PlayAGS, Inc.

Ladies and gentlemen, please remain holding. Your conference call will begin shortly. Again, please remain holding. Your conference call will begin shortly. Hello, everyone. Thank you for attending today's PlayAGS fourth quarter and full year 2023 earnings call. My name is Sierra, and I'll be your moderator for today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star followed by one on your telephone keypad. I would like to pass the conference over to our host, Brad Boyer, Senior Vice President of Investor Relations.

Thank you, operator, and good afternoon, everyone. Welcome to the PlayAGS Incorporated fourth quarter and full year 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 fourth quarter and fiscal year ended December 31st, 2023, can be found on our investor relations website, investors.playags.com. On today's call, we will provide an overview of our Q4 and full-year 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 obligations 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 in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliation between GAAP and non-GAAP metrics for our 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. The fourth quarter capped off an exceptional year for AGS with revenues and adjusted EBITDA increasing 15% year over year. Q4 represented our 11th consecutive quarter of double digit growth and our fifth consecutive quarter of double digit adjusted EBITDA growth. The strength in the quarter was broad based with all three operating segments setting new quarterly records for revenue and adjusted EBITDA. The quality and consistency of our financial performance is a true reflection of our incredibly talented and focused team increasingly deep and diverse product offerings across all three segments, and the improving efficiency and effectiveness of our execution. Before providing some perspective on the current year, I would like to highlight a few notable achievements for the fourth quarter. First, global EGM sales increased 36% year-over-year to a record 1,519 units, surpassing the 30% growth level for the third consecutive quarter. Just like Q3, our record performance was not driven by a concentration of sales to any one customer or within a jurisdiction as we sold units to nearly 180 unique customers in the quarter, a new record for the company. Our interactive revenue grew by over 30% versus the prior year to 3.4 million with strong flow through increasing interactive adjusted EBITDA by nearly 160% year over year to a record $1.3 million. Our refreshed and energized interactive team continues to further cement our position as a leading B2B content provider within the global real money gaming market. Third, table product sales and recurring revenue reached new records in the quarter, producing an approximately 20% increase in adjusted EBITDA to a record $2.8 million and pushing full year adjusted EBITDA to approximately $10 million. I think it is important to remind everyone our table segment was doing less than $1 million of annual EBITDA in 2018. with the 60% growth CAGR over the past five years reflecting the incredible work from our entire tables team. Fourth, free cash flow increased more than 45% year over year to $11 million, topping the $10 million for the third consecutive quarter. We are encouraged by the progress made improving the consistency and magnitude of our free cash flow generation over the past several quarters, and I believe our organizational focus on this key metric will continue to drive consistent growth in our free cash flow conversion in 2024 and beyond. Kima will provide some context around our free cash flow outlook for 2024 in his prepared remarks. Finally, We ended the year with net leverage at 3.2 times, down from 3.8 times at the start of the year, and slightly below the low end of our targeted 3.25 times to 3.5 times range. We have considerably improved our leverage profile over the past several years and will continue to prioritize further deleveraging as our preferred use of excess capital for the foreseeable future, with a path to below 3.0 times well within our sight. With all that said, I would like to turn my attention to 2024 and the exciting path forward for our company. As you have heard me say on prior calls, I continue to believe we have the strongest, most diverse product offerings in our company's history. Additionally, the quality of our team across all three operating segments and at the corporate level has never been better. Lastly, the consistency and quality of our execution continues to steadily improve as evidenced by our recent string of record operating performance. Collectively, I believe the three Ps of people, product, and process position us to not only improve upon our record 2023 results in the current year, but also set us up for compelling multi-year growth trajectory. Within our EGM segment, the expanded scale and scope of our game content and cabinet portfolio focused go-to-market strategy and driven sales team have us well positioned on both sides of the business. For the first time in the company's history, we've had two high-performing cabinets, Spectra 43 and Spectra 49, with deep game libraries targeting the most in-demand product segments. Additionally, as we progress into the back half of 2024, we remain on schedule to make our initial push into the mechanical reel and jumbo segments, with our MEC reel cabinet recently receiving GLI approval. Collectively, these two segments account for over 15% of the total units sold into the North American market, dramatically expanding our addressable market. Ultimately, our growth algorithm in slots sales is simple. First, Further leverage our focused and targeted sales strategy and the recent strength of our product performance to broaden our customer base. And second, utilize the added diversity and quality of our product offerings to increase the average order size within our activated customers. I am confident successful execution of our strategy will not only lead to shift share gains in 2024, but it will also set us on a path to becoming a top five supplier of choice for many years to come. On the recurring revenue side of our domestic slot business, the outlook is as equally as compelling. We have demonstrated over the past several quarters, our unique mixed driven growth catalyst, including an increasingly powerful premium game offering and more diverse array of core content have armed us with the necessary tools to deliver consistent modest growth in both domestic RPD and within our domestic EGM installed base. Looking to 2024, I believe the unprecedented depth and diversity of our cabinet and content roadmaps across both the core and premium market segments should allow us to utilize a similar growth algorithm to deliver relative outperformance and domestic gaming operations revenue as compared to the rate of change observed in the market level GGR. Moving on to tables, although we have come a long way over the past five years, I believe our recent momentum will continue throughout 2024 as we further solidify our position as a partner and innovator of choice within the market. The enhanced features and functionality of our bonus spin extreme progressive continue to be well received, as evidenced by the 5% sequential growth in our BSX install base achieved in the fourth quarter. Additionally, customer adoption of our efficient and effective Paxos shuffler continues to surge, with our footprint surpassing 330 units at year end and a healthy pipeline building for Q1. Finally, we continue to drive greater adoption of our AGS Arsenal site license offerings with several notable launches lined up for the first quarter. All told, I believe the unwavering strength of our three growth pillars, BSX, PACS, and Arsenal, coupled with our strategic focus on broadening our geographic and customer account reach and our continued progress on the development of a new multi-deck shuffler, keep our table game business on a compelling multi-year growth trajectory. Finally, I'm greatly encouraged by the increasingly consistent and efficient execution with our interactive segments. where our run rate of annualized revenue and adjusted EBITDA is now topping $13 million and $5 million, respectively. Although Interactive is in the early innings of an outsized multi-year growth cycle, I think it is important to highlight the February 2024 Eilers Industry Survey ranked us as the sixth largest provider of slot content to North America online market, with a reported market share of approximately 5%. Additionally, we produced the fourth best overall slot performance in the report with a reported index of 1.6 times site average with our capital gains theme performing as the second best slot overall. Looking ahead, I believe the quality of our interactive team and the great number of strategic growth objectives in our line of sight positions AGS to emerge as a leading share gainer within the high growth RMG channel in both 2024 and beyond. In closing, I would like to thank our team members around the globe for their commitment, focus, and dedication throughout 2023. The record-setting performance we have been able to achieve is a true reflection of the quality products you have developed, the successful strategies you have orchestrated, and the efficient execution of your plans. With the most exciting lineup of new products and the highest quality team in my tenure as CEO, I remain extremely excited about what lies ahead for AGS, and I look forward to sharing our progress with you on future calls. With that, I will turn the call over to Kimo.