Three months after suffering through its first-ever quarterly earnings meltdown, gaming equipment provider AGS steered its ship back on course.
The Las Vegas-based company said revenues grew 5.1% to $70.4 million in the quarter that ended Sept. 30 and, more importantly, cash flow rebounded from a 2% dip in the second quarter to a 9.6% increase in the third quarter to $36.8 million.
AGS CEO David Lopez said Thursday the third quarter featured the sale of nearly 1,400 electronic gaming machines, the single-highest quarterly sale in the company’s history.
Lopez credited the 4% increase to a new cabinet design and growth in several new markets. He said the company’s products unveiled at last month’s Global Gaming Expo in Las Vegas caught the attention of casino decision makers.
“We believe this robust suite of products will help drive growth in 2020 and beyond,” Lopez said.
In the quarter, AGS said sales revenue from electronic gaming machines jumped 7.2% while gaming operations – slot machines where AGS shares revenues with casinos – grew 3.7%. Table game sales revenue for AGS increased 39.4%, which was led by the company’s first placements of progressive tables into Ontario, Canada. AGS installed 70 games at Falls View Casino.
However, AGS reported a net loss of $5.5 million in the quarter, compared to income of $4.3 million a year ago. The company’s loss per share was 16 cents.
Still, the investment community had a positive reaction to the company’s stock price.
Shares of AGS closed at $12.67 on the Nasdaq, up 27 cents or 2.18%. The shares were down less than 1% in afterhours trading, which was a vast difference from three months ago when AGS’s stock price dipped 52% soon after telling investors was cutting its 2019 earnings guidance from a 17%-to-20% growth rate down to 6%-to-10% growth rate.
AGS’s largest problem had been Oklahoma, where the company had issues with product rollout.
“We understand the challenges we face in Oklahoma,” Lopez said.
Lopez said the company expected to improve some 1,500 games in Oklahoma Indian casinos by the end of the year, which included changing out lower performing game themes.
“Through increasing our resources, we have enhanced the depth and quality of data analysis,” Lopez said. “Through leveraging long standing relationships, we have detailed daily performance reports on roughly 60 percent of Oklahoma installed base.”
In a research note following G2E, SunTrust Bank gaming analyst Barry Jonas said tribal Oklahoma slot managers suggested AGS’s issues in that market “are fixable.” However, he said there was some concern from commercial casino operators that AGS’s content “may be spread a little thin.”
However, Jonas said the company addressed those concerns through “recent research and development investments (two new studios) and G2E game theme offerings (nearly 60 new titles next year).”
Lopez pointed out the AGS has been expanding its footprint across the U.S. New licenses have allowed the company to penetrate several markets, including Nevada, Pennsylvania, Louisiana and in parts of Canada.
AGS is growing its interactive gaming division with more than 28 suppliers in Europe live with the company’s real money gaming platform. In the U.S., AGS launched its real money gaming product in New Jersey with Rush Street Gaming.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
