Game and financial technology sales growth helped Everi Holdings post third-quarter net income and reverse a year earlier loss. Everi’s price per share spiked in after-hours trading following the post-closing-bell release of the results.
In a statement, Everi, a Las Vegas-based manufacturer, said it earned $2.1 million, or 3 cents per share, for the three months ended Sept. 30, reversing a loss of $4.3 million, or 6 cents per share, a year earlier.
Adjusted earnings before income, taxes, depreciation and amortization, a measure of cash flow, rose 9.6 percent to a record $58.3 million from $53.2 million.
Everi’s shares rose 3 cents, or 0.4 percent to close at $7.44 in regular trading, then added 3 percent in after-hours trading.
Everi’s quarterly revenue rose 17.3 percent to $120.3 million from $102.6 million.
Stifel Nicolaus gaming analyst Brad Boyer told investors Tuesday Everi’s cash flow trading multiple, “conveys a gross lack of appreciation for the predictability and defensibility of the high-margin and largely recurring financial technology business, and the current momentum building behind the games segment.”
In the third quarter, Everi had $65.8 million in games segment revenue, up 19 percent from $55.3 million a year earlier, and $54.5 million in financial technology revenue, up 15.2 percent from $47.3 million a year earlier.
In the quarter, Everi sold 1,165 games, up 42.6 percent from 817 a year earlier and had a total installed end-of-quarter base of 14,233 machines, up 8.7 percent from 13,098 a year earlier.
Everi’s financial technology equipment sales revenue more than doubled to $7.2 million from $3 million, lifted by integrated kiosk sales.
In a statement accompanying the results, Everi CEO Michael Rumbolz said new games and sales of E43 and mechanical reel games spurred revenue growth.
“It is clear that the investments we have made in our games and financial technology portfolios have led to the creation of the new products that are helping drive consistent growth in our operating results,” Rumbolz said.
Everi entered its earnings call with momentum, having agreed to a four-year extension of its deal to supply cash advance, ATM, check warranty, and redemption device services to Penn National Gaming.
In a statement announcing the deal, Everi said it will also exclusively supply new kiosk hardware for Penn National to deploy during the extended agreement term. Financial terms of the deal weren’t disclosed.
“We continue to provide our customers with a wide range of products that efficiently deliver the most cash to their gaming floor and provide them with … data that helps them manage their operations more proactively,” Rumbolz said in the statement.
A highlight of the quarter came Sept. 12, when Everi’s stock price had a one-day 13 percent gain. Boyer issued a “buy” rating that day and The Motley Fool, highlighted Boyer’s investors note, saying Everi had “several potential catalysts on the horizon” that could push shares upward.
Boyer suggested Everi would boost its profile by holding its first-ever analyst day, which ran Sept. 26, and participating in early October’s Global Gaming Expo in Las Vegas.
Everi also boosted its market exposure by joining Bank of America Merrill Lynch’s gaming and lodging conference, which ran in New York in September and Stifel Baltusrol’s executive summit, which ran in New Jersey in September.
Boyer said in his note that Rumbolz cited G2E as a catalyst for sales of Everi games and systems to casinos.
“We’re excited to further demonstrate the significant strides that we continue to make in raising the level of entertainment that our games provide for players,” Rumbolz said.
Everi unveiled two new movie-themed games at the 2018 G2E, “The Mask,” based on the 1994 Jim Carrey movie and “The Karate Kid,” based on the 1984 movie starring Ralph Macchio and Elisabeth Shue. The company also unveiled new video slot machine themed after music icon Willie Nelson.
Also in October, Everi Holdings extended its three-year agreement to provide its CentralCredit system to some Caesars Entertainment Corp. casinos. The specific casinos and financial terms weren’t disclosed.
Follow Matthew Crowley on Twitter @copyjockey
