Everi (EVRI) - 2024 Q4 - Annual Report

Financial Transactions and Proceeds - Everi stockholders will receive $14.25 per share in cash as part of the Proposed Transaction with IGT, which is expected to close in 2024[24]. - IGT will receive$4.1 billion of gross cash proceeds for IGT Gaming, subject to customary transaction adjustments[26]. Market Presence and Installed Base - As of December 31, 2024, approximately 9,554 units, or 59.9% of the total installed base, were outside of the Oklahoma tribal market[32]. - Premium game installations represented approximately 44.9% of Everi's total installed base as of December 31, 2024[32]. - As of December 31, 2024, the company served over 2,800 casinos and gaming properties primarily in the United States, Canada, and Australia[67]. Research and Development - Everi plans to increase investment in research and development to innovate and introduce new gaming hardware and theme content[32]. - The company focuses on research and development for both Gaming and FinTech, aiming to enhance existing product lines and develop new gaming systems and payment products[72][73]. - The company has made significant investments in R&D, with costs primarily related to salaries, consulting fees, and testing fees, indicating a commitment to innovation[74]. Business Segments - Everi operates across two business segments: Games and Financial Technology Solutions (FinTech)[21]. - The FinTech segment generates revenue from three major streams: Financial Access Services, Software and Other, and Hardware[42]. Economic and Employment Factors - The Company has experienced impacts from macro-economic volatility, including inflation and interest rate movements, affecting its supply chain[27]. - Employment constraints due to inflation have led to increased wages and related costs for the Company[28]. Financial Technology Solutions - Everi's financial technology products support digital, cashless, and physical cash options across various channels[23]. - Funds dispensed transactions represent the largest category of electronic payment transactions processed by Everi, involving direct access to funds via ATMs or enabled devices[45]. - The CashClub Wallet® offers patrons a digital cashless method to fund their entertainment experience, integrating various funding options including credit card transactions and ACH[56]. - Everi Compliance automates compliance processes for gaming operators, including filing Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs), improving efficiency and accuracy[61]. - Central Credit service allows gaming operators to access a database of credit information on millions of gaming patrons, aiding in credit-granting decisions[62]. Product Innovations - The Player Classic Reserve cabinet, launched in 2023, features a high-profile three-reel mechanical design with extensive top box capabilities[40]. - The JackpotXpress platform streamlines jackpot payout processes, reducing wait times and enhancing customer engagement[57]. - The Loyalty Platform enables gaming operators to deliver personalized promotions and content, enhancing patron engagement and retention[58]. - The company offers a range of kiosk solutions, including JackpotXchange kiosks for efficient jackpot payouts and CageConnect for streamlined cash dispensing operations[69]. Compliance and Regulatory Environment - The company is in substantial compliance with gaming and financial institution laws and regulations, overseen by a dedicated compliance program[96]. - The gaming industry is highly regulated, with various laws governing the operation of gambling and financial services[97]. - The company must maintain licenses and approvals from Gaming Authorities to operate in various jurisdictions[100]. - The process of obtaining necessary licenses involves substantial disclosure and regulatory scrutiny[101]. - The company’s gaming devices require certification from Gaming Authorities before sale[102]. - The company is subject to financial services regulations, including the Durbin Amendment, which affects debit card interchange fees[108]. - The company implements policies to comply with privacy regulations, including the Gramm-Leach-Bliley Act and state privacy laws[119]. Financial Obligations and Performance - Total contractual obligations as of December 31, 2024, amount to $1,345,452,000, with$960,500,000 in debt obligations and $238,685,000 in estimated interest obligations[298]. - The company incurred usage fees of approximately$18.6 million, $20.4 million, and$9.3 million for the years ended December 31, 2024, 2023, and 2022, respectively, due to increased funds dispensing volumes and higher interest rates[302]. - The outstanding balances under the Contract Cash Solutions Agreement with Wells Fargo were approximately $379.3 million and$388.5 million as of December 31, 2024, and 2023, respectively[304]. - The company is required to make quarterly principal payments on its Term Loan, with a total of $20.0 million paid during the fourth quarter of fiscal year 2024[299]. - Lease obligations total$37,416,000, with $9,219,000 due in 2025[298]. Workforce and Employee Engagement - The company has a workforce of approximately 2,300 employees, with about 1,000 in the Games segment and 1,300 in the FinTech segment[81]. - The company has received numerous Top Workplace awards from 2020 to 2023, reflecting its commitment to employee engagement and satisfaction[86]. - The company offers a comprehensive benefits package, including medical, dental, wellness programs, and a 401(k) retirement plan with company matching[92]. - The company employs a blind resume screening process to promote diversity and inclusivity in its talent acquisition efforts[90]. - The company conducts an annual employee benefits survey to gather feedback and improve employee satisfaction[93]. - The company has a proactive approach to workplace health and safety, adhering to relevant laws and regulations[94]. Seasonal and International Considerations - Revenue and cash flows are subject to seasonal fluctuations, with generally higher operating income in the first half of the year[95]. - The company expects to rely on treaty-favored cross-border transfers of funds and cash generated from operations in foreign jurisdictions as it expands its business internationally[301]. - The company is subject to various gaming and financial services regulations in international markets, which may impact its expansion efforts[124]. Data Security and Standards - The company has been designated as a compliant service provider under the PCI Data Security Standard, requiring annual certification[121]. - The EMV standard is adopted for all POS, fully-integrated kiosk, and ATM devices, necessitating maintenance to support this standard[123]. - The company has no material losses related to self-insurance for cash losses in fund dispensing devices for the years ended December 31, 2024, 2023, and 2022[305].