Everi (US:EVRI)2020-08-05 06:00Financial Data and Key Metrics Changes - The company achieved better than expected results for Q2 2020, generating positive adjusted EBITDA with contributions from both Games and FinTech segments [8][16] - The net cash position improved to $133 million from $40 million at the end of Q1 2020, primarily due to $118 million in net proceeds from a new term loan [40][41] - Daily win per unit on active devices was in excess of $35 per day, comparable to pre-pandemic levels [32][50] Business Line Data and Key Metrics Changes - The installed base grew by 87 units in Q2 2020, following a 140 unit increase in Q1, representing a 9% year-over-year increase [29][30] - Premium games accounted for 81 of the incremental units added in Q2, with premium units growing nearly 70% year-over-year [30][31] - Revenues from player loyalty products totaled $3.0 million, down from $4.9 million a year ago, but new installations continued during the casino closures [38] Market Data and Key Metrics Changes - Approximately 85% of U.S. casinos were reported to be open as of the call date, with a similar percentage of cash access terminals and gaming units installed in active locations [42] - The company noted that cash access volumes remained consistent, with moderate declines compared to the prior year [49][72] Company Strategy and Development Direction - The company is focusing on cashless and contactless solutions, anticipating increased demand for these products due to the pandemic [11][15] - There is a strong emphasis on product differentiation and innovation in both Games and FinTech segments to drive future growth [22][25] - The company aims to leverage its existing offerings and new product developments to regain revenue and cash flow momentum [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the recovery of the gaming industry, noting strong demand from casino patrons as operations resumed [10][43] - The company expects to generate positive free cash flow in both Q3 and Q4 2020, earlier than previously anticipated [45] - There is an expectation for continued improvement in adjusted EBITDA and performance metrics into 2021, provided there is no significant industry pullback [46] Other Important Information - The company incurred $14.8 million in pretax charges during Q2, with approximately $11 million being non-cash [24] - The company is consolidating facilities and reducing occupancy costs as part of its operational review [20][21] Q&A Session Summary Question: What percentage of machines are active in open casinos? - Management estimated that about 80% of their games at open locations are available, but specific operational status varies by casino [59] Question: What are the expected annual cost savings from restructuring? - The company indicated that operating expenses are expected to be in the range of $35 million to $40 million, with potential savings from reduced employee base and other cost-saving measures [63] Question: How is cash access revenue tied to transactions? - Cash access revenues are influenced by both the number of transactions and the size of those transactions, with ATMs being more volume-driven [70] Question: What is the outlook for cashless solutions? - The company is seeing increased interest in cashless solutions, with discussions ongoing with casino operators about implementation and customer education [52][54] Question: How is the installed base growth composed? - The growth in the installed base is primarily driven by premium games, which are expected to continue to perform well [75] Question: Are operators looking for package deals or conversion kits? - Operators are cautiously looking for opportunities to optimize their gaming floors, including potential purchases of new products [86]