10-K: Everi Holdings Reports Mixed 2024 Results Amidst Pending Acquisition by Apollo

Everi Holdings' 2024 results reflect a decrease in revenue and operating income, influenced by macro-economic factors and transaction-related costs, as the company anticipates being acquired by Apollo.

Summary

• Everi Holdings' 2024 total revenues decreased by 6% to $757.9 million, primarily due to lower Games revenues.
• Games revenues declined by 12% to $378.9 million, attributed to a reduction in daily win per unit and a decline in the average number of units in the installed base.
• FinTech revenues remained relatively flat at $379.0 million, with growth in financial access services and software offset by a decrease in hardware sales.
• Operating income decreased by 50% to $89.2 million, with the operating income margin falling to 12% from 22% in the prior year.
• The decrease in operating income was primarily due to transaction and related costs, a charge associated with a decline in the expected utility of certain firm purchase commitments, and rising expenses for payroll and software licensing.
• Net income decreased significantly to $15.0 million from $84.0 million in the prior year.
• The company is in the process of being acquired by Voyager Parent, LLC, a newly formed holding company owned by funds managed by affiliates of Apollo, in an all-cash transaction expected to close in 2025.
• Everi stockholders will receive $14.25 per share in cash as part of the acquisition.

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative due to declining financial performance, offset by the pending acquisition which provides a cash benefit to shareholders. The high transaction costs and uncertain macro-economic environment contribute to the lower score.

Positives

• FinTech revenues saw growth in financial access services and software, indicating strength in those areas.
• The company continues to invest in research and development to drive future growth.
• The pending acquisition provides stockholders with a cash payment of $14.25 per share.

Negatives

• Total revenues decreased by 6% due to lower Games revenues.
• Games revenues decreased by 12% due to lower daily win per unit and a smaller installed base.
• Operating income decreased by 50%, and net income decreased significantly.
• The company incurred significant transaction costs related to the pending acquisition, impacting profitability.

Risks

• The pending acquisition could adversely impact the business, financial condition, and results of operations.
• The company faces macro-economic volatility, global instability, inflationary pricing pressures, and interest rate movements.
• The company is subject to extensive governmental gaming and financial services laws and regulations, which are subject to change and uncertain application.
• The company faces intense competition in the gaming industry.
• The company is exposed to cybersecurity threats and potential data breaches.

Future Outlook

Following the closing of the Proposed Transaction, IGT Gaming and Everi will be privately owned companies that are part of one combined enterprise, and Everis common stock will be delisted from the New York Stock Exchange and deregistered under the Securities Exchange Act of 1934, as amended.

Industry Context

The gaming industry is dependent on discretionary consumer spending and is subject to intense competition. Consolidation among customers or competitors could have a material adverse effect on revenues and profitability.

Legal Proceedings

• Following the announcement of the Proposed Transaction, three purported stockholders of Everi filed complaints alleging that the definitive proxy statement for the Special Meeting of Everi stockholders omitted or misstated material information with respect to the Proposed Transaction and seeking supplemental disclosures and other equitable and legal relief.

Stakeholder Impact

• Shareholders will receive $14.25 per share in cash upon completion of the acquisition.
• Employees face uncertainty regarding their roles and the future direction of the company post-acquisition.
• Customers may experience changes in product offerings and service delivery as a result of the acquisition.

Next Steps

• The company expects the acquisition by Voyager Parent, LLC to close in 2025, pending regulatory approvals.

Key Dates