AGS revenues grow by over 36% in Q3 2021 financials

AGS has published its financials for Q3 2021, where it celebrated growing product momentum and improved execution across all its core business divisions.
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AGS has published its financial results for the third quarter of 2021, where it celebrated growing product momentum and improved execution across all its core business divisions.

For Q3, the period ending September 30, 2021, the firm’s total revenue grew by 36.5% year-on-year to $67.27m (Q3 2020: $49.28m) but dropped by 15.2% when compared to Q3 2019’s $79.37m.

An improvement in domestic EGM gaming operations and interactive revenue, alongside a record table products performance, was more than offset by declines in EGM equipment sales and international gaming operations versus Q3 2019 levels.

Still, AGS did note encouragement at ‘operators’ growing propensity to commit capital for new equipment purchases,” while also staying positive about the Mexican gaming market’s gradual recovery.

Revenue across its EGM segment closed at $61.6m, up 36.6% on Q3 2020’s $45.08m, but down 18.1% on Q3 2019’s $75.29m.

Domestic operations showed signs of growth at $44m (Q3 2020: $31.6m, Q3 2019: $42.5m), with the group’s $3.7m international segment up significantly from Q3 2020’s $600,000, but down 70.2% from Q3 2019’s $6.3m.

AGS adds that the decline reflects the degree to which its Mexican business has been affected by measures implemented by COVID-19, including the imposition of casino capacity restrictions. Additionally, in contrast to the US, the country has not provided any type of fiscal stimulus to support its economic recovery.

Table products revenue came in at $3.1m (Q3 2020: $2.26m, Q3 2019: $2.86m), driven by continued customer adoption, as well as increased uptake of its licensed offering. Interactive also improved to $2.57m, up 32.5% and 11.4% from Q3 2020’s $1.94m and Q3 2019’s $1.21m, respectively.

President and CEO David Lopez commented: “Our third-quarter financial performance once again reflects our growing product momentum and improved execution across all three of our operating segments.

“The investments we have made into our business over the past eighteen months have strengthened our company’s foundation, which should pave the way for meaningful shareholder value creation in the coming quarters.”

AGS’ group-wide net loss for Q3 closed at $1.8m (Q3 2020: $11.1m, Q3 2019: $5.5m) thanks to enhanced operating performance and lower depreciation and amortization expense.

Adjusted EBITDA closed Q3 at $31.9m (Q3 2020: $27m, Q3 2019: $36.8m), with interactive and table products increasing sharply due to the successful execution of strategic revenue growth initiatives. EGM Adjusted EBITDA fell 17.7% on Q3 2019 levels.

CFO Kimo Akiona added: “Supported by our solid third-quarter financial results and the stability we are in seeing within our business fourth quarter to date, we now expect to be nicely free cash flow positive for the full year 2021 and to end the year with net leverage inside of 4.5x TTM Adjusted EBITDA.

“Looking ahead, we continue to carefully manage our leverage and liquidity position to ensure we can execute on opportunities to lower our borrowing costs as they present themselves, with an intermediate-term focus on restoring the balance sheet flexibility we had prior to the onset of COVID-19 when our balance sheet was levered well inside of 4.0x.”