Slot and fintech service supplier Everi Holdings, Inc. announced that it is projecting record earnings for the second quarter of 2021, ending Jun 30.
The company projects second-quarter consolidated revenues of approximately $167 million to $172 million, reflecting a quarterly sequential improvement from $139.1 million in the 2021 first quarter and an increase of more than 25 percent compared to $129.7 million in the pre-pandemic 2019 second quarter.
The company projects 2021 second quarter net income of $31 million to $34 million, compared to $20.5 million in the 2021 first quarter and $5.5 million in the 2019 second quarter. Diluted earnings per share are expected to be $0.31 to $0.34 compared to $0.21 per share in the 2021 first quarter and $0.07 per share in the 2019 second quarter.
In addition, the company expects that adjusted EBITDA will be $87 million to $91 million in the 2021 second quarter, compared to $75.4 million in the 2021 first quarter and $64.1 million in the 2019 second quarter.
As a result of the higher revenues and net income, free cash flow is expected to be $32 million to $36 million for the 2021 second quarter.
“Our expected record 2021 second-quarter results highlight the ongoing strength of our core recurring revenue businesses and the benefit of our organic growth initiatives,” said Michael Rumbolz, chief executive officer of Everi. “Both our Games and FinTech segments are performing significantly above pre-pandemic periods, driving substantial improvements in our total revenue, net income, adjusted EBITDA, and free cash flow.
“Since March, the total value processed of our financial access transactions on a same-store basis has been consistently trending at a mid-teens percentage growth rate above the comparable 2019 volumes. This is significantly higher than our mid-single digit percentage historical average growth rate. Additionally, our gaming operations installed base has continued to grow, fueled primarily by a greater number of premium units, which is also driving new record levels of daily win per unit. We also expect our gaming machine unit sales in the second quarter will well exceed the level shipped in the first quarter of 2021.
“Our strong performance is driven by the collaborative efforts of the worldwide Everi Team to continuously enhance our product portfolio and innovate new products that help our customers extend the connection with their guests and operate more efficiently, as well as our focus on providing unmatched customer service.”
The company announce that it will take advantage of the projected record results to lower its cost of debt and extend maturities through a refinancing of its total outstanding debt.
Wall Street reacted favorably to the development.
Fitch Ratings Inc. has upgraded Everi’s issuer default rating to ‘B+’, a non-investment grade, from ‘BB-’.
“The one-notch upgrade reflects significantly reduced leverage pro forma for the refinancing, due to the company utilizing nearly US$180 million in excess cash to pay down debt and exhibiting strong EBITDA growth in the first half 2021,” said the ratings agency in an investor note.
Fitch forecast Everi’s gross leverage to be 3.5 times on a pro forma last 12 months basis and to reach 3.1 times by the end of 2021. “U.S. regional gaming is experiencing a strong recovery trajectory and Everi has additional tailwinds from success of its recent investments in the gaming operations segment,” stated the report.
David Bain, a senior research analyst with B. Riley Securities, raised his price target from $33 to $38 and said, “the good just got better.” The stock opened June 21 at $22.62.
“Everi announced a refinancing of its total debt outstanding and guided (second quarter) mid-point EBITDA +21 percent versus consensus EBITDA. We believe the refinancing will result in (about) $16 million of additional free cash flow per annum,” Bain wrote in an investor note.
“We further believe EBITDA has reached a new baseline from continued win per day gains driven from premium unit installations, market share/ship share gains of recurring/participation installations and of for-sale units, and the thawing of capital budgets by operators for replacement game purchases.”
