Everi Holdings Inc. (NYSE: EVRI) reported Q4 EPS of ($0.05), $0.13 worse than the analyst estimate of $0.08. Revenue for the quarter came in at $145.2 million versus the consensus estimate of $132.61 million.

Fourth Quarter 2019 Highlights

• Revenue increased 22% to a quarterly record $145.2 million
• Net loss was $4.1 million, or $(0.05) per diluted share, inclusive of a $6.4 million pre-tax charge related to a litigation settlement, compared to net income of $4.2 million, or $0.06 per diluted share, in the prior year
• Adjusted EBITDA, a non-GAAP financial measure, increased 16% to $63.2 million
• Free Cash Flow, a non-GAAP financial measure, increased $6.4 million to $4.5 million

Michael Rumbolz, President and Chief Executive Officer of Everi, said, “Our strong fourth quarter and full year 2019 operating results reflect the continued successful execution on our strategic initiatives that are driving ongoing momentum across the Company. Our focus on delivering an expanding range of products that deliver great gaming entertainment experiences and casino operator efficiencies resulted in our 14th consecutive quarter of year-over-year growth in revenue and Adjusted EBITDA. Full year 2019 revenue rose 14% to $533.2 million, Adjusted EBITDA increased 10% to a record $253.2 million and Free Cash Flow improved 77% to $43.8 million.

“For 2019, our Games business achieved a record level of unit sales, a record year-end installed base and a 15% improvement in full-year daily win per unit. Our FinTech business again delivered consistent year-over-year growth in cash access services transactions and revenue, equipment sales, and information and compliance product-related revenue. We also established a strong foundation to deliver growth from our entry into the player loyalty products and services market. Additionally, our efforts to build a transformative integrated digital gaming neighborhood, which provides compelling value for both our customers and our customers’ patrons, continues to evolve and progress. We remain on track with further operating momentum in both businesses this year, as we expect consolidated revenues will grow at a high single-digit to low-double digit rate with Adjusted EBITDA forecast to be in a range of $272 million to $282 million.”

Randy Taylor, Executive Vice President and Chief Financial Officer, added, “The improvement in our full-year operating results drove a significant improvement in cash flow, which we allocated primarily to pay down debt. Including the use of funds from our December 2019 follow-on common stock offering, we lowered our pro forma principal value of total debt by $143.2 million, driving our year-end pro-forma Total Net Debt Leverage Ratio to 3.9x. Our capital allocation priorities also included investments in organic growth initiatives that continue to generate attractive returns throughout our business, as well as for two strategic and accretive tuck-in acquisitions that served as our entry into what we believe is an attractive high-growth opportunity in the player loyalty business. Going forward, we continue to prioritize allocation of our growing cash flow toward reducing our Total Net Debt Leverage Ratio to our target of 3.0x to 3.5x and for return-focused investments that profitably grow our business. At the same time, we have the financial flexibility to act under our new share repurchase program as another means of enhancing shareholder value.”

2020 Outlook

Everi today provided its initial outlook for certain 2020 financial and operational metrics. The Company expects to continue to generate year over year revenue, net income, Adjusted EBITDA and Free Cash Flow growth in 2020. Adjusted EBITDA is expected to increase to a range of $272 million to $282 million. Factors considered in Everi’s 2020 outlook include:

• Broad-based revenue growth across the Company’s operations, including increases in DWPU and the installed base, unit sales, cash access service revenue, sales of fully integrated kiosks and other Fintech equipment, information services and other revenue, and growth in the player loyalty business;
• No change to Class III gaming operations in the State of Oklahoma, as a result of the ongoing dispute between the State and the tribal casinos that offer Class III gaming;
• Capital expenditures and placement fees for 2020 to be in a range of $114 million to $120 million, including anticipated capital expenditures for the player loyalty business;
• In conjunction with the early redemption of $84.5 million in principal value of its 7.50% senior unsecured notes on January 6, 2020, the Company expects to incur a loss on extinguishment of debt of approximately $10.8 million; and
• The Company’s 2020 full year Adjusted EBITDA outlook does not contemplate any potential impact related to the COVID-19 virus.

A summary of the financial targets is included as a supplemental table at the end of this release.

For earnings history and earnings-related data on Everi Holdings Inc. (EVRI) click here.