Everi Holdings Inc. (NYSE:EVRI) Q2 2023 Earnings Call Transcript

Everi Holdings Inc. (NYSE:EVRI) Q2 2023 Earnings Call Transcript August 9, 2023

Operator: Hello, everyone. Thank you for standing by and welcome to the Everi Holdings Inc. Second Quarter 2023 Earnings Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the prepared remarks, the call will be opened for question-and-answer session. As a reminder, this call is being recorded. Now, let me turn the call over to Ms. Jennifer Hills, Vice President Investor Relations. Please go ahead.

Jennifer Hills: Thank you, operator. Let me begin with a reminder that our Safe Harbor disclaimer, which covers today’s call and webcast, contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those discussed on today’s 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 Investors section of our corporate website at everi.com. Because of the potential risks, you are cautioned not to place undue reliance on forward-looking statements. We do not intend and assume no obligation to update any forward-looking statements, which are made only as of today, August 09, 2023.

We will refer to certain non-GAAP financial measures, such as adjusted EBITDA, adjusted EPS, free cash flow and net cash position. A description of each of these non-GAAP measures and a reconciliation to the most directly comparable GAAP measure can be bound in our earnings release and related 8-K today, as well as in the Investors 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 Investors section of our website. On our call today are Randy Taylor, Chief Executive Officer; Mark Labay, Chief Financial Officer; Kate Lowenhar-Fisher, General Counsel; Dean Ehrlich, Games Business Leader; and Darren Simmons, FinTech Business Leader. Now I will turn the call over to Randy.

Randy Taylor: Thank you, Jennifer. Good morning, and thank you all for joining us. In the quarter we reported revenue of 208.7 million, adjusted EBITDA of 96.1 million and free cash flow of 47.7 million. This brings our year-to-date free cash flow to 87.7 million. In the second quarter we used the free cash flow generated along with cash from our balance sheet to acquire certain assets of Video King and to return 40 million to shareholders through repurchase. Our FinTech business continued its strong double-digit revenue with a 13% increase over the prior year period. Our Games business revenue was relatively flat as compared to the prior year, primarily due to lower unit sales in Q2 of 2023, our unit sales in the quarter compared to a strong year for new openings and expansions in 2022.

Our FinTech business continues to perform well with strong double-digit revenue growth driven by growth in dollars delivered to the casino floor for our customers and the expansion of products and services to new and existing customers. This creates a Greenfield of growth opportunity that we believe will provide a runway of high single-digit revenue growth for the full-year that is driven by a healthy pipeline of existing signed orders across our diverse, high-recurring revenue product line, including payments, regtech, loyalty and mobile solutions. As we reinvest for growth, we are executing on our multiyear strategy that centers around maximizing value to both the patron and the operator through our digital neighborhood of interconnected touch points, which we expect will grow our total addressable market.

We are also expanding financial access services across, attended, self-service and mobile channels. We can now fully enable cash flows across the casino floor without the need for sign-ups in external caps or through slot system integrations. By leveraging Concierge, our mobile payment product, QuikTicket, our cashless purchase of a traditional gaming voucher. And now QuickTransfer, which allows patrons to deposit their slot tickets directly back to their bank card, we extend cash flows at the tables, slots and our full service kiosk. Our digital wallet continues to gain traction, and we work closely with our customers as they adopt digital and cashless capabilities to provide new financial access products and services to their patrons. The wallet data is compelling with the most mature installed property showing that the wallet accounts more than 10% of their overall cash to the floor.

And the majority of patrons using the wallet have shown a 2.5 ties increase in their number of transactions per visit and a 15% to 20% more dollar spent per visit. We have already added additional revenue generating payment types including Apple Pay, PayPal and QuickTransfer and expect this to grow as patron acceptance of the wallet increases. We remain bullish on the opportunities to grow our business with our recent acquisitions, including ecash, which should drive long-term growth in North American distributed gaming markets. Venuetize is also contributing to our ongoing mobile first initiatives that will grow our base to recurring revenues and expand our market into sports, venues, entertainment, retail, hotel, food and beverage by leveraging our combined capabilities with payments and loyalty.

All of this will be on display at G2E demonstrating our gold standard digital ecosystem of mission-critical products and services. In our Games business we are executing on our extensive new product roadmap. We are moving forward with the introduction of our next generation family of new premium and for sale cabinets over the next several quarters. At the end of the first quarter, we began selling the first cabinet in our next generation family of cabinets, the Dynasty Vue. With this new for sale cabinet and a growing portfolio of game themes, we expect sales of Dynasty Vue to continue to ramp and be an increasing contributor to our game sales in the future. Building on this foundation of additional hardware, we will introduce our next for sale cabinet, a Dynasty Soul and D2E in October.

The Dynasty Soul is a portrait based cabinet with a 49 inch curved screen that includes a more integrated button panel and our most powerful CPU to-date. This cabinet will be available for sale beginning in fourth quarter. However, as we mentioned in our first quarter call, we are seeing slight near-term headwinds. In the for sale category, these headwinds reflect the highly competitive dynamics of our industry in both video and mechanical games. For example, two of the largest suppliers of the history of success in the mechanical real segment have introduced new cabinets for the first time in many years. With the continued great performance of our high denom and low denom mechanical real games, we expect to continue to be a leader in this segment.

Our game content and cabinet roadmap for both video and mechanical games should provide longer-term growth in all our game segments, despite the increased competition. Consistent with the first quarter of 2023, premium cabinets in our installed base continue to experience a slightly higher churn than we originally anticipated. We expect to launch our new premium Dynasty Dynamic and PC Reserve cabinets in late in third quarter. The introduction of these two cabinets was accelerated in our hardware plan so that we could introduce them both ahead of G2E and provide new cabinets, premium cabinets for install base. Our G2E game content will include the first new game themes developed by our studio in Australia, and we believe this differentiated content will be a great addition to our portfolio of games in the U.S. With tremendous number of new products in both cabinets and game themes, we are looking forward to another successful showing at G2E.

We will continue to utilize a portion of our strong free cash flow to make internal investments in game development, our FinTech digital neighborhood and adjacent categories to set us up well for the future growth. This strategy has returned a 30% year-over-year increase in digital game content revenues, as we continue to scale that business. Our cast deployment has also allowed us to expand into Bingo with our acquisition of Video King, continued our expansion in the historical horseracing, propel our planned entrance into distributed gaming markets in 2024, and support the expected launch of [indiscernible] our omnichannel mobile gaming payments and loyalty platform. On May 1st, we closed our asset acquisition of Video King, which provides an opportunity for Everi to leverage our sales force and relationships to grow the existing business and ultimately expand our gaming content into an additional platform.

The integration of these assets is well underway. We have already begun to add new customers during the second quarter, and we have seen increased interest from existing Everi customers in our new Bingo products. We expect to continue to integrate Everi products with those acquired from Video King, including offering side games on the Bingo tablets, integrations into kiosk, and ultimately the addition of our cashless wallet solutions to provide incremental growth opportunities. Now let me turn the call over to Mark, who will provide more insight into our second quarter financials and current outlook for the remainder of the year.

Mark Labay: Thanks, Randy. Let me begin by adding a little more color to our operating results. We reported year-over-year quarterly revenue growth of 6%, driven by a 13% growth in FinTech revenues and a 1% growth in games. FinTech continued to see a strong growth in financial access services revenue, which grew by five million or 9%. We delivered nearly 11.7 billion in financial value to our customers and their patrons, which is a 10% increase compared to the second quarter of last year. Additionally, software and other revenues increased by 26% and hardware sales increased by 6% for the prior year. Adjusted EBITDA for the FinTech segment increased 6% year-over-year to 38 million inclusive of the impact of higher cost of labor and increased R&D spending.

Within the game segment, adjusted EBITDA was 58 million compared with 59 million a year-ago. Our installed base increased 348 units from last year’s second quarter, but declined by 29 units sequentially. We believe any further declines in our installed base in the second half of the year will be less than 1% of the units installed as of the end of June. Consolidated gross margin expanded by a hundred basis points to 79.1%, primarily due to a mixed shift to higher margin, gaming operations and financial access services from the lower margin gaming equipment and hardware sales. Consolidated adjusted EBITDA rose 2% year-over-year to 96.1 million. Adjusted EBITDA as a percentage of revenues was 46% compared with 48% a year-ago reflecting higher payroll expenses and R&D spending as we continue to invest for future growth.

We expect adjusted EBITDA as a percentage of revenue to remain in the mid to high 40% range through the end of this year. Our adjusted EPS was $0.41 in the second quarter compared to $0.48 a year-ago. A lower income tax provision and a decrease in our diluted shares outstanding primarily from our share repurchase activity, partially offset the impact from substantially higher net interest expense incurred during the quarter as a result of rising interest rates. Interest expense in the quarter was 20 million, an increase of 12 million from the prior year quarter. As a reminder, we have 400 million of outstanding unsecured notes at a fixed rate of 5% and 586 and a half billion of term loan that has a variable interest rate. Also included in interest expense is the cash usage fee on our ATM Vault Cash arrangements.

Our estimated full-year expense for our vault cash is expected to be approximately 20 million compared to only nine million in 2022 at the end of the quarter. Our weighted average borrowing rate was approximately 6.6%. Based on our expectation for strong free cash flow, we remain comfortable with our current level of debt and our current cash interest costs. We ended the second quarter with total net leverage at 2.5 times trailing adjusted EBITDA, which remains in line with our 2.5 to 3 time target range. We expect to remain at or below this target throughout 2023. Free cash flow generated in the quarter was 47.7 million compared with 49.8 million a year-ago. The decline was primarily the result of seven million of increased net cash interest costs, partially offset by six million of lower capital expenditures.

Although Randy discussed our share repurchase activity in the quarter, I would add that, since we began repurchasing shares of our common stock in May of last year, we have acquired 7.7 million shares for approximately 124 million of total common stock. These repurchases have more than offset new share issuances from our employee equity incentive plan, and have been the primary driver of the 5,000,000 share or 5% decline in our fully diluted shares outstanding in the second quarter. We have a 140 million remaining available to repurchase under the $180 million authorized by the Board in May. We expect to maintain our current capital allocation strategy and continue to focus first on the direct investments in our business that generate long-term growth opportunities.

Second, we will seek acquisition opportunities that support our product development and growth objectives. And finally, after making these investments, we expect to utilize a consistent approach towards share repurchases, returning a portion of the excess free cash flow to our stockholders. Moving on to our outlook. With an expectation for modest growth in the second half of 2023, above the 188.5 million of adjusted EBITDA generated for the first half, we have revised our annual guidance. Our revised expectation is for adjusted EBITDA of between 380 million to 386 million and free cash flow of between 147 million to 153 million. This level of free cash flow remains strong and the midpoint applies we are currently trading at a free cash flow yield of approximately 12%.

Due to the increased benefit of certain discrete items related to the current year, we have reduced our expectation for the provision for income taxes on a GAAP basis to 18% to 20% of pretax income. As a result of all these changes, we have raised the range for net income and our outlook for adjusted EPS. We now expect annual net income of between 98 million and 106 million and adjusted EPS of a $1.62 to $1.67 per diluted share. This estimate is based on the shares outstanding at the end of the second quarter and does not reflect any potential benefit from future share count reductions due to additional share buyback activity. And with that, I will now conclude our prepared remarks turn the call over to our operator for questions.

Q&A Session

Operator: Thank you. [Operator Instructions] And our first question comes from the line of David Katz with Jefferies.

David Katz: Hi. Morning, everyone. It is still morning for me and for you. If you could just give us a sense on the premium participation side, sort of where we are. I know we have talked about this, say, 90-days ago. What we are going to see some new product as we get into G2E. And I just want to be clear that those are going to be relatively ready to hit the market ready to hit the market and start to sell from that point on. Help us understand how the sort of unit flow and wind per day flow could conceivably roll if it meets your expectations.

Randy Taylor: So I think you are a couple things. So we have two premium cabinets that are actually going to be out before G2E. And so we expect to see some of those placed at the end of this quarter, early fourth quarter. And then we have two more premium cabinets coming out one in – I think early in Q1 of 2024 and one in Q2 of 2024. And look, we have the content in the roadmap to support those. So, my first would be, I think we talked about the churn. There is more churn. From my viewpoint, we only really lost 29 units in the quarter. As Mark said in his opening comments, we think, we may go back less than or around 1% as of where our install base was at the end of the year. So to me, it is important to hold our install base, which I think we are doing.

Our win per day is still above that 37, which is what we told you about, or what we have talked about. And that appears to be where we will be for the full-year. That is our expectation. So, I think there is positive that should come out of these new units that get placed in the fourth quarter, late third quarter. Again, there won’t be that is just two products and then the other products come out next year. So my expectation, I think our expectation is towards the end of 2023 and clearly a 2024 turnaround is when we will see win per day start to, to creep up and when we see the install base go back to growth. So I think we have got a great amount of new hard work coming out. And I think the fact that we are holding and people are waiting for new content in the new cabinets is a good sign and should show growth again towards the end of the year and into next year.

David Katz: And if I can just follow quickly on the topic of leverage, and I know there is been, you did share a fair amount of commentary around capital allocation but as we look at sort of what your ideal leverage is or should be, do you feel like that target level is? And this is not a leading question in any way, do you feel like that level, I have you somewhere between two and 2.5 turns, is that the ideal place for you to sit or any thoughts on whether you could conceivably be lower or potentially higher for some reason?

Randy Taylor: Yes, I think we like the between two and 2.5 times. Could we go a little higher? I don’t think that bothers. I don’t really want to go above much more than maybe two and three quarters, but I like the 2 to 2.5 times. And so I think that that is what we will continue to shoot for. And so I think we are in a good position from a leverage standpoint, David. So I don’t see really any change in that unless there is something opportunistically comes up.

Operator: Our next question comes from the line of Barry Jonas with Truist Securities.

Barry Jonas: Cash access business same-store trends sounded really solid despite flattish DGR growth across the market. Can you maybe just help us out better understand that relative outperformance are you gaining market share? And any color would be helpful.

Randy Taylor: I will add a little bit and then Darren can probably correct me. But I would say a couple things. We do continue to win more than we than we lose, Barry, that does help our overall growth in the cash access? I would say, what we have been seeing on a same-store is that, low to mid single-digit growth in cash to the floor. So I think that is probably more in-line with GGR, but from our standpoint, why we were performing better is, I think a couple of things. One, just our ability to win more than we lose. And second of all, just our ability, to I think process more transactions with how we do our cash access. It is just we believe we have better products, better networking, and it just allows us to put more cash to the floor. So I think it is in-line, but we expect it to perform better than in the market.

Darren Simmons: That is perfect, Randy. That is good.

Barry Jonas: Great. And then just was hoping to get a little more color on Video King. How integration is progressing? And also, help us think about the contribution it is adding to EBITDA guidance, at least relative to what you were thinking last quarter, if there is any change. Thanks.

Randy Taylor: Sure. Look, I would say the integration is going really well. I actually visited, that acquisition a couple months ago. I think it is a really tight group. They are well run. We have someone separate from this team, gentleman named Tim Richards, who oversees that. He was keen a big part of the actual acquisition itself. So far, the integration has gone very well and we are actually seeing growth more than what we had expected or projected at the acquisition. Mark, do you want to add anything on what we had in the guidance? I’m not sure that how much we provide?

Mark Labay: I think we haven’t really provided any explicit guidance, Randy. But we certainly, I think as we have talked about the acquisition, we kind of framed out that we think it could be seven million or so EBITDA contribution on a annualized basis for us. And again, we think there is tremendous opportunities to take that core product and expand it our existing customer set and really see some nice growth in future periods as we get it integrated and get some of our other products layered in on.

Operator: Our next question comes from the line of Jeff Stantial with Stifel.

Jeff Stantial: Good morning guys. Thanks for taking our questions. Starting off here on the slot sales side of things, which appears to be sort of the main incremental takeaway relative to the one we last spoke. Randy, Dean, whoever wants to take this, could you just maybe add some color on what specifically you see us driving some of the softness you are calling out for the back half? Are you seeing a slower ramp in Dynasty Vue than you had previously modeled? Is it more of the competition you are seeing in Steppers? Is it just competition broadly speaking? Just any additional context to help to frame this shift and expectations would help. Thanks.

Randy Taylor: Sure, Jeff. And then I think you have nailed it pretty much. I would say two things. Probably not on that. One, as we looked at the back half of the year, a couple of things, right? We had a really strong back half of the year in 2022, and that included a fair amount of Steppers. And as we went into, Q1, we still had a very nice share of Stepper sales. Q2, we saw a decline in that and look. We had always expected that there would be some pressure on our mechanical cabinet sales, and that happened in Q2. We think really perators are divvying that up more than they have in the past. I think we probably got more than our fair share in the past where they now have a product that, I think operators are sharing. So the real impact from my standpoint is that, we had expected a better amount of sale of steppers in the back half.

And now as we see Q2 wrapping up, we expect that is going to be less, I think the video product is ramping. And we had thought that ramp would kind of offset the stepper impact, but that is been a little bit more, and so it is not quite offsetting it. We know we have a new for sale coming at the end of this year. So I still think there is a lot of growth opportunity for us. And I would say, look, our product in the mechanical is still doing very well. I mean, we rank high in IRS in both high denom and low denom. So, we are happy with the product, but it is the – I will say the amount of impact on our projections for the back half of the year really needed to be revised based on what we saw in Q2.

Jeff Stantial: And then sticking on this theme, but shifting and thinking about things a little bit more strategically given what you are seeing some of these incremental, we will call it changes in operator purchasing behavior or how they are spreading out their – how they are purchasing between the different suppliers? Does this change your R&D strategy at all, I guess what I mean by that is does it make sense to start to invest a little bit more in different categories than others as your view of the market continues to evolve, and let me know if that makes sense.

Randy Taylor: Yes, well, no, you are spot on, Jeff. And it is where I think, the game team has been, and I mean, Dean can add a little bit, but clearly we know that our Greenfield is in video and that is where we are putting our resources to. We have a great share and a great product in the stepper side. And we do feel like we have got new cabinets and we have got content to back that up. So the R&D is focused on the video because we think that is where we can make our most of our progress and growth. I don’t know if you have anything else to add in there, Dean?

Dean Ehrlich: Nope, you covered it.

Operator: Our next question is from Chad Beynon with Macquarie.

Chad Beynon: On the FinTech side, just a high level question. There is been some movement, I guess in the last quarter and six months from some of your competitors. Just regarding how big of a push they are making in into this space. Has anything changed in terms of how you view partnerships in the industry or kind of your outlook on what the FinTech business can be in the next two to three years as acceptance takes further hold.

Randy Taylor: I think I can understand it. Look, I would say it is still competitive. I know we have had a couple of changes where a competitor may be being a little more aggressive. But I will say there is every deal that we go into, Because I listen on the calls with Darren, and Darren and I talk quite a bit. It is competitive, whether they are a smaller provider or a bigger provider. So, I think, it will always be competitive, but we go with our suite of products and our ability to provide more and in our view, better products. So, as I said earlier, we generally win more than we lose and it really doesn’t change our outlook on FinTech. We think it is a great business. We think that cashless will continue to grow. We think that wallet, it will continue to grow.

We think that while it will continue to grow and we think the overall omnichannel with our byproduct, and just adding loyalty and payments to that and hopefully adding payments to Bingo. I think there are a number of other places that FinTech can grow. And so it really hasn’t changed our, I will say, bullishness on the FinTech side of the business.

Darren Simmons: Chad, I think what I would just add a little bit is, what we have been working on as far as again, our overall sort of digital strategy, which includes cashless and overall just a lot of mobile strategies. We continue to create a tremendous amount of value in the diverse and robust product set that we have, as we kind of mentioned in the call there. And so, it really gives us, in my view a differentiated platform to offer to our customers because it is just not a one trick pony about an app that could do transactions, right, because the reality is, how it is integrated across the ecosystem that becomes very important. And, for example, something like a video game, we obviously believe that we have got significant opportunities to bring what I would say is our content into that platform, which is payments and loyalty and other things that we believe will create again more tremendous value across, what we provide to our customers.

Because, again, the more customers take with our products, the greater the value in terms of what we are providing and so, long-term with FinTechs, again, with one of the acquisitions that we made with Venutized last year. Again, we are really thinking about just not the gaming floor because what we are seeing from operators is, trying to create value just across their enterprise, which includes stepping outside of that, which is hotel, retail, food and beverage, the venues, sports, sports relationships, sports teams relationships, league relationships. And so that is our long-term strategy that we have been executing now for different years. And so, I think we really start to gain traction that, as we move forward. And so that is been our goal and that is what we have been executing on.

And as Randy said, I think we have got a significantly different new product that we have been investing for a long time, and it gives us the layup for long-term.

Chad Beynon: Thanks. Appreciate that, Darren. And then on the iGaming business, some nice sequential growth. I know you guys have talked about launching in a bigger way into UK, which is the biggest market in the world currently for iGaming. Anything you can talk about there in terms of partner signings or titles or games that are kind of working in the market? And how we should think about when you can have a bigger presence in this market and what it would mean to financials in 2024 and beyond? Thanks.

Randy Taylor: I think the one thing that I can add, and I think we have talked about it. We do have our UK license now. But integrating in the UK is a little different than how we are doing here in the in the U.S. So I think, we are on plan, but that plan really is probably late this year into next year. But I think, once we get in the UK, it allows us then to expand outside of that and grow that digital business. And we are still very excited about getting outside of just the U.S., getting in the UK. But I would say we are on target, on plan, and I’m very pleased with where we are right now on the digital side.

Operator: Our next question comes from the line of Edward Engel with ROTH Capital Partners.

Edward Engel: Hi. Thank you for taking my question. You have talked about some product releases in the first half of next year as well. Were any of those originally expected to kind of happen in the second half of this year? And then would they maybe push back just a little bit.

Randy Taylor: I think, we are talking about the premium products and – that is really not the case. We actually pulled forward a couple of the cabinets into the third quarter of this year. I think we anticipated having to have new cabinets for our install base. And I think the games team was set to debut everything at G2E, but given kind of the pressure, we pulled those up. But the two bigger cabinets for next year really, I think were planned in the first quarter and second quarter of next year. Our goal is always to show at G2E what we can put in the field prior to summer of the next year. So, you also have to have the content behind that, and that is what we are working on.

Edward Engel: And then I guess kind of bigger picture, I guess, once we kind of get through this little air pocket of product leases kind of in then the second quarter kind when you move into next year and even beyond that, are we going to have a much more consistent kind of cadence of product releases?

Randy Taylor: That would be our intention, most definitely. I mean, look, I would say I will stop there. That is our intention, we would have a much more consistent cadence, did not have so much hardware at one time. But that is where we are at.

Operator: Our next question comes from the line of George Sutton with Craig Hallam.

George Sutton: A question for Darren, I admittedly have never run a casino, but I think if you laid out the statistics that you are seeing with the mobile wallet where you are getting a 15% to 20% spend lift with those customers, I’m just not sure why I wouldn’t be aggressively adding a mobile wallet. So you can just walk through the thought process that you are hearing back as you are pitching this, offering.

Darren Simmons: Look, I think the data that we have is very compelling and as we said in the prepared remarks we talked about what some of the more mature properties that we have converted to cash flows, and in fact, I think the highest that we have is about 14% of the overall cash to the floor has gone to wallet. Those are the trends that we are seeing now. And so, I would say the conversations are great that we are having with our customers. We have got a terrific pipeline. We are expecting to add a number of properties and operators here through the end of this year. So, I don’t know if there is any real difficulty with the conversations. It is just they are all sort of again retrenching after coming out of our 2021 and 2022 sort of change in dynamics of their business and just sort of like getting a cadence and now making those investments for what they need to do and thinking very strategically about it, which we have always said is important, right.

This is just not a one trick thing. It needs to be part of an overall digital strategy. So, I think the conversations are positive. We have got a lot of projects in flight right now, and I think we expect to continue to ramp. Again, not dissimilar to Tito came into the market, right. And it wasn’t an overnight success. It just ramped up over years. We expect the exact same thing because even as you recall, the – data was terrific. I mean, in terms of how it was helping performance. And so, again, I think the same thing makes this compelling, and I think operators are adopting it at sort of the rate that they want to go to as far as their overall strategy, which is what they are all working on.

George Sutton: Great point. A quick question for Mark. You mentioned from a buyback perspective, you would effectively use a portion of your free cash flow to do so. I’m just curious, are you potentially reactive to weakness in the stock? I mean, to the extent that we are seeing weakness today, would that elevate your interest or plans relative to the percentage of free cash flow?

Mark Labay: We have always been pretty clear on our capital allocation strategy that the best investments, the first and foremost investing in building off and within, looking at strategic alternatives in terms of acquisitions, tuck-ins, maybe to accelerate growth, get us into new markets. And that third kind of piece was a share repurchase or returning capital to shareholders. I still believe our stock price is very compelling where we are and we are a great investment in ourselves. So obviously, we look for opportunistic buys of our own stock. And when the stock price is lower, you would expect us to be buying maybe a little bit more. And if it rises, it will be a little bit less.

Randy Taylor: George. I would just say, the answer is yes.

Operator: Thank you. And our next question comes from the line of John Davis with Raymond James.

John Davis: Good morning, guys. Randy and Dean, I just want to touch on the install base for a second. I think if we go back to last quarter, there was hopes that you get back to growth in 4Q. And it kind of seems that now the plan is more flattish. Just curious kind of what the change there and what kind of drove that kind of change in messaging, assuming that that I have it right?

Randy Taylor: It is all semantics, right. John. I think I tried to say, towards the end of fourth quarter, because I just, we didn’t know, and we still don’t know. I would say, I will give you an example. We have a customer that may take some units offline because they are doing a renovation. Those didn’t come out of your install base and then they come back in. What is the churn? We have seen a little bit more churn than we had anticipated, John. So that is one impact to it. Second of all, I think we are trying to be realistic as to the two new products that we have coming out and will they really turn that tide in fourth quarter. Fourth quarter seasonality wise, there is a little bit of a of a struggle as well. So, not that I’m trying to be cute here.

I just would say, look, we always thought that it would be towards the end of Q4. I mean, excuse me, Q4 this year, yes, in 2023, and then really start to move positively in Q4 in 2024. I don’t think so, John. Look, I hate to say I’m pleased with 29 unit pull back. But, I am. I think if we can continue to hold the install base, that is what I’m most concerned about, because I think If we can hold it and then get our new products out there, it really sets us up well for next year, John. So it is not a major change, but, look, it is probably pushing a little bit more into 2024. I’m still hopeful we will see some type of indication maybe in – towards the end of this year just to see if these new products are doing what we want them to do.

John Davis: Okay. No. That is helpful. And then, either Mark or Darren, looks like the yield and the FinTech. So if I just look at, your cash access revenue over the volume process. You know, it is been pretty stable but it was up about four and a half basis points this quarter. Is that cashless anything to call out there? Like is that sustainable? I think, it is back over 50 basis points for the first time in a while in the quarter. Just curious, anything to call out there?

Darren Simmons: I mean, look, I think we are continuing to see a little bit of a pickup in the signature based financial access transactions. So if you think of your credit card usage as opposed to ATMs or on a per product basis, probably a much lower like for like transaction or margin basis. So the faster the credit card picks up the little bit more flow through you get to the bottom line. I wouldn’t say it is a material shift, but we are seeing kind of that shift happening or kind of returning to those pre pandemic levels of outpatient spend money. But other than that, I wouldn’t say there is anything material I would call out for shift.

Operator: We have reached the end of our question and answer session and I would like to turn the floor back over to Mr. Randy Taylor for closing comments.

Randy Taylor: Just like to thank everybody for joining us today. We appreciate your interest in Everi and we look forward to providing you an update at our G2E in October as well as in third quarter for our third quarter results. Thank you.

Operator: Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.