling price (“ASP”) of $20,512 in the 2023 second quarter, compared with 1,957 units sold at an ASP of $18,800 in the 2022 second quarter.

Financial Technology Solutions Segment Full Quarter Comparative Results (unaudited)
	Three Months Ended June 30,
	2023	2022
	(in millions, unless otherwise noted)
FinTech revenues
Financial access services	$ 55.7	$ 50.9
Software and other	24.0	19.0
Hardware	15.9	15.0
FinTech total revenues	$ 95.6	$ 84.9

Operating income ⁽¹⁾	$ 28.9	$ 25.7

Adjusted EBITDA ⁽²⁾	$ 38.0	$ 35.7

Research and development expenses	$ 5.4	$ 4.6

Capital expenditures	$ 6.3	$ 7.5

Value of financial access transactions:
Funds advanced	$ 3,005.0	$ 2,661.1
Funds dispensed	8,176.2	7,511.0
Check warranty	483.6	439.1
Total value processed	$ 11,664.8	$ 10,611.2

Number of financial access transactions:
Funds advanced	4.5	3.5
Funds dispensed	30.9	28.6
Check warranty	0.9	1.2
Total transactions completed	36.3	33.3

⁽¹⁾

Operating income for the three months ended June 30, 2023 included $0.9 million for employee severance costs and related expenses
and $0.3 million for non-recurring professional fees associated with acquisitions, litigation and the debt amendment. Operating income
for the three months ended June 30, 2022, included $0.9 million for professional fees associated with acquisitions and non-recurring
litigation costs.

⁽²⁾

For a reconciliation of net income and operating income to Adjusted EBITDA, see the Unaudited Reconciliation of Selected Financial
GAAP to Non-GAAP Measures provided toward the end of this release.

2023 Second Quarter Financial Technology Solutions (“FinTech”) Segment Highlights

FinTech revenues for the 2023 second quarter increased 13% to $95.6 million compared to $84.9 million in the second quarter of 2022, reflecting a 26% gain in software and other revenues, 9% growth in financial access services, and a 6% increase in hardware sales.

Operating income increased 12% to $28.9 million compared to $25.7 million in the prior-year period, reflecting higher revenues partially offset by higher operating expenses and increased research and development expense for new and enhanced products. Adjusted EBITDA rose 6% to $38.0 million compared to $35.7 million in the 2022 second quarter.

Financial access services revenues, which include cashless and cash-dispensing debit and credit card transactions and check services, increased 9% to $55.7 million compared with the 2022 second quarter, reflecting higher same-store financial funding transactions, as well as continued growth from new customer additions. Funds delivered to casino floors increased 10% to an all-time quarterly record of $11.7 billion on a 9% increase in the number of financial transactions and an increase in average transaction size. Cashless transactions (including both digital wallet and the sale of paper gaming vouchers) increased 48% over the 2022 second quarter and 8% on a quarterly sequential basis, while still representing less than 5% of funding transactions. The Company’s CashClub Wallet technology is currently installed or being deployed across 22 jurisdictions at 45 properties.
Software and other revenues, which include Loyalty and RegTech software, product subscriptions, kiosk maintenance services, and other revenues, rose 26% to $24.0 million in the second quarter of 2023 compared to $19.0 million in the second quarter of 2022. Approximately 77% and 78% of software and other revenues were of a recurring nature in the 2023 and 2022 second quarter periods, respectively.
Hardware sales revenues increased 6% to $15.9 million compared to $15.0 million in the second quarter of 2022.

Balance Sheet, Liquidity and Cash Flow

As of June 30, 2023, the Company had $210.6 million of cash and cash equivalents compared with $293.4 million as of December 31, 2022. The Net Cash Position was $28.4 million compared with $89.2 million as of December 31, 2022.
Total debt decreased to $986.5 million at June 30, 2023, from $992.5 million as of December 31, 2022, as the Company paid $6.0 million on its secured term loan during the 2023 first quarter.
Cash paid for interest, net of interest income, was $14.4 million in the 2023 second quarter compared with $7.6 million in the year-ago period. The increase in net interest paid was primarily due to the impact of rising interest rates. In addition to the Company’s variable-rate term debt and notes outstanding, interest expense also includes the impact of rising rates on third-party commercial cash arrangements associated with certain of the Company’s funding of financial access services. These fees were $5.9 million for the 2023 second quarter on a daily average balance of $310.7 million compared to $1.7 million on a daily average balance of $382.8 million for the 2022 second quarter.
In May 2023, the Company completed the acquisition of the assets of VKGS LLC (“Video King”), a privately-owned provider of integrated electronic bingo gaming tablets, video gaming content, instant win games, and systems for cash consideration of approximately $61.3 million, inclusive of estimated customary net working capital adjustments of which $59.2 million was paid in the quarter.
During the quarter, the Company repurchased 2.7 million shares of its common stock for total consideration of $40.0 million under the current 18-month, $180 million share repurchase authorization. Currently $140.0 million is remaining under this authorization.

Investor Conference Call and Webcast

The Company will host an investor conference call to discuss its 2023 second quarter results at 11:00 a.m. EST (8:00 a.m. PST) today. The conference call may be accessed live by phone by dialing (201) 689-8471. A replay of the call will be available beginning at 2:00 p.m. ET today and may be accessed by dialing (412) 317-6671; the PIN number is 13739295. A replay will be available until August 16, 2023. The call also will be webcast live and archived on www.everi.com (select “Investors” followed by “Events & Contact”).

Non-GAAP Financial Information

In order to enhance investor understanding of the underlying trends in our business, our cash balance, and cash available for our operating needs, and to provide for better comparability between periods in different years, we are providing in this press release Adjusted EBITDA, Free Cash Flow, Adjusted EPS, Net Cash Position and Net Cash Available, which are not measures of our financial performance or position under United States Generally Accepted Accounting Principles (“GAAP”). Accordingly, these measures should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP. These measures should be read in conjunction with our net earnings, operating income, and cash flow data prepared in accordance with GAAP. With respect to Net Cash Position and Net Cash Available, these measures should be read in conjunction with cash and cash equivalents prepared in accordance with GAAP.

We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, of debt, non-cash stock compensation expense, accretion of contract rights, non-recurring litigation costs net of settlements and insurance proceeds received, facilities consolidation costs, asset acquisition expense, non-recurring professional fees, debt amendment costs and other one-time charges and benefits. We present Adjusted EBITDA, as we use this measure to manage our business and consider this measure to be supplemental to our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA; and our credit facility and senior unsecured notes require us to comply with a consolidated secured leverage ratio that includes performance metrics substantially similar to Adjusted EBITDA.

We define Free Cash Flow as Adjusted EBITDA less cash paid for interest net of cash received for interest income, cash paid for capital expenditures, cash paid for placement fees, and cash paid for taxes net of refunds. We present Free Cash Flow as a measure of performance. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures.

A reconciliation of the Company’s net income per GAAP to Adjusted EBITDA and Free Cash Flow is included in the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided at the end of this release. Additionally, a reconciliation of each segment’s operating income to EBITDA and Adjusted EBITDA is also included. On a segment level, operating income per GAAP, rather than net earnings per GAAP, is reconciled to EBITDA and Adjusted EBITDA as the Company does not report net earnings by segment. Management believes that this presentation is meaningful to investors in evaluating the performance of the Company’s segments.

We define Adjusted EPS as earnings per diluted share before non-cash stock compensation expense, accretion of contract rights, amortization of acquired intangible assets, non-recurring litigation costs net of settlements and insurance proceeds received, facilities consolidation costs, asset acquisition expense, non-recurring professional fees, and one-time charges and benefits. We consider Adjusted EPS as a supplemental measure to our operating performance and believe it provides investors with another indicator of our operating performance. A reconciliation of the Company’s earnings per diluted share per GAAP to Adjusted EPS is included in the Unaudited Reconciliation of Earnings per Diluted Share to Adjusted EPS provided at the end of this release.

We define Net Cash Position as cash and cash equivalents plus settlement receivables less settlement liabilities and Net Cash Available as Net Cash Position plus undrawn amounts available under our revolving credit facility. We present Net Cash Position because our cash position, as measured by cash and cash equivalents, depends upon changes in settlement receivables and the timing of payments related to settlement liabilities. As such, our cash and cash equivalents can change substantially based upon the timing of our receipt of payments for settlement receivables and payments we make to customers for our settlement liabilities. We present Net Cash Available as management monitors this amount in connection with its forecasting of cash flows and future cash requirements.

A reconciliation of the Company’s cash and cash equivalents per GAAP to Net Cash Position and Net Cash Available is included in the Unaudited Reconciliation of Cash and Cash Equivalents to Net Cash Position and Net Cash Available provided at the end of this release.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance, but instead are based only on our current beliefs, expectations, and assumptions regarding the future of our business, plans and strategies, projections, anticipated events and trends, the economy, and other future conditions, as of the date this press release is issued. Forward-looking statements often, but do not always, contain words such as “expect,” “anticipate,” “aim to,” “designed to,” “intend,” “plan,” “believe,” “goal,” “target,” “future,” “assume,” “estimate,” “indication,” “seek,” “project,” “may,” “can,” “could,” “should,” “favorably positioned,” or “will” and other words and terms of similar meaning. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which are based only on information currently available to us and only as of the date hereof. We undertake no obligation to update or publicly revise any forward-looking statements as a result of new information, future developments or otherwise.

Examples of forward-looking statements include, among others, statements regarding our ability to execute on key initiatives and deliver ongoing operating and financial improvements, including guidance related to 2023 financial and operational metrics, such as maintaining revenue, earnings and Free Cash Flow momentum; sustaining our growth; driving growth of the gaming operations installed base and DWPU; expanding the portions of the gaming floor the Company’s games address, including into the Historical Horse Racing category of gaming devices and the Company’s overall targeted ship share of gaming machines sold; successfully performing obligations required by acquisition agreements; and creating incremental value for our shareholders, as well as statements regarding our expectations for the industry environment and mitigating potential challenges created by macroeconomic uncertainties and conditions; and the adoption of our products and technologies.

Forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are often difficult to predict and many of which are beyond our control, including, but not limited to, statements regarding: macro-economic impacts on consumer discretionary spending, interest rates and interest expense; global supply chain disruption; inflationary impact on supply chain costs; inflationary impact on labor costs and retention; equity incentive activity and compensation expense; our ability to maintain revenue, earnings, and cash flow momentum or lack thereof; changes in global market, business and regulatory conditions whether as a result of a pandemic or other economic or geopolitical developments around the world, including availability of discretionary spending income of casino patrons as well as expectations for the closing or re-opening of casinos; product innovations that address customer needs in a new and evolving operating environment; to enhance shareholder value in the long-term; trends in gaming establishment and patron usage of our products; benefits realized by using our products and services; benefits and/or costs associated with mergers, acquisitions, and/or strategic alliances; product development, including the benefits from the release of new products, new product features, product enhancements, or product extensions; regulatory approvals and changes; gaming, financial regulatory, legal, card association, and statutory compliance and changes; the implementation of new or amended card association and payment network rules or interpretations; consumer collection activities; competition (including consolidations); tax liabilities; borrowings and debt repayments; goodwill impairment charges; international expansion or lack thereof; resolution of litigation or government investigations; our share repurchase and dividend policy; new customer contracts and contract renewals or lack thereof; and financial performance and results of operations (including revenue, expenses, margins, earnings, cash flow, and capital expenditures).

Our actual results and financial condition may differ materially from those indicated in forward-looking statements, and important factors that could cause them to do so include, but are not limited to, the following: our ability to generate profits in the future and to create incremental value for shareholders; our ability to withstand economic slowdowns, inflationary and other economic factors that pressure discretionary consumer spending; our ability to execute on mergers, acquisitions and/or strategic alliances, including our ability to integrate and operate such acquisitions or alliances consistent with our forecasts in order to achieve future growth; our ability to execute on key initiatives and deliver ongoing improvements; expectations regarding growth for the Company’s installed base and daily win per unit; expectations regarding placement fee arrangements; inaccuracies in underlying operating assumptions; our ability to withstand direct and indirect impacts of a pandemic outbreak or other public health crisis of uncertain duration on our business and the businesses of our customers and suppliers, including as a result of actions taken in response to governments, regulators, markets and individual consumers; changes in global market, business, and regulatory conditions arising as a result of economic, geopolitical and other developments around the world, including a global pandemic, increased conflict and political turmoil, capital market disruptions and instability of financial institutions; climate change or currently unexpected crises or natural disasters; our leverage and the related covenants that restrict our operations; our ability to comply with our debt covenants and our ability to generate sufficient cash to service all of our indebtedness, fund working capital, and capital expenditures; our ability to withstand the loss of revenue during a closure of our customers’ facilities; our ability to maintain our current customers; our ability to replace revenue associated with terminated contracts or margin degradation from contract renewals: expectations regarding customers’ preferences and demands for future product and service offerings; our ability to successfully introduce new products and services, including third-party licensed content; gaming establishment and patron preferences; failure to control product development costs and create successful new products; the overall growth or contraction of the gaming industry; anticipated sales performance; our ability to prevent, mitigate, or timely recover from cybersecurity breaches, attacks, and compromises or other security vulnerabilities; national and international economic and industry conditions including the prospect of a shutdown of the U.S. federal government; changes in gaming regulatory, financial regulatory, legal, card association, and statutory requirements; the impact of evolving legal and regulatory requirements, including emerging environmental, social and governance requirements; regulatory and licensing difficulties, competitive pressures and changes in the competitive environment; operational limitations; changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; business prospects; unanticipated expenses or capital needs; technological obsolescence and our ability to adapt to evolving technologies; employee hiring, turnover, and retention; our ability to comply with regulatory requirements under the Payment Card Industry (“PCI”) Data Security Standards and maintain our certified status; and those other risks and uncertainties discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”). Given these risks and uncertainties, there can be no assurance that the forward-looking information contained in this press release will in fact transpire or prove to be accurate.

This press release should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022, and with the information included in our other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand our reported financial results and our business outlook for future periods.

EVERI REPORTS RECORD SECOND QUARTER 2022 RESULTS

August 3, 2022 Published by TheFintechBuzz.com

Everi Holdings Inc. (NYSE: EVRI) (“Everi” or the “Company”), a premier provider of land-based and digital casino gaming content and products, financial technology and player loyalty solutions, today announced results for the second quarter ended June 30, 2022. Everi also reiterated its full year outlook for Net income, Adjusted EBITDA and Free Cash Flow.

Second Quarter 2022 Financial Highlights

Revenues grew 14% to an all-time quarterly record $197.2 million from $172.6 million in the 2021 second quarter, reflecting a 7% increase in recurring revenues to a quarterly record $139.7 million and a 37% increase in sales of gaming machines and FinTech hardware.
Income before income tax increased 16% to a record $42.3 million compared to $36.6 million a year ago.
Net income was $32.5 million, or $0.33 per diluted share, compared to $36.2 million, or $0.36 per diluted share, in the 2021 second quarter, as the provision for income taxes increased $9.3 million in the 2022 second quarter related to the reversal of deferred tax asset valuation allowance in the 2021 fourth quarter; cash taxes paid were essentially flat at $0.1 million.
Adjusted EBITDA, a non-GAAP financial measure, increased to an all-time quarterly record $94.4 million compared to $92.5 million in the 2021 second quarter.
Free Cash Flow, a non-GAAP financial measure, rose 26% to $49.5 million from $39.2 million in the 2021 second quarter.
Repurchased 2.0 million shares of stock for $33.3 million in the 2022 second quarter.

Randy Taylor, Chief Executive Officer of Everi, said, “Our strong operating momentum continued in the second quarter, as we delivered all-time quarterly record revenues, income before income tax, Adjusted EBITDA and Free Cash Flow. These record financial results were driven by another consecutive quarter of record recurring revenues for both our Games and FinTech businesses despite the very challenging year-over-year comparison for these operations, as last year’s results included the significant benefit from casino reopening activities and financial stimulus payments provided to consumers.

“Our second quarter Games segment results include our highest-ever quarterly level of gaming machines sold, which increased 40% to 1,957 units; and the 13^th consecutive quarterly sequential increase in our installed base of gaming operations units. Our ongoing investments in the development of differentiated cabinets and expansion of our games portfolio continues to drive increases in our installed base, strong Daily Win per Unit, and growth in our ship share of units sold. In particular, the record number of units sold in the quarter reinforces our confidence in our ability to achieve our 15% ship share target over the next several years.

“Our FinTech segment is achieving similar success, as it generated record revenues, operating income and Adjusted EBITDA for the third consecutive quarter. The record quarterly performance was driven by increased revenues from financial access services, which included more than $10 billion of funding delivered to our customers’ casino floors for the second consecutive quarter, a record number of kiosk sales, and ongoing organic growth of our Loyalty and RegTech solutions. These results demonstrate our ability to offer industry-leading, integrated solutions that help drive increases in same-store activity and cost efficiencies for our customers. With our planned introductions of additional innovative products to our Digital Neighborhood of integrated solutions, our FinTech business is positioned to deliver consistent growth.

“Our top-line growth and focus on operational excellence continues to result in strong Free Cash Flow generation, which reached $49.5 million in the 2022 second quarter and $101.1 million for the first six months of 2022. We remain focused on allocating our higher Free Cash Flow to further grow the business through prudent investments in product development, as well as with acquisitions of businesses and technologies that continue to expand the scale and scope of our product offerings and/or drive our entry into new product categories and geographical markets. As reflected in the growing contributions of our Loyalty products, our return-focused approach to acquisitions benefits our operating performance. We expect recent acquisitions, which have expanded our addressable market to include opportunities in Australia and Historical Horse Racing gaming devices, will deliver similar benefits over time. Our Free Cash Flow performance, liquidity, and strong balance sheet also enabled us to opportunistically act on our share repurchase program in the second quarter given our view that our current valuation does not fully reflect the strength of our business and our outlook for ongoing growth.”

Consolidated Full Quarter Comparative Results (unaudited)

	As of and for the Three Months Ended June 30,
	2022	2021
	(in millions, except per share amounts)
Revenue	$ 197.2	$ 172.6

Operating income ⁽¹⁾	$ 54.5	$ 54.4

Net income ⁽¹⁾	$ 32.5	$ 36.2

Net earnings per diluted share ⁽¹⁾	$ 0.33	$ 0.36

Weighted average diluted shares outstanding	98.7	100.0

Adjusted EBITDA ⁽²⁾	$ 94.4	$ 92.5

Free Cash Flow ⁽²⁾	$ 49.5	$ 39.2

Principal amount of outstanding debt	$ 995.5	$ 1,144.6

Cash and cash equivalents	$ 238.1	$ 340.4

Net Cash Position⁽³⁾	$ 93.1	$ 196.6

(1)	Operating income, net income, and net earnings per diluted share for the three months ended June 30, 2022, included $0.7 million for office and warehouse consolidation costs, and $0.9 million in professional fees associated with acquisitions and for non-recurring litigation costs.
(2)	For a reconciliation of net income to Adjusted EBITDA and Free Cash Flow, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided toward the end of this release.
(3)	For a reconciliation of Net Cash Position to Cash and Cash Equivalents, see the Unaudited Reconciliation of Cash and Cash Equivalents to Net Cash Position and Net Cash Available toward the end of this release.

Second Quarter 2022 Results Overview

Revenues for the three-month period ended June 30, 2022 increased 14% to $197.2 million compared to $172.6 million in the second quarter of 2021. Recurring revenues grew 7% to $139.7 million and revenues from non-recurring sales increased 37% to $57.5 million.

Operating income for the 2022 second quarter was $54.5 million compared to $54.4 million in the prior-year period, and net income was $32.5 million, or $0.33 per diluted share, compared to $36.2 million, or $0.36 per diluted share, in the second quarter of 2021. The provision for income taxes increased $9.3 million in the 2022 second quarter related to the reversal of deferred tax asset valuation allowance in the 2021 fourth quarter. Operating margin declined from the prior-year period, reflecting a change in the revenue mix as a result of substantially greater growth in gaming machine and FinTech hardware sales year over year together with a lower margin on machine and hardware sales due to increased supply chain costs, higher operating costs that reflect the additions of acquisitions, and higher research and development expense that supports the Company’s focus on increased internal, new product development. Adjusted EBITDA increased to $94.4 million from $92.5 million in the prior-year period.

Free Cash Flow increased to $49.5 million from $39.2 million in the year-ago period, reflecting higher Adjusted EBITDA and lower cash interest paid, partially offset by higher capital expenditures.

Games Segment Full Quarter Comparative Results (unaudited)

	Three Months Ended June 30,
	2022	2021
	(in millions, except unit amounts and prices)
Games revenues
Gaming operations – Land-based casinos	$ 68.2	$ 69.6
Gaming operations – Digital iGaming	5.8	3.6
Gaming operations – Total	74.0	73.2
Gaming equipment and systems	38.3	26.1
Gaming other	—	—
Games total revenues	$ 112.3	$ 99.3

Operating income ⁽¹⁾	$ 28.9	$ 30.6

Adjusted EBITDA ⁽²⁾	$ 58.7	$ 60.4

Capital expenditures	$ 28.9	$ 21.3

Gaming operations information:
Units installed at period end:
Class II	9,792	9,422
Class III	7,672	6,829
Total installed base at period end ⁽³⁾	17,464	16,251

Premium units ⁽³⁾	8,355	6,961

Average units installed during period ⁽³⁾	17,362	16,088

Daily win per unit (“DWPU”) ⁽⁴⁾	$ 39.94	$ 45.66

Unit sales information:
Units sold	1,957	1,402
Average sales price (“ASP”)	$ 18,800	$ 17,894

(1)	Operating income for the three months ended June 30, 2022, included $0.7 million for office and warehouse consolidation costs and professional fees associated with acquisitions.
(2)	For a reconciliation of net income to Adjusted EBITDA, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP measures provided toward the end of this release.
(3)	The ending and average installed base include all units, whether or not casinos were open and whether or not the games were active.
(4)	Daily win per unit reflects the total of all units installed at casinos, inclusive of casinos closed due to the COVID pandemic and inactive units, where such units would have recorded no revenue and excludes the impact of the direct costs associated with the Company’s wide-area progressive jackpot expense.

2022 Second Quarter Games Segment Highlights

Games segment revenues grew 13% to a record $112.3 million compared to $99.3 million in the second quarter of 2021, primarily driven by record sales of gaming machines and ongoing growth in digital gaming revenues.

Operating income was $28.9 million compared to $30.6 million in the second quarter of 2021, reflecting higher revenues from machine sales, offset by lower margins on the machine sales due to increased supply chain costs as well as higher operating expenses, including increased costs associated with acquisitions and higher research and development expense, reflecting an acceleration in games development to support a path to a targeted future 15% ship share of gaming machines sold. Adjusted EBITDA was $58.7 million compared to $60.4 million in the second quarter of 2021. Revenues from the recent acquisitions of Intuicode Gaming and certain assets of Atlas Gaming (Australia) contributed $1.4 million in the 2022 second quarter.

Gaming operations revenues were $74.0 million compared to $73.2 million a year ago, and increased 5% on a quarterly sequential basis.

The installed base reached a record 17,464 units as of June 30, 2022; representing a year-over-year increase of 7%, or 1,213 units. The installed base increased by 136 units on a quarterly sequential basis.
The premium portion of the installed base increased by 20%, or 1,394 units, year over year and by 276 units on a quarterly sequential basis to a record 8,355 units. This was the 16^thconsecutive quarterly sequential increase in premium units. Growth was driven in part by continued placements of Cashnado units, the initial installations of Smokin’ Hot Stuff Fire and Ice, the Company’s popular premium mechanical reel games, and its Wide-area Progressive (“WAP”) gaming machines.
Daily Win per Unit (“DWPU”) was $39.94 in the second quarter of 2022 compared to $45.66 in the second quarter of 2021. DWPU in the year-ago period included the significant benefit of government stimulus payments coupled with pent-up demand as COVID vaccinations increased and consumers began to return to normalized activities. DWPU improved on a quarterly sequential basis from $39.76 in the 2022 first quarter.
Gaming operations revenues from digital gaming rose 61% to $5.8 million in the second quarter of 2022 compared to $3.6 million in the second quarter of 2021, and increased 5% on a quarterly sequential basis. Digital revenue growth reflects the continued growth and expanded base of iGaming operator sites featuring Everi’s games along with a growing library of available slot content, as well as going live in Ontario, Canada with nine operator sites as of June 30, 2022.

Gaming equipment and systems revenues generated from the sale of gaming machines and other related parts and equipment increased 47% to $38.3 million in the second quarter of 2022 compared to $26.1 million in the second quarter of 2021.

The Company sold an all-time record 1,957 gaming machines at an average selling price (“ASP”) of $18,800 in the 2022 second quarter, up 555 units, or 40%, from 1,402 units sold at an ASP of $17,894 in the 2021 second quarter, which had included a larger-than-average number of unit sales for new casino openings and expansions. Unit growth reflects the Company’s estimation of an improved industry ship share driven by the popularity of an expanding game library supporting the Empire Flex video reel cabinet, ongoing demand for the Player Classic mechanical reel cabinet, and sales of the newly launched Player Classic Signature mechanical reel cabinet.

Financial Technology Solutions Segment Full Quarter Comparative Results (unaudited)

	Three Months Ended June 30,
	2022*	2021*
	(in millions, unless otherwise noted)
FinTech revenues
Financial access services	$ 50.9	$ 44.8
Software and other	19.0	15.6
Hardware	15.0	12.8
FinTech total revenues	$ 84.9	$ 73.2

Operating income ⁽¹⁾	$ 25.7	$ 23.8

Adjusted EBITDA ⁽²⁾	$ 35.7	$ 32.1

Capital expenditures	$ 7.5	$ 7.9

Value of financial access transactions:
Funds advanced	$ 2,661.1	$ 2,210.9
Funds dispensed	7,511.0	6,960.1
Check warranty	439.1	378.8
Total value processed	$ 10,611.2	$ 9,549.8

Number of financial access transactions:
Funds advanced	3.5	3.3
Funds dispensed	28.6	28.4
Check warranty	1.2	0.9
Total transactions completed	33.3	32.6

*	Rounding may cause variances.
(1)	Operating income for the three months ended June 30, 2022, included $0.9 million for professional fees associated with certain acquisitions and non-recurring litigation costs.
(2)	For a reconciliation of net income to Adjusted EBITDA, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided toward the end of this release.

2022 Second Quarter Financial Technology Solutions (“FinTech”) Segment Highlights

FinTech revenues for the 2022 second quarter increased 16% to an all-time quarterly record $84.9 million compared to $73.2 million in the 2021 second quarter, reflecting a 14% increase in financial access services, a 22% increase in software and other revenues, and a 17% improvement in revenues from hardware sales. Revenues from the recent acquisition of ecash Holdings (Australia) contributed $4.2 million in the 2022 second quarter.

Operating income increased 8% to $25.7 million in the 2022 second quarter compared to $23.8 million in the prior-year period, reflecting a benefit from higher revenues partially offset by increased research and development expense primarily in support of new and enhanced Loyalty products, the Company’s digital CashClub Wallet^®, and new RegTech products and software. Adjusted EBITDA rose 11% to $35.7 million compared to $32.1 million in the 2021 second quarter.

Financial access services revenues, which include cashless and cash-dispensing debit and credit card transactions and check services, was a quarterly record $50.9 million, a 14% increase compared with the 2021 second quarter, reflecting continued strength in financial funding transactions at casinos, as well as growth from new customer additions. The number of completed financial transactions increased 2% year over year and for the second consecutive quarter delivered more than $10 billion of funding to customers’ casino floors, representing a year-over-year funding increase of 11%. The Company’s CashClub Wallet digital technology is currently deployed across six jurisdictions at 19 casinos, with 20 additional casino properties under various stages of deployment.
Software and other revenues, which include Loyalty and RegTech software, product subscriptions, kiosk maintenance services, and other revenues, rose 22% to $19.0 million in the second quarter of 2022 compared to $15.6 million in the second quarter 2021. Approximately 78% and 80% of software and other revenues were of a recurring nature in the 2022 and 2021 second quarter periods, respectively.
Hardware sales revenues increased 17% to a record $15.0 million compared to $12.8 million in the second quarter of 2021. The record level of self-service kiosks and other cash access hardware products sold in the quarter reflect significant continued demand for the Company’s hardware and software solutions that deliver optimal performance and cost efficiencies to casino operators, including voucher redemption kiosks sold in Australia as a result of the ecash Holdings acquisition.

Balance Sheet and Liquidity

As of June 30, 2022, the Company had $238.1 million of cash and cash equivalents, and its Net Cash Position was $93.1 million.
The Company repurchased 2.0 million shares of its common stock for total consideration of $33.3 million during the quarter, and as of June 30, 2022, had $116.7 million remaining under the Board’s $150 million authorization announced on May 10, 2022.
In the 2022 second quarter, the Company paid $14.1 million for the initial purchase price payment and the net working capital payment related to the acquisition of Intuicode Gaming, $6.0 million of consideration related to the acquisition of certain assets of ecash Holdings and $2.0 million related to the acquisition of certain assets of XUVI.

Outlook

Reflecting the operating performance in the first half of the year and the Company’s expectations for continued operating execution over the balance of the year driven by demand for its products, Everi reiterated its full year 2022 guidance for net income of $125 million to $132 million, Adjusted EBITDA of $368 million to $378 million and Free Cash Flow of $187 million to $200 million.

The Company’s year-to-date results have not reflected, and its updated guidance does not contemplate, any additional material impact from a pandemic-related setback or other macroeconomic effect, such as recessionary or inflationary influence on consumer spending, a material supply chain disruption, or other changes in global market conditions. A summary and reconciliation of the full year 2022 financial targets are included in a supplemental table at the end of this release.

Investor Conference Call and Webcast

The Company will host an investor conference call to discuss its 2022 second quarter results at 11:00 a.m. EDT (8:00 a.m. PDT) today. The conference call may be accessed live by phone by dialing (201) 689-8471. A replay of the call will be available beginning at 2:00 p.m. ET today and may be accessed by dialing (412) 317-6671; the PIN number is 13730679. A replay will be available until August 10, 2022. The call also will be webcast live and archived on www.everi.com (select “Investors” followed by “Events & Contact”).

Non-GAAP Financial Information

In order to enhance investor understanding of the underlying trends in our business, our cash balance, and cash available for our operating needs, and to provide for better comparability between periods in different years, we are providing in this press release Adjusted EBITDA, Free Cash Flow, Net Cash Position and Net Cash Available, which are not measures of our financial performance or position under United States Generally Accepted Accounting Principles (“GAAP”). Accordingly, Adjusted EBITDA and Free Cash Flow should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP. These measures should be read in conjunction with our net earnings, operating income, and cash flow data prepared in accordance with GAAP. With respect to Net Cash Position and Net Cash Available, these measures should be read in conjunction with cash and cash equivalents prepared in accordance with GAAP.

We define Adjusted EBITDA as earnings (loss) before interest, taxes, depreciation and amortization, loss on extinguishment of debt, non-cash stock compensation expense, accretion of contract rights, write-downs of inventory, property and equipment and intangible assets, employee severance costs and other related expenses, litigation settlement received net of legal costs, foreign exchange loss, asset acquisition expense, non-recurring professional fees, certain litigation costs, and one-time charges. We present Adjusted EBITDA, as we use this measure to manage our business and consider this measure to be supplemental to our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA; and our current credit facility and existing senior unsecured notes require us to comply with a consolidated secured leverage ratio that includes performance metrics substantially similar to Adjusted EBITDA.

We define Free Cash Flow as Adjusted EBITDA less cash paid for interest, cash paid for capital expenditures, cash paid for placement fees, and cash paid for taxes net of refunds. We present Free Cash Flow as a measure of performance and believe it provides investors with another indicator of our operating performance. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures.

A reconciliation of the Company’s net income (loss) per GAAP to Adjusted EBITDA and Free Cash Flow is included in the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided at the end of this release. Additionally, a reconciliation of each segment’s operating income to EBITDA and Adjusted EBITDA is also included. On a segment level, operating income per GAAP, rather than net earnings per GAAP, is reconciled to EBITDA and Adjusted EBITDA as the Company does not report net earnings by segment. Management believes that this presentation is meaningful to investors in evaluating the performance of the Company’s segments.

We define (i) Net Cash Position as cash and cash equivalents plus settlement receivables less settlement liabilities and (ii) Net Cash Available as Net Cash Position plus undrawn amounts available under our revolving credit facility. We present Net Cash Position because our cash position, as measured by cash and cash equivalents, depends upon changes in settlement receivables and the timing of payments related to settlement liabilities. As such, our cash and cash equivalents can change substantially based upon the timing of our receipt of payments for settlement receivables and payments we make to customers for our settlement liabilities. We present Net Cash Available as management monitors this amount in connection with its forecasting of cash flows and future cash requirements.

Cautionary Note Regarding Forward-Looking Statements

Examples of forward-looking statements include, among others, statements regarding our ability to execute on key initiatives and deliver ongoing operating and financial improvements, including guidance related to 2022 financial and operational metrics; regain or maintain revenue, earnings and Free Cash Flow momentum; sustain our overall growth; drive growth of the gaming operations installed base and DWPU; continue expanding the portions of the gaming floor the Company’s games address, including into the Historical Horse Racing category of gaming devices and the Company’s overall targeted ship share of gaming machines sold; successfully perform obligations required by acquisition agreements; and create incremental value for our shareholders, as well as statements regarding our expectations for the industry environment and the adoption of our products and technologies.

Forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are often difficult to predict and many of which are beyond our control, including, but not limited to, statements regarding: trends, developments, and uncertainties impacting our business, including our ability to withstand: global supply chain disruption; inflationary impact on supply chain costs; changes in global market, business and regulatory conditions arising as a result of the COVID-19 global pandemic, including any related public health confidence and availability of discretionary spending income of casino patrons, as well as expectations for the re-opening of casinos; product innovations that address customer needs in a new and evolving operating environment; to regain or maintain revenue, earnings, and cash flow momentum, and to enhance shareholder value in the long-term; trends in gaming establishment and patron usage of our products; benefits realized by using our products and services; benefits and/or costs associated with mergers, acquisitions, and/or strategic alliances; product development, including the release of new game features, additional games, and system releases in the future; regulatory approvals; gaming and financial regulatory and legal, card association, and statutory compliance and changes; the implementation of new or amended card association and payment network rules or interpretations; consumer collection activities; competition (including consolidations); tax liabilities; goodwill impairment charges; international expansion; resolution of litigation or government investigations; our dividend policy; new customer contracts and contract renewals; financial performance and results of operations (including revenue, expenses, margins, earnings, cash flow, and capital expenditures); inflationary impact on labor costs and retention; interest rates and interest expense; borrowings and debt repayments; and equity incentive activity and compensation expense.

Our actual results and financial condition may differ materially from those indicated in forward-looking statements, and important factors that could cause them to do so include, but are not limited to, the following: our ability to generate profits in the future and to create incremental value for shareholders; our ability to withstand inflationary and other factors that pressure discretionary consumer spending; our ability to execute on mergers, acquisitions and/or strategic alliances, including our ability to integrate and operate such acquisitions or alliances consistent with our forecasts in order to achieve future growth; our ability to execute on key initiatives and deliver ongoing improvements; expectations regarding growth for the Company’s installed base and daily win per unit; expectations regarding placement fee arrangements; inaccuracies in underlying operating assumptions; the impact of the ongoing Coronavirus Disease 2019 (“COVID-19”) global pandemic on our business, operations and financial condition, including (i) actions taken by international, federal, state, tribal and municipal governmental and regulatory agencies to contain the COVID-19 public health emergency or mitigate its impact, (ii) the direct and indirect economic effects of COVID-19 and measures to contain it, including directives, orders or similar actions by international, federal, state, tribal and municipal governmental and regulatory agencies to regulate freedom of movement and business operations such as travel restrictions, border closures, business closures, limitations on public gatherings, quarantines and shelter-in-place orders as well as re-opening safety protocols; changes in global market, business, and regulatory conditions arising as a result of the COVID-19 global pandemic; our history of net losses and our ability to generate profits in the future; our leverage and the related covenants that restrict our operations; our ability to withstand unanticipated impacts of a pandemic outbreak of uncertain duration; our ability to withstand the loss of revenue during the closure of our customers’ facilities; our ability to generate sufficient cash to service all of our indebtedness, fund working capital, and capital expenditures; our ability to maintain our current customers; expectations regarding customers’ preferences and demands for future product and service offerings; the overall growth of the gaming industry, if any; our ability to replace revenue associated with terminated contracts; margin degradation from contract renewals; our ability to comply with the Europay, MasterCard, and Visa global standard for cards equipped with security chip technology; our ability to successfully introduce new products and services, including third-party licensed content; gaming establishment and patron preferences; failure to control product development costs and create successful new products; anticipated sales performance; our ability to prevent, mitigate, or timely recover from cybersecurity breaches, attacks, and compromises; national and international economic and industry conditions; changes in gaming regulatory, card association, and statutory requirements; regulatory and licensing difficulties, competitive pressures and changes in the competitive environment; operational limitations; gaming market contraction; changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; business prospects; unanticipated expenses or capital needs; technological obsolescence and our ability to adapt to evolving technologies; our ability to comply with our debt covenants and service outstanding debt; employee hiring, turnover, and retention; our ability to comply with regulatory requirements under the Payment Card Industry (“PCI”) Data Security Standards and maintain our certified status; and those other risks and uncertainties discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”). Given these risks and uncertainties, there can be no assurance that the forward-looking information contained in this press release will in fact transpire or prove to be accurate.

This press release should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021, and with the information included in our other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand our reported financial results and our business outlook for future periods.

Everi to Acquire Financial Technology Provider – ecash Holdings Pty Ltd.

February 8, 2022 Published by Roboticulized.com

Everi Holdings Inc. (NYSE: EVRI) (“Everi” or the “Company”), a premier provider of land-based and digital casino gaming content and products, financial technology and player loyalty solutions, announced today that it has entered into an agreement to acquire ecash Holdings Pty Ltd. (“ecash”), a privately owned, Australia-based developer and provider of innovative cash handling and financial payment solutions for the broader gaming industry in Australia, Asia, Europe and the United States. ecash’s products and technologies represent a strategic extension of Everi’s current suite of financial technology solutions within the FinTech segment. The acquisition will provide Everi with a complementary portfolio of new customer locations throughout Australia, the United States and other geographies. The closing of the transaction, subject to customary conditions, is expected to occur within 60 days.

Everi will acquire ecash for guaranteed payments totaling AUD$33 million, with an initial payment at the time of closing of AUD$20 million (approximately US$14 million) with the remaining payments to be made on each of the first and second anniversaries in 2023 and 2024, respectively, following the date of the transaction’s closing. Subject to achieving certain growth targets, there will be an additional contingent payment of up to AUD$10 million, which could increase the total consideration up to AUD$43 million. Everi expects to fund the total purchase price from existing cash on hand and future cash flow.

“We are pleased to enter into this agreement to acquire ecash and welcome their entire team to Everi upon the closing of the transaction,” said Randy Taylor, Everi’s President and Chief Operating Officer. “ecash is a strategic addition to our growing global portfolio that will provide Everi with an entry into the large Australian gaming market thanks to their experienced team, proven product portfolio and established customer base. The acquisition will also provide us with an incremental customer base in certain U.S. and other gaming markets we do not currently serve. Everi has never been better positioned as we continue to successfully execute our strategic growth initiatives.”

Darren Simmons, Everi’s Executive Vice President and FinTech Business Leader, said, “The integration of ecash into our robust FinTech portfolio and ability to scale this complementary business represents a significant opportunity to further expand our leadership position in the space and further diversify the markets we serve. We also expect that several of our FinTech and RegTech products, such as our Trilogy Loyalty solutions and Anti-Money Laundering software, will have applicability and add value for Australian gaming operators.”

Andre Soussa, Chief Executive Officer of ecash said, “We are thrilled by the opportunity to join the gaming industry’s FinTech leader. By integrating ecash’s current products and markets with Everi’s offerings, we will be able to add value across a much wider range of clients and unlock exciting new growth opportunities along the way.” Subsequent to closing, Mr. Soussa will be employed by Everi in the capacity of Managing Director, Australia.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often contain words such as “intends,” “anticipates,” “seek,” “expect,” “plan,” “believe,” “goal,” “target,” “future,” “estimate,” “may,” “should,” “well positioned” or “will” and similar expressions to identify forward-looking statements. Forward-looking statements in this press release include, among other things, statements with respect to the anticipated timing for the completion of the transaction and the expected benefits of the transaction, including market share and future operating and financial results.

The forward-looking statements in this press release are subject to additional risks and uncertainties, including those set forth under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our filings with the Securities and Exchange Commission (the “SEC”), including, without limitation, our Annual Report on Form 10–K for the fiscal year ended December 31, 2020 filed with the SEC on March 15, 2021 and subsequent periodic reports, and are based on information available to us on the date hereof.

These cautionary statements qualify our forward-looking statements, and you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement contained herein speaks only as of the date on which it is made, and we do not intend, and assume no obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This press release should be read in conjunction with our most recent reports on Form 10–K and Form 10–Q, and the information included in our other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand our reported financial results and our business outlook for future periods.

Everi Reports 2021 Third Quarter Results

November 3, 2021 Published by Roboticulized.com

Third Quarter 2021 Financial Highlights and Updated Full Year Outlook

As the third quarter 2020 financial results were significantly impacted by the COVID-19 pandemic, Everi believes a more meaningful comparison for its 2021 third quarter results and an indication of its growth is to the 2019 third quarter results, for which revenues and Adjusted EBITDA were higher than in the 2020 third quarter. Financial results for the 2021, 2020 and 2019 third quarter periods are presented in the Consolidated, Games and Financial Technology Solutions comparative results tables below.

Revenues rose 25% to $168.3 million, compared to $134.6 million in the 2019 third quarter.
Operating income more than doubled to a record $55.1 million compared to $27.3 million in the 2019 third quarter. Net income, inclusive of $34.4 million in pre-tax costs for the extinguishment of debt associated with the Company’s refinancing of its outstanding debt in the quarter, decreased to $6.7 million, or $0.07 per diluted share, compared to $9.3 million, or $0.12 per diluted share, in the 2019 third quarter.
Adjusted EBITDA, a non-GAAP financial measure, increased 40% to $90.6 million, compared to $64.7 million in the 2019 third quarter.
Free Cash Flow, a non-GAAP financial measure, increasedmore than fivefold to a quarterly record of $56.3 million, compared to $11.1 million in the 2019 third quarter.
Company now expects full year revenue of $645 million to $653 million, net income of $98 million to $100 million, Adjusted EBITDA of $342 million to $346 million and Free Cash Flow of $155 million to $160 million.

Michael Rumbolz, Chief Executive Officer of Everi, said, “The growth in our third quarter revenue, operating earnings and Free Cash Flow demonstrate the substantial ongoing momentum in our financial performance. We expect that further growth across both our Games and FinTech segments will continue for the remainder of this year and into 2022 and beyond. We expect to continue to benefit from the expansion of our installed base of leased gaming units, growth in ship share, same-store increases in financial access transactions, and the ongoing organic growth of our loyalty and regulatory compliance solutions. We believe the ongoing strength across both businesses and our deep pipeline of new offerings will drive consistent earnings and revenue growth as well as the continued generation of significant Free Cash Flow.

“The favorable customer reaction to our newest products at G2E® last month bolsters our confidence in our near- and long-term outlook. For our Games segment, the scale of our newest content continues to increase with well-received new themes introduced across the spectrum of premium video, premium mechanical, standard video, standard mechanical, and wide-area progressive (“WAP”) machines. New premium games such as Cashnado and Smokin’ Hot Stuff Wicked Wheel Fire and Ice® further demonstrated to customers our commitment to offer both new themes and support of our popular hit franchises, while our unique for-sale Cha Ching and Moneyline games for the high-performing Empire Flex® portrait cabinet highlight the creativity and innovation of our game design teams. Everi’s development teams continue to create products that raise the level of gaming entertainment and thereby offer an attractive return on the investments our customers make in our gaming products.

“Our portfolio of integrated FinTech products and services is more comprehensive and provides more value to casino operators than ever before and our newest offerings were similarly met with very favorable response at G2E. Our omni-channel, digital Cashclub Wallet® was a highlight of the show, including our demonstration of its seamless integration with our mobile-player loyalty offering. New products, such as MetersXpress and PitXpress, which extends our Digital Neighborhood to the casino pit, provide key process efficiencies. With the strength and depth of our newest products and core offerings, Everi is favorably positioned to execute on our significant opportunities to gain market share and deliver consistent future growth across our Games and FinTech businesses.”

Consolidated Full Quarter Comparative Results (unaudited)

	As of and for the Three Months Ended September 30,
	2021		2020		2019
	(in millions, except per share amounts)
Consolidated revenue	$	168.3	$	112.1	$	134.6

Operating income	$	55.1	$	19.7	$	27.3

Net income (loss)	$	6.7	$	(0.9)	$	9.3

Net earnings (loss) per diluted share	$	0.07	$	(0.01)	$	0.12

Diluted shares outstanding ⁽¹⁾	101.4		85.6		79.1

Adjusted EBITDA ⁽²⁾	$	90.6	$	59.8	$	64.7

Free Cash Flow ⁽²⁾	$	56.3	$	22.8	$	11.1

Principal amount of outstanding debt ⁽³⁾	$	1,000.0	$	1,145.6	$	1,157.0

Cash and cash equivalents	$	215.6	$	235.4	$	275.7

Net Cash Position⁽⁴⁾	$	88.6	$	128.3	$	33.3


(1)												In December 2019, the Company completed a public offering of 11.5 million shares of common stock. Weighted average basic shares outstanding were 90.3 million, 85.6 million, and 72.3 million shares for the three months ended September 30, 2021, 2020, and 2019, respectively.
(2)												For a reconciliation of net income (loss) to Adjusted EBITDA and Free Cash Flow, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided at the end of this release.
(3)												In the third quarter of 2021, the Company reduced its total outstanding debt to $1.0 billion through the successful issuance of $400 million of 5.000% senior unsecured notes due 2029 and $600 million of senior secured term loan, along with a $125 million revolving credit facility that is currently undrawn. In completing the transactions on August 3, 2021, the Company used cash on hand to pay the transaction fees and expenses and reduce the total debt outstanding by $144.6 million.
(4)												For a reconciliation of Net Cash Position to Cash and Cash Equivalents, see the Unaudited Reconciliation of Cash and Cash Equivalents to Net Cash Position and Net Cash Available at the end of this release.

Third Quarter 2021 Results Overview
Results for the three-month period ended September 30, 2021 continued to reflect the impact of the COVID-19 pandemic, albeit to a lesser extent than recent quarterly periods. Third quarter 2020 results reflect a significant impact of COVID-19, while 2019 results were unimpacted by the pandemic.

Randy Taylor, Everi’s Chief Operating Officer, said, “Our strong quarterly financial results are directly correlated to the continued successful execution of our strategic growth initiatives, leading to consistent new demand for our products. A key driver of our operating momentum is the continued growth of our high-margin, recurring revenue streams, which increased to more than $131 million, a quarterly record. This strength translates to improved cash flow, which provides additional capital we can allocate towards return-focused investments in product innovation to drive sustainable growth, as well as the flexibility to pursue and successfully integrate and scale accretive bolt-on acquisitions.

“Growth in our FinTech business continues to reflect improvements in financial access services, loyalty and RegTech software solutions from new and existing customers, as well as double-digit growth in same-store financial access transactions and dollars processed. In addition, we are achieving consistent progress with the rollout of our cashless digital wallet offering, which is now deployed across four jurisdictions at 15 casinos that have more than 32,000 gaming machines. This progress demonstrates our ability to offer industry-leading, integrated solutions that help our customers operate more efficiently and maximize funds delivered to their casino floors while providing their guests with a seamless experience.

“Our Games segment continues to benefit from placements of our higher-earning premium units, which grew to a record 7,351 units in the quarter, representing 45% of the total installed base. Third quarter sales of 1,176 electronic gaming machines reflect our growing ship share of replacement units, which we believe now approximate double-digit quarterly ship share. The strength of our for-sale games is also evidenced by the quarterly sequential growth in replacement sales achieved throughout 2021, compared to pre-pandemic periods. As the replacement cycle of electronic gaming machines returns to pre-pandemic levels, we expect the investments we have made in our Games business have positioned us to make consistent progress towards our new target of 15% ship share over the next several years.

“The operating performance of our two segments, together with a continued focus on costs, led to a record level of recurring revenue, operating income and Free Cash Flow generation of $56.3 million.”

Games Segment Full Quarter Comparative Results (unaudited)

	Three Months Ended September 30,
	2021		2020		2019
	(in millions, except unit amounts and prices)
Games revenues
Gaming operations	$	71.6	$	47.0	$	48.5
Gaming equipment and systems	24.2		10.2		19.6
Gaming other	—		—		1.2
Games total revenues	$	95.8	$	57.2	$	69.3

Operating income (loss)	$	30.2	$	(0.4)	$	3.1

Adjusted EBITDA ⁽¹⁾	$	57.7	$	32.9	$	34.6

Capital expenditures	$	19.3	$	17.3	$	30.3

Gaming operations information:
Units installed at period end:
Class II	9,525		9,115		9,188
Class III	6,896		6,141		5,084
Total installed base at period end ⁽²⁾	16,421		15,256		14,272

Premium units ⁽²⁾	7,351		6,141		4,395

Average units installed during period ⁽²⁾	16,232		15,081		13,979

Daily win per unit (“DWPU”) ⁽³⁾	$	42.74	$	32.81	$	33.95

Unit sales information:
Units sold	1,176		492		1,040
Average sales price (“ASP”)	$	18,014	$	18,209	$	17,983


(1)												For a reconciliation of net income (loss) to Adjusted EBITDA, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP measures provided at the end of this release.
(2)												The ending and average installed base for all three periods includes all units, whether or not casinos were open and whether or not the games were active.
(3)												Daily win per unit reflects the total of all units installed at casinos, inclusive of closed casinos and inactive units, where such units would have recorded no revenue and excludes the impact of the direct costs associated with the Company’s wide-area progressive jackpot expense.

2021 Third Quarter Games Segment Highlights

Games segment revenues increased to a quarterly record $95.8 million compared to $57.2 million and $69.3 million in the third quarter of 2020 and 2019, respectively, primarily reflecting growth in the installed base and in Daily Win per Unit (“DWPU”) in gaming operations, as well as increased shipments of gaming machines.

Operating income increased to $30.2 million, compared to an operating loss of $0.4 million a year ago and operating income of $3.1 million in the third quarter 2019. The increase in operating income over the prior-year periods reflects the benefit of higher revenues, a revenue mix that includes a greater contribution from the higher-margin gaming operations business and lower amortization expense. Adjusted EBITDA increased to a quarterly record $57.7 million, from $32.9 million and $34.6 million in the third quarter of 2020 and 2019, respectively.

Gaming operations revenue grew to a quarterly record $71.6 million, compared to $47.0 million and $48.5 million in the third quarter of 2020 and 2019, respectively.

Driven by the strength of higher-performing premium games, DWPU increased to $42.74 in the third quarter of 2021, compared to $32.81 and $33.95 in the third quarter of 2020 and 2019, respectively.
The installed base as of September 30, 2021 was a record 16,421 units, an increase of 8%, or 1,165 units, compared to September 30, 2020. The installed base increased by 170 units on a quarterly sequential basis despite the previously announced convert-to-sale of 238 standard units in the 2021 third quarter.
- In the third quarter, the Company extended terms of its placement fee arrangement with a significant multi-property tribal casino operator that secures 4,557 games, or 28% of the Company’s current total installed base, until mid-2027 for an additional fee of $28.9 million to be paid in the 2021 fourth quarter.
The premium portion of the installed base increased by 20%, or 1,210 units, year over year and by 390 units on a quarterly sequential basis to a record 7,351 units. This was the 13th consecutive quarterly sequential increase in premium units. Growth was in part driven by initial placements of Cashnado units along with incremental placements of the strong-performing The Vault game theme, as well as the Company’s industry-leading premium mechanical reel games. The installed base of Wide-area Progressive (“WAP”) gaming machines, a subcategory of premium units, grew by 182 units year over year and 101 units on a quarterly sequential basis to 1,183 machines as of September 30, 2021, due in part to the launch of the Monsterverse game on the Empire DCX® cabinet and the installation of WAP units into commercial casinos in Nevada and New Jersey.
Digital revenue rose 90% to $3.8 million compared to $2.0 million a year ago and more than triple the amount two years ago. Digital revenue growth reflects increased B2B revenue from the expanded base of iGaming operator sites featuring Everi’s games – including new customer sites in New Jersey, Pennsylvania, and Michigan that went live during the quarter – along with a growing library of available slot content. Subsequent to quarter-end, Everi Digital went live in Ontario and Connecticut. The B2B revenue increase more than offset a decline in B2C revenue as the Company has de-emphasized its B2C social gaming operations, which it now expects will be fully closed by the end of 2021.
Revenues from the New York Lottery systems business increased to $6.4 million compared to $1.1 million and $4.8 million in the third quarter of 2020 and 2019, respectively.

Gaming equipment and systems revenues generated from the sale of gaming units and other related parts and equipment totaled $24.2 million in the third quarter of 2021, compared to $10.2 million and $19.6 million in the third quarter of 2020 and 2019, respectively.

The Company sold 1,176 new units at an average selling price (“ASP”) of $18,014in the 2021 third quarter. This is an increase compared with 492 units at an ASP of $18,209 in the 2020 third quarter and 1,040 units at an ASP of $17,983 in the 2019 third quarter. Units sold and ASP do not include the 238 pre-owned convert-to-sale gaming machines at a customer location noted above.

Financial Technology Solutions Segment Full Quarter Comparative Results (unaudited)*

	Three Months Ended September 30,
	2021		2020		2019
	(in millions, unless otherwise noted)
FinTech revenues
Financial access services	$	46.4	$	34.0	$	43.1
Software and other	17.0		14.6		12.0
Hardware	9.0		6.2		10.2
FinTech total revenues	$	72.4	$	54.9	$	65.3

Operating income	$	24.9	$	20.2	$	24.2

Adjusted EBITDA ⁽¹⁾	$	32.9	$	26.8	$	30.1

Capital expenditures	$	4.8	$	5.0	$	5.7

Value of financial access transactions:
Funds advanced	$	2,352.7	$	1,767.6	$	1,909.0
Funds dispensed	7,164.0		4,906.4		5,402.2
Check warranty	393.2		262.6		361.6
Total value processed	$	9,909.9	$	6,936.6	$	7,672.8

Number of financial access transactions:
Funds advanced	3.3		2.6		3.0
Funds dispensed	28.6		21.1		25.0
Check warranty	0.9		0.7		0.9
Total transactions completed	32.8		24.4		28.9

Rounding may cause variances.

(1)

For a reconciliation of net income (loss) to Adjusted EBITDA, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided at the end of this release.

2021 Third Quarter Financial Technology Solutions Segment Highlights

FinTech revenues for the 2021 third quarter increased to a record $72.4 million compared to $54.9 million and $65.3 million in the third quarter of 2020 and 2019, respectively. The growth over both years primarily reflects an increase in revenues from financial access services and software and other.

Operating income rose to $24.9 million compared to $20.2 million and $24.2 million in the third quarter of 2020 and 2019, respectively. The increase primarily reflects the benefit of higher revenues partially offset by an increase in research and development expense driven by an acceleration of new product development efforts, including new and enhanced loyalty products, the Company’s CashClub Wallet^® digital technology solution and new RegTech offerings. Adjusted EBITDA was $32.9 million compared to $26.8 million and $30.1 million in the third quarter of 2020 and 2019, respectively.

Financial access services revenues, which include cashless and cash-dispensing debit and credit card transactions and check services, increased on a quarterly sequential basis to $46.4 million from $44.8 million in the second quarter 2021, reflecting continued strength in casino activity; and were up 8% from the third quarter of 2019. Transactional activity on a same-store basis increased in the third quarter 2021 by a mid-teens percentage rate over the pre-COVID third quarter of 2019.
Software and other revenues, which include loyalty and RegTech software, product subscriptions, kiosk maintenance services, and other revenue, rose to a record $17.0 million, of which approximately 77% were of a recurring nature. This compares to total revenue of $14.6 million in the third quarter 2020, of which 76% were of a recurring nature, and $12.0 million in the third quarter 2019, of which 73% were of a recurring nature.
Hardware sales revenues were $9.0 million, inclusive of significant shipments of self-service kiosks and other loyalty and financial access equipment for new casino openings and major expansions, in the third quarter 2021, compared to $6.2 million and $10.2 million in the third quarter of 2020 and 2019, respectively.

Balance Sheet and Liquidity

During the 2021 third quarter, the Company completed a refinancing that reduced total debt by $144.6 million to $1.0 billion, decreased annual cash interest costs and extended maturities.
As of September 30, 2021, the Company had cash and cash equivalents of $215.6 million and a Net Cash Position of $88.6 million.
Early in the 2021 fourth quarter, the Company paid $28.9 million in a single lump sum to extend the term of its placement fee agreement with a significant customer.

Outlook

Everi today raised its previous guidance for full year 2021 results. The Company now expects net income of $98 million to $100 million, Adjusted EBITDA of $342 million to $346 million, and Free Cash Flow of $155 million to $160 million (inclusive of the $28.9 million fourth quarter placement fee noted above). The factors considered in Everi’s 2021 outlook include:

Continued year-over-year growth in gaming operations revenues. Reflecting the recent increase in installed base and the additional growth anticipated in the later part of the fourth quarter, the Company expects the 2021 year-end installed base will approach or slightly exceed 17,000 units, inclusive of ongoing growth in premium unit placements. While reflecting usual fourth quarter influences, recent record-high DWPU is anticipated to remain above $40.00.
Capital expenditures and placement fees collectively are expected to be $132 million to $134 million.
Although not factored into its guidance, the Company is currently evaluating a potential significant change to income taxes related to the possible reversal of some portion of the Company’s deferred tax asset valuation allowances during the 2021 fourth quarter. To the extent this materializes, a significant non-cash income tax benefit may be realized, which would likely result in a substantial full year income tax benefit and increased net income for the Company while not affecting cash taxes paid or Free Cash Flow.
The Company’s 2021 outlook does not contemplate any additional meaningful impact from a macroeconomic or pandemic-related setback; it does reflect, however, the likelihood of receding government stimulus benefits and an increase in pressure on consumer discretionary spending.

A summary and reconciliation of the financial targets are included in a supplemental table at the end of this release.

Investor Conference Call and Webcast

The Company will host an investor conference call to discuss its 2021 third quarter results at 11:00 a.m. ET (8:00 a.m. PT) today. The conference call may be accessed live by phone by dialing (201) 689-8471. A replay of the call will be available beginning at 3:00 p.m. ET today and may be accessed by dialing +1 (412) 317-6671; the PIN number is 13724406. A replay will be available until November 10, 2021. The call also will be webcast live and archived on www.everi.com (select “Investors” followed by “Events & Contact”).

Non-GAAP Financial Information

In order to enhance investor understanding of the underlying trends in our business, our cash balance, and cash available for our operating needs, and to provide for better comparability between periods in different years, we are providing in this press release Adjusted EBITDA, Free Cash Flow, Net Cash Position and Net Cash Available, which are not measures of our financial performance or position under United States Generally Accepted Accounting Principles (“GAAP”). Accordingly, Adjusted EBITDA, and Free Cash Flow should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP. These measures should be read in conjunction with our net earnings, operating income, and cash flow data prepared in accordance with GAAP. With respect to Net Cash Position and Net Cash Available, these measures should be read in conjunction with cash and cash equivalents prepared in accordance with GAAP.

We define Adjusted EBITDA as earnings (loss) before interest, taxes, depreciation and amortization, loss on extinguishment of debt, non-cash stock compensation expense, accretion of contract rights, write-downs of inventory, property and equipment and intangible assets, employee severance costs and other related expenses, litigation settlement received net of legal costs, foreign exchange loss, asset acquisition expense, non-recurring professional fees, and one-time charges. We present Adjusted EBITDA, as we use this measure to manage our business and consider this measure to be supplemental to our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA; and our current credit facility and existing senior unsecured notes require us to comply with a consolidated secured leverage ratio that includes performance metrics substantially similar to Adjusted EBITDA.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements address our expected future business and financial performance, and often contain words such as “goal,” “target,” “indication,” “future,” “assume,” “estimate,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “project,” “may,” “should,” “will,” “can,” “aim to,” “designed to,” “will provide,” or “favorably positioned” or similar expressions to identify forward-looking statements. Examples of forward-looking statements include, among others, statements regarding our ability to execute on key initiatives and deliver ongoing operating and financial improvements including guidance related to 2021 financial and operational metrics; regain or maintain revenue, earnings and Free Cash Flow momentum; sustain our overall growth; drive growth of the gaming operations installed base and DWPU; continue expanding the portions of the gaming floor the Company’s games address; successfully perform obligations required by acquisition agreements; and create incremental value for our shareholders, as well as statements regarding our expectations for the industry environment and the adoption of our products and technologies.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are often difficult to predict and many of which are beyond our control. Our actual results and financial condition may differ materially from those indicated in forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, without limitation, the impact of the ongoing COVID-19 global pandemic on our business, operations and financial condition, our history of net losses and our ability to generate profits in the future; our debt leverage and the related covenants that restrict our operations; our ability to generate sufficient cash to service all of our indebtedness and fund working capital and capital expenditures; our ability to withstand unanticipated impacts of a pandemic outbreak of uncertain duration; our ability to withstand the loss of revenue during the closure of our customers’ facilities; our ability to maintain our current customers; our ability to compete in the gaming industry; our ability to execute on mergers, acquisitions and/or strategic alliances, including the timing and closing of acquisitions and our ability to integrate and operate such acquisitions consistent with our forecasts; our ability to access the capital markets to raise funds; expectations regarding our existing and future installed base and daily win per day; expectations regarding development and placement fee arrangements; inaccuracies in underlying operating assumptions; expectations regarding customers’ and gaming patrons’ preferences and demands for future services and product offerings; the overall growth of the gaming industry, if any; our ability to replace revenue associated with terminated customer contracts; margin degradation from contract renewals; technological obsolescence; our ability to comply with the Europay, MasterCard and Visa global standard for cards equipped with security chip technology; our ability to introduce new and enhanced products and services, including third-party licensed content; our ability to prevent, mitigate or timely recover from cybersecurity breaches, attacks and compromises; the level of our capital expenditures and product development; anticipated sales performance; employee turnover; national and international economic conditions; global supply chain disruption; changes in global market, business and regulatory conditions arising as a result of the COVID-19 global pandemic; changes in gaming regulatory, card association and statutory requirements; regulatory and licensing difficulties that we may face; competitive pressures in the gaming and financial technology sectors; the impact of changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; unanticipated expenses or capital needs and those other risks and uncertainties discussed in our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 15, 2021. Given these risks and uncertainties, there can be no assurance that the forward-looking information contained in this press release will in fact transpire or prove to be accurate. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which are based only on information currently available to us and speak only as of the date hereof.

This press release should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020, and with the information included in our other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand our reported financial results and our business outlook for future periods.

About Everi

Everi’s mission is to lead the gaming industry through the power of people, imagination and technology. With a focus on player engagement and helping casino customers operate more efficiently, the Company develops entertaining game content and gaming machines, gaming systems, and services for land-based and iGaming operators. The Company is also a preeminent and comprehensive provider of trusted financial technology solutions that power the casino floor while improving operational efficiencies and fulfilling regulatory compliance requirements, including products and services that facilitate convenient and secure cash and cashless financial transactions, self-service player loyalty tools and applications, and regulatory and intelligence software. For more information, please visit www.everi.com, which is updated regularly with financial and other information about the Company.

Investor Relations Contacts:

Everi Holdings Inc.	JCIR
William Pfund	Richard Land, James Leahy
SVP, Investor Relations	212-835-8500 or [email protected]
702-676-9513 or [email protected]

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EVERI HOLDINGS INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) *(In thousands, except earnings (loss) per share amounts)*

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues
Games revenues
Gaming operations	$	71,580	$	46,968	202,941		106,513
Gaming equipment and systems	24,220		10,229		68,298		28,795
Gaming other	33		44		82		76
Games total revenues	95,833		57,241		271,321		135,384
FinTech revenues
Financial access services	46,421		33,979		129,973		80,986
Software and other	17,024		14,630		49,874		31,748
Hardware	9,024		6,248		28,829		16,004
FinTech total revenues	72,469		54,857		208,676		128,738
Total revenues	168,302		112,098		479,997		264,122
Costs and expenses
Games cost of revenues⁽¹⁾
Gaming operations	5,675		4,245		15,776		10,471
Gaming equipment and systems	13,503		5,730		39,058		16,625
Gaming other	—		—		—		456
Games total cost of revenues	19,178		9,975		54,834		27,552
FinTech cost of revenues⁽¹⁾
Financial access services	1,830		1,161		4,863		5,227
Software and other	1,063		859		3,196		2,057
Hardware	5,380		3,548		17,078		9,452
FinTech total cost of revenues	8,273		5,568		25,137		16,736
Operating expenses	47,121		34,927		133,320		115,428
Research and development	9,598		7,034		26,799		20,958
Depreciation	14,463		16,163		46,571		48,700
Amortization	14,596		18,693		43,680		57,312
Total costs and expenses	113,229		92,360		330,341		286,686
Operating income (loss)	55,073		19,738		149,656		(22,564)
Other expenses
Interest expense, net of interest income	14,257		18,905		50,488		56,226
Loss on extinguishment of debt	34,389		—		34,389		7,457
Total other expenses	48,646		18,905		84,877		63,683
Income (loss) before income tax	6,427		833		64,779		(86,247)
Income tax (benefit) provision	(319)		1,711		1,285		(3,434)
Net income (loss)	6,746		(878)		63,494		(82,813)
Foreign currency translation	(442)		359		(335)		(1,295)
Comprehensive income (loss)	$	6,304	$	(519)	$	63,159	$	(84,108)

(1) Exclusive of depreciation and amortization.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Earnings (loss) per share
Basic	$	0.07	$	(0.01)	$	0.72	$	(0.97)
Diluted	$	0.07	$	(0.01)	$	0.64	$	(0.97)
Weighted average common shares outstanding
Basic	90,322		85,556		88,688		85,102
Diluted	101,359		85,556		99,581		85,102

EVERI HOLDINGS INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value amounts)

	At September 30,		At December 31,
	2021		2020
ASSETS
Current assets
Cash and cash equivalents	$	215,551	$	251,706
Settlement receivables	50,596		60,652
Trade and other receivables, net of allowances for credit losses of $4,788 and $3,689 at September 30, 2021 and December 31, 2020, respectively	95,200		74,191
Inventory	31,690		27,742
Prepaid expenses and other current assets	25,218		17,348
Total current assets	418,255		431,639
Non-current assets
Property and equipment, net	114,943		112,323
Goodwill	681,975		681,974
Other intangible assets, net	216,621		214,627
Other receivables	14,068		14,620
Other assets	20,181		21,996
Total non-current assets	1,047,788		1,045,540
Total assets	$	1,466,043	$	1,477,179
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Settlement liabilities	$	177,582	$	173,211
Accounts payable and accrued expenses	199,254		145,029
Current portion of long-term debt	6,000		1,250
Total current liabilities	382,836		319,490
Non-current liabilities
Long-term debt, less current portion	976,407		1,128,003
Deferred tax liability, net	19,782		19,956
Other accrued expenses and liabilities	14,250		17,628
Total non-current liabilities	1,010,439		1,165,587
Total liabilities	1,393,275		1,485,077
Commitments and contingencies
Stockholders’ equity (deficit)
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and no shares outstanding at September 30, 2021 and December 31, 2020, respectively	—		—
Common stock, $0.001 par value, 500,000 shares authorized and 116,357 and 90,692 shares issued and outstanding at September 30, 2021, respectively, and 111,872 and 86,683 shares issued and outstanding at December 31, 2020, respectively	116		112
Additional paid-in capital	493,022		466,614
Accumulated deficit	(231,126)		(294,620)
Accumulated other comprehensive loss	(1,526)		(1,191)
Treasury stock, at cost, 25,664 and 25,190 shares at September 30, 2021 and December 31, 2020, respectively	(187,718)		(178,813)
Total stockholders’ equity (deficit)	72,768		(7,898)
Total liabilities and stockholders’ equity (deficit)	$	1,466,043	$	1,477,179

EVERI HOLDINGS INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS *(In thousands)*

	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities
Net income (loss)	$	63,494	$	(82,813)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation	46,571		48,700
Amortization	43,680		57,312
Non-cash lease expense	3,400		3,615
Amortization of financing costs and discounts	3,234		3,111
Loss on sale or disposal of assets	1,616		111
Accretion of contract rights	6,966		5,345
Provision for credit losses	5,499		6,925
Deferred income taxes	(174)		(3,788)
Reserve for inventory obsolescence	1,610		1,810
Write-down of assets	—		11,281
Loss on extinguishment of debt	34,389		7,457
Stock-based compensation	12,404		10,108
Other non-cash items	—		456
Changes in operating assets and liabilities:
Settlement receivables	10,056		36,922
Trade and other receivables	(25,522)		6,682
Inventory	(5,569)		(10,614)
Prepaid expenses and other assets	(8,068)		(4,952)
Settlement liabilities	4,371		(93,622)
Accounts payable and accrued expenses	45,543		(5,814)
Net cash provided by (used in) operating activities	243,500		(1,768)
Cash flows from investing activities
Capital expenditures	(73,288)		(52,428)
Acquisitions, net of cash acquired	(15,000)		(15,000)
Proceeds from sale of property and equipment	215		141
Placement fee agreements	—		(3,021)
Net cash used in investing activities	(88,073)		(70,308)
Cash flows from financing activities
Proceeds from new term loan	600,000		—
Repayments of prior term loan	(735,500)		(13,500)
Proceeds from prior incremental term loan	—		125,000
Repayment of prior incremental term loan	(124,375)		(313)
Proceeds from prior revolver	—		35,000
Repayments of prior revolver	—		(35,000)
Proceeds from 2021 unsecured notes	400,000		—
Repayments of 2017 unsecured notes	(285,381)		(89,619)
Fees associated with debt transactions – new debt	(19,797)		—
Fees associated with debt transactions – prior debt	(20,828)		(11,128)
Proceeds from exercise of stock options	14,012		3,509
Treasury stock	(8,909)		(1,097)
Payment of acquisition contingent consideration	(9,875)		—
Net cash (used in) provided by financing activities	(190,653)		12,852
Effect of exchange rates on cash and cash equivalents	(237)		(1,370)
Cash, cash equivalents and restricted cash
Net decrease for the period	(35,463)		(60,594)
Balance, beginning of the period	252,349		296,610
Balance, end of the period	$	216,886	$	236,016

EVERI HOLDINGS INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF CASH AND CASH EQUIVALENTS TO NET CASH POSITION AND NET CASH AVAILABLE *(In thousands)*

	At September 30,		At December 31,		At September 30,		A September 30,
	2021		2020		2020		2019
Cash available
Cash and cash equivalents ⁽¹⁾	$	215,551	$	251,706	$	235,407	$	275,706
Settlement receivables	50,596		60,652		33,126		56,035
Settlement liabilities	(177,582)		(173,211)		(140,229)		(298,490)
Net Cash Position	88,565		139,147		128,304		33,251

Undrawn revolving credit facility	125,000		35,000		35,000		35,000
Net Cash Available	$	213,565	$	174,147	$	163,304	$	68,251

(1)

Cash and cash equivalents does not include $1.3 million, $0.6 million, $0.6 million, and $8.4 million of restricted cash at September 30, 2021 December 31, 2020, September 30, 2020, and September 30, 2019, respectively.

EVERI HOLDINGS INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES *(In thousands)*

	Three Months Ended September 30, 2021
	Games		FinTech		Total
Net income					$	6,746
Income tax benefit					(319)
Loss on extinguishment of debt					34,389
Interest expense, net of interest income					14,257
Operating income	$	30,199	$	24,874	$	55,073

Plus: depreciation and amortization	23,300		5,759		29,059
EBITDA	$	53,499	$	30,633	$	84,132

Non-cash stock compensation expense	1,904		2,048		3,952
Accretion of contract rights	2,330		—		2,330
Non-recurring professional fees and other	—		184		$	184
Adjusted EBITDA	$	57,733	$	32,865	$	90,598

Cash paid for interest					(9,858)
Cash paid for capital expenditures					(24,054)
Cash paid for income taxes, net					(409)
Free Cash Flow					$	56,277

EVERI HOLDINGS INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES *(In thousands)*

	Three Months Ended September 30, 2020
	Games		FinTech		Total
Net loss					$	(878)
Income tax provision					1,711
Interest expense, net of interest income					18,905
Operating (loss) income	$	(430)	$	20,167	$	19,738

Plus: depreciation and amortization	29,615		5,242		34,857
EBITDA	$	29,185	$	25,409	$	54,595

Non-cash stock compensation expense	1,549		1,436		2,985
Accretion of contract rights	2,175		—		2,175
Adjusted EBITDA	$	32,909	$	26,845	$	59,755

Cash paid for interest					(12,375)
Cash paid for capital expenditures					(22,294)
Cash paid for placement fees					(2,146)
Cash paid for income taxes, net					(133)
Free Cash Flow					$	22,807

EVERI HOLDINGS INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES *(In thousands)*

	Three Months Ended September 30, 2019
	Games		FinTech		Total
Net income					$	9,315
Income tax benefit					(1,319)
Interest expense, net of interest income					19,297
Operating income	$	3,073	$	24,220	$	27,293

Plus: depreciation and amortization	28,678		4,493		33,171
EBITDA	$	31,751	$	28,713	$	60,464

Non-cash stock compensation expense	602		1,379		1,981
Accretion of contract rights	2,221		—		2,221
Adjusted EBITDA	$	34,574	$	30,092	$	64,666

Cash paid for interest					(12,528)
Cash paid for capital expenditures					(35,959)
Cash paid for placement fees					(5,454)
Cash refunded for income taxes, net					362
Free Cash Flow					$	11,087

EVERI HOLDINGS INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES *(In thousands)*

	Nine Months Ended September 30, 2021
	Games		FinTech		Total
Net income					$	63,494
Income tax provision					1,285
Loss on extinguishment of debt					34,389
Interest expense, net of interest income					50,488
Operating income	$	76,064	$	73,592	$	149,656

Plus: depreciation and amortization	73,586		16,665		90,251
EBITDA	$	149,650	$	90,257	$	239,907

Non-cash stock compensation expense	6,075		6,329		12,404
Accretion of contract rights	6,966		—		6,966
Litigation settlement, net	—		(1,107)		(1,107)
Asset acquisition expense, non-recurring professional fees and other	—		268		268
Adjusted EBITDA	$	162,691	$	95,747	$	258,438

Cash paid for interest					(45,167)
Cash paid for capital expenditures					(73,288)
Cash paid for income taxes, net					(975)
Free Cash Flow					$	139,008

EVERI HOLDINGS INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES *(In thousands)*

	Nine Months Ended September 30, 2020
	Games		FinTech		Total
Net loss					$	(82,813)
Income tax benefit					(3,434)
Loss on extinguishment of debt					7,457
Interest expense, net of interest income					56,226
Operating (loss) income	$	(47,671)	$	25,107	$	(22,564)

Plus: depreciation and amortization	90,087		15,926		106,013
EBITDA	$	42,416	$	41,033	$	83,449

Non-cash stock compensation expense	5,237		4,871		10,108
Accretion of contract rights	5,345		—		5,345
Write-down of inventory, property and equipment and intangible assets	9,232		1,801		11,033
Employee severance costs and other expenses	1,578		1,122		2,700
Foreign exchange loss	83		1,199		1,282
Non-recurring professional fees	30		932		962
Other one-time charges	456		—		456
Adjusted EBITDA	$	64,377	$	50,958	$	115,335

Cash paid for interest					(45,331)
Cash paid for capital expenditures					(52,428)
Cash paid for placement fees					(3,021)
Cash paid for income taxes, net					(81)
Free Cash Flow					$	14,474

EVERI HOLDINGS INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF SELECTED FINANCIAL GAAP TO NON-GAAP MEASURES *(In thousands)*

	Nine Months Ended September 30, 2019
	Games		FinTech		Total
Net income					$	20,661
Income tax benefit					(2,747)
Interest expense, net of interest income					60,130
Operating income	$	8,729	$	69,315	$	78,044

Plus: depreciation and amortization	83,927		13,278		97,205
EBITDA	$	92,656	$	82,593	$	175,249

Non-cash stock compensation expense	1,895		4,246		6,141
Accretion of contract rights	6,539		—		6,539
Write-down of inventory, property and equipment and intangible assets	843		—		843
Non-recurring professional fees	484		790		1,274
Adjusted EBITDA	$	102,417	$	87,629	$	190,046

Cash paid for interest					(52,077)
Cash paid for capital expenditures					(81,642)
Cash paid for placement fees					(17,102)
Cash refunded for income taxes, net					69
Free Cash Flow					$	39,294

EVERI HOLDINGS INC. AND SUBSIDIARIES RECONCILIATION OF PROJECTED NET INCOME TO PROJECTED EBITDA AND PROJECTED ADJUSTED EBITDA FOR THE YEAR ENDING DECEMBER 31, 2021 *(In thousands)*

	2021 Guidance Range ⁽¹⁾
	Low		High
Revenues	$	645,000	$	653,000

Projected net income	98,000		100,000
Projected income tax provision	3,000		4,000
Projected loss on extinguishment of debt	34,400		34,400
Projected interest expense, net of interest income	64,600		62,600
Projected operating income	$	200,000	$	201,000

Plus: projected depreciation and amortization	119,000		120,000
Projected EBITDA	$	319,000	$	321,000

Projected non-cash stock compensation expense	14,800		15,800
Projected accretion of contract rights	9,000		10,000
Projected asset acquisition expense and non-recurring professional fees	300		300
Projected litigation settlement, net	(1,100)		(1,100)
Projected Adjusted EBITDA	$	342,000	$	346,000

Projected cash paid for interest	(52,000)		(51,000)
Projected cash paid for capital expenditures	(100,000)		(102,000)
Projected cash paid for placement fees	(32,000)		(32,000)
Projected cash paid for income taxes, net of refunds	(3,000)		(1,000)
Projected Free Cash Flow	$	155,000	$	160,000


(1)								All figures presented are projected estimates for the year ending December 31, 2021.
(2)								This guidance assumes no change in deferred tax valuation allowances.

SOURCE Everi Holdings Inc.

Everi Reports Record Results For The 2021 Second Quarter

August 4, 2021 Published by TheFintechBuzz.com

Everi Holdings Inc. (NYSE: EVRI) (“Everi” or the “Company”), a premier provider of land-based and digital casino gaming content and products, financial technology, and loyalty solutions, today reported record financial results for the second quarter ended June 30, 2021. The 2021 second quarter revenue, net income, Adjusted EBITDA and Free Cash Flow are all slightly above the respective ranges the Company provided on June 21, 2021. The results are a quarterly sequential improvement from the 2021 first quarter, reflecting continued strength in casino patron demand, while still reflecting an ongoing, but reduced, impact of the COVID-19 pandemic.

Second Quarter 2021 Financial Highlights Compared to the Second Quarter 2019

Because second quarter 2020 financial results were severely impacted by casino closures related to the COVID-19 pandemic, the Company believes it is more meaningful to compare 2021 second quarter results to those of the 2019 second quarter. Financial results for the 2021, 2020 and 2019 second quarter periods are presented in the Consolidated, Games and Financial Technology Solutions highlight tables below.

Revenues rose 33% to a quarterly record $172.6 million, compared to $129.7 million in the 2019 second quarter.
Net income improved 560% to a quarterly record $36.2 million, or $0.36 per diluted share, compared to $5.5 million, or $0.07 per diluted share, in the 2019 second quarter.
Adjusted EBITDA, a non-GAAP financial measure, increased 44% to a quarterly record $92.5 million, compared to $64.1 million in the 2019 second quarter.
Free Cash Flow, a non-GAAP financial measure, increased 462% to $39.2 million, compared to $7.0 million in the 2019 second quarter.
Revenue, net income, Adjusted EBITDA and Free Cash Flow are all slightly above the respective ranges the Company provided on June 21, 2021.
Subsequent to quarter-end, completed a successful refinancing that reduced total debt to $1.0 billion, decreased cash interest costs and extended maturities.

Michael Rumbolz, Chief Executive Officer of Everi, said, “The record 2021 second quarter results reflect the substantial benefit of our execution of our ongoing growth initiatives, as well as improvement in industry trends. The strong momentum to-date this year in revenues, earnings and cash flow is being driven by consistent improvements in our Games and FinTech segment operating performance, demonstrating yet again the substantial demand that exists for our high-value products.

“A key highlight of our significant growth compared to pre-pandemic periods is the strength of our recurring revenue streams, which comprise an increased percentage of our overall business mix. This revenue is a significant contributor to our growing Free Cash Flow, which in turn has allowed us to dramatically lower our net leverage,” added Rumbolz. “Accordingly, we are favorably positioned to prudently invest in both internal product innovation and complementary, high-return, accretive acquisitions that will support our future growth.”

Mark Labay, Chief Financial Officer of Everi, said, “Our improved performance positioned us to obtain a strong response from the capital markets for our recent debt refinancing, including credit rating agency upgrades of all our newly issued debt instruments. This resulted in lower borrowing rates and extended debt maturities. Upon completion of this successful refinancing, at current interest rates our annualized cash interest costs will now be approximately $23 million less than at June 30, 2021. We expect our lower annual interest will contribute to the sustainability and further growth of our Free Cash Flow.”

Consolidated Full Quarter Comparative Results (unaudited)

	As of and For the Three Months Ended June 30,
	2021		2020		2019
	(in millions, except per share amounts)
Consolidated revenue	$	172.6	$	38.7	$	129.7

Operating income (loss) ⁽¹⁾	$	54.4	$	(52.7)	$	24.9

Net income (loss) ⁽¹⁾	$	36.2	$	(68.5)	$	5.5

Net earnings (loss) per diluted share ⁽¹⁾	$	0.36	$	(0.80)	$	0.07

Diluted shares outstanding⁽²⁾	100.0		85.1		79.2

Adjusted EBITDA ⁽³⁾	$	92.5	$	3.3	$	64.1

Free Cash Flow ⁽³⁾	$	39.2	$	(26.7)	$	7.0

Principal amount of outstanding debt ⁽⁴⁾	$	1,144.6	$	1,180.9	$	1,147.2

Cash and cash equivalents ⁽⁴⁾	$	340.4	$	257.4	$	123.8

Net Cash Position⁽⁵⁾	$	196.6	$	133.2	$	36.7


(1)	Operating loss, net loss, and net loss per diluted share for the three months ended June 30, 2020, included $14.8 million of pre-tax charges, including $11.0 million of business reorganization costs, $2.7 million of employee severance costs, $0.6 million non-recurring professional fees, and $0.5 million in other one-time charges. Operating income, net income and net earnings per diluted share for the three months ended June 30, 2019 included approximately $0.8 million for certain non-recurring professional fees and related costs and expenses associated with the acquisition of certain player loyalty assets and a non-cash charge of $0.8 million for the write-off of inventory related to certain legacy cabinets.
(2)	In December 2019, the Company completed a public offering of 11.5 million shares of common stock. Weighted average basic shares outstanding were 88.7 million, 85.1 million, and 71.5 million shares for the periods ended June 30, 2021, 2020, and 2019, respectively.
(3)	For a reconciliation of net income (loss) to Adjusted EBITDA and Free Cash Flow, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided at the end of this release.
(4)	Subsequent to quarter-end, the Company reduced its total outstanding debt to $1.0 billion through the successful issuance of $400 million of 5.000% senior unsecured notes due 2029 and $600 million of senior secured term loan at a rate of LIBOR plus 250 basis points with a LIBOR floor of 50 basis points due 2028, along with a $125 million revolving credit facility that is currently undrawn. In completing the transactions on August 3, 2021, the Company used cash on hand to pay the transaction fees and expenses and reduce the total debt by $144.6 million from the June 30, 2021 reported amount.
(5)	For a reconciliation of Net Cash Position to Cash and Cash Equivalents, see the Unaudited Reconciliation of Cash and Cash Equivalents to Net Cash Position and Net Cash Available at the end of this release.

Second Quarter 2021 Results Overview

Results for the three-month period ended June 30, 2021 reflect the continued, albeit lesser, impact of the COVID-19 pandemic. Results for the 2020 second quarter reflect the impact of the COVID-19 pandemic and results for the 2019 second quarter were unimpacted by the pandemic.

Randy Taylor, Everi’s Chief Operating Officer, said, “Our record quarterly revenue was up 33% over the pre-COVID 2019 second quarter, primarily driven by the strength in our recurring revenue operations in both our Games and FinTech segments. Our Games segment momentum reflects the continued growth in our installed base of gaming operations units, particularly increased placements of our higher-earning premium units that drove the increase in daily win per unit. In addition, slot machine sales increased by 49% sequentially from the 2021 first quarter, reflecting what we believe is another quarter of higher ship share of replacement units. Second quarter unit sales also benefited from a larger share of shipments to new casino openings and expansions than we have historically achieved together with a greater number of new casino openings and expansions than typically experienced in a quarter.

“Our FinTech segment continues to benefit from our comprehensive, integrated financial access services and RegTech software solutions, as well as our newer loyalty products such as our updated and upgraded self-service loyalty kiosks. Our strong FinTech industry position enables Everi to benefit from the widespread increase in casino player activity, which drove mid-teens percentage growth in the number of financial access transactions we processed as compared to 2019 second quarter volumes; a rate that was significantly above our historical rate of growth.

“The operating performance of our two segments, together with a continued focus on operating expenses, led to net income of $36.2 million, or $0.36 per diluted share, record quarterly Adjusted EBITDA of $92.5 million, up more than 40% over the comparable 2019 period, and Free Cash Flow generation of $39.2 million.

“Additionally, we continue to see a high level of interest by casino operators in our cashless digital wallet solution and our iGaming slot content. These are two important growth initiatives in which we’ve invested over a number of years given our expectation that they can both be additive to our core business momentum in the near- and long-term.”

Games Segment Full Quarter Comparative Results (unaudited)

	Three Months Ended June 30,
	2021		2020		2019
	(in millions, except unit amounts and prices)
Games revenues
Gaming operations	$	73.2	$	13.9	$	45.6
Gaming equipment and systems	26.1		7.0		23.4
Gaming other	—		—		0.4
Gaming total revenues	$	99.3	$	20.9	$	69.4

Operating income (loss) ⁽¹⁾	$	30.6	$	(41.8)	$	2.6

Adjusted EBITDA ⁽²⁾	$	60.4	$	3.0	$	34.7

Gaming operations information:
Units installed at period end:
Class II	9,422		8,971		9,205
Class III	6,829		5,967		4,489
Total installed base at period end ⁽⁴⁾	16,251		14,938		13,694

Premium units	6,961		5,796		3,413

Average units installed during period	16,088		14,854		13,624

Daily win per unit (“DWPU”) ⁽³⁾	$	45.66	$	9.84	$	32.26

Unit sales information:
Units sold	1,402		381		1,270
Average sales price (“ASP”)	$	17,894	$	18,044	$	17,338


(1)	Operating loss for the three months ended June 30, 2020, included $11.3 million of pre-tax charges, including $9.2 million of business reorganization costs, $1.6 million of employee severance costs and $0.5 million of other one-time charges. Operating income for the three months ended June 30, 2019 included approximately $0.3 million for certain nonrecurring professional fees and related costs and a non-cash charge of $0.8 million for the write-off of inventory related to certain legacy cabinets.
(2)	For a reconciliation of net income (loss) to Adjusted EBITDA, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP measures provided at the end of this release.
(3)	Daily win per unit reflects the total of all units installed at casinos, inclusive of closed casinos and inactive units, where such units would have recorded no revenue and excludes the impact of the direct costs associated with the Company’s wide-area progressive jackpot expense.
(4)	The ending and average installed base for all three periods includes all units, whether or not casinos were open and whether or not the games were active.

2021 Second Quarter Games Segment Highlights

Games segment revenues increased to a quarterly record $99.3 million compared to $20.9 million in the 2020 second quarter and was up 43% over the $69.4 million in the 2019 second quarter. This reflects strong gaming operations performance as well as higher shipments of gaming machines.

Operating income increased to $30.6 million, compared to an operating loss of $41.8 million a year ago and operating income of $2.6 million in the second quarter of 2019. The increase in the 2021 second quarter operating income over the prior-year periods reflects the benefit of higher revenues, a greater proportion of higher-margin gaming operations revenue in the overall mix, the Company’s cost containment efforts, and lower amortization. Adjusted EBITDA increased to a quarterly record $60.4 million, from $3.0 million and $34.7 million in the second quarter of 2020 and 2019, respectively.

Gaming operations revenue grew to a quarterly record $73.2 million, compared to $13.9 million and $45.6 million in the second quarter of 2020 and 2019, respectively.

Reflecting the player popularity of the latest games and the growth in higher-earning premium unit placements, Daily Win per Unit (“DWPU”) rose to a quarterly record $45.66 in the second quarter of 2021, compared to $9.84 and $32.26 in the second quarter of 2020 and 2019, respectively.
The installed base as of June 30, 2021 increased by 9%, or 1,313 units, year over year and by 302 units on a quarterly sequential basis to a record 16,251 units.
The premium portion of the installed base increased by 20%, or 1,165 units, year over year and by 264 units on a quarterly sequential basis to 6,961 units. Growth was driven primarily by incremental placements of the strong-performing The Vault game theme and premium mechanical reel games, as well as the continued solid performance of other themes including Smokin’ Hot Stuff Wicked Wheel® and Shark Week®. Premium units represented 43% of the total installed base at quarter-end compared to 39% a year ago and 25% as of June 30, 2019. Wide-area progressive (“WAP”) units, a subcategory of premium units, grew by 114 units year over year to 1,082 units as of June 30, 2021, partly reflecting the launch of the new Monsterverse game on the Empire DCX® cabinet and the installation of the first WAP into commercial casinos in Nevada and New Jersey.
Digital revenue more than doubled to $3.6 million in the second quarter of 2021 compared to $1.5 million a year ago and increased 50% on a quarterly sequential basis, partially reflecting a full quarter of revenue from Michigan. Digital revenue growth also reflects increased B2B revenue from the expanded base of iGaming operator sites featuring the Company’s games – including in West Virginia, British Columbia and Manitoba that went live during the quarter – along with a growing library of available slot content.
Revenues from the New York Lottery system business were $6.3 million in the second quarter of 2021, compared to $4.9 million in the second quarter 2019. There was no revenue in the second quarter of 2020 due to the impact of the COVID-19 pandemic.
Gaming equipment and systems revenues generated from the sale of gaming units and other related parts and equipment totaled $26.1 million in the second quarter of 2021, compared to $7.0 million and $23.4 million in the second quarter of 2020 and 2019, respectively.
The Company sold 1,402 units, including several hundred units for new casino openings and expansions, at an average selling price (“ASP”) of $17,894 in the second quarter of 2021. This is an increase compared with 381 units at an ASP of $18,044 in the second quarter of 2020 and 1,270 units at an ASP of $17,338 in the second quarter of 2019.

Financial Technology Solutions Segment Full Quarter Comparative Results (unaudited)*

	Three Months Ended June 30,
	2021		2020		2019
	(in millions, unless otherwise noted)
FinTech revenues
Financial access services	$	44.8	$	10.0	$	39.7
Software and other	15.6		4.4		12.8
Hardware	12.8		3.4		7.8
FinTech total revenues	$	73.2	$	17.8	$	60.3

Operating income (loss) ⁽¹⁾	$	23.8	$	(10.9)	$	22.3

Adjusted EBITDA ⁽²⁾	$	32.1	$	0.3	$	29.4

Value of financial access transactions:
Funds advanced	$	2,210.9	$	531.3	$	1,878.2
Funds dispensed	6,960.1		1,403.4		5,328.7
Check warranty	378.8		67.0		353.0
Total value processed	$	9,549.8	$	2,001.7	$	7,559.9

Number of financial access transactions:
Funds advanced	3.3		0.9		2.9
Funds dispensed	28.4		6.3		24.8
Check warranty	0.9		0.2		0.9
Total transactions completed	32.6		7.4		28.6


*	Rounding may cause variances.
(1)	Operating loss for the three-month period ended June 30, 2020, included $3.5 million of pre-tax charges, including $1.8 million of business reorganization costs, $1.1 million of employee severance costs and $0.6 million of non-recurring professional fees. Operating income for the three months ended June 30, 2019 included the impact of approximately $0.5 million for certain non-recurring professional fees and related costs and certain expenses associated with the acquisition of certain player loyalty assets.
(2)	For a reconciliation of net income (loss) to Adjusted EBITDA, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided at the end of this release.

2021 Second Quarter Financial Technology Solutions Segment Highlights

FinTech revenues for the 2021 second quarter increased to a record $73.2 million, compared to $17.8 million in the 2020 second quarter and were up 21% over the $60.3 million in the 2019 second quarter. The growth over both years reflects an increase in revenues from financial access services, lower-margin hardware sales and software and other.

Operating income in the 2021 second quarter rose to $23.8 million, compared to an operating loss of $10.9 million a year ago and operating income of $22.3 million in the 2019 second quarter. The increase primarily reflects the benefit of higher revenues partially offset by an increase in research and development expense as a result of an acceleration of new product development efforts, including development of new and enhanced loyalty products and the Company’s CashClub Wallet^® digital technology offering. Adjusted EBITDA was $32.1 million, compared to $0.3 million and $29.4 million in the second quarter of 2020 and 2019, respectively.

Financial access services revenues, which include both cashless and cash dispensing debit and credit card transactions and check services, increased 16% on a quarterly sequential basis to $44.8 million, reflecting continued improvements in casino activity, and grew 13% from the second quarter of 2019.
- Throughout the 2021 second quarter, growth in transactional activity on a same-store basis was up at a consistent mid-teens rate compared to the second quarter of 2019.
Software and other revenues, which include loyalty and regulatory compliance (RegTech) software, product subscriptions, kiosk maintenance services, and other revenue, were $15.6 million, of which approximately 80% were of a recurring nature. This compares to total revenue of $4.4 million in the second quarter of 2020, of which 79% were of a recurring nature, and $12.8 million in the second quarter of 2019, of which 66% were of a recurring nature.
Hardware sales revenues were $12.8 million, inclusive of significant shipments of self-service kiosks and other loyalty and financial access equipment for new casino openings and major expansions, in the second quarter of 2021, compared to $3.4 million and $7.8 million in the second quarter of 2020 and 2019, respectively.

Balance Sheet and Liquidity

Subsequent to the 2021 second quarter-end, the Company entered into a series of refinancing transactions that reduced interest cost, extended debt maturities and resulted in $1.0 billion of total indebtedness. The new total debt comprises $600.0 million of senior secured term loan priced at LIBOR plus 2.50% with a LIBOR Floor of 50 basis points due 2028, $400.0 million of 5.000% senior unsecured notes due 2029, and a $125.0 million revolving credit facility due 2026 which is undrawn. At current market interest rates, the refinancing resulted in annual cash interest savings of approximately $23 million compared to June 30, 2021.
As of June 30, 2021, the Company had $340.4 million of cash and cash equivalents. Pro forma for the debt repayment, early redemption fees and transaction costs of the refinancing transactions completed in the third quarter, the Company had cash and cash equivalents of $155.1 million.
In the 2021 second quarter, the Company paid $9.9 million in total earned contingent consideration for its 2019 acquisition of certain assets of Atrient and paid the remaining $5.0 million purchase price installment related to the 2019 acquisition of certain assets of Micro Gaming Technology.

Outlook

With industry conditions stabilizing, and assuming that conditions continue to trend without additional setbacks due to pandemic or other macro-economic effects, Everi is providing annual guidance of selected expected financial results, a practice consistent with its custom prior to the onset of the COVID-19 pandemic in 2020. For the full year 2021, the Company expects revenue of $615 million to $635 million, net income of $87 million to $95 million, Adjusted EBITDA of $332 million to $342 million, and Free Cash Flow of $168 million to $177 million. Factors considered in Everi’s 2021 outlook include:

Capital expenditures (inclusive of placement fees) will be $105 million to $113 million;
The Company expects to incur a loss on extinguishment of debt of approximately $32 million to $35 million in the 2021 third quarter, in conjunction with the early redemption of its 7.50% senior unsecured notes due 2025, the repayment of the incremental term loan and the refinancing of its senior secured credit facility due 2024, including the revolving credit facility due 2022. Approximately $11 million to $14 million is expected to be non-cash related to the write-off of existing debt issuance costs and unamortized discount on the existing borrowings; and
Shipments for new casino openings and expansions in the 2021 second half are expected to be lower, reflecting fewer new opening and expansions compared to the first half of 2021.
Assumes no significant change or reversal of the Company’s deferred tax asset valuation allowances during the year.
The Company’s 2021 full year outlook does not contemplate any additional meaningful potential impact from any macroeconomic or pandemic-related setback; but does reflect the likelihood of receding government stimulus benefits and an increase in pressure on consumer discretionary spending.

A summary and reconciliation of the financial targets is included as a supplemental table at the end of this release.

Investor Conference Call and Webcast

The Company will host an investor conference call to discuss its 2021 second quarter results at 11:00 a.m. ET (8:00 a.m. PT) today. The conference call may be accessed live by phone by dialing (201) 689-8471. A replay of the call will be available beginning at 3:00 p.m. ET today and may be accessed by dialing +1 (412) 317-6671; the PIN number is 13721158. A replay will be available until August 11, 2021. The call will be webcast live and archived on www.everi.com (select “Investors” followed by “Events & Contact”).

Non-GAAP Financial Information

In order to enhance investor understanding of the underlying trends in our business, our cash balance, and cash available for our operating needs, and to provide for better comparability between periods in different years, we are providing in this press release Adjusted EBITDA, Free Cash Flow, Net Cash Position and Net Cash Available, which are not measures of our financial performance or position under United States Generally Accepted Accounting Principles (“GAAP”). Accordingly, Adjusted EBITDA, and Free Cash Flow should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP. These measures should be read in conjunction with our net earnings, operating income, and cash flow data prepared in accordance with GAAP. With respect to Net Cash Position and Net Cash Available, these measures should be read in conjunction with cash and cash equivalents prepared in accordance with GAAP.

We define Adjusted EBITDA as earnings (loss) before interest, taxes, depreciation and amortization, loss on extinguishment of debt, non-cash stock compensation expense, accretion of contract rights, write-down of inventory, property and equipment and intangible assets, employee severance costs and other related expenses, litigation settlement received net of legal costs, foreign exchange loss, asset acquisition expense, non-recurring professional fees, and one-time charges. We present Adjusted EBITDA, as we use this measure to manage our business and consider this measure to be supplemental to our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA; and our current credit facility and existing senior unsecured notes require us to comply with a consolidated secured leverage ratio that includes performance metrics substantially similar to Adjusted EBITDA.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “goal,” “target,” “indication,” “future,” “assume,” “estimate,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “project,” “may,” “should,” “can,” “designed to,” ” “favorably positioned,” “will provide,” or “will” and similar expressions to identify forward-looking statements. These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of timing, future events, or performance. Actual results may differ materially from those contemplated in these statements, due to risks and uncertainties. Examples of forward-looking statements include, among others, statements regarding our ability to execute on key initiatives and deliver ongoing operating and financial improvements including guidance related to 2021 financial and operational metrics; regain revenue momentum; sustain our overall growth; generate Free Cash Flow; improve the Company’s capital structure; drive growth of the gaming operations installed base and DWPU; continue expanding the portions of the gaming floor the Company’s games address; successfully perform obligations required by acquisition agreements; and create incremental value for our shareholders, as well as statements regarding our expectations for the industry environment and the adoption of our products and technologies.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are often difficult to predict and many of which are beyond our control. Our actual results and financial condition may differ materially from those indicated in forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, without limitation, the impact of the ongoing COVID-19 global pandemic on our business, operations and financial condition, our history of net losses and our ability to generate profits in the future; our debt leverage and the related covenants that restrict our operations; our ability to generate sufficient cash to service all of our indebtedness and fund working capital and capital expenditures; our ability to withstand unanticipated impacts of a pandemic outbreak of uncertain duration; our ability to withstand the loss of revenue during the closure of our customers’ facilities; our ability to maintain our current customers; our ability to compete in the gaming industry; our ability to execute on mergers, acquisitions and/or strategic alliances, including the timing and closing of acquisitions and our ability to integrate and operate such acquisitions consistent with our forecasts; our ability to access the capital markets to raise funds; expectations regarding our existing and future installed base and win per day; expectations regarding development and placement fee arrangements; inaccuracies in underlying operating assumptions; expectations regarding customers’ and gaming patrons’ preferences and demands for future services and product offerings; the overall growth of the gaming industry, if any; our ability to replace revenue associated with terminated customer contracts; margin degradation from contract renewals; technological obsolescence; our ability to comply with the Europay, MasterCard and Visa global standard for cards equipped with security chip technology; our ability to introduce new and enhanced products and services, including third-party licensed content; our ability to prevent, mitigate or timely recover from cybersecurity breaches, attacks and compromises; the level of our capital expenditures and product development; anticipated sales performance; employee turnover; national and international economic conditions; changes in global market, business and regulatory conditions arising as a result of the COVID-19 global pandemic; changes in gaming regulatory, card association and statutory requirements; regulatory and licensing difficulties that we may face; competitive pressures in the gaming and financial technology sectors; the impact of changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; unanticipated expenses or capital needs and those other risks and uncertainties discussed in our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 15, 2021. Given these risks and uncertainties, there can be no assurance that the forward-looking information contained in this press release will in fact transpire or prove to be accurate. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which are based only on information currently available to us and speak only as of the date hereof.

Tag: Everi Holdings Inc.

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