UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 12, 2017 Everi Holdings Inc. (Exact name of registrant as specified in its charter) Delaware 001-32622 20-0723270 (State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.) incorporation) 7250 S. Tenaya Way, Suite 100 Las Vegas, Nevada 89113 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (800) 833-7110 N/A (Former name or former address if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORTPursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 12, 2017
Everi Holdings Inc.(Exact name of registrant as specified in its charter)
Delaware 001-32622 20-0723270(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation)
7250 S. Tenaya Way, Suite 100Las Vegas, Nevada 89113
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (800) 833-7110
N/A
(Former name or former address if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant underany of the following provisions: ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01. Regulation FD Disclosure.
In connection with Everi Holdings Inc.’s (the “Company”) previously announced proposed refinancing of its outstanding $335million aggregate principal amount of Senior Secured Notes due 2021 and its existing First Lien Term Loan that matures in 2020,representatives of the Company will make presentations to potential lenders that include the slides attached to this report as Exhibit 99.1(the “Lender Presentation”) and incorporated herein by reference.
The Lender Presentation contains proposed debt terms, which have not been negotiated and remain subject to change. The
consummation and actual terms of the proposed refinancing are subject to a number of factors, including market conditions, negotiationand execution of definitive agreements and satisfaction of customary closing conditions. There can be no assurance that the refinancingwill occur, or, if it does, as to the terms of the refinancing.
The Lender Presentation also includes certain financial measures that are not in accordance with accounting principlesgenerally accepted in the United States (“GAAP”) and a discussion of the reasons why the Company’s management believes thatpresentation of the non-GAAP financial measures provides useful information to investors regarding the Company’s financial conditionand results of operations. Reconciliations of the non-GAAP financial measures to GAAP appear in the Lender Presentation and certainearning releases located on the Company’s website , as discussed further in the Lender Presentation attached hereto as Exhibit 99.1.
The preliminary unaudited 2017 first quarter results and last twelve months ended March 31, 2017 results set forth in the
Lender Presentation are derived from preliminary internal financial reports and are subject to revision upon the completion of theCompany’s customary financial reporting process, including customary reviews, internal audit procedures and approvals. Accordingly,actual results may differ from these preliminary results and such differences may be material.
This report, including the Lender Presentation, contains “forward-looking statements” within the meaning of the U.S. PrivateSecurities Litigation Reform Act of 1995. These statements are based upon management’s current expectations, assumptions andestimates and are not guarantees of timing, future results or performance. These forward-looking statements involve certain risks,uncertainties and other factors that could cause actual results to differ materially from those contemplated in this report and the LenderPresentation.
The information contained in the Lender Presentation is summary information that is intended to be considered in the context of
the Company’s Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, bypress release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the informationcontained in this report, although it may do so from time to time as its management believes is warranted. Any such updating may bemade through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
The information set forth in this Item 7.01 and in the attached Exhibit 99.1 is being furnished in this report and shall not bedeemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwisesubject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933,as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Document
99.1 Lender Presentation, dated April 2017.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed onits behalf by the undersigned hereunto duly authorized.
EVERI HOLDINGS INC.
Date: April 12, 2017 By: /s/ Todd A. ValliName: Todd A. ValliTitle: Senior Vice President, Corporate Finance and Chief Accounting
Officer
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Exhibit 99.1
Exhibit 99.1
LenderPresentationApril 2017
DisclaimerForward-LookingStatements;Non-GAAPFinancialMeasures Thispresentationcontains“forward-looking”statementswithin themeaning ofSection 27A ofthe SecuritiesAct of 1933, asamended (the“SecuritiesAct”), Section21E of theSecuritiesExchange Actof 1934, asamended (the“ExchangeAct”), and thePrivateSecuritiesLitigationReform Act of1995. Fromtime to time,we alsoprovideforward-lookingstatements inother materialswe release tothe public, aswell as oralforward-lookingstatements. Wehave tried,whereverpossible, toidentify suchstatements byusing wordssuch as“anticipate,”“believe,”“expect,”“intend,”“estimate,”“project,”“may,”“should,”“will,”“likely,” “willlikely result,”“willcontinue,”“future,”“plan,”“target,”“forecast,”“goal,”“observe,”“seek,”“strategy” andother wordsand terms ofsimilarmeaning.Forward-lookingstatements areneitherhistorical factsnor assurancesof futureperformance.Instead, theyare based onlyon our currentbeliefs,expectationsandassumptionsregarding thefuture of ourbusiness, futureplans andstrategies,projections,anticipatedevents andtrends, theeconomy andother futureconditions.Becauseforward-lookingstatementsrelate to thefuture, they aresubject toinherent risks,uncertaintiesand change incircumstancesthat are oftendifficult topredict andmany of whichare beyond ourcontrol. Ouractual resultsand financialcondition maydiffermateriallyfrom thoseindicated inforward-lookingstatements.Importantfactors thatcould causeour actualresults andfinancialcondition todiffermateriallyfrom thoseindicated inthe forward-lookingstatementsinclude,withoutlimitation, ourability togenerateprofits in thefuture; ourability toexecute onmergers,acquisitionsand/orstrategicalliances,including ourability tointegrate andoperate suchacquisitionsconsistent withour forecasts;expectationsregarding ourexisting andfuture installedbase and winper day;expectationsregardingdevelopmentand placementfeearrangements;inaccuracies inunderlyingoperatingassumptions;expectationsregardingcustomers’preferencesand demandsfor futuregamingofferings;expectationsregarding ourproductportfolio; theoverall growthof the gamingindustry, ifany; our abilityto replacerevenueassociated withterminatedcontracts;margindegradationfrom contractrenewals; ourability tocomply withthe Europay,MasterCardand Visaglobalstandard forcards equippedwith securitychiptechnology;our ability tointroduce newproducts andservices,includingthird-partylicensedcontent;gamingestablishmentand patronpreferences;expendituresand productdevelopment;anticipatedsalesperformance;employeeturnover;national andinternationaleconomicconditions;changes ingamingregulatory,cardassociation andstatutoryrequirements;regulatory andlicensingdifficulties;competitivepressures;operationallimitations;gaming marketcontraction;changes to taxlaws;uncertainty oflitigationoutcomes;interest ratefluctuations;businessprospects;unanticipatedexpenses orcapital needs;technologicalobsolescence;and those otherrisks anduncertaintiesdiscussed inour mostrecent AnnualReport onForm 10-Kfiled with theU.S. Securitiesand ExchangeCommission.In light ofthese risks anduncertainties,there can be noassurance thatthe forward-lookinginformationcontained inthispresentationwill in facttranspire orprove to beaccurate.Readers arecautioned tonot to placeundue relianceon theforward-lookingstatementscontainedherein, whichare based onlyon informationcurrentlyavailable to usand speak onlyas of the datehereof.AdditionalNotes Thispresentationcontainsindustrymarket data,industryforecasts andother statisticalinformation.Suchinformationhas beenobtained frompubliclyavailableinformationand industrypublications.Everi has notindependentlyverified suchinformationand makes norepresentationsas to theaccuracy ofsuchinformation.Non-GAAPFinancialMeasures Inorder toenhanceinvestorunderstandingof theunderlyingtrends in ourbusiness and toprovide forbettercomparabilitybetweenperiods indifferent years,we areproviding inthispresentationAdjustedEBITDA andAdjustedEBITDAMargin, whichare notmeasures ofour financialperformanceor positionunder UnitedStatesGenerallyAcceptedAccountingPrinciples(“GAAP”).Accordingly,these measuresshould not beconsidered inisolation or asa substitutefor, and shouldbe read inconjunctionwith, our netearnings (loss),operatingincome (loss),basic ordilutedearnings (loss)per share andcash flow dataprepared inaccordancewith GAAP.Everi definesAdjustedEBITDA asearnings (loss)before interest,taxes,depreciationandamortization,non-cash stockcompensationexpense,goodwillimpairmentcharges,accretion ofcontract rights,write-down ofnote receivableand warrant,loss on the saleof the aircraft,acquisition andother costsrelated tomergers andpurchaseaccountingadjustments,separationcosts related tothe Company’sformer CEO,andmanufacturingrelocationcosts less abenefit fromone-time legalsettlementproceeds.Everi presentsAdjustedEBITDA as ituses thismeasure tomanage itsbusiness andconsiders thismeasure to besupplementalto its operatingperformance.Everi alsomakes certaincompensationdecisionsbased, in part,on itsoperatingperformance,as measured byAdjustedEBITDA; andits creditfacility, seniorsecured notesand seniorunsecurednotes requireEveri tocomply with aconsolidatedsecuredleverage ratiothat includesperformancemetricssubstantiallysimilar toAdjustedEBITDA. WedefineAdjustedEBITDAMargin asAdjustedEBITDAdivided byrevenues. Areconciliationof Everi’s mostdirectlycomparableGAAPmeasure toAdjustedEBITDA andAdjustedEBITDAMargin isincluded inEveri’s earningreleaseslocated onEveri’swebsite atir.everi.com.Additionally, areconciliationof eachsegment’soperatingincome (loss)to AdjustedEBITDA isalso included.On a segmentlevel,operatingincome (loss)per GAAP,rather than netearnings (loss)per GAAP, isreconciled toAdjustedEBITDA asEveri does notreport netearnings (loss)by segment. Inaddition,AdjustedEBITDAMargin isprovided on asegment level.Managementbelieves thatthispresentation ismeaningful toinvestors inevaluating theperformance ofEveri’ssegments. 2
HistoricalFinancialPerformanceCapitalExpenditures ($millions) TotalRevenue ($millions)AdjustedEBITDA(1) ($millions) CAGR4.1% CAGR6.2% 26AdjustedEBITDA andAdjustedEBITDA Marginare non-GAAPmeasures.Reconciliationsto the mostdirectlycomparableGAAP measurefor historicalperiods can befound inapplicableearnings releaseslocated onEveri’s websiteat ir.everi.comand Pro FormaLTMreconciliationcan be found onslide 27.Historicalperiods for 2012– 2014 reflect thecombinedoperations ofMultimediaGames and EveriPayments Inc. ona Pro Formabasis to reflectthe combinationof the companiesthat occurred inDecember 2014.LTM 1Q17E and1Q17E amountsare based uponthe midpoint ofthe preliminary1Q17managementestimates ofconsolidatedrevenue of $233-$238 million($53 - $55million for theGames segmentand $180 - $183million for thePaymentssegment) andconsolidatedAdjustedEBITDA of$52.0 – $54.0million ($29.5 -$30.5 million forthe Gamessegment and$22.5 - $23.5million for thePaymentssegment).AdjustedEBITDA for FY2015 includes again ofapproximately$4.0 million fromthe sale of certainassets ofPokerTek, anelectronic tablegamesmanufacturingcompanypurchased byMultimediaGames in 2014.Excluding thisgain,consolidatedAdjustedEBITDA wouldhave been $196.4million andconsolidatedAdjustedEBITDA Marginwould have been23.8%. PaymentsGames (3) (3)$4.0 (4) (2) (2)(2) (2) (2) (2) (2)(2) (2) $79.3$71.2 $76.0$77.6 $82.0$87.7 $79.9$106.6 $110.9$118.8 $116.0$117.6 $159.2$177.8 $186.9$200.4 $198.0$205.3 21.2%22.6% 23.6%24.2% 23.0%23.2% 2012A2013A 2014A2015A 2016ALTM 1Q17EMargin $74.6$74.5 $68.0$77.0 $80.8$15.6 $2.0 $0.8$2.8 $11.3 $90.2$76.5 $68.7$79.8 $92.12012A 2013A2014A 2015A2016A CapexPlacement Fees$584.5 $582.4$585.6 $612.6$646.2 $670.1$165.7 $204.2$207.0 $214.1$213.3 $219.1$750.2 $786.6$792.6 $826.7$859.5 $889.22012A 2013A2014A 2015A2016A LTM1Q17E PaymentsGames
Pro FormaAdjustedEBITDA(1)Reconciliation 27Reported andAdjustedEBITDA arenon-GAAPmeasures.Reconciliationsto the mostdirectlycomparableGAAP measurefor historicalperiods can befound inapplicableearnings releaseslocated onEveri’s websiteat ir.everi.com.LTM 1Q17E and1Q17E amountsare based uponthe midpoint ofthe preliminary1Q17managementestimates ofconsolidatedrevenue of $233-$238 million($53 - $55million for theGames segmentand $180 - $183million for thePaymentssegment) andconsolidatedAdjustedEBITDA of$52.0 – $54.0million ($29.5 -$30.5 million forthe Gamessegment and$22.5 - $23.5million for thePaymentssegment).Goodwillimpairment:Based on annualgoodwillimpairmenttesting, theCompanydetermined thatthe carryingamount of itsGames reportingunit exceeded itsestimated fairvalue Accretionof contract rights:Games operationsrevenuesgenerated byplayer terminalsdeployed at sitesunder placementfee agreementsare reduced bythe accretion ofcontract rightsacquiredSeparation costsof former CEO:Legal andseverance costsassociated withthe termination offormer CEO inFebruary 2016Write-down ofnote receivable:Write-down tofair value of anote receivablethat was extendedby MultimediaGames,predecessor toEveri GamesHolding Inc., to apartner Austin-based digital andinteractivecompany whodefaulted on thereceivable Losson the sale of theaircraft:Purchased anaircraft in 2015and upontermination of theformer CEOmade thedecision to sellthe aircraftManufacturingrelocation costs:Costs to relocateand integratecertain Gamesmanufacturingand warehousingfunctions fromLas Vegas andWashington toAustin, Texas (2)EBITDAAdjustmentDetail TotalTotal Total TotalTotal GamesPayments ($millions) 2Q163Q16 4Q161Q17E (2) LTM1Q17E LTM1Q17E LTM1Q17E Net loss($10.8) ($8.3)($217.3) ($5.0)($241.3) Incometax provision(benefit) (7.9)(5.0) 52.6 1.341.1 Interestexpense, net ofinterest income24.7 24.8 24.725.1 99.3Operating (loss)income $6.1$11.6 ($140.0)$21.4 ($100.9)($158.3) $57.4Depreciation andamortization$36.1 $36.5$36.6 $28.2$137.3 $114.7$22.6 ReportedEBITDA (1)$42.1 $48.0($103.4) $49.6$36.4 ($43.6)$80.0Management'sAdjustments 1.Non-cash stockcompensationexpense 1.7 1.42.6 1.4 7.1 1.75.4 2. Goodwillimpairment - -146.3 - 146.3146.3 - 3.Accretion ofcontract rights2.2 2.2 2.2 2.08.6 8.6 - 4.Separation costsfor former CEO -- 1.4 - 1.4 - 1.4 5.Write-down ofnote receivable4.3 - - - 4.3 4.3 -6. Loss on sale ofaircraft 0.9 - - -0.9 - 0.9 7.Manufacturingrelocation costs -- 0.4 - 0.4 0.4 -TotalManagementAdjustments 9.13.6 152.8 3.4168.9 161.2 7.7AdjustedEBITDA (1)$51.2 $51.6$49.4 $53.0$205.3 $117.6$87.7
Current 2017Outlook 2017AdjustedEBITDA(1)expected to be$204 million -$209 millionFactors inCompany’s2017(2) outlookinclude: FY 2017unit salesexpected toincrease 10%+Y/Y with 1Q17unit salescomparable to4Q16 Installedbase at December31, 2017 isexpected to growY/Y Expectsremoval of ~530third-party ClassIII units in 1H17with ~70% ofremovalsreplaced withproprietary ClassII units; shift bycertain Californiatribal customersmoving to ClassIII units fromClass II unitsestimated toresult in loss of100 - 300 unitsfrom installedbase, primarily in1H17 Installedbase to benefitfrom introductionof Class IImechanical reelWAP andpendingintroduction ofClass II videoreel WAP withlicensed brandsin 2H17 DailyWPU in 1H17expected to bebelow 1H16 withimprovementsbeginning in2H17 Paymentsrevenues andAdjustedEBITDA shouldbenefit fromcontinuedimprovement incash to the floorand Company’srecent expansionof its cash accesscapabilities inCanada Sales ofhigher margincomplianceproducts willoffset flat tomodestly lowerkiosk salesAdjustedEBITDA is anon-GAAPmeasure.Reconciliationsto the mostdirectlycomparableGAAP measurefor historicalperiods can befound inapplicableearnings releaseslocated onEveri’s websiteat ir.everi.comand Pro FormaLTMreconciliationcan be found onslide 27. TheCompanyprovidedadditionalfinancial metricsfor 2017 as partof the FourthQuarter and YearEnd earningspress release,which isavailable onEveri’s websiteat ir.everi.com.28
Credit Highlights29 ExtensiveReach and Scale1 Stable andDiversifiedRecurringRevenue Business2 HighlyDifferentiated,ComplementaryProducts 3Powerful, Long-Term CustomerRelationships 4SignificantBarriers to Entry5 Strong TrackRecord ofProprietaryTechnology andInnovation 6SuccessfullyExecuting onBusiness Plan 7Experienced andSeasonedLeadership 8
SyndicationOverview
TransactionTimeline DateActivity April13th BankMeeting /Launch April27thCommitmentsdue fromLenders Early/ Mid MayClose andFundTransaction 31April May SM T W T F SS M T W T FS 1 1 2 3 4 5 62 3 4 5 6 7 8 78 9 10 11 1213 9 10 11 1213 14 15 14 1516 17 18 19 2016 17 18 19 2021 22 21 22 2324 25 26 27 2324 25 26 27 2829 28 29 30 3132 33 34 30 35DenotesHoliday KeyTransactionDate
Term Sheet -Senior SecuredCredit FacilitiesBorrower EveriPayments Inc.Facilities $855million SeniorSecured CreditFacilitiesconsisting of: $35million SeniorSecuredRevolver (the“Revolver”)$820 millionSenior SecuredFirst Lien TermLoan (the “1stLien”) TermRevolver: 5 years1st Lien: 7 years(with a springingmaturity 3months inside ofthe existingSenior UnsecuredNotes if notrefinanced)LIBOR FloorRevolver / 1stLien: 1.0%Amortization 1stLien: 1% perannumMandatoryPrepayments 1stLien: Customaryfor the type oftransactionproposed,including but notlimited to asweep of 50% ofexcess cash flowgenerated, withstep-downs to25% and 0%based on leveragelevels to beagreed VoluntaryPrepayments 1stLien: 101% softcall for 6 months;otherwiserepayable at anytime in whole orin part at par,subject to LIBORbreakage fees andthe payment ofaccrued interestand fees SecuritySecured by firstlien securityinterest insubstantially allassets of existing/ future domesticsubsidiariesGuaranteesUnconditionallyguaranteed byeach existing andsubsequentlyacquired ororganizedwholly-ownedsubsidiary of theCompanyFinancialCovenantsMaximumSecured NetLeverageAffirmative andNegativeCovenantsCustomary forfacilities of thistype 32