LAS VEGAS, May 8, 2024 /PRNewswire/ -- Everi Holdings Inc. (NYSE:EVRI) ("Everi" or the "Company"), today announced results for the first quarter ended March 31, 2024. Randy Taylor, Chief Executive Officer of Everi, said, "We are making progress on the steps necessary to complete our proposed merger with IGT's Global Gaming and PlayDigital businesses later this year or in early 2025. We are excited about the significant growth opportunities we believe this combination will unlock. This transaction will bring together a comprehensive and complementary product set focused on our customers and their diverse needs which we believe will deliver substantial long-term value to our shareholders. "During the first quarter our games segment continued to make progress in our transition to our newest family of cabinets and new and innovative content to support these cabinets. While this transition has been slower than anticipated, we are gaining momentum with these efforts and expect our progress will continue to accelerate throughout the back half of the year. Starting in the second quarter we expect this momentum to translate into improvements in sequential quarterly unit sales.  We will continue to support our portfolio of game products following the closing of the proposed merger. "For our FinTech business, our highest margin financial access and software and other revenue categories continued to grow in the first quarter, though this growth was more than offset by a decline in hardware revenues, which are less predictable on a quarterly basis. Following the impact from weather related headwinds early in the year, our financial access revenue trends continued to improve, and we expect more consistent growth trends to continue. In addition, we expect consolidated hardware sales will recover over the balance of the year. "Over the last several years, we have increased our investments in our employees and technology to develop our next generation of products that positions the Company for long-term growth. While conversion of these investments into increased revenues has taken longer than initially anticipated, we are on track to begin to deliver on several of our initiatives in the second half of 2024, including our initial video lottery terminal ("VLT") placements and our first gaming products for Australia. While our investments have led to higher payroll and related expenses, we believe investing in new products for our FinTech segment, for-sale and for-lease gaming products and products focused on new segments and jurisdictions will drive revenue growth in the second half of 2024 and position the Company for long-term success." First Quarter 2024 Financial Results Consolidated revenues for the three-month period ended March 31, 2024 were $189.3 million compared to $200.5 million in the year-ago first quarter. Games revenues of $97.1 million were down from the prior year period, and essentially flat on a quarterly sequential basis as the Company continues to transition to its new family of cabinets and content. Approximately half of the decline in the installed base during the quarter is attributable to the Company's proactive decisions not to replace cabinets in lower performing locations. The Company launched its new for-sale Dynasty Sol cabinet late in the 2023 fourth quarter and its new, premium-leased Dynasty Sol Sync cabinet late in the 2024 first quarter. These cabinets are expected to continue to grow in popularity as new games are introduced. FinTech revenues of $92.2 million were down slightly year over year and on a quarterly sequential basis. Financial access revenues experienced more modest growth in the quarter with bad weather impacting a large portion of the Company's customer base early in the quarter. Same store volumes began to improve late in the first quarter and remain steady throughout the early part of the second quarter. In the first quarter, the Company experienced a decline in hardware sales, primarily from reduced unit sales of our ticket redemption kiosks in certain foreign jurisdictions and lower loyalty equipment sales due to timing of initial software sales and installations. FinTech Hardware sales tend to be large purchases tied to new contracts and contract renewals, and therefore, revenues can fluctuate on a quarterly basis. The Company expects to see growth in hardware sales for the year.  Operating expenses and research and development expenses increased year-over-year primarily due to the $15.7 million in merger-related costs incurred in the first quarter this year. Both the decline in segment revenues and higher operating expenses resulted in lower net income this year compared to the prior year first quarter. Consolidated Full Quarter Comparative Results (unaudited) As of and for the Three Months Ended March 31, 2024 2023 (in millions, except per share amounts) Revenues $                    189.3 $                    200.5 Operating income (1) $                      24.8 $                      52.0 Net income (1) $                        4.6 $                      28.1 Net earnings per diluted share (1) $                      0.05 $                      0.30 Weighted average diluted shares outstanding 87.3 94.8 Adjusted EBITDA (2) $                      80.3 $                      92.5 Free Cash Flow (2) $                      14.0 $                      40.1 Capital Expenditures: Games $                      34.5 $                      23.8 FinTech $                        8.2 $                        6.0 Consolidated $                      42.7 $                      29.8 Cash and cash equivalents $                    268.6 $                    293.2 Net Cash Position (3) $                      49.6 $                    106.8 (1) Operating income, net income, and net earnings per diluted share for the three months ended March 31, 2024, included $14.3 million of merger-related professional fees, $1.3 million in merger-related employee retention costs, $0.1 million of litigation fees net of insurance recoveries, and $0.1 million associated with other acquisitions costs and non-recurring professional fees. Operating income, net income, and net earnings per diluted share for the three months ended March 31, 2023, included $0.1 million for non-recurring professional fees and other and a recovery of $0.2 million from insurance for previously paid non-recurring litigation costs. (2) For a reconciliation of net income to Adjusted EBITDA and Free Cash Flow, see the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided toward the end of this release. (3) For a reconciliation of Net Cash Position to Cash and Cash Equivalents, see the Unaudited Reconciliation of Cash and Cash Equivalents to Net Cash Position and Net Cash Available provided toward the end of this release.   Three Months Ended March 31, 2024 2023 (in millions, except unit amounts and prices) Performance Metrics: Gaming operations information: Units installed at period end: Class II 10,195 10,346 Class III 6,569 7,461 HHR 153 34 Total installed base at period end 16,917 17,841 Average units installed during period 17,256 17,898 Daily win per unit ("DWPU") (1) $                   34.51 $                   38.37 Games unit sales information: Units sold 1,021 1,546 Average sales price ("ASP") $                 20,827 $                 19,748 Value of financial access transactions: Funds advanced $                3,086.3 $                2,968.0 Funds dispensed 8,858.7 8,113.0 Check warranty 476.8 462.4 Total value processed $              12,421.8 $              11,543.4 Number of financial access transactions: Funds advanced 4.5 4.4 Funds dispensed 33.6 30.9 Check warranty 0.9 0.9 Total transactions completed 39.0 36.2 (1) Daily win per unit excludes the impact of the direct costs associated with the Company's wide-area progressive jackpot expense. Balance Sheet As of March 31, 2024, the Company had $268.6 million of cash and cash equivalents compared with $267.2 million as of December 31, 2023. The Net Cash Position was $49.6 million compared with $46.1 million as of December 31, 2023. Total debt decreased to $980.5 million at March 31, 2024, from $986.5 million as of December 31, 2023, as the Company paid $6.0 million on its secured term loan during the 2024 first quarter. Outlook Everi updated its outlook for 2024 and now expects Adjusted EBITDA to be down from 2023 primarily reflecting the ongoing near-term challenges that are impacting the Games segment but expects improvement in the second half of the year as new cabinets and new content continue to gain traction with customers. The business is also expected to benefit from new product introductions including the initial commercialization of video lottery terminals and the entrance into new international jurisdictions. The Company's FinTech segment is expected to be relatively flat year-over-year in the second quarter and return to year-over-year growth in the second half of the year.  Everi expects Free Cash Flow to be down compared to 2023 with capital expenditures for the year flat to up slightly compared with 2023, cash interest flat with 2023, and cash taxes of $15 million to $20 million. Investor Conference Call and Webcast The Company will host an investor conference call to discuss its 2024 first quarter results at 11:00 a.m. EDT (8:00 a.m. PDT) today. The conference call may be accessed live by phone by dialing (201) 689-8471. A replay of the call will be available beginning at 2:00 p.m. EDT today and may be accessed by dialing (412) 317-6671; the PIN number is 13745956. A replay will be available until May 17, 2024. The call also will be webcast live and archived on www.everi.com (select "Investors" followed by "Events & Contact"). Non-GAAP Financial Information To provide for better comparability between periods and a better understanding of underlying trends, this press release includes Adjusted EBITDA, Free Cash Flow, Net Cash Position and Net Cash Available, which are not measures of our financial performance or position under United States Generally Accepted Accounting Principles ("GAAP"). Accordingly, these measures should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP. These measures should be read in conjunction with our net earnings, operating income, and cash flow data prepared in accordance with GAAP. With respect to Net Cash Position and Net Cash Available, these measures should be read in conjunction with cash and cash equivalents prepared in accordance with GAAP. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, non-cash stock compensation expense, accretion of contract rights, non-recurring litigation costs net of settlements and insurance proceeds received, facilities consolidation costs, asset acquisition expense, non-recurring professional fees, and other one-time charges and benefits. We present Adjusted EBITDA, as we use this measure to manage our business and consider this measure to be supplemental to our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA; and our credit facility and senior unsecured notes require us to comply with a consolidated secured leverage ratio that includes performance metrics substantially similar to Adjusted EBITDA. We define Free Cash Flow as Adjusted EBITDA less cash paid for interest net of cash received for interest income, cash paid for capital expenditures, cash paid for placement fees, and cash paid for taxes net of refunds. We present Free Cash Flow as a measure of performance. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures. A reconciliation of the Company's net income per GAAP to Adjusted EBITDA and Free Cash Flow is included in the Unaudited Reconciliation of Selected Financial GAAP to Non-GAAP Measures provided at the end of this release. Additionally, a reconciliation of each segment's operating income to EBITDA and Adjusted EBITDA is also included. On a segment level, operating income per GAAP, rather than net earnings per GAAP, is reconciled to EBITDA and Adjusted EBITDA as the Company does not report net earnings by segment. Management believes that this presentation is meaningful to investors in evaluating the performance of the Company's segments. We define Net Cash Position as cash and cash equivalents plus settlement receivables less settlement liabilities and Net Cash Available as Net Cash Position plus undrawn amounts available under our revolving credit facility. We present Net Cash Position because our cash position, as measured by cash and cash equivalents, depends upon changes in settlement receivables and the timing of payments related to settlement liabilities. As such, our cash and cash equivalents can change substantially based upon the timing of our receipt of payments for settlement receivables and payments we make to customers for our settlement liabilities. We present Net Cash Available as management monitors this amount in connection with its forecasting of cash flows and future cash requirements. A reconciliation of the Company's cash and cash equivalents per GAAP to Net Cash Position and Net Cash Available is included in the Unaudited Reconciliation of Cash and Cash Equivalents to Net Cash Position and Net Cash Available provided at the end of this release. Cautionary Note Regarding Forward-Looking Statements This press release contains "forward-looking statements" as defined in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance, but instead are based only on our current beliefs, expectations, and assumptions regarding the future of our business, plans and strategies, projections, anticipated events and trends, the economy, and other future conditions, ...