Following the publication of the AGS Q1 report, the company has now achieved nine consecutive quarters of record revenue results.
AGS president and chief executive officer David Lopez hailed the result as a consequence of prior investment in the company bearing fruit. In a statement he emphasized the core strengths of the business:
“Our record-setting first quarter revenue and adjusted EBITDA performance is yet another testament to the way in which the strategic investments we have made in our people and products over the past several years have strengthened the underlying resiliency and vibrancy of our business,” he said.
“Supported by what I view as the strongest team and most compelling new product lineup in AGS’s history, I am extremely excited about what lies ahead for the company and our shareholders.”
PlayAGS attempts to deleverage debt burden
With a majority of the company’s revenue originating from its electronic gaming machine (EGM) business, AGS took on significant debt during the course of the Covid-19 pandemic.
The supplier has previously said that deleveraging its debt – which stood at $569.9m as of 31 March – is the company’s top priority.
AGS chief financial officer Kimo Akiona said that the organisation was “singularly focused” on optimizing its operating and capital deployment efficiency to de-lever its balance sheet.
“Supported by our strong first quarter financial performance, the growing demand for our high-performing for-sale products, and the relative stability observed across our recurring revenue operations, we remain confident in our ability to exit 2023 with net leverage inside of our targeted 3.25 times to 3.75 times range, with an intermediate-term focus on returning net leverage inside of 3.0 times,” he said.
Interest payment push AGS into loss in Q1
Total revenue increased to a record $83.2m for the three-month period ending 31 March, a 14% rise from the $72.9m AGS achieved in the same period the previous year.
Breaking this down, AGS’s EGM division drove much of the growth, with revenue increasing 14.4% to $76.6m from the $66.9m the business recorded the previous year.
The company’s Table Products segment also reported a significant rise in revenue, with the business announcing a 17.6% increase in revenue to $4.1m.
However, revenue sourced from AGS’s Interactive products experienced a comparatively modest increase, rising 2.1% to $2.5m.
The business’s operating expenses did not experience much significant change, rising to $71.4m compared to the $67.1m the business announced in Q1 2022.
As a result, the business announced a net income of $11.7m for the quarter. However, due to the company’s ongoing debt burden, AGS’s interest expense stood at $13.7m for the period.
After receiving a $1.2m tax benefit on top of its pre-tax loss of $1.5m, the company announced a total net loss for the three-month period of $334,000.