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Third Quarter 2022 Highlights:
LAS VEGAS, Nov. 8, 2022 /PRNewswire/ -- PlayAGS, Inc. (NYSE: AGS) ("AGS", "us", "we" or the "Company"), a designer and developer of equipment and services solutions for the global gaming industry, today reported operating results for the third quarter ended September 30, 2022.
Commenting upon the Company's third quarter performance, AGS President and Chief Executive Officer David Lopez said, "Our third quarter financial results further reflect the people, product and process-driven operating momentum building within our business. Given the encouraging initial customer response to the broader and more diverse new product lineup we recently unveiled at the Global Gaming Expo ("G2E"), I am even more excited about what lies ahead for our Company and its key stakeholders."
Kimo Akiona, AGS Chief Financial Officer added, "I am extremely pleased with the balance sheet deleveraging progress we have made year-to-date, as we ended the third quarter with net leverage at 4.0 times. Supported by the stable operating trends we continue to observe within the business, I remain confident in our ability to deliver on our year-end net leverage target of less than 4.0 times and look forward to further reducing leverage in the years ahead."
Summary of the Three Months Ended September 30, 2022 and 2021 | ||||||||||||||||
(In thousands, except per-share and Adjusted EBITDA margin data) | ||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Revenues: | ||||||||||||||||
EGM | $ | 71,620 | $ | 61,600 | $ | 10,020 | 16.3 | % | ||||||||
Table Products | 4,036 | 3,104 | 932 | 30.0 | % | |||||||||||
Interactive | 2,603 | 2,573 | 30 | 1.2 | % | |||||||||||
Total revenues | $ | 78,259 | $ | 67,277 | $ | 10,982 | 16.3 | % | ||||||||
Income from operations | $ | 9,031 | $ | 7,011 | $ | 2,020 | 28.8 | % | ||||||||
Net income (loss) | $ | 476 | $ | (1,829) | $ | 2,305 | (126.0) | % | ||||||||
Income (loss) per share | $ | 0.01 | $ | (0.05) | $ | 0.06 | (120.0) | % | ||||||||
Adjusted EBITDA: | ||||||||||||||||
EGM | $ | 31,331 | $ | 29,474 | $ | 1,857 | 6.3 | % | ||||||||
Table Products | $ | 2,561 | 1,628 | 933 | 57.3 | % | ||||||||||
Interactive | $ | 575 | 806 | (231) | (28.7) | % | ||||||||||
Total Adjusted EBITDA(1) | $ | 34,467 | $ | 31,908 | $ | 2,559 | 8.0 | % | ||||||||
Total Adjusted EBITDA margin(2) | 44.0 | % | 47.4 | % | (3.4) | % | (340 bps) |
Third Quarter 2022 Financial Results
(1) | Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures, see non-GAAP reconciliation below. |
(2) | Basis points ("bps"). |
EGM | ||||||||||||||||
Three Months Ended September 30, 2022 compared to Three Months Ended September 30, 2021 | ||||||||||||||||
(Amounts in thousands, except unit data) | Three Months Ended September 30, | |||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
EGM segment revenues: | ||||||||||||||||
Gaming operations | $ | 50,233 | $ | 47,705 | $ | 2,528 | 5.3 | % | ||||||||
Equipment sales | 21,387 | 13,895 | 7,492 | 53.9 | % | |||||||||||
Total EGM revenues | 71,620 | 61,600 | 10,020 | 16.3 | % | |||||||||||
EGM Adjusted EBITDA | $ | 31,331 | $ | 29,474 | $ | 1,857 | 6.3 | % | ||||||||
EGM Business Segment Key Performance Indicators ("KPI's") | ||||||||||||||||
EGM gaming operations: | ||||||||||||||||
EGM installed base: | ||||||||||||||||
Class II | 11,324 | 11,272 | 52 | 0.5 | % | |||||||||||
Class III | 4,934 | 4,495 | 439 | 9.8 | % | |||||||||||
Domestic installed base, end of period | 16,258 | 15,767 | 491 | 3.1 | % | |||||||||||
International installed base, end of period | 6,274 | 7,896 | (1,622) | (20.5) | % | |||||||||||
Total installed base, end of period | 22,532 | 23,663 | (1,131) | (4.8) | % | |||||||||||
EGM revenue per day ("RPD"): | ||||||||||||||||
Domestic revenue per day | $ | 31.13 | $ | 31.08 | $ | 0.05 | 0.2 | % | ||||||||
International revenue per day | $ | 7.34 | $ | 5.11 | $ | 2.23 | 43.6 | % | ||||||||
Total revenue per day | $ | 24.31 | $ | 22.40 | $ | 1.91 | 8.5 | % | ||||||||
EGM equipment sales | ||||||||||||||||
EGM units sold | 1,014 | 663 | 351 | 52.9 | % | |||||||||||
Average sales price ("ASP") | $ | 19,146 | $ | 18,970 | 176 | 0.9 | % | |||||||||
EGM Quarterly Results
Domestic Gaming Operations
International Gaming Operations
EGM Equipment Sales
Product Highlights
(3) | Domestic" includes both the United States and Canada. |
Table Products | ||||||||||||||||
Three Months Ended September 30, 2022 compared to Three Months Ended September 30, 2021 | ||||||||||||||||
(Amounts in thousands, except unit data) | Three Months Ended September 30, | |||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Table Products segment revenues: | ||||||||||||||||
Gaming operations | $ | 3,756 | $ | 2,953 | $ | 803 | 27.2 | % | ||||||||
Equipment sales | 280 | 151 | 129 | 85.4 | % | |||||||||||
Total Table Products revenues | $ | 4,036 | $ | 3,104 | $ | 932 | 30.0 | % | ||||||||
Table Products Adjusted EBITDA | $ | 2,561 | $ | 1,628 | $ | 933 | 57.3 | % | ||||||||
Table Products unit information: | ||||||||||||||||
Table products installed base, end of period(4) | 4,969 | 3,783 | 1,186 | 31.4 | % | |||||||||||
Average monthly lease price | $ | 243 | $ | 260 | $ | (17) | (6.5) | % |
Table Products Quarterly Results
(4) As a result of a comprehensive review of our unit counts, the Table Products installed base and average monthly lease price have been revised in the prior period to reflect a more accurate count of the products on lease. The review resulted in no changes to revenues or Adjusted EBITDA. |
Interactive | ||||||||||||||||
Three Months Ended September 30, 2022 compared to Three Months Ended September 30, 2021 | ||||||||||||||||
(Amounts in thousands) | Three Months Ended September 30, | |||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Interactive segment revenue: | ||||||||||||||||
Gaming Operations | $ | 2,603 | $ | 2,573 | $ | 30 | 1.2 | % | ||||||||
Total Interactive revenue | $ | 2,603 | $ | 2,573 | $ | 30 | 1.2 | % | ||||||||
Interactive Adjusted EBITDA | $ | 575 | $ | 806 | $ | (231) | (28.7) | % |
Interactive Quarterly Results
Liquidity and Capital Expenditures
As of September 30, 2022, the Company had an available cash balance of $33.4 million and $40.0 million of availability under its undrawn revolving credit facility, resulting in total available liquidity of $73.4 million.
The total principal amount of debt outstanding, as of September 30, 2022, was $572.8 million compared to $615.7 million at December 31, 2021. Total net debt, which is the principal amount of debt outstanding less cash and cash equivalents, was approximately $539.4 million as of September 30, 2022, conveying a total net debt leverage ratio of 4.0 times compared to 4.2 times as of December 31, 2021(5).
Third quarter 2022 capital expenditures totaled $19.7 million, bringing year-to-date capital expenditures through September 30, 2022 to $49.9 million. Gaming equipment-related investments into our EGM and Table Product installed bases accounted for approximately 60% of capital expenditures incurred year-to-date. Driven by unwavering demand for our high-performing and growing portfolio of premium EGM products and growing customer interest in our recently-unveiled Spectra UR43 gaming cabinet in response to strong initial game performance, we expect to incur full-year capital expenditures near the upper end of our previously articulated $62 to $67 million range.
2022 Net Leverage Target
Supported by our solid operational and financial execution year-to-date, the accelerating new product momentum developing across multiple segments of our business and the consistency we continue to observe within our core day-to-day operations, we remain on pace to deliver upon our year-end 2022 net leverage target of less than 4.0 times.
(5) Total Adjusted EBITDA and Total Net Debt Leverage Ratio are non-GAAP measures, see non-GAAP reconciliation below. |
Conference Call and Webcast
AGS leadership will host a conference call to review the Company's third quarter 2022 results on November 8, 2022, at 5 p.m. ET. Participants may access a live webcast of the conference call, along with a slide presentation reviewing the quarterly results, at the Company's Investor Relations website http://investors.playags.com. A replay of the webcast will be available on the website following the live event. U.S. and Canadian participants may access the call live by telephone by calling +1 (833) 927-1758, while international participants should call +1 (929) 526-1599. The conference call access code is 151571.
Company Overview
AGS is a global company focused on creating a diverse mix of entertaining gaming experiences for every kind of player. Our roots are firmly planted in the Class II tribal gaming market, but our customer-centric culture and remarkable growth have helped us branch out to become one of the most all-inclusive commercial gaming equipment suppliers in the world. Powered by high-performing Class II and Class III slot products, an expansive table products portfolio, highly rated social casino, real-money gaming solutions for players and operators, and best-in-class service, we offer an unmatched value proposition for our casino partners. Learn more at playags.com.
AGS Investor & Media Contacts:
Brad Boyer, Senior Vice President Corporate Operations and Investor Relations
investors@playags.com
Julia Boguslawski, Chief Marketing Officer
jboguslawski@playags.com
©2022 PlayAGS, Inc. Products referenced herein are sold by AGS LLC or other subsidiaries of PlayAGS, Inc. Solely for convenience, marks, trademarks and trade names referred to in this press release appear without the ® and TM and SM symbols, but such references are not intended to indicate, in any way, that PlayAGS, Inc. will not assert, to the fullest extent under applicable law, its rights or the rights of the applicable licensor to these marks, trademarks and trade names.
Forward-Looking Statement
This release contains, and oral statements made from time to time by our representatives may contain, forward-looking statements based on management's current expectations and projections, which are intended to qualify for the safe harbor of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding the proposed public offering and other statements identified by words such as "believe," "will," "may," "might," "likely," "expect," "anticipates," "intends," "plans," "seeks," "estimates," "believes," "continues," "projects" and similar references to future periods, or by the inclusion of forecasts or projections. All forward-looking statements are based on current expectations and projections of future events.
These forward-looking statements reflect the current views, models, and assumptions of AGS, and are subject to various risks and uncertainties that cannot be predicted or qualified and could cause actual results in AGS's performance to differ materially from those expressed or implied by such forward looking statements. These risks and uncertainties include, but are not limited to, the ability of AGS to maintain strategic alliances, unit placements or installations, grow revenue, garner new market share, secure new licenses in new jurisdictions, successfully develop or place proprietary product, comply with regulations, have its games approved by relevant jurisdictions, the effects of COVID-19 on the Company's business and results of operations and other factors set forth under Item 1. "Business," Item 1A. "Risk Factors" in AGS's Annual Report on Form 10-K, filed with the Securities and Exchange Commission. All forward-looking statements made herein are expressly qualified in their entirety by these cautionary statements and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized. Readers are cautioned that all forward-looking statements speak only to the facts and circumstances present as of the date of this press release. AGS expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
PLAYAGS, INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(amounts in thousands, except share and per share data) | ||||||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 33,447 | $ | 94,977 | ||||
Restricted cash | 20 | 20 | ||||||
Accounts receivable, net of allowance of $2,099 and $1,993, respectively | 58,051 | 49,426 | ||||||
Inventories | 35,625 | 27,534 | ||||||
Prepaid expenses | 6,730 | 4,878 | ||||||
Deposits and other | 9,696 | 8,240 | ||||||
Total current assets | 143,569 | 185,075 | ||||||
Property and equipment, net | 79,386 | 74,916 | ||||||
Goodwill | 287,106 | 285,546 | ||||||
Intangible assets | 146,584 | 160,044 | ||||||
Deferred tax asset | 7,342 | 7,333 | ||||||
Operating lease assets | 11,653 | 12,503 | ||||||
Other assets | 9,783 | 7,394 | ||||||
Total assets | $ | 685,423 | $ | 732,811 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 18,274 | $ | 9,439 | ||||
Accrued liabilities | 35,667 | 39,165 | ||||||
Current maturities of long-term debt | 6,090 | 6,877 | ||||||
Total current liabilities | 60,031 | 55,481 | ||||||
Long-term debt | 550,945 | 599,281 | ||||||
Deferred tax liability, non-current | 3,476 | 2,653 | ||||||
Operating lease liabilities, long-term | 10,960 | 11,871 | ||||||
Other long-term liabilities | 15,788 | 21,954 | ||||||
Total liabilities | 641,200 | 691,240 | ||||||
Stockholders' equity | ||||||||
Preferred stock at $0.01 par value; 50,000,000 shares authorized, no shares issued and outstanding | - | - | ||||||
Common stock at $0.01 par value; 450,000,000 shares authorized at September 30, 2022 and at December 31, 2021; and 37,704,806 and 36,943,770 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 377 | 369 | ||||||
Additional paid-in capital | 405,116 | 392,161 | ||||||
Accumulated deficit | (355,666) | (344,889) | ||||||
Accumulated other comprehensive loss | (5,604) | (6,070) | ||||||
Total stockholders' equity | 44,223 | 41,571 | ||||||
Total liabilities and stockholders' equity | $ | 685,423 | $ | 732,811 |
PLAYAGS, INC. | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||
(amounts in thousands, except per share data) | ||||||||
Three Months Ended September | ||||||||
2022 | 2021 | |||||||
Revenues | ||||||||
Gaming operations | $ | 56,592 | $ | 53,231 | ||||
Equipment sales | 21,667 | 14,046 | ||||||
Total revenues | 78,259 | 67,277 | ||||||
Operating expenses | ||||||||
Cost of gaming operations(6) | 10,375 | 9,641 | ||||||
Cost of equipment sales(6) | 11,857 | 6,805 | ||||||
Selling, general and administrative | 16,955 | 15,913 | ||||||
Research and development | 9,702 | 9,269 | ||||||
Write-downs and other charges | 1,389 | 197 | ||||||
Depreciation and amortization | 18,950 | 18,441 | ||||||
Total operating expenses | 69,228 | 60,266 | ||||||
Income from operations | 9,031 | 7,011 | ||||||
Other expense (income) | ||||||||
Interest expense | 10,291 | 10,700 | ||||||
Interest income | (305) | (263) | ||||||
Loss on extinguishment and modification of debt | - | - | ||||||
Other expense (income) | 445 | 1,126 | ||||||
Loss before income taxes | (1,400) | (4,552) | ||||||
Income tax benefit (expense) | 1,876 | 2,723 | ||||||
Net income (loss) | 476 | (1,829) | ||||||
Foreign currency translation adjustment | 23 | (1,612) | ||||||
Total comprehensive income (loss) | $ | 499 | $ | (3,441) | ||||
Basic and diluted income (loss) per common share: | ||||||||
Basic | $ | 0.01 | $ | (0.05) | ||||
Diluted | $ | 0.01 | $ | (0.05) | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 37,244 | 36,725 | ||||||
Diluted | 37,244 | 36,725 |
(6) Exclusive of depreciation and amortization. |
PLAYAGS, INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | ||||||||
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Cash flows from operating activities | ||||||||
Net loss | (10,576) | $ | (13,482) | |||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 56,979 | 55,460 | ||||||
Accretion of contract rights under development agreements and placement fees | 4,790 | 4,916 | ||||||
Amortization of deferred loan costs and discount | 2,167 | 3,439 | ||||||
Write-off of deferred loan costs and discount | 1,586 | - | ||||||
Cash paid for debt prepayment penalties to prior debt holders | 848 | - | ||||||
Stock-based compensation expense | 10,572 | 8,856 | ||||||
Provision for bad debts | 402 | 313 | ||||||
Disposal of long-lived assets | 337 | 388 | ||||||
Impairment of assets | 21 | 653 | ||||||
Fair value adjustment of contingent consideration | 1,466 | (56) | ||||||
Provision for deferred income tax (benefit) | 936 | 159 | ||||||
Changes in assets and liabilities that relate to operations: | - | |||||||
Accounts receivable | (8,868) | (10,646) | ||||||
Inventories | (6,856) | 945 | ||||||
Prepaid expenses | (2,259) | (3,862) | ||||||
Deposits and other | (1,266) | (3,565) | ||||||
Other assets, non-current | (134) | 3,054 | ||||||
Accounts payable and accrued liabilities | 2,429 | 7,625 | ||||||
Net cash provided by operating activities | 52,574 | 54,197 | ||||||
Cash flows from investing activities | ||||||||
Business acquisitions, net of cash acquired | (4,750) | - | ||||||
Proceeds from payments on customer notes receivable | 137 | - | ||||||
Software development and other expenditures | (15,439) | (11,329) | ||||||
Proceeds from disposition of assets | 15 | 35 | ||||||
Purchases of property and equipment | (34,484) | (24,938) | ||||||
Net cash used in investing activities | (54,521) | (36,232) | ||||||
Cash flows from financing activities | ||||||||
Repayment of prior first lien credit facilities | (521,215) | (4,040) | ||||||
Repayment of first lien credit facilities | (2,876) | - | ||||||
Repayment of incremental term loans | (93,575) | (713) | ||||||
Payment of financed placement fee obligations | (3,917) | (3,690) | ||||||
Proceeds from term loans | 569,250 | - | ||||||
Payment of deferred loan costs | (4,838) | (848) | ||||||
Payment of debt prepayment penalties to prior debt holders | (848) | - | ||||||
Payments of previous acquisition obligation | (445) | (416) | ||||||
Payments on finance leases and other obligations | (920) | (1,195) | ||||||
Repurchase of stock | (201) | (905) | ||||||
Net cash used in financing activities | (59,585) | (11,807) | ||||||
Effect of exchange rates on cash and cash equivalents | 2 | (3) | ||||||
Net increase in cash, cash equivalents and restricted cash | (61,530) | 6,155 | ||||||
Cash, cash equivalents and restricted cash, beginning of period | 94,997 | 81,709 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 33,467 | $ | 87,864 | ||||
Supplemental cash flow information: | ||||||||
Non-cash investing and financing activities: | ||||||||
Leased assets obtained in exchange for new operating lease liabilities | $ | 956 | $ | 3,042 | ||||
Leased assets obtained in exchange for new finance lease liabilities | $ | 354 | $ | 317 |
Non-GAAP Financial Measures
To provide investors with additional information in connection with our results as determined by generally accepted accounting principles in the United States ("GAAP"), we disclose the following non-GAAP financial measures: total Adjusted EBITDA, total Adjusted EBITDA margin, total net debt leverage ratio, and Free Cash Flow. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income (loss), income from operations, cash flows, or any other measure calculated in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
Total Adjusted EBITDA
This press release and accompanying schedules provide certain information regarding Adjusted EBITDA, which is considered a non-GAAP financial measure under the rules of the Securities and Exchange Commission.
We believe that the presentation of total Adjusted EBITDA is appropriate to provide additional information to investors about certain material non-cash items that we do not expect to continue at the same level in the future, as well as other items we do not consider indicative of our ongoing operating performance. Further, we believe total Adjusted EBITDA provides a meaningful measure of operating profitability because we use it for evaluating our business performance, making budgeting decisions, and comparing our performance against that of other peer companies using similar measures. It also provides management and investors with additional information to estimate our value.
Total Adjusted EBITDA is not a presentation made in accordance with GAAP. Our use of the term total Adjusted EBITDA may vary from others in our industry. Total Adjusted EBITDA should not be considered as an alternative to operating income or net income. Total Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation or as a substitute for the analysis of our results as reported under GAAP.
Our definition of total Adjusted EBITDA allows us to add back certain non-cash charges that are deducted in calculating net income and to deduct certain gains that are included in calculating net income. However, these expenses and gains vary greatly, and are difficult to predict. They can represent the effect of long-term strategies as opposed to short-term results. In addition, in the case of charges or expenses, these items can represent the reduction of cash that could be used for other corporate purposes. Due to these limitations, we rely primarily on our GAAP results, such as net income (loss), income from operations, EGM Adjusted EBITDA, Table Products Adjusted EBITDA or Interactive Adjusted EBITDA and use Total Adjusted EBITDA only supplementally.
The total Adjusted EBITDA discussion above is also applicable to its margin measure, which is calculated as total Adjusted EBITDA as a percentage of total revenues.
The following table presents a reconciliation of total Adjusted EBITDA to net loss, which is the most comparable GAAP measure:
Total Adjusted EBITDA Reconciliation | ||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||
(Amounts in thousands) | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Net income (loss) | $ | 476 | $ | (1,829) | $ | 2,305 | (126.0) | % | ||||||||
Income tax benefit | (1,876) | (2,723) | 847 | (31.1) | % | |||||||||||
Depreciation and amortization | 18,950 | 18,441 | 509 | 2.8 | % | |||||||||||
Interest expense, net of interest income and other | 10,431 | 11,563 | (1,132) | (9.8) | % | |||||||||||
Write-downs and other(7) | 1,389 | 197 | 1,192 | 605.1 | % | |||||||||||
Other adjustments(8) | 585 | 235 | 350 | 148.9 | % | |||||||||||
Other non-cash charges(9) | 2,171 | 2,030 | 141 | 6.9 | % | |||||||||||
Non-cash stock-based compensation(10) | 2,341 | 3,994 | (1,653) | (41.4) | % | |||||||||||
Total Adjusted EBITDA | $ | 34,467 | $ | 31,908 | $ | 2,559 | 8.0 | % |
Three Months Ended September 30, | ||||||||||||||||
(Amounts in thousands, except total Adjusted EBITDA margin) | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Total revenues | $ | 78,259 | $ | 67,277 | $ | 10,982 | 16.3 | % | ||||||||
Total Adjusted EBITDA | $ | 34,467 | $ | 31,908 | $ | 2,559 | 8.0 | % | ||||||||
Total Adjusted EBITDA margin | 44.0 | % | 47.4 | % | (3.4) | % | (340 bps) |
(7) Write-downs and other includes items related to loss on disposal or impairment of long-lived assets and fair value adjustments to contingent consideration. |
(8) Other adjustments are primarily composed of the following: |
• | Costs and inventory and receivable valuation charges associated with the COVID-19 pandemic, professional fees incurred for projects, costs incurred related to public offerings, contract cancellation fees and other transaction costs deemed to be non-operating in nature; |
• | Acquisition and integration related costs related to the purchase of businesses and to integrate operations and obtain costs synergies; |
• | Restructuring and severance costs, which primarily relate to costs incurred through the restructuring of the Company's operations from time to time and other employee severance costs recognized in the periods presented; and |
• | Legal and litigation related costs, which consist of payments to law firms and settlements for matters that are outside the normal course of business. |
(9) Other non-cash charges are costs related to non-cash charges and losses on the disposition of assets, non-cash charges on capitalized installation and delivery, which primarily includes the costs to acquire contracts that are expensed over the estimated life of each contract, and non-cash charges related to accretion of contract rights under development agreements. |
(10) Non-cash stock-based compensation includes non-cash compensation expense related to grants of options, restricted stock, and other equity awards. |
Total Net Debt Leverage Ratio Reconciliation | ||||||||
The following table presents a reconciliation of total net debt and total net debt leverage ratio: | ||||||||
(Amounts in thousands, except total net debt leverage ratio) | September 30, | December 31, | ||||||
2022 | 2021 | |||||||
Total principal amount of debt | $ | 572,818 | $ | 615,743 | ||||
Less: Cash and cash equivalents | 33,447 | 94,977 | ||||||
Total net debt | $ | 539,371 | $ | 520,766 | ||||
LTM Adjusted EBITDA | $ | 133,617 | $ | 122,587 | ||||
Total net debt leverage ratio | 4.0 | 4.2 |
Free Cash Flow
This schedule provides certain information regarding Free Cash Flow, which is considered a non-GAAP financial measure under the rules of the Securities and Exchange Commission.
We define Free Cash Flow as net cash provided by operating activities less cash outlays related to capital expenditures. We define capital expenditures to include purchase of intangible assets, software development and other expenditures, and purchases of property and equipment. In arriving at Free Cash Flow, we subtract cash outlays related to capital expenditures from net cash provided by operating activities because they represent long-term investments that are required for normal business activities. As a result, subject to the limitations described below, Free Cash Flow is a useful measure of our cash available to repay debt and/or make other investments.
Free Cash Flow adjusts for cash items that are ultimately within management's discretion to direct, and therefore, may imply that there is less or more cash that is available than the most comparable GAAP measure. Free Cash Flow is not intended to represent residual cash flow for discretionary expenditures since debt repayment requirements and other non-discretionary expenditures are not deducted. These limitations are best addressed by using Free Cash Flow in combination with the GAAP cash flow numbers.
The following table presents a reconciliation of Free Cash Flow:
(Amounts in thousands) | Nine Months | Six Months | Three Months | |||||||||
Net cash provided by operating activities | $ | 52,574 | $ | 34,904 | $ | 17,670 | ||||||
Software development and other expenditures | (15,439) | (9,852) | (5,587) | |||||||||
Purchases of property and equipment | (34,484) | (20,401) | (14,083) | |||||||||
Free Cash Flow | $ | 2,651 | $ | 4,651 | $ | (2,000) |
(Amounts in thousands) | Nine Months | Six Months | Three Months | |||||||||
Net cash provided by operating activities | $ | 54,197 | $ | 35,893 | $ | 18,304 | ||||||
Software development and other expenditures | (11,329) | (7,210) | (4,119) | |||||||||
Purchases of property and equipment | (24,938) | (14,191) | (10,747) | |||||||||
Free Cash Flow | $ | 17,930 | $ | 14,492 | $ | 3,438 |
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SOURCE AGS