Mark Labay - SVP, Strategic Development and IR Michael Rumbolz - President and CEO Randy Taylor - CFO Dean Ehrlich - Games Business Leader Darren Simmons - FinTech Business Leader Harper Ko - General Counsel.

Brad Boyer - Stifel Nicolaus George Sutton - Craig-Hallum Erik Hellquist - Jefferies Brian McGill - Telsey Advisory Group.

Good day, ladies and gentlemen, and welcome to the Everi Holdings Inc. Third Quarter 2018 Earnings Call. I'd like to remind everyone this conference is being recorded. And at this time, I'd like to turn the conference over to Mark Labay, Senior Vice President, Strategic Development and Investor Relations..

Thank you, Greg, and welcome to the call. Joining me today are Mike Rumbolz, our President and Chief Executive Officer; Randy Taylor, our Chief Financial Officer; Dean Ehrlich, our Games business leader; Darren Simmons, our FinTech business leader; and Harper Ko, our General Counsel.

Before we begin, I'd like to remind everyone that the safe harbor disclaimer in our public filings covers this call and our webcast.

Some of the comments to be made during this call contain forward-looking statements and assumptions that are subject to risks and uncertainties, including, but not limited to, those contained in our SEC filings, all of which are posted within the Investor Relations section of our corporate Web site.

These events could cause actual results to differ materially from those described in our forward-looking statements, and they should not be considered an indication of future performance. We do not intend and assume no obligation to update any forward-looking statements.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of today. In addition, this call may refer to certain non-GAAP measures such as adjusted EBITDA and adjusted EBITDA margin.

We reference these non-GAAP measures, because management uses them in part to manage the business and to enhance investor understanding of the underlying trends in our business and to provide better comparability between periods and different years.

We also make certain compensation decisions based in part on our operating performance as measured by adjusted EBITDA, and our credit facility requires us to comply with the consolidated secure leverage ratio that includes performance metrics substantially similar to adjusted EBITDA.

This year, to assist and understand the comparability of our reported 2018 revenue and cost of revenue amounts, we're reporting non-GAAP adjusted revenue and related measures for the prior year periods on a comparable basis, assuming the adoption of new recognition rules under 606.

Beginning for all periods after January 1, 2018, we are now required to net certain amounts as reductions of revenues that had previously been recorded as cost of revenues under ASC 605. For a reconciliation of these adjusted amounts to the as-reported equivalent in our Form 10-Q, please refer to our earnings release.

For more information regarding these adjustments, please see our Form 10-Q for the quarter. For a full reconciliation of our non-GAAP measures to GAAP results, please see our earnings release and related 8-K, both of which have been filed with the SEC and are available on our corporate Web site within the section captioned Investors.

Finally, this call is being webcast. A link to the webcast has been included within the Investor Relations section of our corporate Web site, and a replay of the call will be archived. With that, I'm pleased to introduce our President and Chief Executive Officer, Mike Rumbolz..

Thank you, Mark, and good afternoon, everyone, and thank you all for joining us. This afternoon, we reported our ninth consecutive quarter of year-over-year revenue and adjusted EBITDA growth and our third consecutive quarter of profitability. Third quarter revenue on a comparable basis increased 17.3% to $120.3 million.

Adjusted EBITDA rose 9.6% to $58.3 million, and net income was $2.1 million or $0.03 per diluted share. FinTech revenue and adjusted EBITDA were both quarterly records, and Games revenue and adjusted EBITDA both came in at their second highest levels ever.

Given the strong performance across both of our business segments to date, this afternoon, we reiterated our expectation for full year adjusted EBITDA to be in a range of $228 million to $231 million. Turning now to our third quarter Games business highlights.

Adjusted EBITDA of $31.8 million was the second highest ever for our Games business as we again generated growth across the majority of the segment's key performance indicators.

The 1,165 games sold in the third quarter set a new record for quarterly unit sales since our acquisition of the Games business and represented our second consecutive record quarter for this metric. Third quarter unit sales reflect our highest ever sales of both E43 games and mechanical reel games.

Each of these accounted for approximately 37% of our total unit sales in the quarter. Our installed base of 14,116 units at quarter-end is up 901 units year-over-year and 820 units year-to-date.

The quarter-ending unit count was down 85 units from the second quarter, due primarily to certain customers reducing their overall slot floor size as well as the previously anticipated removal of a portion of our Class II units from a customer in California.

Our premium units at quarter-end were a record 2,840 games, which is up 492 units year-over-year. The Wide-Area Progressive games in our installed base at quarter-end also hit a record of 535 units.

Our proactive management of our installed base and the continued increase in premium units, particularly our WAP units, is driving very healthy increases in our daily win per unit, which improved almost 9% or $2.32 year-over-year, representing the second highest year-over-year increase in this metric.

The investments that we've made in the Games business over the last three years are helping to drive consistently better results. Unit sales are up 23% for the first nine months compared to the first nine months of 2017. And our installed base is up 6% from the end of 2017.

We've generated very strong improvement in daily win per unit in all three quarters of this year. Based on the reception that we received at G2E for our newest products, it's clear that our strategic road map is being executed at the highest level, and this gives us confidence in our prospects for continued growth.

Our product road map includes the planned introduction of at least one new cabinet each year. For 2019, we expect to introduce our 43-inch dual-screen curved Empire DCX cabinet for our premium segment. Our road map also includes the introduction of a consistent cadence of new game themes to continue to support our current hardware platforms.

This includes a brand-new linked bank progressive based upon our highly successful Lightning Zap to support the E43. Additionally, we expect different merchandising innovations and new game themes for our Player Classic 3.0 reel mechanical cabinet to support our trend of strong unit sales.

This is a segment of the slot floor where we clearly have demonstrated our position as an industry leader. Another example of our success with new product introductions is evident in the positive reaction and reception that we've received on the initial success of our Renegade 3600. This product was recently launched in four casinos.

While it's always very early, this unique hardware platform, which features bonus rounds played on three large overhead video reels as part of its eye-catching sign package, is off to a very strong start, with daily win per unit far above more casinos' floor averages.

We have high expectations for this new premium product as we continue with our rollout. Overall, our Games business is very well positioned for continued growth, as reflected in the assumption that we've provided at our recent Analyst Day.

As we discussed, our Games business growth will also include our entry into newer markets such as international and the ramp-up of our interactive business.

Now while the latter business is still in its very early days of growth, the recent introduction of our remote game server is expected to propel the business towards the generation of positive adjusted EBITDA in 2019 and then positive cash flow beginning in 2020.

Turning now to our FinTech business; the 2018 third quarter was the seventh consecutive quarter in which we generated year-over-year revenue and adjusted EBITDA growth. Both transaction volumes and dollars processed continue to increase.

In addition, the functionality of our integrated product set combined with our competitive positioning continues to lead the industry. I want to highlight adjusted EBITDA in the quarter of $26.5 million set a new quarterly record.

Growth in our FinTech business remains broad based with healthy gains from both net wins and competitive bid processes and the renewals of existing customer accounts. We also continue to benefit from the positive momentum in gross gaming revenues that are being generated by our customers as well as the health of the macro economy.

This has resulted in games in same-store transactions and total dollars processed. We've now had 16 consecutive quarters of growth in same-store transactions and dollars processed. And finally, equipment sales and services revenue in the third quarter was the highest quarterly total since the quarter ended in September 2015.

During our Analyst Day presentations, we've spent some time talking about the value and power of our network. This network is connected to more than 840 casinos, and we believe that there are opportunities to further leverage and monetize it by bringing new solutions and enhanced functionality to casino operators.

G2E was a great showcase for our FinTech industry leadership and our vision for product evolution. We demonstrated applications at our fully integrated kiosk that would highlight certain casino events or features and a concept marketing product that could drive play to specific games on the casino floor.

We were also able to show our customers how we've taken previously stand-alone products like our compliance solution and fully integrated them into our comprehensive product suite. This type of enhancement increases the power of our solutions, delivering greater operational and regulatory efficiency.

Our commitment to development and innovation separates our products in the market and resonates with our customers. This has led to the success that we've been generating with contract renewals and competitive bid wins.

Going forward, we will continue to collaborate with our customers to develop applications that we believe will help them to market, promote and operate more effectively and efficiently. Our CashClub e-wallet product was another highlight of G2E.

We're currently in the midst of two test programs tailored specifically to those customers' different operating goals and objectives.

It's a testament to the wealth of development of our e-wallet solution that we're able to address the diverse needs of different casino operators and show both of them how we can help their guests seamlessly move financial value across the gaming ecosystem, including into potential new channels like sports wagering.

This is a developing technology and one that is extremely -- is an extremely high priority on our product road map as we position Everi to address near- and long-term opportunities both on and off casino floors.

Now finally before I turn the call over to Randy, I'd like to talk about our new 4-year contract extension with Penn National Gaming that we announced yesterday. As we have consistently stated, any renewal of our existing business is usually a highly contested affair.

In these renewals, we must differentiate ourselves and our products to win the business. We must prove that we can deliver on our product road map in a manner that ensures that our industry-leading products remain at the forefront of technology and innovation. Penn National is now the largest regional gaming operator in North America.

This contract extension covers all of their gaming operations, including the newly acquired Pinnacle Entertainment properties. Penn has been an extremely valued long-term partner of Everi for many years, and we are highly appreciative of their business.

Our ability to execute long-term extensions such as this is clear evidence of the confidence our customers have placed in us and our ability to deliver new products and services that meet their needs. Now with that, I would like to turn the call over to Randy..

Thank you, Mike, and good afternoon, everyone. Please note that the following discussion of our results is based on the comparable revenues and cost of revenues as reported in our press release. For the third quarter 2018, total revenues were $120.3 million comprised of $65.8 million from Games and $54.5 million from FinTech.

Games revenue increased approximately 19% year-over-year, and our FinTech revenue increased approximately 15% year-over-year. Adjusted EBITDA for the third quarter of 2018 increased by $5.1 million or 9.6% to $58.3 million.

Adjusted EBITDA for the Games segment was $31.8 million compared to $29.4 million a year ago, while adjusted EBITDA for the FinTech segment was a quarterly record $26.5 million compared to $23.8 million last year. In our Games segment, gaming operations revenue increased $5.8 million year-over-year to $43.5 million.

This includes $4.7 million in revenue from our New York Lottery operations and $500,000 from our Interactive business, which is up about $300,000 over the prior year period. On a year-over-year basis, our installed base increased 901 units to 14,116, while daily win per unit increased 8.6% or $2.32.

Within our installed base, premium unit placements rose approximately 21% or 492 units year-over-year. This includes 535 WAP units at quarter-end, which is up 23 units from the second quarter.

On our second quarter call, we mentioned our expectation of our installed base being relatively flat at the end of the quarter -- at the end of the third quarter, and with a modest decline of 85 units, we were in line with that expectation.

As Mike noted, the sequential decline was due primarily to certain customers reducing their overall slot floors as well as the previously anticipated removal of a portion of our Class II units at a customer in California.

We expect an additional reduction in Class II units at this California location in the fourth quarter and as a result now believe our installed base at year-end will be relatively flat to our installed base at the end of Q3. This should equate into full year unit growth of about 6%.

While this unit growth is slightly below our guidance metric, we still expect to meet our total gaming operation revenue projections for the year, which should grow approximately 13% from the prior year levels.

This growth is largely driven from the success we are seeing from growth in premium games, including WAP and new form factors such as the Renegade 3600.

Combining this premium unit growth and the benefits we're generating from refreshing the legacy installed base, we continue to expect increases in the daily win per unit on a year-over-year basis in the fourth quarter.

We expect this key performance measure will grow by approximately 7%, which is above the levels we have -- that we modeled in our guidance to achieve full year 2018 revenues.

The expected growth in our daily win per unit should offset the slightly lower installed base growth and result in revenue growth for our gaming operations consistent with our expectations for the fourth quarter. What is clear here is that there are several levers that enable us to achieve our stated revenue growth goals.

As I highlighted at our Analyst Day, every $1 annual increase in our win per day on our 14,000-plus installed base translates into about $5.1 million in additional revenue. And the gaming operations portion of the business has a gross margin of about 80% to 85%.

To maximize the free cash flow value of the increases we are achieving in our daily win per unit, we must also prudently manage our capital spend and ensure this spend justifies the daily win per unit that we generate. If we're not generating an appropriate return on capital, we will not make the investment.

By making sound business choices, we believe that we can ultimately reduce our capital spend while continuing to improve our daily win per unit. Revenues from electronic game sales were $21.1 million for the third quarter of 2018, which is up over 29% year-over-year.

In the quarter, we sold a record 1,165 units at an ASP of $17,005 compared to 817 units in the third quarter of last year at an ASP of $17,251. The unit sales for the third quarter included 60 units that were sold into an international market, which had a lower ASP, and that impacted our blended ASP for the quarter.

Based upon the strong growth in unit sales we have generated through the end of the third quarter, we are raising our full year unit sales expectation from an increase of 10% to an increase of over 16%. We continue to expect the ASP in the fourth quarter to hold in the $17,000 range or better.

Adjusted EBITDA margin for the Games segment was 48.3% in the third quarter 2018 compared to 53.3% in the third quarter of 2017. The decline in the adjusted EBITDA margin primarily relates to higher cost of revenues for our E43 cabinet and increased SG&A costs and R&D expenses, which includes our Interactive operations.

For our FinTech segment, in the third quarter of 2018, both revenue and adjusted EBITDA grew for the seventh consecutive quarter. The third quarter also marked the 16th consecutive quarter of same-store growth in both transactions and dollars processed.

Third quarter 2018 revenues on a comparable basis increased 8% for cash access services and 140% for equipment sales revenue, while information services and other revenue was essentially flat compared to the prior year quarter. For the full year 2018, we now expect total FinTech revenues on a comparable basis to increase over 10% versus 2017.

Adjusted EBITDA margin for the FinTech segment was 48.6% in the 2018 third quarter compared to 50.3% for the third quarter 2017, with the decline resulting primarily from an increase in SG&A cost.

Moving to the balance sheet, the outstanding principal on our long-term debt was $1.18 billion, and we had no amounts outstanding under our revolving credit facility as of September 30. In May of this year, we completed the repricing of our term loan and the interest rate spread on these borrowings was reduced to LIBOR plus 300 basis points.

The weighted average interest rate on our total outstanding debt obligations at September 30, 2018, was approximately 6%. In the third quarter, we made $2.1 million in required repayments on our term loan. When we repriced our term loan, we agreed to a soft call provision that will expire this month.

With the strength of our operating results and the expiration of the soft call provision, we will continue to monitor the debt markets and look for further opportunities to reduce our cost of borrowings on our term loan. Our consolidated secured leverage ratio at quarter-end was 3.3x adjusted EBITDA compared to a maximum senior leverage of 5x.

As of September 30, the outstanding balance of ATM cash utilized by us from our bulk cash providers is approximately $225.3 million.

For 2018, we continue to expect interest expense of between $83 million and $87 million, which includes interest on bulk cash of approximately $8 million, $2 million of imputed interest on the Player Station Agreement and $3.4 million in non-cash amortization of capitalized debt issuance cost.

Also included in this total are the fees incurred and the non-cash loss on early extinguishment of debt from the repricing we completed in May. The third quarter placement fees totaled $5.2 million, and other capital expenditures totaled $20.6 million.

Excluding the placement fees, Games segment CapEx was $17.4 million and FinTech segment CapEx was $3.2 million. Games segment capital expenditures related to game and platform design was approximately $6.6 million. CapEx related to gaming equipment was approximately $9.2 million.

This amount includes equipment upgrades, replacement for existing installed base units and new units placed on trial. Our trial count at the end of the quarter was approximately 450 units. We expect full year FinTech segment CapEx will be approximately $15 million to $16 million.

Games segment placement fees will be approximately $21 million and other games segment capital expenditures will be approximately $90 million to $92 million. As such, our expectation for the full year CapEx inclusive of placement fees continues to be $125 million to $130 million.

Of the $90 million to $92 million in total CapEx for the year, approximately $54 million to $55 million will be related to customer equipment, and $28 million to $30 million will be related to capitalized development costs. As a reminder, our existing placement fee obligation will only impact quarterly CapEx through the third quarter of 2019.

Following that, the related unit placements will remain in our installed base for at least another 4.5 years without any additional placement fees. This afternoon, we reiterated our outlook for 2018 adjusted EBITDA of $228 million to $231 million. We also continue to expect to be profitable for the full year.

And therefore, you should model fully diluted shares outstanding for the year at approximately 74 million shares. We expect fully diluted shares to increase if our stock price increases. Finally, total depreciation and amortization expense is expected to be approximately $122 million to $130 million.

And finally, we expect to record an income tax benefit of between $3 million and $5 million for 2018, which includes cash tax payments of approximately $0.5 million. With that, I will turn the call back to the operator for questions..

Thank you, sir. [Operator Instructions] First we have Brad Boyer with Stifel..

Hey, guys, thanks for taking my questions, and congrats on a solid quarter. First question is just around the product sales. As you said, it came in quite strong, certainly a little bit better than what we were expecting.

Just curious if you could provide a little bit more color around what drove the strength in the quarter? Was there any lumpiness in orders with one particular customer? Any timing changes? Anything there, or was it just kind of an all-around solid quarter?.

Brad, this is Dean Ehrlich. Hey. It was an all-around solid quarter, I mean, if you take a look at what we put out there between player class like E43 and Core, as Mike mentioned, between our 3.0 reel mechanical, in E43, we had 37% between each of those, really driven by small orders within multiple customers.

So we felt pretty good all around in terms of what we shipped and the current momentum we have going forward..

Okay, that's helpful. And then looking at the margin on product sales, gross margin was -- looked a little soft to me.

Was there anything going on there? Was anything mix related? Was it tied to some initial runs on some new hardware? Any color around the margins there?.

Yes, we talked a little bit about in the remarks. I mean, one, we talked a little bit about the E43, a slightly higher cost to that unit. We also had 60 international units that were at a lower ASP. So that impacted the margin. So I would think those two items are in an area that we continue to focus on going forward..

Okay, that's helpful.

And then just lastly, the California removals that you called out from the third quarter that are going to continue in the fourth quarter, should we expect that to be a sort of 2-quarter situation and then kind of a clean slate going into '19? Or is there anticipation for any further removals as we move into the new year?.

Brad, this is Randy, again. I believe that we believe that will be the end of this setback to fourth quarter. I don't think there's any more of that customer that was the one that was really kind of converting primarily from Class II to Class III. And I think most, if not all, that will have taken place in the fourth quarter..

Perfect, thanks guys..

Thanks, Brad. I appreciate, Brad. Take care..

[Operator Instructions] Next we move to George Sutton with Craig-Hallum..

Thank you, and nice results. So you guys, in your press release, mentioned near-term acceleration and free cash flow generation. Frankly, that's not something we model. So I just wanted to discuss that.

Is there anything upcoming from a cash flow perspective that we should be expecting to change?.

George, this is Randy. I don't think -- so I think again, we're just trying to kind of lay out. We know next year, the placement fee drops off at least $5 million of that. And then we know into '20, $20 million of that or another $15 million, $16 million drops off. So really nothing different than we put out at the Analyst Day.

But compared to where we are now, we feel like there will be a nice increase in net free cash flow in '19 and into '20..

Understand. And maybe it's just a different definition of near term. So relative….

Should be..

Relative to your Games, the thing that I came away really impressed from the Analyst Day was the breadth of demographics that you're hitting with your various different products.

Can you talk about the reception that you feel you've got at G2E relative to that? It just feels like you're hitting a much bigger part of the market than you historically were hitting..

George, this is Dean. So we have -- we do a pretty good job of covering all categories. I mean, it's taken us a little bit to get there.

But between our mechanical segment, our lower-denomination video, even our high-denomination video and some of the premium products we're rolling out, we do cover the gamut in terms of the player demographics, if you will.

And the thing I think that you've taken note of our exceptional amount of products that we're really launching and the things I note just to get us to Q2 is Mike talked about Renegade, upcoming right after that is Shark Week, which is on our Arena platform, we have our first mechanical reel, it's Skyline Revolve.

And then we've got a new cabinet coming out the end of Q2 that Mike also mentioned with the 43-inch dual-screen DCX. So there's plenty of bandwidth coming out there, especially on the premium side, but we match it equally on our different segments and our standard video and mechanical. So putting all that together, it's pretty robust.

So we're very excited about it..

Truth be told, I was thinking Snoop Dogg next to Willie Nelson, next to Brady Bunch, but we're on the same wavelength..

I said that covers all the demographics, right?.

Yes, that pretty much covers it, yes..

Right there. I mean, it sums it up perfectly..

Well, they're all voting today. So lastly, daily win rate continues to really be something that surprises us positively.

And I'm just curious, can you -- how much further do you think you can see that dynamic improve? Is that something that we could continue to be surprised by going forward?.

It's certainly something that I'm hoping you're going to be surprised by going forward. But we -- there are a lot of things that affect that and can impact it, not the least of which is better game performance in our installed base, which is primarily, I think, what you've been seeing.

But also as we balance the installed base, both with our premium products as well as our standard, as we lean toward more premium, you should continue to see some improvement in that. And I know Dean had a comment also..

Yes, I was going to just support Mike in what he just said. It's all about product performance.

And it's -- you're seeing a lot of which is through premium growth in our installed base, which translates really to better performance, but it is also better on our standard products that we roll out for a lion's share of our gaming ops installed base that as those do better, it blends in and that's where you get your growth.

So it's both segments working collectively pushing in the right direction..

So Dean and I are using a lot of words to say yes..

And I would add, George, also works into our managing of the CapEx, right? As we talked before, we're going to prudently put things out when it makes sense and it produces the returns. So it's all three of those things together.

But I agree, I think, in our Analyst Day, we definitely have modeled in some continued improvement over the next couple of years in our daily win per unit..

Thanks, guys..

Thank you..

Thanks, George..

Moving on, we have David Katz with Jefferies..

Hi, guys. This is Erik Hellquist on for David.

How are you doing today?.

I would say you don't sound all like David..

Great. So just want to touch on the leverage.

Can you remind us where you envision the leverage gain through target-wise? And thinking about kind of the capital allocation decisions, where do you think the choices would be outside deleveraging? And what kind of potential time that could be on?.

one, accretive; and two, not a big number in any one year..

Okay, great.

And just kind of switching back over to the guidance, switching back over to the guidance, so looking at the range you outlined and thinking about some of the headwinds you discussed in the installed base, can you talk about what you might need to execute on to get above the guidance range for the fourth quarter and the year-end?.

Well, we talked about where we thought we'd be that 7% increase in daily win per unit. If that comes out better -- I mean, again, we were -- I think if you do the numbers, that's somewhere between $1.75 and $2 increase in the daily win per unit. If that's better -- and we've done over $2 for the last two quarters.

But I don't know that -- and that's not what we're expecting right now. I still think we're going to be in the range that we gave.

But if that performed better or somehow we did better on where our installed base ends for the year, but right now, I think with everything that we're looking at, we think we're going to be within that range and not really look at what would take us outside of that.

But clearly, sometimes a big sale would, but there's nothing that we're looking at that would drive that right now..

Okay. And just one last one actually on the product sales, So thinking about the games sales in the current trajectory, seems like you're well ahead of where you've been in the past.

Should we expect that to continue going into 2019 as far as the momentum goes?.

That's our expectation..

Yes..

Oh, yes..

The reason we've been spending the capital and developing all the new games and form factors and features was specifically to try and ensure that..

Okay, thank you..

Thank you..

Thank you, Erik..

Next we have Brian McGill from Telsey Advisory Group..

Yes, good afternoon. Okay. So I guess, maybe touching on the same question there on the games sales. I guess, there was really on the last -- over the last month, there's been a concern with pullback by the corporate buyers on slot purchases. I just want to know are you seeing this.

But then maybe even more so, could you talk about the strength in the Native American market that probably that doesn't get enough attention? And then maybe following up, he was saying like how do you see industry replacements maybe going into next year in 2019?.

Sure, I'll tackle the first part of that. I mean, yes, the fourth quarter is generally a bit slower with the corporate buyers, only because they -- by this time of the year, they generally have gotten down to a very small CapEx budget that's left over for them to do anything with.

And unless they're in a shop that's a use it or lose it, there's no incentive for them to rush out and expend whatever is left in their CapEx budget. But I think you point -- and so we are seeing a bit of a slowdown there, but that's also the kind of the seasonal slowdown that we would expect to see.

But you correctly identified that Native American casino operations are generally not necessarily running on the same kind of a calendar basis that a corporate casino customer may be running on. And so you may see outliers in that market that are in fact ramping up their CapEx, and therefore, their purchases at this point in time.

It kind of depends in that regard on where their casino is with respect to refresh, where their floor is at with respect to refresh and if they have any expansion plans..

How about -- lastly, how about anything on the tribal expansions in California and how big that could be as you look out over the next maybe 12 or 18 months? Is that something that could certainly be material to you guys?.

I look at it as -- I look at two components, Brian, this is Dean. So I look at the replacement market kind of ratchets in somewhere between 6% and 7%. That's the numbers that people are comfortable putting out there.

New openings, depending on the find in the areas that we play with, are anywhere from 10,000 to 12,000 units coming from all sorts of different places domestically. And between those, we expect to go after the share that we believe our product can garner and then some. So do we think there's upside? Yes.

Our performance continues to go the right direction. Our share continues to rise. And we've seen that over the last couple of years. When I started here, we were at 3%. We're now, call it, somewhere between 6% and 7%. If we do what we're supposed to do, I'd like to be at 10% at some point.

So the more that we have in both of those two areas, the better it becomes for us. But as far as the numbers, that's what I look at in terms of what our total target is between replacement and new openings..

Okay, thank you..

Okay..

All right. And with no further questions, I'd like to turn the floor back to Randy Taylor for any closing remarks..

Thank you for joining us on the call this afternoon. We look forward to discussing further progress in our business when we report our 2018 fourth quarter results next year. Thank you..

Thanks, everyone..

And once again, ladies and gentlemen, that concludes today's call. Thank you for joining us. You may now disconnect..