Everi Holdings Inc.

Hello, everybody, and thank you for standing by. Welcome to Avery Holdings' 2021 Fourth Quarter Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the prepared remarks, we will open the call for a question-and-answer session. As a reminder, this call is being recorded. Now let me turn the call over to Bill Fund, Senior Vice President of Investor Relations. Thank you, sir. You may begin.

Thank you, Operator. Let me begin by reminding everyone that our Safe Harbor disclaimer covers today's call and webcast. Our call contains forward-looking statements that involve risks and uncertainties, which could cause actual results to differ materially from those discussed on this call. These risks and uncertainties include, but are not limited to, those contained in our earnings release today and in other SEC filings which are posted in the investor section of our corporate website at every.com. We do not intend and assume no obligation to update any forward-looking statements which are made only as of today, March 1, 2022. You are also cautioned not to place undue reliance on forward-looking statements. Our call will reference certain non-GAAP financial measures such as adjusted EBITDA, free cash flow, and net cash position. A description of each non-GAAP measure and a reconciliation to the most directly comparable GAAP measure can be found in our earnings release and related 8 as well as in the investor section of our website. This call is being webcast and recorded. A link to the webcast and a replay of today's call can be found in the investor section of our website. On our call today are Mike Rumbles, Chairman and Chief Executive Officer, Randy Taylor, President and Chief Operating Officer, Mark Labai, Chief Financial Officer, Kate Lowenhar-Fisher, General Counsel, Dean Ehrlich, Games Business Leader, and Darren Simmons, our FinTech Business Leader. Now, I will turn the call over to Mike.

Well, thank you, Bill, and good morning, everyone, and thank you for joining us. Before we begin today, I would like to acknowledge that this will be my last time addressing you as every CEO. I would also like to express my gratitude for all of your support these past six years. I will continue working for our shareholders as the executive chairman of our board, but will not be participating in these quarterly calls in the future. I'd also like to take this opportunity to publicly welcome Randy Taylor to his new role, leading our company as its Chief Executive Officer beginning April 1st. I have the utmost confidence in Randy to lead our company and Every's team of outstanding executives. I look forward to watching all of them take us into an even brighter future. Now let me share a few of Every's highlights for the fourth quarter and 2021 year end. Fourth quarter financial results and key operating metrics were up dramatically compared to 2020 and also increased significantly over the then record pre-pandemic 2019 fourth quarter. The continued strength of our recurring revenue streams and record game sales drove our fourth quarter revenues to a record level. This strong quarterly performance capped an unprecedented year that began with substantial pandemic impacts and which had continued challenges throughout the year. Now, despite these challenges, the Every Team delivered full-year record results for revenues, operating and net income, and most significantly, adjusted EBITDA and free cash flow. These impressive results were driven by the strength of our outstanding global workforce and the leadership team that guides them. Together, we have built a global organization that has never been stronger. This team continues to focus on the consistent execution of our growth strategies, strategies that place a priority on high return investments in both new products and new geographies for both our games and FinTech business units. It was the concerted execution of these strategies drove our record 2021 results and will continue to deliver steady year-over-year growth as we begin 2022. In our games business, the investments that we have made to build world-class game development studios, to engineer an expanding differentiated portfolio of player-appealing cabinets, and a state-of-the-art remote gaming server platform for our digital gaming operation, have been the key drivers supporting our growth. These investments are also what is driving share games, both in the growth of our gaming operations and our ship share of gaming machines sold to operators, and it's also driving our rapidly growing iGaming revenues. The improvement in our ship share of games sold led to a record level of game shipments in the fourth quarter and for the full year. Our installed base of high-performing gaming machines in gaming operations also reached a record level of nearly 17,000 units at year end. Importantly, the fourth quarter represented the 14th consecutive quarter of increased placements of premium games. Our investment for the future continues with the recent announcement of our agreement to acquire certain assets and employees of Atlas Gaming in Melbourne, Australia, as well as with our recent decision to enter the niche but growing historical horse racing gaming machine market. Atlas will provide a foundation for our longer-term entry into Australia by bringing a core group of game developers and engineers who will form the core of the beginning of our new Australian studio operations. This will help accelerate our entry into what is, after the US, the second largest slot market in the world. This also provides an opportunity for Every to develop and bring additional new game content to the United States market. And we also recently announced that we are in the early stages of entering the historical horse racing machine market. and we expect to place HHR machines before year end. In our FinTech business, our investments have been focused on leveraging our strength in cash access to build a digital neighborhood, or what I think of as a digital neural network for casinos. With the foundation of this network in place, we continue to layer in new products and enhanced features, each of which further benefits the casino operator and strengthens our customer relationships. As an existing leader of financial access, loyalty, and reg tech solutions, our focus on expanding into new geographic jurisdictions, innovating and acquiring new products, and developing new features that improve a patron's experience while at the same time providing greater cost efficiency for casino operators is paramount. Internally, This includes the development of products such as our Jackpot Express tablet that streamlines the administrative process that accompanies the payout of major jackpots. We have further enhanced this product through the addition of integrated features and technology that we gained with the acquisition of the assets of Meter Imaging Capture last autumn. It also includes our exciting, robust cashless wallet that enables casino operators to offer their patrons easy to use funding features across multiple properties in multiple jurisdictions and across the entirety of their casino resort operations, both on premises as well as online. Our focus also includes our continued search for Tuckian acquisitions that we can integrate and scale up for future organic growth. We've already established a successful track record for this through our prior acquisitions, including the two loyalty businesses that provided our entry into the casino loyalty solutions category. Our loyalty products continue to provide revenue growth for our fintech business. Most recently, our agreement to acquire eCash Holdings provides for a geographic expansion of our FinTech offerings into the Australian gaming market. Additionally, we will be adding eCash products to our offerings in North America. One example is that certain of their kiosks have been developed to meet the demands of smaller facilities and are currently being used in the Australian pubs and clubs gaming sector. These kiosks will also perfectly meet the needs of the distributed gaming sector in the United States. This acquisition will provide both new products to our FinTech portfolio and create new growth opportunities in the US and Australia. Given the strength of our balance sheet and our expectations for continued free cash flow growth, we will stay on course with this dual growth focus, continuing to prioritize internal product development and the evaluation of attractive bolt-on or tuck-in acquisitions. This focus emphasizes products, technologies, and talent that complement our core businesses. This also allows us to focus on newer products and technologies that may not be getting appropriate attention today. The strategy also includes geographic opportunities where we're not currently operating or where we're not as heavily penetrated as we would like. enabling this capital allocation strategy to drive our longer term expansion is the phenomenal growth of our free cash flow. Despite spending $31 million on CapEx in the fourth quarter, which was a key driver behind our high return gaming operations growth, and investing another $31 million in placement fees, we were able to generate nearly $20 million in free cash flow in the quarter. For the full year, our $159 million of free cash flow was equal to the combined total of the previous five years. Now, let me turn the call over to Randy to provide you more insight into our operational successes.