PlayAGS : AGS REPORTS Fourth QUARTER and Full Year 2021 RESULTS – Form 8-K

AGS REPORTS Fourth QUARTER and Full Year 2021 RESULTS

Fourth Quarter 2021 Highlights:

	•	Domestic EGM RPD Exceeded $30 for the Third Consecutive Quarter
	•	Premium EGM Footprint More than Doubled Year-over-Year
	•	EGM Replacement Unit Sales Increased by over 35% Sequentially
	•	Table Products Revenue Surpassed $3 Million for the Second Straight Quarter
	•	Successfully Completed a Comprehensive Debt Refinancing on February 15, 2022
	•	Continue to Target Year-End 2022 Net Leverage of lower than 4.0x

LAS VEGAS, MARCH 10, 2022 – PlayAGS, Inc. (NYSE: AGS) (“AGS”, “us”, “we” or the “Company”), a designer and developer of apparatus and companies options for the worldwide gaming trade, in the present day reported working outcomes for the fourth quarter and full yr ended December 31, 2021.

In addressing the Company’s fourth quarter and full yr monetary efficiency, AGS President and Chief Executive Officer David Lopez mentioned, “If 2020 was the yr of resiliency inside our enterprise, 2021 was the yr of transition. Supported by the foundational adjustments put into place over the previous 18 months and an accommodative macroeconomic backdrop, we have been capable of set up working momentum inside all three enterprise verticals as we progressed all year long, a pattern that continued into the fourth quarter.”

Mr. Lopez continued, “With our improved 2021 monetary outcomes behind us, our consideration has shifted to making sure we’re greatest positioned to attain even higher success in 2022. To that finish, I might characterize 2022 as a yr of acceleration for AGS; one through which we are going to look to additional leverage the continual enchancment in our folks, merchandise and processes to strengthen our monetary efficiency.”

Kimo Akiona, AGS’ Chief Financial Officer, added, “I’m happy with the diploma to which we have been capable of enhance the standard and flexibility of our stability sheet all through 2021. Looking forward to 2022, I consider the operational momentum we proceed to see throughout the enterprise, the roughly $10 million of annualized money curiosity expense financial savings we anticipate to appreciate on account of our latest refinancing transaction, and our organizational dedication to maximizing free money move place us to ship upon our yr finish web leverage goal of lower than 4.0x.”

Summary of the Three Months Ended December 31, 2021, 2020 and 2019

(In 1000’s, besides per-share and Adjusted EBITDA margin knowledge)

		Three Months Ended December 31,
														% Change
		2021			2020			2019			2021 vs 2020			2021 vs 2019
Revenues:
EGM		$	64,498			$	42,396			$	73,710				52.1	%			(12.5	)%
Table Products			3,189				2,551				2,757				25.0	%			15.7	%
Interactive			2,536				1,675				1,319				51.4	%			92.3	%
Total revenues		$	70,223			$	46,622			$	77,786				50.6	%			(9.7	)%
Income (loss) from operations		$	1,849			$	(7,835	)		$	7,815				(123.6	)%			(76.3	)%
Net (loss) earnings		$	(9,090	)		$	(17,242	)		$	1,423				(47.3	)%			(738.8	)%
(Loss) earnings per share		$	(0.25	)		$	(0.49	)		$	0.04				(49.8	)%			(715.5	)%
Adjusted EBITDA:
EGM		$	29,487			$	19,696			$	36,630				49.7	%			(19.5	)%
Table Products			1,951				1,316				1,005				48.3	%			94.1	%
Interactive			816				287				(370	)			184.3	%			(320.5	)%
Total Adjusted EBITDA(1)		$	32,254			$	21,299			$	37,265				51.4	%			(13.4	)%
Total Adjusted EBITDA margin(2)			45.9	%			45.7	%			47.9	%			25 bps				(198 bps)

Fourth Quarter 2021 Financial Results

	•	Given the COVID-19 pandemic’s continued affect on the worldwide gaming trade all through This autumn 2020, we’ve got included our This autumn 2019 monetary leads to the tables introduced all through this launch, as we consider comparisons to This autumn 2019 metrics present extra significant perception into the restoration trajectory of our numerous enterprise segments.
	•	Consolidated income totaled $70.2 million, marking the fourth consecutive quarter through which we have been capable of obtain quarterly sequential income progress. This autumn 2021 consolidated income exceeded the extent reached in Q3 2021 by roughly 4%, supported by an over 20% improve in EGM tools gross sales, sustained power inside our home EGM recurring income enterprise, file Table Products efficiency, and additional restoration in our worldwide EGM gaming operations income. This autumn 2021 consolidated income reached roughly 90% of the extent achieved in This autumn 2019, as greater income contributions from our home EGM recurring income, Table Products and Interactive companies have been greater than offset by the extra gradual put up-COVID-19 recoveries we’re experiencing inside our EGM tools gross sales and worldwide EGM gaming operations verticals. Although slower to completely get better, you will need to observe EGM tools gross sales elevated sequentially in all 4 quarters of 2021, whereas worldwide EGM gaming operations income has improved sequentially in all six quarters since reaching COVID-19-impacted lows in Q2 2020.

	•	Gaming operations, or recurring income, elevated to $52.9 million versus $40.0 million and $51.6 million in This autumn 2020 and This autumn 2019, respectively. Relative to This autumn 2019, the expansion achieved inside our home EGM, Table Products, and Interactive recurring income companies was partially offset by a decline in our worldwide EGM recurring income enterprise, as beforehand mentioned. In combination, recurring income accounted for about 75% of our consolidated This autumn 2021 income in comparison with roughly 86% and 66% in This autumn 2020 and This autumn 2019, respectively.
	•	Our 2021 fourth quarter web lack of $9.1 million improved as in comparison with the $17.2 million web loss incurred in This autumn 2020. The yr-over-yr decline in our reported web loss displays our improved monetary efficiency and decrease depreciation and amortization (“D&A”) expense. Our web loss elevated relative to web earnings of $1.4 million realized in This autumn 2019, pushed by the modest decline in our monetary efficiency, greater curiosity expense and decreased earnings tax profit, partially offset by decrease D&A expense.

•

Total Adjusted EBITDA (non-GAAP)(1) was $32.3 million in comparison with $21.3 million in This autumn 2020 and $37.3 million in This autumn 2019. Interactive and Table Products Adjusted EBITDA elevated sharply relative to the degrees achieved in This autumn 2019, supported by the profitable execution of our strategic income progress initiatives inside every of the segments. EGM Adjusted EBITDA decreased roughly 20% versus This autumn 2019 ranges, because the upside from our improved This autumn 2021 home EGM gaming operations efficiency was greater than offset by the extra gradual recoveries we’re experiencing inside our EGM tools gross sales and worldwide EGM gaming operations companies.

•

Total Adjusted EBITDA margin (non-GAAP)(1) was 45.9%, comparatively according to the 45.7% achieved in This autumn 2020. Adjusted EBITDA margin compressed by roughly 200bps(2) in comparison with the 47.9% reached in This autumn 2019, because the improved profitability achieved throughout the Table Product and Interactive segments was greater than offset by a discount in our EGM phase Adjusted EBITDA margin, which we attribute to our tactical determination to permit working bills to normalize to pre-COVID-19 ranges prematurely of a corresponding restoration in EGM revenues to make sure we greatest place the enterprise to attain lengthy-time period success.

⁽¹⁾ Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures, see non-GAAP reconciliation under.

⁽²⁾ Basis factors (“bps”).

1

EGM

Three Months Ended December 31, 2021 in comparison with Three Months Ended December 31, 2020 and 2019

(Amounts in 1000’s, besides unit knowledge)		Three Months Ended December 31,
														% Change
		2021			2020			2019			2021 vs 2020			2021 vs 2019
EGM phase revenues:
Gaming operations		$	47,309			$	35,940			$	47,586				31.6	%			(0.6	)%
Equipment gross sales			17,189				6,456				26,124				166.2	%			(34.2	)%
Total EGM revenues		$	64,498			$	42,396			$	73,710				52.1	%			(12.5	)%
EGM Adjusted EBITDA		$	29,487			$	19,696			$	36,630				49.7	%			(19.5	)%
EGM unit data:
VLT			–				–				512				N/A				(100.0	)%
Class II			11,256				11,794				12,415				(4.6	)%			(9.3	)%
Class III			4,683				4,474				5,441				4.7	%			(13.9	)%
Domestic put in base, finish of interval			15,939				16,268				18,368				(2.0	)%			(13.2	)%
International put in base, finish of interval			7,643				7,985				8,497				(4.3	)%			(10.1	)%
Total put in base, finish of interval			23,582				24,253				26,865				(2.8	)%			(12.2	)%
Installed base – Oklahoma			8,045				8,871				10,171				(9.3	)%			(20.9	)%
Installed base – non-Oklahoma			7,894				7,397				8,197				6.7	%			(3.7	)%
Domestic put in base, finish of interval			15,939				16,268				18,368				(2.0	)%			(13.2	)%
Domestic income per day		$	30.17			$	23.26			$	24.97				29.7	%			20.8	%
International income per day		$	5.55			$	2.56			$	7.65				116.8	%			(27.5	)%
Total income per day		$	22.16			$	16.42			$	19.52				35.0	%			13.5	%
Domestic EGM unit gross sales elements:
Casino opening and growth models			68				–				52				N/A				30.8	%
Other			747				283				1,121				164.0	%			(33.4	)%
Total Domestic EGM models offered			815				283				1,173				188.0	%			(30.5	)%
International EGM models offered			–				–				110				N/A				(100.0	)%
Total EGM models offered			815				283				1,283				188.0	%			(36.5	)%
Domestic common gross sales worth		$	19,286			$	18,035			$	17,833				6.9	%			8.1	%

EGM Quarterly Results

	Domestic Gaming Operations(3)
	•	Domestic EGM gaming operations, or recurring income, elevated to $43.4 million in comparison with $34.1 million and $41.6 million in This autumn 2020 and This autumn 2019, respectively. A higher combine of upper-yielding premium video games, extra constant core recreation content material execution, and a secure gaming macroeconomic backdrop drove our improved income efficiency. Quarterly home EGM recurring income exceeded corresponding 2019 ranges for the third consecutive quarter.

	•	Our home EGM put in base grew by greater than 170 models versus the 15,767 models put in at September 30, 2021, marking the second consecutive quarterly sequential improve in our home EGM put in base. Growing operator demand for our expanded suite of premium recurring income merchandise and, to a lesser diploma, new on line casino opening and growth exercise paced the quarterly sequential unit progress. Our home put in base decreased by 329 models and 2,429 models versus This autumn 2020 and This autumn 2019, respectively, with the overwhelming majority of the declines immediately attributable to our determination to strategically prune decrease-yielding models.
	•	Domestic EGM income per day (“RPD”) elevated by greater than 20% in comparison with the $24.97 achieved in This autumn 2019. Continued progress of our greater-yielding premium recreation footprint, accelerating core recreation content material momentum, the strategic pruning of decrease-yielding models, and a secure gaming macroeconomic setting drove our improved home RPD efficiency. Domestic EGM RPD exceeded $30 for the third consecutive quarter.
	•	Our premium recreation footprint greater than doubled yr-over-yr, accounting for about 10% of our home EGM put in base at December 31, 2021 in comparison with roughly 9% and 4% at September 30, 2021 and December 31, 2020, respectively. We estimate our premium recreation footprint generated over 15% of our This autumn 2021 home EGM gaming operations income.

	International Gaming Operations
	•	International EGM gaming operations income totaled $3.9 million in comparison with $1.8 million in This autumn 2020 and $6.0 million in This autumn 2019. The decline versus This autumn 2019 displays the diploma to which our Mexico enterprise has been impacted by measures carried out to sluggish the unfold of COVID-19, together with the imposition of on line casino capability restrictions. Additionally, in distinction to the United States, Mexico has not supplied any sort of fiscal stimulus to assist its put up-COVID-19 financial restoration. International EGM gaming operations income elevated roughly 5% over Q3 2021 ranges, marking the sixth consecutive quarterly sequential improve following Q2 2020 COVID-19-impacted lows.
	•	International EGM RPD was $5.55 in comparison with $2.56 in This autumn 2020 and $7.65 in This autumn 2019. International EGM RPD improved roughly 9% on a quarterly sequential foundation from the $5.11 achieved in Q3 2021, supported by a rise within the variety of lively playable video games in casinos and Mexico’s continued, albeit gradual, put up-COVID-19 macroeconomic restoration. We estimate This autumn 2021 worldwide EGM RPD, adjusted to exclude inactive video games, was comparatively in keeping with This autumn 2019 ranges.
	•	Our worldwide EGM put in base totaled 7,643 models at December 31, 2021, representing a modest lower as in comparison with the 7,896 models put in as of September 30, 2021.We estimate roughly 70% of our worldwide EGM put in base was lively and playable as of December 31, 2021 in comparison with roughly 35% as of December 31, 2020.
	•	Given the extra gradual income restoration we’re experiencing inside our Mexico enterprise, our group stays centered on managing prices to protect profitability. To that finish, our worldwide EGM phase continued to contribute constructive Adjusted EBITDA in This autumn 2021.
	Equipment Sales
	•	We offered a complete of 815 home EGM models in comparison with 283 models and 1,173 models in This autumn 2020 and This autumn 2019, respectively. EGM unit gross sales elevated meaningfully versus the 663 models offered in Q3 2021, supported by sustained core recreation content material momentum, additional penetration of product adjacencies, resembling Historical Horse Racing (“HHR”), and continued restoration in core North American alternative unit demand, partially offset by a extra modest opening and growth alternative set. Excluding on line casino opening and growth models, EGM unit gross sales elevated by greater than 35% on a quarterly sequential foundation.

	•	Domestic common gross sales worth (“ASP”) was $19,286 versus $18,035 in This autumn 2020 and $17,833 in This autumn 2019. Our improved home ASP displays a higher mixture of premium-priced Orion Curve cupboards, which accounted for over 55% of This autumn 2021 whole models offered, and profitable implementation of our worth integrity initiative. Domestic ASP elevated roughly 2% in comparison with the $18,970 achieved in Q3 2021.
	•	We offered models into 19 U.S. states and three Canadian provinces all through This autumn 2021, with Nevada, Virginia and California rising as our high three gross sales markets.

	•	Our Orion Curve Premium put in base greater than doubled on a quarterly sequential foundation, supported by the robust efficiency of our participant-favourite Rakin Bacon Deluxe recreation themes in each Class II and Class III jurisdictions. We proceed to develop a various pipeline of recent premium recreation content material, recreation play mechanics and {hardware} to additional assist our lengthy-time period progress initiatives throughout the greater-yielding premium recreation phase.
	•	Our distinctive recreation efficiency and deep buyer relationships have allowed us to command higher share throughout the increasing HHR market. The ahead demand image throughout the HHR market stays encouraging, supported by growth and additional market penetration alternatives inside present jurisdictions, together with Virginia, Kentucky and Wyoming, and the pending launch of recent jurisdictions, notably New Hampshire.
	•	We anticipate to materially broaden our core Class II recreation content material portfolio all through the primary half of 2022, offering us with the means to additional yield optimize our over 11,000-unit Class II EGM put in base in a capital environment friendly method. Looking past 2022, we proceed to search for alternatives to leverage our in depth expertise, time-examined buyer relationships, distinctive recreation play mechanics, and scale-advantaged footprint to additional strengthen our aggressive positioning throughout the secure Class II gaming market.

⁽³⁾ “Domestic” consists of each the United States and Canada.

2

Table Products

Three Months Ended December 31, 2021 in comparison with Three Months Ended December 31, 2020 and 2019

(Amounts in 1000’s, besides unit knowledge)		Three Months Ended December 31,
														% Change
		2021			2020			2019			2021 vs 2020			2021 vs 2019
Table Products phase revenues:
Gaming operations		$	3,096			$	2,362			$	2,653				31.1	%			16.7	%
Equipment gross sales			93				189				104				(50.8	)%			(10.6	)%
Total Table Products revenues		$	3,189			$	2,551			$	2,757				25.0	%			15.7	%
Table Products Adjusted EBITDA		$	1,951			$	1,316			$	1,005				48.3	%			94.1	%
Table Products unit data:
Table Products put in base, finish of interval			4,701				4,254				3,766				10.5	%			24.8	%
Average month-to-month lease worth		$	220			$	182			$	239				20.9	%			(7.9	)%

Table Products Quarterly Results

	•	Gaming operations, or recurring income, grew to a file $3.1 million, paced by sustained buyer demand for our trade-main desk recreation progressive merchandise and the rising attraction of our all-inclusive web site license providing, the AGS Arsenal. Recurring income elevated roughly 5% over the earlier file of $3.0 million set in Q3 2021.
	•	Adjusted EBITDA elevated practically 50% versus This autumn 2020 and roughly 20% on a quarterly sequential foundation to a file $2.0 million. Adjusted EBITDA margin was 61.2% in comparison with 52.4% in Q3 2021 and 51.6% in This autumn 2020.
	•	Our put in base expanded by over 50 models on a quarterly sequential foundation to a file 4,701 models, with progress achieved throughout all core segments of our diversified Table Products portfolio, together with aspect bets, progressives, premium video games, and card shufflers.
	•	Operator curiosity in our trade-main and increasing desk recreation progressive product suite continues to construct, pushing our progressive put in base to over 1,700 models at December 31, 2021. Customer demand for our Royal 9 Baccarat progressive product stays constant, whereas the put in base of our extremely anticipated Bonus Spin Xtreme (“BSX”) progressive greater than doubled on a quarterly sequential foundation. We proceed to obtain constructive buyer suggestions on our preliminary BSX installsand anticipate buyer adoption to speed up within the quarters forward, notably as operators look to activate progressives on latent roulette tables.

•

Our common month-to-month lease worth (“ALP”) elevated roughly 4% in comparison with the $212 achieved in Q3 2021 and roughly 21% yr-over-yr. The roughly 8% decline in ALP versus This autumn 2019 ranges displays the affect of AGS Arsenal on our reported metrics, as this providing is meant to strategically drive down per unit pricing in return for greater whole income and an prolonged contract dedication.

	•	We have been reside with 16 AGS Arsenal web site licenses on the finish of This autumn 2021 in comparison with 13 on the finish of Q3 2021. Interest in our web site license program continues to develop, supported by our organizational dedication to desk product innovation and on line casino operators’ need to additional improve the effectivity of their desk recreation operations.
	•	Subsequent to quarter finish, we additional strengthened our Table Product content material portfolio by the acquisition of the participant-favourite Lucky Lucky blackjack aspect guess from Aces Up Gaming. In addition to increasing our aspect guess put in base, the Lucky Lucky asset has the potential to strengthen our AGS Arsenal worth proposition and broaden our progressive product portfolio over time.
	•	We lately obtained GLI approval for our PAX S specialty recreation card shuffler and our first income producing models are already reside within the area.

Interactive

Three Months Ended December 31, 2021 in comparison with Three Months Ended December 31, 2020 and 2019

(Amounts in 1000’s)		Three Months Ended December 31,
														% Change
		2021			2020			2019			2021 vs 2020			2021 vs 2019
Interactive phase income:
Social gaming income		$	550			$	767			$	713				(28.3	)%			(22.9	)%
Real-money gaming income			1,986				908				606				118.7	%			227.7	%
Total Interactive income		$	2,536			$	1,675			$	1,319				51.4	%			92.3	%
Interactive Adjusted EBITDA		$	816			$	287			$	(370	)			184.3	%			(320.5	)%

Interactive Quarterly Results

	•	Total Interactive income elevated greater than 50% yr-over-yr to $2.5 million, exceeding $2.0 million for the fourth consecutive quarter. Outsized progress inside our actual-cash gaming enterprise continues to assist our improved Interactive income efficiency.
	•	Interactive Adjusted EBITDA grew to $816 thousand, marking the phase’s eighth consecutive quarter of constructive Adjusted EBITDA efficiency and reinforcing our dedication to scaling our Interactive enterprise in a worthwhile vogue.

	•	RMG income greater than doubled yr-over-yr to $2.0 million. The profitable integration of our distant gaming server (“RGS”) with further iGaming operators, the growth of regulated iGaming to further North American jurisdictions, together with a number of Canadian provinces, and continued robust efficiency of AGS recreation content material paced the robust yr-over-yr RMG income progress comparability.
	•	We proceed to broaden our RMG content material catalog with over 30 AGS titles at present accessible for play on-line. Our content material is reside within the majority of essentially the most outstanding regulated North American on-line jurisdictions, together with PA, MI, NJ, Ontario, and Quebec, and we proceed to organize for scheduled upcoming launches into further jurisdictions, together with CT, WV, British Columbia, and Alberta.
	•	Social gaming income of $550 thousand was comparatively according to the prior sequential quarter, as we proceed to prioritize stability and profitability inside this phase of our enterprise. The yr-over-yr income comparability displays the patron’s desire for at-dwelling actions throughout This autumn 2020 in response to the worldwide unfold of COVID-19, mixed with a discount in participant advertising spend as a part of our profitability focus throughout the phase.

3

Liquidity and Capital Expenditures

As of December 31, 2021, the Company had $125.0 million of whole accessible liquidity, comprised of a $95.0 million accessible money stability and $30.0 million of revolver availability, in comparison with whole accessible liquidity of $111.7 million at December 31, 2020. The whole principal quantity of debt excellent, as of December 31, 2021, was $615.7 million, predominantly comprised of $614.8 million in first lien time period loans.

Total web debt, which is the principal quantity of debt excellent much less money and money equivalents, as of December 31, 2021 was roughly $520.8 million in comparison with roughly $540.8 million at December 31, 2020. The Total Net Debt Leverage Ratio decreased from 7.5 occasions at December 31, 2020 to 4.2 occasions at December 31, 2021 (see Total Net Debt Leverage Ratio Reconciliation under(4)), inserting the Company nicely inside compliance of its 6.0 occasions monetary covenant.

On February 15, 2022, the Company efficiently accomplished the refinancing of its whole debt excellent by the issuance of (i) a senior secured first lien time period mortgage in an combination principal quantity of $575.0 million due 2029 (the “New Term Loan Facility”), the proceeds of which, along with money readily available, have been used to repay all quantities excellent below the Company’s present time period mortgage amenities and to pay associated charges and bills, and (ii) a $40.0 million senior secured first lien revolving facility due 2027 (the “New Revolving Credit Facility”), which was undrawn at shut. The refinancing transaction concurrently lowered the principal quantity of debt excellent by roughly $40 million, decreased annualized money curiosity expense by roughly $10 million, relative to the extent incurred for the complete yr 2021, expanded the Company’s revolver capability to $40.0 million, and prolonged key debt maturities. Pro-forma for the refinancing transaction, the Company’s whole web debt was roughly $538.3 million.

Fourth quarter 2021 capital expenditures totaled $15.3 million, primarily comprised of $9.7 million in progress capital expenditures, which mirror prices related to the location of further models into the Company’s leased put in base, and $4.1 million in intangible capital expenditures, inclusive of capitalized inner software program growth prices. Capital expenditures for the complete yr ended December 31, 2021 totaled $51.5 million in comparison with $71.1 million for the complete yr ended December 31, 2019.

2022 Net Leverage Target

Supported by our robust end to 2021, the roughly $10 million of annualized money curiosity expense financial savings we anticipate to appreciate along with our latest debt refinancing and the working momentum we proceed to see within the enterprise, we stay assured in our skill to ship upon our beforehand issued yr-finish 2022 web leverage goal of lower than 4.0x.

⁽⁴⁾ Total Adjusted EBITDA and Total Net Debt Leverage Ratio are non-GAAP measures, see non-GAAP reconciliation under.

4

Conference Call and Webcast

AGS management will host a convention name to evaluation the Company’s fourth quarter and full yr 2021 outcomes on March 10, 2022, at 5 p.m. EST. Participants could entry a reside webcast of the convention name, together with a slide presentation reviewing the quarterly outcomes, on the Company’s Investor Relations web site http://investors.playags.com. A replay of the webcast will probably be accessible on the web site following the reside occasion. U.S. and Canadian contributors could entry the decision reside by phone by calling +1 (844) 200-6205, whereas worldwide contributors ought to name +1 (929) 526-1599 . The convention name entry code is 251701.

Company Overview

AGS is a worldwide firm centered on creating a various mixture of entertaining gaming experiences for each type of participant. Our roots are firmly planted within the Class II tribal gaming market, however our buyer-centric tradition and exceptional progress have helped us department out to develop into one of the crucial all-inclusive industrial gaming tools suppliers on the planet. Powered by excessive-performing Class II and Class III slot merchandise, an expansive desk merchandise portfolio, extremely rated social on line casino, actual-cash gaming options for gamers and operators, and greatest-in-class service, we provide an unmatched worth proposition for our on line casino companions. Learn extra at playags.com.

AGS Investor & Media Contacts:

Brad Boyer, Senior Vice President Corporate Operations and Investor Relations

[email protected]

Julia Boguslawski, Chief Marketing Officer

[email protected]

©2022 PlayAGS, Inc. Products referenced herein are offered by AGS LLC or different subsidiaries of PlayAGS, Inc. Solely for comfort, marks, logos and commerce names referred to on this press launch seem with out the ® and ^TM and ^SM symbols, however such references are usually not meant to point, in any means, that PlayAGS, Inc. is not going to assert, to the fullest extent below relevant regulation, its rights or the rights of the relevant licensor to those marks, logos and commerce names.

Forward-Looking Statement

This launch accommodates, and oral statements made every so often by our representatives could include, ahead-trying statements based mostly on administration’s present expectations and projections, that are meant to qualify for the protected harbor of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements embrace statements relating to the proposed public providing and different statements recognized by phrases resembling “consider,” “will,” “could,” “may,” “probably,” “anticipate,” “anticipates,” “intends,” “plans,” “seeks,” “estimates,” “believes,” “continues,” “initiatives” and comparable references to future durations, or by the inclusion of forecasts or projections. All ahead-trying statements are based mostly on present expectations and projections of future occasions.

These ahead-trying statements mirror the present views, fashions, and assumptions of AGS, and are topic to numerous dangers and uncertainties that can’t be predicted or certified and might trigger precise leads to AGS’s efficiency to vary materially from these expressed or implied by such ahead trying statements. These dangers and uncertainties embrace, however are usually not restricted to, the flexibility of AGS to keep up strategic alliances, unit placements or installations, develop income, garner new market share, safe new licenses in new jurisdictions, efficiently develop or place proprietary product, adjust to rules, have its video games authorised by related jurisdictions, the results of COVID-19 on the Company’s enterprise and outcomes of operations and different components set forth below Item 1. “Business,” Item 1A. “Risk Factors” in AGS’s Annual Report on Form 10-Ok, filed with the Securities and Exchange Commission. All ahead-trying statements made herein are expressly certified of their entirety by these cautionary statements and there could be no assurance that the precise outcomes, occasions or developments referenced herein will happen or be realized. Readers are cautioned that every one ahead-trying statements converse solely to the info and circumstances current as of the date of this press launch. AGS expressly disclaims any obligation to replace or revise any ahead-trying statements, whether or not on account of new data, future occasions or in any other case.

5

PLAYAGS, INC.

CONSOLIDATED BALANCE SHEETS

(quantities in 1000’s, besides share and per share knowledge)

		December 31,			December 31,
		2021			2020
Assets
Current belongings
Cash and money equivalents		$	94,977			$	81,689
Restricted money			20				20
Accounts receivable, web of allowance of $1,993 and $2,077 respectively			49,426				41,743
Inventories			27,534				26,902
Prepaid bills			4,878				4,210
Deposits and different			8,240				4,704
Total present belongings			185,075				159,268
Property and tools, web			74,916				81,040
Goodwill			285,546				286,042
Intangible belongings			160,044				187,644
Deferred tax asset			7,333				6,762
Operating lease belongings			12,503				9,763
Other belongings			7,394				10,259
Total belongings		$	732,811			$	740,778
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$	9,439			$	9,547
Accrued liabilities			39,165				26,325
Current maturities of lengthy-time period debt			6,877				7,031
Total present liabilities			55,481				42,903
Long-term debt			599,281				601,560
Deferred tax legal responsibility, non-present			2,653				2,254
Operating lease liabilities, lengthy-time period			11,871				9,497
Other lengthy-time period liabilities			21,954				30,781
Total liabilities			691,240				686,995
Commitments and contingencies
Stockholders’ fairness
Preferred inventory at $0.01 par worth; 50,000,000 shares approved, no shares issued and excellent			–				–
Common inventory at $0.01 par worth; 450,000,000 shares approved at December 31, 2021 and December 31, 2020; 36,943,770 and 36,494,002 shares issued and excellent at December 31, 2021 and 2020, respectively.			369				364
Additional paid-in capital			392,161				379,917
Accumulated deficit			(344,889	)			(321,412	)
Accumulated different complete loss			(6,070	)			(5,086	)
Total stockholders’ fairness			41,571				53,783
Total liabilities and stockholders’ fairness		$	732,811			$	740,778

6

PLAYAGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(quantities in 1000’s, besides per share knowledge)

		Three Months Ended December 31,			Twelve Months Ended December 31,
		2021			2020			2021			2020
Revenues
Gaming operations		$	52,941			$	39,977			$	205,627			$	129,150
Equipment gross sales			17,282				6,645				54,069				37,857
Total revenues			70,223				46,622				259,696				167,007
Operating bills
Cost of gaming operations(5)			10,951				8,331				38,945				32,087
Cost of apparatus gross sales(5)			8,241				3,438				24,262				16,789
Selling, basic and administrative			18,928				15,352				63,749				46,463
Research and growth			9,970				7,444				36,308				26,786
Write-downs and different prices			1,806				523				2,791				3,329
Depreciation and amortization			18,478				19,369				73,938				85,722
Total working bills			68,374				54,457				239,993				211,176
(Loss) Income from operations			1,849				(7,835	)			19,703				(44,169	)
Other expense (earnings)
Interest expense			11,154				11,369				44,352				41,935
Interest earnings			(237	)			(336	)			(1,064	)			(1,179	)
Loss on extinguishment and modification of debt			–				–				–				3,102
Other expense (earnings)			93				(767	)			1,185				3,226
Loss earlier than earnings taxes			(9,161	)			(18,101	)			(24,770	)			(91,253	)
Income tax profit			71				859				2,198				5,875
Net loss			(9,090	)			(17,242	)			(22,572	)			(85,378	)
Foreign foreign money translation adjustment			574				3,556				(984	)			(2,678	)
Total complete loss		$	(8,516	)		$	(13,686	)		$	(23,556	)		$	(88,056	)
Basic and diluted loss per widespread share:
Basic		$	(0.25	)		$	(0.49	)		$	(0.62	)		$	(2.40	)
Diluted		$	(0.25	)		$	(0.49	)		$	(0.62	)		$	(2.40	)
Weighted common widespread shares excellent:
Basic			36,923				35,760				36,688				35,639
Diluted			36,923				35,760				36,688				35,639

⁽⁵⁾ Exclusive of depreciation and amortization.

7

PLAYAGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (in 1000’s)

		Year Ended December 31,
		2021			2020
Cash flows from working actions
Net loss		$	(22,572	)		$	(85,378	)
Adjustments to reconcile web loss to web money supplied by working actions:
Depreciation and amortization			73,938				85,722
Accretion of contract rights below growth agreements and placement charges			6,516				7,421
Amortization of deferred mortgage prices and low cost			4,677				3,656
Stock-based compensation expense			14,643				8,457
Provision (profit) for dangerous money owed			235				2,694
Loss on disposition of lengthy-lived belongings			590				2,399
Impairment of belongings			2,257				134
Fair worth adjustment of contingent consideration			(56	)			796
Benefit from deferred earnings tax (profit)			(175	)			(1,671	)
Changes in belongings and liabilities associated to operations:
Accounts receivable			(8,133	)			16,469
Inventories			1,577				10,099
Prepaid bills			(1,332	)			(1,264	)
Deposits and different			(3,516	)			517
Other belongings, non-present			3,789				3,367
Accounts payable and accrued liabilities			5,894				(17,248	)
Net money supplied by working actions			78,332				36,170
Cash flows from investing actions
Customer notes receivable			–				(4,690	)
Proceeds from funds on buyer notes receivable			1,362				1,087
Purchase of intangible belongings			–				(1,756	)
Software growth and different expenditures			(15,432	)			(11,017	)
Proceeds from disposition of belongings			35				32
Purchases of property and tools			(36,102	)			(22,939	)
Net money utilized in investing actions			(50,137	)			(39,283	)
Cash flows from financing actions
Proceeds from incremental time period loans			–				92,150
Borrowing on revolver			–				30,000
Repayment of first lien credit score amenities			(5,387	)			(5,387	)
Repayment of incremental time period loans			(950	)			(475	)
Repayment of revolver			–				(30,000	)
Payments on finance leases and different obligations			(1,321	)			(1,185	)
Payment of deferred mortgage prices			(848	)			(5,744	)
Payment of financed placement payment obligations			(4,959	)			(6,933	)
Payment of earlier acquisition obligation			(534	)			(381	)
Proceeds from inventory possibility train			–				158
Repurchase of inventory			(906	)			(560	)
Net money supplied by (utilized in) financing actions			(14,905	)			71,643
Effect of change charges on money, money equivalents and restricted money			(2	)			(3	)
Net Increase (lower) in money, money equivalents and restricted money			13,288				68,527
Cash, money equivalents and restricted money, starting of interval		$	81,709			$	13,182
Cash, money equivalents and restricted money, finish of interval		$	94,997			$	81,709
Supplemental money move data:
Cash paid throughout the interval for curiosity		$	39,268			$	37,749
Cash paid throughout the interval for taxes		$	544			$	423
Non-cash investing and financing actions:
Leased belongings obtained in change for brand new finance lease liabilities		$	317			$	425
Leased belongings obtained in change for brand new working lease liabilities		$	4,686			$	84

8

Non-GAAP Financial Measures

To present buyers with further data in reference to our outcomes as decided by usually accepted accounting ideas within the United States (“GAAP”), we disclose the next non-GAAP monetary measures: whole Adjusted EBITDA, whole Adjusted EBITDA margin, whole web debt leverage ratio, and Free Cash Flow. These measures are usually not monetary measures calculated in accordance with GAAP and shouldn’t be thought of as an alternative choice to web earnings, working earnings, money flows, or every other measure calculated in accordance with GAAP, and is probably not similar to equally titled measures reported by different corporations.

Total Adjusted EBITDA

This press launch and accompanying schedules present sure data relating to Adjusted EBITDA, which is taken into account a non-GAAP monetary measure below the foundations of the Securities and Exchange Commission.

We consider that the presentation of whole Adjusted EBITDA is acceptable to supply further data to buyers about sure materials non-money gadgets that we don’t anticipate to proceed on the similar stage sooner or later, in addition to different gadgets we don’t think about indicative of our ongoing working efficiency. Further, we consider whole Adjusted EBITDA gives a significant measure of working profitability as a result of we use it for evaluating our enterprise efficiency, making budgeting selections, and evaluating our efficiency in opposition to that of different peer corporations utilizing comparable measures. It additionally gives administration and buyers with further data to estimate our worth.

Total Adjusted EBITDA will not be a presentation made in accordance with GAAP. Our use of the time period whole Adjusted EBITDA could differ from others in our trade. Total Adjusted EBITDA shouldn’t be thought of as a substitute for working earnings or web earnings. Total Adjusted EBITDA has necessary limitations as an analytical instrument, and you shouldn’t think about it in isolation or as an alternative choice to the evaluation of our outcomes as reported below GAAP.

Our definition of whole Adjusted EBITDA permits us so as to add again sure non-money prices which might be deducted in calculating web earnings and to deduct sure good points which might be included in calculating web earnings. However, these bills and good points differ drastically, and are troublesome to foretell. They can signify the impact of lengthy-time period methods versus quick-time period outcomes. In addition, within the case of prices or bills, this stuff can signify the discount of money that might be used for different company functions. Due to those limitations, we rely totally on our GAAP outcomes, resembling web loss, (loss) earnings from operations, EGM Adjusted EBITDA, Table Products Adjusted EBITDA or Interactive Adjusted EBITDA and use Total Adjusted EBITDA solely supplementally.

The whole Adjusted EBITDA dialogue above can be relevant to its margin measure, which is calculated as whole Adjusted EBITDA as a proportion of Total Revenue.

The following desk presents a reconciliation of whole Adjusted EBITDA to web loss, which is essentially the most comparable GAAP measure:

Total Adjusted EBITDA Reconciliation

		Three Months Ended December 31,
(Amounts in 1000’s)														% Change
		2021			2020			2019			2021 vs 2020			2021 vs 2019
Net loss		$	(9,090	)		$	(17,242	)		$	1,423				(47.3	)%			(738.8	)%
Income tax (profit) expense			(71	)			(859	)			(1,565	)			(91.7	)%			(95.5	)%
Depreciation and amortization			18,478				19,369				22,472				(4.6	)%			(17.8	)%
Interest expense, web of curiosity earnings and different			11,010				10,266				7,957				7.2	%			38.4	%
Write-downs and different(6)			1,806				523				53				245.3	%			N/A
Other changes(7)			2,205				3,266				696				(32.5	)%			216.8	%
Other non-money prices(8)			2,129				2,245				2,537				(5.2	)%			(16.1	)%
Non-cash inventory-based mostly compensation			5,787				3,731				3,692				55.1	%			56.7	%
Total Adjusted EBITDA		$	32,254			$	21,299			$	37,265				51.4	%			(13.4	)%

		Three Months Ended December 31,
(Amounts in 1000’s, besides Adjusted EBITDA margin)														% Change
		2021			2020			2019			2021 vs 2020			2021 vs 2019
Total revenues		$	70,223			$	46,622			$	77,786				50.6	%			(9.7	)%
Total Adjusted EBITDA		$	32,254			$	21,299			$	37,265				51.4	%			(13.4	)%
Total Adjusted EBITDA margin			45.9	%			45.7	%			47.9	%			0.5	%			(4.1	)%

⁽⁶⁾Write-downs and different consists of gadgets associated to loss on disposal or impairment of lengthy-lived belongings and truthful worth changes to contingent consideration.

⁽⁷⁾ Other changes are primarily composed of the next:

•	Costs and stock and receivable valuation prices related to the COVID-19 pandemic, skilled charges incurred for initiatives, prices incurred associated to public choices, contract cancellation charges and different transaction prices deemed to be non-working in nature;

•	Acquisition and integration associated prices associated to the acquisition of companies and to combine operations and get hold of prices synergies;

•	Restructuring and severance prices, which primarily relate to prices incurred by the restructuring of the Company’s operations every so often and different worker severance prices acknowledged within the durations introduced; and

•	Legal and litigation associated prices, which encompass funds to regulation companies and settlements for issues which might be outdoors the traditional course of enterprise.

⁽⁸⁾Other non-money prices are prices associated to non-money prices and losses on the disposition of belongings, non-money prices on capitalized set up and supply, which primarily consists of the prices to amass contracts which might be expensed over the estimated life of every contract, and non-money prices associated to accretion of contract rights below growth agreements.

9

Total Net Debt Leverage Ratio Reconciliation

The following desk presents a reconciliation of whole web debt and whole web debt leverage ratio:

(Amounts in 1000’s, besides web debt leverage ratio)		December 31,			December 31,
		2021			2020
Total principal quantity of debt		$	615,743			$	622,509
Less: Cash and money equivalents			94,977				81,689
Total web debt		$	520,766			$	540,820
LTM Adjusted EBITDA		$	122,587			$	71,669
Total web debt leverage ratio			4.2				7.5

Free Cash Flow

This schedule gives sure data relating to Free Cash Flow, which is taken into account a non-GAAP monetary measure below the foundations of the Securities and Exchange Commission.

We outline Free Cash Flow as web money supplied by working actions much less money outlays associated to capital expenditures. We outline capital expenditures to incorporate buy of intangible belongings, software program growth and different expenditures, and purchases of property and tools. In arriving at Free Cash Flow, we subtract money outlays associated to capital expenditures from web money supplied by working actions as a result of they signify lengthy-time period investments which might be required for regular enterprise actions. As a outcome, topic to the constraints described under, Free Cash Flow is a helpful measure of our money accessible to repay debt and/or make different investments.

Free Cash Flow adjusts for money gadgets which might be finally inside administration’s discretion to direct, and subsequently, could suggest that there’s much less or extra cash that’s accessible than essentially the most comparable GAAP measure. Free Cash Flow will not be meant to signify residual money move for discretionary expenditures since debt reimbursement necessities and different non-discretionary expenditures are usually not deducted. These limitations are greatest addressed through the use of Free Cash Flow together with the GAAP money move numbers.

The following desk presents a reconciliation of Free Cash Flow:

(Amounts in 1000’s)		Year Ended December 31, 2021			Nine Months Ended September 30, 2021			Three Months Ended December 31, 2021
Net money supplied by working actions		$	78,332			$	54,197			$	24,135
Software growth and different expenditures			(15,432	)			(11,329	)			(4,103	)
Purchases of property and tools			(36,102	)			(24,938	)			(11,164	)
Free Cash Flow		$	26,798			$	17,930			$	8,868

(Amounts in 1000’s)		Year Ended December 31, 2020			Nine Months Ended September 30, 2020			Three Months Ended December 31, 2020
Net money supplied by working actions		$	36,170			$	19,719			$	16,451
Purchase of intangible belongings			(1,756	)			(1,414	)			(342	)
Software growth and different expenditures			(11,017	)			(8,004	)			(3,013	)
Purchases of property and tools			(22,939	)			(12,196	)			(10,743	)
Free Cash Flow		$	458			$	(1,895	)		$	2,353

10

Disclaimer

PlayAGS Inc. printed this content material on 10 March 2022 and is solely chargeable for the data contained therein. Distributed by Public, unedited and unaltered, on 10 March 2022 21:39:09 UTC.