Everi (US:EVRI)2021-11-03 22:19Financial Data and Key Metrics Changes - The company generated a record $56 million of free cash flow in Q3 2021, showing significant growth compared to 2020 and pre-pandemic 2019 [6][11] - Total revenue from recurring operations grew 42% year-over-year and 31% compared to Q3 2019, accounting for 78% of Q3 revenue [13] - Adjusted EBITDA is expected to be in the range of $342 million to $346 million for the full year, with net income projected between $98 million to $100 million [21] Business Line Data and Key Metrics Changes - Gaming operations revenue increased 52% year-over-year and 48% over Q3 2019, with a total installed base up 8% year-over-year [13][14] - Product sales revenue more than doubled from Q3 2020 and was up 24% compared to Q3 2019, driven largely by replacement sales [14] - FinTech segment revenues increased 32% year-over-year and 11% over Q3 2019, with financial access services revenues up 8% compared to 2019 [15][16] Market Data and Key Metrics Changes - The CashClub Wallet is now deployed in 15 casinos across four jurisdictions, with plans for additional launches by year-end [8] - Digital gaming revenue saw a 90% year-over-year increase, with new content going live in Ontario and Connecticut [14] Company Strategy and Development Direction - The company plans to focus on internal organic growth opportunities, investing in product development in both games and FinTech businesses [11][12] - There is an emphasis on high return capital investments to expand the gaming operation's installed base and secure placements for extended periods [12] - The company is also evaluating bolt-on acquisitions to complement its core businesses and expand into new geographies [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing growth trajectory, with expectations for continued strong performance in both gaming operations and FinTech segments [17][19] - The company anticipates a sequential increase in capital expenditures and placement fees in Q4, driven by new agreements and installations [19][20] - There is a high probability of reversing some deferred tax asset valuation allowances, potentially resulting in a significant non-cash income tax benefit [22] Other Important Information - The company showcased several new products at the G2E tradeshow, including new patron loyalty and RegTech related products [9][10] - Management highlighted the importance of customer feedback and the competitive advantage of their cashless solutions [7][8] Q&A Session Summary Question: Thoughts on FinTech adoption and penetration - Management indicated that they are not yet capturing all relevant data but expect to have KPIs soon, with encouraging growth in patron usage [23][24] Question: Industry replacement levels for 2022 - Management believes replacement levels will be slightly better next year, but provided limited additional color [25] Question: Composition of the 15% games target - Management sees the target as achievable, with a mix of mechanical and video products, but specifics depend on customer purchasing behavior [27] Question: Impact of supply chain issues - Management reported no material impact from supply chain issues to date, though challenges exist [28] Question: Investment goals and areas of focus - Management is looking for products, technologies, and talents that can scale and complement existing offerings [32] Question: Margin sustainability and future expectations - Management expects margins to gradually revert closer to historic levels as the mix of revenue changes [38] Question: Opportunities with Shift4 partnership - The focus is on expanding retail opportunities, with potential for sports wagering integration in the future [40][41] Question: Digital gaming growth and content development - Management sees significant growth opportunities in porting existing content to digital platforms, with a focus on internal investments [58][60]