PlayAGS, Inc.

Hello and welcome to the Play AGS Q2 2023 earnings conference call. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star followed by one on your telephone keypad. If you'd like to remove your question, you may press star followed by two. I'll now hand it over to your host, Brad Boyer, SVP Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to the PlayAGS Incorporated second quarter 2023 earnings conference call. With me today are David Lopez, CEO, and Kimo Akiyona, CFO. A slide presentation reviewing our key operational and financial highlights for the second quarter ended June 30th, 2023 can be found on our investor relations website, investors.playags.com. On today's call, we will provide an overview of our Q2 2023 financial performance, and offer perspective on our current financial outlook for the business. This conference call will include the use of forward-looking statements. Any statement that refers to expectations, projections, or other characterizations of future events, including financial projections or future market conditions, is a forward-looking statement based on assumptions today. Actual results may differ materially from those expressed in these forward-looking statements and we make no obligation to update our disclosures. For more information about factors that may cause our actual results to differ materially from our forward-looking statements, Please refer to the earnings press release we issued today as well as risks described in our annual report on Form 10-K, particularly in the section of these documents titled Risk Factors. Our commentary today will also include non-GAAP financial measures. We believe the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends in our business. These measures should not be considered an isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics for reported results can be found in our earnings release issued today. Please refer to our filings with the SEC for more information. With that, I would like to turn the call over to our CEO, David Lopez.

Thanks, Brad, and good afternoon, everyone. Today, I will keep my remarks brief as I believe our record-setting financial performance clearly demonstrates the strength of our products, team members, and strategy. which is creating significant momentum within all three segments of our business. Over the past several quarters, I've talked about our commitment to recruiting and hiring the best R&D, sales, and product management talent to join our team. The culmination of these efforts is reflected in our second quarter performance as we establish 10 new records in the quarter. I will start with total revenues, which increased 17% year-over-year to nearly $90 million, improving sequentially for the 10th consecutive quarter. Adjusted EBITDA grew 16% year-over-year to approximately $40 million. Domestic game ops revenue increased 7% year-over-year to $49.3 million, establishing a new record for the third consecutive quarter. Domestic RPD reached $33.48, surpassing $30 for the ninth consecutive quarter. Our premium EGM installs grew to over 2,700 units, increasing for the 14th consecutive quarter. EGM sales revenue surpassed $28 million, up more than 40% year over year, and more than 7% ahead of the previous record set in Q3 2019. EGM ASPs eclipsed $20,000 for the first time ever. We sold units to nearly 150 unique customers, 60% higher than the number sold to in Q2 of 2019. Table revenues reached $4.4 million, up over 25% year-over-year. And last but not least, RMG revenue increased 10% year over year to $2.3 million. Looking beyond records, we also delivered on delevering. During the second quarter, we executed, with EBITDA moving higher and free cash flow surpassing $12 million. As a result, net leverage improved to 3.6 times, down from 3.8 times at the start of the year. Supported by our record-setting first-half performance and our ability to generate free cash flow over the remainder of the year, we now expect to exit 2023 with net leverage in the range of 3.25 times to 3.50 times. This equates to a quarter-turn reduction at the top end of the range. Before turning the call over to Kimo, I'll highlight a few things in each product segment that I'm most excited about. Starting with EGMs, our new Spectra 43 cabinet continues its hot streak, topping the July EILRS survey for the seventh consecutive month. So far, we have placed over 1,650 Spectra units, and demand for the cabinet remains robust. While our two launch titles, Long Bao Bao and Shamrock Fortunes, continue to deliver exceptional performance, with each averaging over 1.75 times house average, the key to Spectra's success extends well beyond our strong games. It has been our R&D expertise, product strategy, and operational execution that has aided in performance that is hands down better than anything I've ever seen, all of which will position us for success over the long term. Turning to table products, our PACS shuffler continues to take the industry by storm, pushing Q2 sales and recurring table revenues to new records. To date, we have placed over 265 PACS units, with our footprint increasing by approximately 30% since Q1. While some folks may take a successful launch for granted, I cannot overstate what an accomplishment it has been to successfully design, develop, manufacture, sell and service a competitive shuffler product in an industry long dominated by one company. That said, I would like to congratulate the engineers, software programmers, testers, assemblers, and the service and sales team for their contributions to the success of this product. Looking ahead at our trial activity and the growing operator interest, I'm confident PAX will continue to serve as a growth catalyst for many quarters to come. Finally, I will move to our interactive segment, where returns on our highly focused talent investments push Q2 RMG revenues to a new record. As the old saying goes, records are made to be broken, and I do not expect our Q2 record to hold up for very long, as just last week we launched our first new game leveraging our revamped RMG gaming development team. In addition to benefiting from the first collaboration between our land-based and interactive teams, the game was the first developed on our completely redesigned online platform and serves as our first title in the popular three real slot segment. Looking forward, I believe we have a strong and passionate team in place to consistently deliver a steady supply of great content. In closing, I would like to thank our teams around the globe for staying focused on their specific goals and delivering on the high-level objectives the company has put before them. It truly is our products and our people that have me excited about the remainder of the year and well beyond. With that, I'll turn it over to Kimo.