PlayAGS, Inc. (NYSE:AGS) Q4 2022 Earnings Call Transcript

Operator: Thank you. Our next question comes from Chad Beynon with Macquarie. May I proceed?

Chad Beynon: Hi, afternoon. Thanks for taking my question. Just to follow-up, Brad, on the Open More Doors category at the outset, David, you talked about some new markets, Colorado, Minnesota, Missouri these are pretty big markets with good order flow. Does this kind of put you at the point where you’ve kind of colored in all the white space? Are there any markets left after that? And then in €“ could you just kind of remind us when you historically have gotten licensed in markets; how long it takes for you to maybe get close to what your market share is? Thanks.

David Lopez: Yes. Chad, I can take that one. So yes, definitely three good markets for us, that sort of closes the book so to speak from a level of materiality perspective of markets where we could get license. So we’re pretty much ready to roll everywhere now in the U.S. From a timing perspective, I mean, I think conservatively speaking, probably looking more to the back half, right? There’s a two-fold process in licensing. One is to get your license and then you have to submit your products to get them licensed as well. So we’ve already started that process here in Q1 on the product side. So I think I’d expect to start to see some lift there in the back half. The beauty of two of those markets is, they’re generally dominated by operators that we have existing relationships with in other jurisdictions.

If you look at Missouri, Colorado, there’s a lot of sort of multi-jurisdiction operators in those markets, so they know our product. And so we can hit the ground running there. And one other thing I would just add on your opening doors comment. I think it ties into this a little bit. If you look at it today, our sales team is effectively double the size it was in 2019. We have a new Head of Corporate Accounts a position that we didn’t have back in 2019. We have regional sales directors overseeing all the regions. Our touch points are greater than they’ve ever been. And so that’s really playing a key role in helping us sell into more customers. And I think you see that in the numbers.

Kimo Akiona: Just to add a tiny bit there, obviously our sales teams firming up nicely, and I think we’ve got a lot of strong players, but obviously with core games performing, and some of the figures that on multiples of three times and up and our premium business doing very well. I think between the salespeople and the performance of the games with opening the doors should be rather quick and easy. But salespeople listing, I don’t know that they’ll agree easy, but the games are doing fantastic. So, we’ve got great opportunities there.

Chad Beynon: Thank you. Appreciate it. And then follow-up question just on your leverage guidance, which kind of implies, EBITDA I guess somewhere between 2022 EBITDA and 2019 EBITDA, was there any assumption for kind of a Texas windfall? I know we’ve talked about that over the past couple quarters. Could you just kind of update us in terms of where that is in the process and if anything’s factored into to your outlook there? Thanks.

Kimo Akiona: No. Hey, thanks Chad. No windfall revenue in our numbers. As a matter of fact, when we do our planning over the next three and four years, we just take windfall stuff out of the equation and we plan all our growth absent of that. Not that we don’t think it’s going to happen, but we don’t like to count on things like that. As far as approvals, and I think you’re referring specifically more to, one of the tribes in Texas nothing as of yet. They’re still in the planning phases. We have always thought that it would be sometime in the first half, so we’re sticking to that timeframe. We think we’ll hear about their plans sometime in the first half of this year. And obviously when that happens, I think it’ll not only come from us, but it’ll be rather public and they’ll be announcing that via press release when that time comes. But none of our numbers do not include Texas expansion.