Casinos & Hotels
PlayAGS Enters the Market With a Bang
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PlayAGS Inc. (NYSE: AGS) entered the market with a bang on Friday in its initial public offering. The stock entered the market at $17 per share, above its original pricing of $16 per share and right in the middle of its expected pricing range. The company is selling 10.25 million shares with an overallotment option for an additional 1.5675 million shares. At the $16 price, the entire offering is valued up to roughly $189 million.
The underwriters for the offering are Credit Suisse, Deutsche Bank, Jefferies, Macquarie Capital, Merrill Lynch, Citigroup, Nomura, Stifel, SunTrust Robinson Humphrey, Roth Capital Partners, Union Gaming, Williams Capital Group and Apollo Global Securities.
This is a leading designer and supplier of electronic gaming machines (EGMs) and other products and services for the gaming industry. Founded in 2005, PlayAGS historically focused on supplying EGMs, including slot machines, video bingo machines and other electronic gaming devices, to the Native American gaming market, where it maintains an approximately 20% market share of all Class II EGMs.
Since 2014, the company has expanded its product lineup to include Class III EGMs for commercial and Native American casinos, table game products and interactive products.
The expansion into Class III and ancillary product offerings has driven strong growth and momentum in revenue, EGM adjusted EBITDA and its installed base, which have increased by 173%, 158% and 152%, respectively, each year since 2014. For the past 52 weeks, roughly 83% of total revenue was generated from recurring contracted lease agreements whereby PlayAGS places EGMs and table game products at customers’ gaming facilities under either a revenue sharing agreement or fee-per-day agreement, or from recurring revenue generated by these interactive gaming operations.
The company intends to use the net proceeds from this offering to pay down the debt associated with its Cadillac Jack acquisition. The remainder of the proceeds will be put toward working capital and general corporate purposes.
Shares of PlayAGS were last seen up about 10% at $17.68, with a range of $16.66 to $17.75 on the day so far. About 3.0 million shares have moved on the day thus far.
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