Gaming manufacturer Everi Holdings topped Wall Street estimates for the third quarter with $222.2 million in net revenues, a net loss of $8.3 million and Adjusted EBITDA of $51.6 million.
Net revenues were up 6.0 percent year-over-year and $6 million above the $216 million consensus estimate. Its $0.12 adjusted loss per share was $0.06 lower than the consensus, while EBITDA checked in at about $1 million higher than Street estimates.
“Our 2016 third quarter results reflect solid execution against key operating initiatives. The progress we achieved in this quarter includes a year-over-year increase in units sold, growth in our installed base and solid growth in our Payments segment in both revenue and Adjusted EBITDA,” said Michael Rumbolz, Everi’s president and chief executive officer.
Everi’s games segment served as the key growth driver for the quarter by posting a 33 percent increase in unit sales for the quarter, though the 783 units sold were less than some analysts had anticipated. The major transaction was a sale of 200 units to the Alberta Gaming and Liquor Commission, the company’s largest-ever new unit sale.
“In our games segment, the key drivers of our performance in the quarter included the continued strong interest in and demand for our core HDX cabinet as well as continued strength in sales of our three reel mechanical slot machine,” Rumbolz said on a call with investors, touting Everi’s new Core HDX cabinet that boasts enhanced graphics and sound features.
Net revenues from gaming operations fell by 4.2 percent year-over-year to $41.4 million. While the company now has more than 13,000 machines installed on gaming floors, win per day from those terminals decreased by around 5 percent from the prior year quarter to $27.53.
Rumbolz said that the trend of declining win per unit will likely continue as the company continues to remove third-party Class III gaming units, though efforts are being undertaken to offset that decline.
“The quarterly results support the transformation that is occurring in the gaming operations business that should position the company for strong growth a few quarters into the future,” wrote David Katz, a gaming analyst with the Telsey Group, with the caveat that there are stills significant risks outstanding. “A more positive view would be obvious if not for the competitiveness and limited nature of the marketplace.”
Everi’s payments business experienced a 7 percent year-over-year revenue increase to $166 million, with growth coming via its casino floor cash advance and ATM services like Cash Club Wallet, Jackpot Express and Everi ID Gateway.
Rumbolz also emphasized that September’s G2E trade show in Las Vegas was a critical moment in the company’s evolution.
“The recent Global Gaming Expo (“G2E”) was our most productive trade show ever, as we showcased innovative products to provide casino operators increased player engagement and time on device as well as more efficient operations,” he said, adding that the customer feedback he received at the show indicated that the industry is beginning to recognize Everi’s efforts in casino floor technology. “I believe the customers were impressed with the commitment we demonstrated to supporting our Core HDX cabinet with the new games and game features that we debuted at G2E.”
