PlayAGS reports higher first quarter earnings but sees wider losses

PlayAGS Inc. headquarters. (Google screenshot)

PlayAGS Inc. said Thursday it anticipates higher supply costs — a headwind faced by many businesses because of the pandemic’s economic impact — to continue into the second quarter, likely lowering its profitability ratio.

The Las Vegas-based gaming equipment manufacturer reported its adjusted pretax margin for the three months ending March 31 was 45 percent, down from the 47.5 percent it posted for the same period last year.

“Although we are starting to see wage pressures, global logistics disruption and the price of certain raw materials moderate, we continue to navigate anomalistic inflationary pressures on a handful of electronic components,” PlayAGS Chief Financial Officer Kimo Akiona said during the company’s first quarter earnings call. “As a result, we expect to incur higher average material costs in the second quarter.”

The company said higher materials cost coupled with expenses for its GameON conference in June would negatively impact its pretax margin in the second quarter. But Akiona was quick to note the drop would be a “low water mark” for the year.

“Our production team continues to do an excellent job mitigating these challenges where possible, allowing us to maintain our prepandemic lead times on new orders and fulfill the full extent of demand in our pipeline,” Akiona said.

PlayAGS, a subsidiary of Apollo Global Management Inc., reported first quarter revenue of $72.86 million, up nearly 32 percent from $55.36 million year-over-year. It reported a net loss of $12.59 million, a 63.5 percent increase from the $7.77 million loss it posted from the same period a year earlier.

Total number electronic gaming machines, or slot machines, sold in the first quarter was 937, up 224 percent from the 289 units sold year-over-year and up 15 percent compared with the 815 units sold in the fourth quarter of 2021. The company said its top three sales markets for the first quarter were Florida, New Hampshire and Nevada.

PlayAGS President and CEO David Lopez noted that the company’s table game business delivered record revenue performance for the third consecutive quarter, increasing by 25 percent year-over-year to $3.5 million.

He said the consistent uptick in the number of products sold is a positive sign for the company.

“I believe they simply foreshadow (that) our laser-focused organization can accomplish in the quarters and years ahead from a product and company performance perspective,” Lopez said during a call with investors. “These are exciting times at AGS.”

PlayAGS shares, traded on the New York Stock Exchange, closed down 2.3 percent to $6.36. After hours, the stock price fell by 1.9 percent to $6.24 per share.

Contact Subrina Hudson at shudson@reviewjournal.com. Follow @SubrinaH on Twitter.