Everi (EVRI) - 2025 Q1 - Quarterly Report

PART I: FINANCIAL INFORMATION Item 1: Financial Statements For the three months ended March 31, 2025, Everi Holdings Inc. reported total revenues of $181.3 million, a 4% decrease year-over-year, primarily driven by a 12% decline in the Games segment, partially offset by a 4% increase in the FinTech segment, with net income at $3.9 million and diluted EPS at $0.04, while cash and cash equivalents significantly increased to $712.5 million, amidst a proposed all-cash acquisition by Voyager Parent, LLC expected to close in mid-2025 Q1 2025 vs Q1 2024 Statement of Operations Highlights (In thousands, except EPS) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $181,296 | $189,346 | | Games Revenues | $85,726 | $97,122 | | FinTech Revenues | $95,570 | $92,224 | | Operating Income | $19,990 | $24,752 | | Net Income | $3,923 | $4,554 | | Diluted EPS | $0.04 | $0.05 | Balance Sheet Highlights (In thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $712,525 | $400,677 | | Total Assets | $2,204,060 | $1,921,909 | | Long-term debt, less current portion | $951,552 | $950,935 | | Total Liabilities | $1,939,860 | $1,665,973 | | Total Stockholders' Equity | $264,200 | $255,936 | Cash Flow Highlights (In thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $342,252 | $55,126 | | Net cash used in investing activities | ($30,751) | ($42,676) | | Net cash provided by (used in) financing activities | $512 | ($9,951) | - The company operates through two business segments: Games (supplying gaming machines, systems, and content) and FinTech (providing financial access, loyalty, and compliance solutions for casinos)[19][20] - On July 26, 2024, Everi entered into a definitive agreement to be acquired by Voyager Parent, LLC in an all-cash transaction at $14.25 per share, cross-conditioned with the acquisition of IGT's Gaming & Digital business and subject to regulatory approvals[45] Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 4% year-over-year revenue decline to a 12% decrease in the Games segment, caused by a reduction in the installed base and lower daily win per unit, partially offset by a 4% revenue increase in the FinTech segment driven by higher hardware sales and software solutions, while operating expenses decreased by 10% primarily due to reduced transaction costs related to the now-terminated 'Original Proposed Transaction' with IGT, maintaining strong liquidity with a net cash available position of $201.7 million as of March 31, 2025, with cash from operations expected to be sufficient for operating and debt servicing needs - Games revenues decreased by $11.4 million (12%) due to a reduction in daily win per unit and a decline in the average number of installed gaming units[119] - FinTech revenues increased by $3.3 million (4%), primarily from higher sales of kiosks and loyalty units, along with growth in support-related software solutions[120] - Operating expenses fell by $7.1 million (10%), mainly due to a $10.6 million reduction in transaction and related costs compared to the prior year, which included expenses for the original IGT merger proposal[124] - Depreciation expense increased by $1.5 million, including a $1.0 million charge from shortening the useful lives of certain end-of-life electronic gaming devices[105][126] Liquidity Position (in thousands) | Metric | At March 31, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Net cash position | $76,710 | $49,804 | | Undrawn revolving credit facility | $125,000 | $125,000 | | Net cash available | $201,710 | $174,804 | - Cash flow from operating activities increased significantly to $342.3 million from $55.1 million in the prior-year period, primarily due to timing differences in settlement activities within the FinTech segment[140] Item 3: Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are related to interest rate fluctuations stemming from its variable-rate senior secured term loan and commercial arrangements with third-party cash providers for its ATMs, while foreign currency exchange risk is considered immaterial and no hedges are currently used for interest rate exposure - A 100 basis point increase in the applicable SOFR would result in an approximate $5.6 million impact on annual interest expense for the $560.5 million Term Loan[156] - For the third-party cash funding arrangements ($258.4 million outstanding), a 100 basis point increase in the target federal funds rate would impact pre-tax income by approximately $2.6 million over a 12-month period[154] - The company's $400 million senior unsecured notes have a fixed interest rate of 5.00% and are not subject to interest rate fluctuation risk[68][157] Item 4: Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025, with no material changes in the company's internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[158] - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[159] PART II: OTHER INFORMATION Item 1: Legal Proceedings The company is involved in various legal proceedings, including ongoing antitrust litigation with NRT Technology Corp. and a contract dispute with Zenergy Systems, LLC, and following the proposed acquisition, three stockholder complaints were filed alleging omissions in the proxy statement, though one has been dismissed and the others were not served, with the company believing resolution of these claims will not have a material adverse impact - Ongoing litigation includes an antitrust case with NRT Technology Corp. scheduled for trial in October 2025 and a breach of contract case with Zenergy Systems, LLC set for trial in June 2025[72][73] - Three stockholder complaints were filed related to the Proposed Transaction, alleging inadequate disclosures, with one case voluntarily dismissed and the other two never served upon Everi[70][146] Item 1A: Risk Factors There have been no material changes to the risk factors previously disclosed in the company's most recently filed Annual Report on Form 10-K - The risk factors included in the company's most recently filed Annual Report have not materially changed[161] Item 2: Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period - None[162]