Earlier this morning, electronic gaming machine maker PlayAGS (AGS) had its 10.3 million share IPO price at $16, the low end of the $16-$18 expected price range. Despite strength in gaming stocks in general, including a 110% year/year gain for Wynn Resorts (WYNN) and a 44% rise in Las Vegas Sands (LVS), the bullish sentiment apparently (and somewhat surprisingly) didn't carry over to AGS' IPO. On that note, AGS primarily targets the Native American casino market, but over the past few years it has won contracts at several casinos on the Las Vegas Strip, such as MGM, Caesars, Penn National Gaming, and Las Vegas Sands.
As for the IPO, the deal raised $164.8 million in gross proceeds, which the company plans to use to pay down high interest debt. The IPO was led by Credit Suisse, Deutsche Bank, Jefferies, BofA Merrill Lynch, Citigroup, Stifel, Macquarie Capital, and SunTrust Robinson Humphrey. Shares are set to open for trading later this morning on the NYSE.
PlayAGS is a designer and supplier of electronic gaming machines (EGMs) and other products used in the casino industry. The company, which was founded in 2005, focuses on electronic gaming machines that include slot machines, video bingo machines, and other electronic gaming devices.
The company’s business is divided into three segments: EGMs, Table Products, and Interactive Social Casino Games. The EGM segment has been responsible for 94% of revenue for the twelve months ending September 30, 2017. The company has nearly 300 proprietary game titles delivered on EGM cabinets. More than 40 new titles were released during the year ending September 30, 2017. The company notes that its EGMs have outperformed most EGMs manufactured by other competitors.
Through its Table Products segment, the company offers more than 30 table product offerings like live felt table games, side bet offerings, progressives, signage, and other table game equipment. Table products are aimed at enhancing the quality of the pit. The segment focuses on high margin recurring revenue from leases.
The Interactive Social Casino Games segment provides business-to-consumer social gaming. These online-based games are free to play, but recurring revenue is generated through in-game sales of virtual goods and currency.
PlayAGS targets the Native American gaming market, where the company boasts a market share of about 20.0% of all Class II EGMs. Class II gaming includes bingo and non-bank card games.
For the nine months ended September 30, 2017, the company reported revenue of $154.29 million, which was up 24.4% year-over-year. The company reported a loss per share of $2.45, which represented an improvement from a loss of $4.09 per share for the nine months ended September 30, 2016. The company’s domestic revenue per day grew 2.1% to $25,730 while international revenue per day declined 11.9% to $8,370.
The company sold 1,868 EGMs during the nine months ended September 30, 2017, up 205 units sold during the year-ago period. The average sales price increased 8.2% to $15,835.
The company has no plans to declare a cash dividend in the foreseeable future, but its Board of Directors reserves the right to change the company’s dividend policy.