Record performance in its core business segments, games and financial technology, helped Everi Holdings beat Wall Street expectations for earnings per share and revenue in the first quarter.
In a statement issued after stock markets closed Tuesday, Everi Holdings, a Las Vegas-based gaming equipment and cash products company, said its net income was $5.9 million, or 8 cents per diluted share, for the three months ended March 31, up from net income of $4.6 million, or 6 cents per share, a year earlier.
The latest result topped the 2 cents per diluted share estimate of analysts polled by Zacks Investment Research.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure excluding one-time costs, rose 5.7 percent to $61.3 million from $58 million.
Revenue rose 11.5 percent to $123.8 million from $111 million. The latest result topped the $121.9 million forecast by Zacks-polled analysts.
“Overall, 2019 is off to the solid start we anticipated,” CEO Michael Rumbolz said in the statement, “and as a result, we remain on track to achieve our full year expectation for Adjusted EBITDA of between $252 million to $255 million.”
Examining his company’s game segment performance, Rumbolz said Everi sold a record number of new units in the first quarter, 1,259, up 18.4 percent from 1,063 a year earlier. Game segment revenue rose 12.1 percent to a record $67.5 million from $60.2 million.
“Our investments in new cabinets, game content and features continue to strengthen the appeal of our games’ segment portfolio for customers and their players, Rumbolz said. “We are delivering higher-performing games across our entire installed base, with the continued growth of premium units, and specifically our wide-area progressive units representing a significant driver of this growth.”
In the financial technology unit, Everi’s revenue rose 10.8 percent to a record $56.3 million from $50.8 million a year earlier. Cash access services, which include ATM, check and cash advance services, yielded $40.8 million in revenue in the quarter, up 6.8 percent from $38.2 million a year earlier. Revenue from equipment sales revenues rose 59 percent to $7 million in the first quarter of 2019 from $4.4 million, boosted by sales of integrated kiosks.
“FinTech is delivering similar growth across all of the key business drivers, including growth in core cash access services revenue, reflecting consistent market share gains and increases in same-store transactions and dollars processed,” Rumbolz said. “We also sold our highest number of kiosks in 14 quarters as we begin to realize the benefits of the expected uptick in our unit replacement cycle.”
Stifel gaming analyst Brad Boyer said in a research note that Everi has “considerable momentum building” in each of the company’s business segments.
“Management remains committed to seeking out channels through which its businesses can become appropriately valued, an outcome we believe the Street is overlooking,” Boyer said.
Everi Holdings shares fell 36 cents, or 3.62 percent, Tuesday to close at $9.58 on the New York Stock Exchange. The shares have risen 86 percent in 2019 and 19.3 percent in the past 12 months.
“The quarter supports our view that despite the strong performance in the shares, there remains a solid momentum of top line, profitability and cash generation growth,” Jefferies gaming analyst David Katz said in a note to investors.
Zacks wrote in a May 3 post that Everi’s key business segments — installed basis and financial technology, stand poised to grow. The company has invested heavily in both in recent years, Zacks wrote.
Installed games base and estimated daily win per unit are expected to drive gambling revenues, Zacks wrote, and strength in cash access and information services and equipment sales should boost financial technology revenue.
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