Market share gains in games and financial technology helped Everi Holdings post fourth-quarter net income, reversing a year-earlier loss and topping Wall Street forecasts.
In a statement issued Tuesday after stock markets closed, Everi Holdings, a Las Vegas-based cash access operations company and gaming equipment provider, said its net income was $4.2 million, or 6 cents per share, for the three months ended Dec. 31, reversing a year-earlier loss of $25 million, or 37 cents per share.
Analysts polled by Zacks Investment Research had expected Everi to lose 5 cents per share in the quarter.
Everi shares jumped on the earnings news, rising 7 cents, or 0.89 percent, to close at $7.97 in regular trading on the New York Stock Exchange. In after-hours trading, Everi’s shares rose 13 cents, or 1.63 percent to reach $8.10 at 5 p.m. PDT.
As it announced earnings, Everi said it will spend $40 million to acquire casino gaming-related assets, including self-service kiosk and marketing platform technology, from Atrient, a Bloomfield Township, Michigan casino loyalty and marketing products company. Everi said it paid half the cost with cash on hand and will pay the rest over the next two years.
“The assets that we acquired from Atrient will add complementary products and services to our fintech business,” Everi CEO Mike Rumbolz said during a conference call with investors. “We believe these assets will expand our market position and help us to accelerate growth in revenue and adjusted EBITDA.”
In February, at the ICE London trade show, Atrient and Everi demonstrated their products’ interoperability. The companies showed how Atrient’s PowerKiosk works with Everi’s multifunction CXC 5.0 L kiosk.
SunTrust gaming analyst Barry Jonas told investors late Tuesday that Everi expanded its financial services business by acquiring more than 50 customer contracts in 100 casinos from Atrient.
“Everi did not quantify the (cash flow) profile of the company, though noted they expect the acquisition to be neutral to cash flow positive for 2019 results,” Jonas said. “We believe the purchase multiple is likely at or below Everi’s current trading multiple on an annualized basis
In the quarter, Everi’s adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that excludes nonrecurring costs, rose 6.4 percent to $54.6 million from $51.3 million in the quarter.
Fourth-quarter revenue was $119.5 million, topping the $113.4 million forecast by Zacks-polled analysts. The latest result is up 5.4 percent from $105 million a year earlier.
In a statement accompanying the results, Rumbolz said the company showed consistent improvement across its key performance indicators, had record full-year unit sales and its highest-ever year-end installed base of machines.
“The investments we have made in our financial technology and games product portfolios over the last several years have led to a greater range of products and services that are delivering higher value to casino operators and better experiences for their guests. As a result, we are expanding our presence on casino floors in both business segments,” said Rumbolz, whose employment agreement was extended by two years in January.
“Our unit sales and ship share continue to improve,” he added. “And we have established a product pipeline that we expect will drive ongoing improvements in our high-margin gaming operations business.”
Everi’s fourth-quarter games segment revenue rose 18.4 percent to $67 million from $56.6 million. Gaming operations revenue rose 11.9 percent to $41.5 million from $37.1 million, reflecting year-over-year growth in installed base and estimated daily win per unit.
Financial technology segment revenue rose 8.5 percent to $52.5 million from $48.4 million. Cash access services revenue, which includes ATM, cash advance and check services, also rose 8.5 percent to $39.5 million from $36.4 million.
For the 12 months ended Dec. 31, Everi had net income of $12.4 million, or 17 cents per share, reversing a year-earlier loss of $51.9 million, or 78 cents per share.
Full-year revenue rose 14.3 percent to $469.5 from $410.7 million.
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