Everi Holdings (EVRI) is a supplier of imaginative entertainment and technology solutions to the digital gaming and casino industry. The company develops gaming machines and gaming systems, and is also a provider of financial products and services to casinos.
The company reports its business across two business segments: Games and Financial Technology. The Games business segment provides gaming machines and gaming technology products and services. The Financial Technology segment’s products and services include equipment that enables casino patrons to have self-service access to cash and cashless funding at gaming facilities and check warranty services.
Everi’s Expected Q2 Results
Everi expects to announce its fiscal second-quarter results on August 4. However, late last month, the company announced expected second-quarter results.
EVRI anticipates revenues between $167 million and $172 million, which would be an improvement in excess of 25% over revenues of $129.7 million in the pre-pandemic Q2 of 2019. Diluted earnings are expected to come in between $0.31 to $0.34 per share versus $0.07 per share in Q2 of 2019.
Michael Rumbolz, CEO of Everi, said, “…both our Games and FinTech segments are performing significantly above pre-pandemic periods…Since March, the total value processed of our financial access transactions on a same-store basis has been consistently trending at a mid-teens percentage growth rate above the comparable 2019 volumes.”
“This is significantly higher than our mid-single digit percentage historical average growth rate. Additionally, our gaming operations installed base has continued to grow, fueled primarily by a greater number of premium units, which is also driving new record levels of Daily Win per Unit. We also expect our gaming machine unit sales in the second quarter will well exceed the level shipped in the first quarter of 2021,” Rumbolz added.
Following the announcement of the expected 2Q results and the debt refinancing, Jeffries analyst David Katz reiterated a Buy and raised the price target from $21 to $30 (22.3% upside) on the stock.
Katz stated in a research note to investors, “The upward revisions position our estimates ahead of consensus with high confidence. The results demonstrate strong momentum which has been in the making the past several years in both segments, which should continue driven the recurring nature of the model.”
Debt Refinancing
The company also announced plans to refinance its outstanding debt and extend maturities. Everi plans to refinance its $35 million Revolving Credit Facility, due in 2022, and its $820 million Term Loan Facility, due in 2024. (See Everi Holdings stock chart on TipRanks)
Furthermore, Everi intends to prepay in full its $125 million Incremental Term Loan Facility, due in 2024, and redeem the $285.4 million of Unsecured Notes due 2025. After the refinancing of its $1.14 billion total outstanding debt, EVRI expects to have $1.0 billion of outstanding total debt. At closing, the company will have a revolving credit facility worth $125 million.
Regarding the debt refinancing, Katz said that this would result in $985 million of debt at an average cost that would be below 5%. The analyst added, “For perspective, the total interest cost according to our updated 2022 estimates is $43.1M, 46% lower than the 2019 level of $79.5M.”
Katz expects the company’s earnings to remain elevated, as the higher expected results in the second quarter are a result of a broad-based upside to the company’s gaming and fintech business segments, which is likely to recur.
Consensus among analysts on Wall Street is a Strong Buy based on 8 Buys. The average Everi Holdings price target of $27.50 implies approximately 12.1% upside potential to current levels.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
