A pretax charge related to social gaming business sent PlayAGS to a wider fourth-quarter loss, missing Wall Street forecasts, but revenue rose to top them.
In a statement issued Tuesday after stock markets closed, PlaysAGS, a Las Vegas-based electronic slot and bingo machine maker that was founded in 2005 and went public in January 2018, said its net loss was $10.3 million, or 29 cents per share, for the three months ended Dec. 31, compared with a net loss of $8.5 million, or 37 cents per share, a year earlier.
A $4.8 million noncash, pretax goodwill impairment charge related to social gaming business within the company’s Interactive Social reporting unit hurt results, PlayAGS said. The goodwill related to the company’s 2015 acquisition of RocketPlay.
Analysts polled by Zacks Investment Research expected a 1-cent-per-share loss.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that excludes nonrecurring charges, rose 19 percent to $31.5 million.
Fourth-quarter revenue rose 25.2 percent to $72.1 million from $57.6 million. Zacks-polled analysts had forecast $69.7 million in revenue.
PlayAGS shares climbed after the earnings news. The stock rose 5 cents, or 3.09 percent, to reach $25 in after-hours trading on the New York Stock Exchange. PlayAGS had closed regular trading up 50 cents, or 2.11 percent, to reach $24.25.
“Our continued top-line growth, increased operating cash, and free cash flow generation reflects the industry-leading performance of our products and AGS’ unique position given how underrepresented we are in the market,” PlayAGS CEO David Lopez said in a statement accompanying the results. “With new product and content launches, further penetration of both new and early-entry markets, and international expansion, AGS is positioned for another high-growth year in 2019.”
PlayAGS, which raised $164 million in its January initial public stock offering, said an 86 percent rise in electronic gambling machine sales drove the revenue bump. The company said 60 percent of the 1,159 units it sold went to early entry markets including Ontario, Canada; Mississippi; and Nevada. A year earlier, the company sold 697 gaming machines in the fourth quarter.
Installed electronic gambling machines base rose by 228 units year-to-year, PlayAGS said, adding that its international installed base increased to 8,350 units. More than 500 Icon units were in Mexico at year-end 2018, the company said.
Table products revenue rose 32 percent to 3,162 units, driven by sales of the Super 4 Progressive Blackjack and Buster Blackjack side bet.
PlayAGS last month closed its $49 million acquisition of privately held Vancouver, British Columbia-based slot maker Integrity Gaming Corp. PlayAGS said the deal added more than 2,700 games to its portfolio. Officials touted the deal as positive for the company’s future.
“Every Integrity customer is also an AGS customer, so this should be a relatively seamless transition,” PlayAGS Senior Vice President of Slot Products Andrew Burke said in the statement.
Union Gaming analyst John DeCree said PlayAGS acquired Integrity Gaming Group at “attractive” valuation, or 5.4 times EBITDA.
“We estimate the new 250 placements will generate an incremental $750,000 of EBITDA in 2019, representing about half of AGS’ 15 percent annual EBITDA growth forecast in year one,” wrote DeCree, whose company rates PlayAGS “outperform,” wrote in an investors’ note posted on Seeking Alpha.
“We also expect a decent amount of cost synergies. Looking at Integrity’s (profit and loss), there are roughly $250,000 of public company costs, plus duplicative operating costs, that could be eliminated post-integration.
During the fourth quarter, PlayAGS also cleared regulatory requirements in the Philippines and began selling its Alora video bingo cabinet there.
PlayAGS’ full-year net loss narrowed to $20.8 million, or 61 cents, per share from $45.1 million, or $1.94 per share, a year earlier.
Twelve-month revenue rose 35.6 percent to $271 million from $199.9 million.
Follow Matthew Crowley on Twitter at @copyjockey
