Mike Rumbolz - President, Chief Executive Officer Randy Taylor - Chief Financial Officer Dean Ehrlich - Games Business Leader Darren Simmons - FinTech Business Leader Harper Ko - Chief Legal Officer, General Counsel Mark Labay - Senior Vice President of Finance, Investor Relations.

Good day and welcome to the Everi Holdings Inc., First Quarter 2019 Earnings Conference Call. Today’s conference is being recorded. At this time I’d like to turn the conference over to Mark Labay, Senior Vice President, Finance, and Investor Relations. Please go ahead sir..

Thank you, and welcome to the call. Joining me today are Mike Rumbolz, our President and CEO; Randy Taylor, our CFO; Dean Ehrlich, our Games business leader; Darren Simmons, our FinTech business leader; and Harper Ko, our Chief Legal Officer and 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 which are subject to risks and uncertainties, including but not limited to those contained in our SEC filings.

All of these filings are posted within the Investor Relations section of our corporate website. 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. This call may also refer to certain non-GAAP measures such as adjusted EBITDA, adjusted EBITDA margin and free cash flow.

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. These measures also provide better comparability between periods and different years.

A full reconciliation of the non-GAAP measures of adjusted EBITDA and free cash flow to their GAAP results is provided in our earnings release and related 8-K, both of which have been filed with the SEC and are available on our corporate website at www.everi.com which the section captioned Investors.

On this call we may also reference Adjusted EBITDA margin for the individual business segments. These amounts are computed as the reported segment adjusted EBITDA divided by the segment revenue. Management believes this measure is meaningful to investors in evaluating the performance of the company’s segments. Finally, this call is being webcast.

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

Thanks Mark. Good afternoon everyone and thank you for joining us. This afternoon we reported our 11th consecutive quarter of year-over-year revenue and adjusted EBITDA growth and our 5th consecutive quarter of profitability. First quarter revenue increased 11.5% to a record $123.8 million and adjusted EBITDA rose 5.7% to a record $61.3 million.

First quarter net income was $5.9 million or $0.08 per diluted share. Both FinTech revenue and adjusted EBITDA were quarterly records and our games division also reported a quarterly record for revenue. This included record gaming operations revenue of $44.3 million and our second highest ever equipment sales revenue.

Randy will review the financial results and details on certain performance metrics in just a few moments, but first I'd like to focus on the key drivers of our business. We announced the acquisition of certain player loyalty technology and contracts from Atrient late in the first quarter.

Now given the timing of this acquisition, the initial revenue and adjusted EBITDA contributions from this new line of business were minimal.

This means that nearly all of our first quarter growth, the growth that we've experienced over the last few years and a major portion of the growth the company expects to achieve this year will be organic in nature. This growth is built on the purposeful investments that we made to improve and expand our games and FinTech product offerings.

Our recent successes and our prospects for continued growth will be even more evident as I review the first quarter and other recent highlights from the games and FinTech segments. In our games business, adjusted EBITDA of $33.1 million reflects continued growth across the majority of our key performance indicators.

We sold a record 1,259 games in the first quarter. This quarter was our fourth consecutive quarterly records for unit sales and the sixth consecutive quarter of sequential growth.

More than 80% of our first quarter sales were comprised of our newest for sale cabinet, the Empire MPX or E43, together with our always popular player classic mechanical reel gains. Now our mechanical reel games are industry leading and we continue to add new innovations to this product to further distinguish it from the competitive set.

The market's strength of our Player Classic cabinet is obvious as we continue to receive significant numbers of orders for new games in the high denomination mechanical reel segment. We are continuing our robust new content strategy to keep the progress moving forward for these cabinets.

Equipment sales were strong in the first quarter, but our progress in gaming operations is even more noteworthy. I already highlighted that gaming operations revenue hit a quarterly record in the first quarter. We achieved this despite the anticipated year-over-year and sequential quarterly decline in our installed base.

The key driver for our record gaming operations revenue was the significant increase in daily win per unit, which rose nearly 12% to $31.76. The vast majority of the daily win per unit improvement was the result of the success that we're generating from investments in our game content and cabinets.

The $3.36 gain in daily win per unit to reach $31.76 represents our highest ever quarterly, daily win per unit total, as well as our highest every year-over-year increase on both the percentage and an absolute dollar basis.

While premium units accounted for a majority of this improvement, we still saw win per unit growth across our entire installed base. Premium units at March 31 comprised 21.5% of our total installed base, compared to 19.8% just a year ago and only 14.5% two years ago.

The highest performing units in the premium segment are from our wide-area progressive units. These games are also the fastest growing component of our premium unit installed base. At March 31 we had an installed base of 723 wide-area progressive units, which is up 119 units or 20% from December 2018 and up to 80% on a year-over-year basis.

WAP units now comprise a little more than 5% of our total installed base and this compares to a little less than 3% a year ago and essentially nothing two years ago. Our Renegade 3600 has been in casinos now for over six months.

The average per unit performance for Diamond Blaze, the first title that we've introduced on this platform is still holding strong. Follow up titles Smokin' Hot Stuff, Extra Jackpots and Snoop Dogg Presents the Joker's Wild will be introduced in the second half of the year.

Another premium game that continues to receive strong positive customer and patron feedback is Smokin' Hot Stuff, Wicked Wheel. Since its introduction on our new E5527 cabinet, Smokin' Hot Stuff, Wicked Wheel has been a consistently strong performer.

Over the past six months we have installed 375 Smokin' Hot Stuff, Wicked Wheel units and we've seen the game's average win per unit sustain a rate of three times the host casino slot floor average. As a result of this strong performance, we have a large installation back log for this game.

The recent introduction of the Empire Arena platform is our best ever new product launch. Discovery Shark Week is our first series of game themes featuring four popular standard based video games that include bonus features with actual footage from Discovery Channel's Shark Week.

These games are featured in a linked bank or pod of E5527 Cabinets and include bonus play that is displayed across the entire bank. We introduced Empire Arena with Shark Week titles in the first quarter and we now have over 125 units installed. The game performance of these units is exceeding the best performing games in our portfolio.

With Smokin' Hot Stuff, Wicked Wheel and the Shark Week titles both featured in different configurations on our E5527 Cabinet, I think it's fair to say that this cabinet is quickly becoming a casino floor favorite.

We've had great success with our new platform and game introductions considering gaming operations already strong margins that we’ve told you about and of course there is more yet to come. Clearly the investments that we've made and continue to make in our new product development are creating value for our business.

The final part of our game segment that I want to touch on is our newest business Interactive. Our new Remote Game Server or RGS with six initial game themes is now live in New Jersey for reel money gaming.

Games offered through our RGS also continue to gain traction in the social gaming space with continued popularity for our Super Jackpot Slots and our high Rollin Vegas Social Casinos. We've just introduced a new game, CashMoney into the social space.

This new game theme was also recently introduced in the Land Based Casino floors on our core HCX cabinet. Early results are showing great success in the performance of this game in both of those channels. We're being very measured in how we expand this business and remain focused on keeping our costs alighted with their financial expectations.

To-date the interactive operating results are in line with the plan that we previously discussed. The initial results that we are achieving in both acquiring and retaining players, along with the average revenue per-daily active user reflect the values that our growing library of content can deliver.

We still expect positive interactive adjusted EBITDA for 2019. Turning now to our FinTech business. The 2019 first quarter was a record 9th consecutive quarter in which we generated year-over-year revenue and adjusted EBITDA growth. Transaction volumes and dollars processed continue to increase and we continue to grow our market share.

We've been successful in this by leveraging our innovation, integrated solutions, customer service and broad scale to offer customers great value and reliability. First quarter FinTech adjusted EBITDA of $28.2 million was up 7.2% and reflected growth across the majority of our key performance indicators.

Total face amount processed and the number of transactions were both up for the 18th consecutive quarter and reflect growth in same store locations. Over the last six months we have renewed and extended cash access agreements with four of our five largest cash access customers for average terms of almost four years.

Equipment sales revenues in the quarter were up nearly 60% over the prior year quarter. On our fourth quarter call we highlighted our belief that we are in the early stages of what we expect will be the start of a refresh cycle for our kiosks equipment.

At the beginning of 2019 we estimated approximately 70% of the kiosks that we sold to our customers are now more than three years old.

If you think about the tremendous volume of self-service transactions these kiosks perform and the critical functionality that they provide on casino floors, it's crucial that these devices are well maintained and functioning properly at all times.

We believe this high volume of transactions and interaction with patrons will require our customers to start refreshing their older units and maintain or add service agreements with these devices. FinTech revenue growth should benefit this year and for the next several years as customers replace and/or maintain these older units.

Our acquisition of a new product line related to player enrolment and loyalty also creates a new opportunity for incremental equipment sales. While it’s still early in the integration of Atrient Solutions into our product portfolio, we are off to a great start.

Our breadth of customer contacts has allowed us to rapidly scale up the introduction of this technology to many new customers that were not previously in Atrient sales pipeline prior to the acquisition.

Our sales team has been very active in the market and has received a very enthusiastic response from the operators as we've already secured several new agreements from our existing customers.

We are currently working through the rollout timing for these new agreements, as well as for the solid pipeline of business that existed at the time of the acquisition. Now the final revenue line item for our FinTech Segment comes from information and other services. We continue to grow and expand our kiosks maintenance revenues.

Additionally we've added new revenues from the sale of the player loyalty and enrollment software applications to our customers. Now although it's off to a little slower start than we had anticipated, we should also see revenue growth from our compliance solutions throughout the remainder of 2019.

In March, we provided our initial adjusted EBITDA guidance for 2019. As noted in this afternoon's Press Release we're reforming that outlook for 2019, which includes year-over-year revenue growth and adjusted EBITDA of approximately $252 million to $255 million.

Our full year expectation for adjusted EBITDA growth reinforces our view that free cash flow generation will continue to accelerate. We remain on track to approximately double the free cash flow we generated last year and to double the 2019 free cash flow again in 2020.

As we’ve said in the past, the priority for us is to use this free cash flow to pay down debt. We anticipate achieving our deleveraging goals through the combination of debt pay down and consistent growth in adjusted EBITDA. And with that I’d like to turn the call over to Randy..

Thank you Mike and good afternoon everyone. For the first quarter of 2019 total revenues were a $123.8 million comprised of $67.5 million from games and $56.3 million from FinTech. Games revenue increased approximately 12% year-over-year and FinTech revenue increased approximately 11% year-over-year.

Adjusted EBITDA for the first quarter of 2019 increased by $3.3 million or 5.7% to $61.3 million. Adjusted EBITDA for the games segment was $33.1 million compared to $31.7 million a year ago, while adjusted EBITDA for the FinTech segment was $28.2 million compared to $26.3 million last year.

In our games segment, gaming operations revenue increased $4.2 million or 10.5% year-over-year to a quarterly record $44.3 million. This includes $4.7 million from our New York lottery operations and approximately $1 million from our interactive business which is up over $800,000 when compared to the prior year period.

Installed base declined year-over-year from 14,124 units at March 31, 2018 to 13,644 at Mach 31, 2019.

Decline was primarily driven by the previously discussed sale of approximately 200 units from our installed to a customer in Indiana and our decision to remove over 330 of the approximate 400 lower performing units at a multi-property customer in Oklahoma. The remaining units are expected to be removed early in the second quarter of 2019.

Factoring in the growth in our installed base at other locations, the next quarterly sequential decline was 355 units. Offsetting the revenue impact of these unit removals and a key factor and our ability to generate record gaming operations revenue in the quarter was the nearly 12% or $3.36 rise in daily win per unit to $31.76.

This was our highest ever daily win per unit. It is important to emphasize that despite the unit count reductions experienced in the first quarter, we expect that our installed base unit count will return to its general cadence of grow. Our interactive business remains on plan to be adjusted EBITDA positive this year.

We expect interactive revenue to increase sequentially throughout the year as we expand our B2B reel money and social gaming offerings and expand our direct to consumer social gaming platforms of Super Jackpot Slots and high Rollin Vegas.

We expect to have further penetration of this product into reel money jurisdictions in North America over the coming quarters, which should drive interactive revenue growth. Revenues from electronic game machine sales were $23.1 million for the first quarter 2019 up, 14% year- over-year. Unit sales grew 18% year-over-year to a record 1,259 units.

Average selling price was 17,361 in the quarter compared to 17,745 in last year's first quarter. For 2019 we continue to expect double digit growth in unit sales and for ASP to remain in the $17,000 range.

As we've noted before, our actual unit sales growth in 2017 and 2018 and our expectations for growth this year are outpacing the actual or expected unit sales growth rates for the industry in each of these three years. This translates into growing ship share and floor share at very high rates when compared to most other manufacturers.

Adjusted EBITDA margin for the game segment was 49% in first quarter of 2019 compared to 52.7% in the first quarter of 2018. The decline primarily relates to higher SG&A and R&D expenses, which includes the increase in marketing and payroll costs associated with our interactive operations.

The SG&A and R&D spend is more in line with the fourth quarter of 2018, which is what we expected based on the investments that we have made in the game segment throughout 2018. For our FinTech segment, the first quarter marked the 18th consecutive quarter of same-store growth in both transactions and dollars processed.

Cash access services revenue increased 6.8% year-over-year, equipment sales revenue was up 59% in the quarter, primarily from higher sales of our fully integrated kiosks.

Information services and other revenue which includes kiosks maintenance, compliance products, central credit and software sales and support from our newly acquired Player Loyalty assets rose 3.7% compared to the prior year period. We continue to expect revenue growth in our FinTech business.

The first quarter revenue growth exceeded our expectations as cash access services continue to benefit from the overall macro economy, market share gains and growth in same store transactions. ES and other equipment sales were also strong and our pipeline looks good for the remainder of the year.

As Mike mentioned, over the last six months we have renewed and extended four of our five largest customers. While these extensions secure a meaningful portion of recurring revenue, there will be slightly higher commission payments to these customers for the core cast advance services resulting in lower net cash active service revenues.

This impact has been factored into our full year guidance. While early we remain very optimistic about the potential upside from the Atrient Player Loyalty solutions which we continue to integrate into our sales offerings.

We are executing on the healthy level of business that was already in the pipeline at the time of the acquisition and we’d help to growth that pipeline.

In just the first few weeks since we closed the acquisition, we've already signed an additional couple of million dollars in business, but this revenue will likely recognize over the next several quarters as we install the product.

We recognized approximately $460,000 in revenue and $255,000 in adjusted EBITDA in the first quarter related to this acquisition which closed in early March.

For our legacy FinTech operations, we expect FinTech adjusted EBITDA will grow in the mid to high single digits compared to 2018, with incremental upside from the acquisition adding to the segments full year adjusted EBITDA.

We are maintaining modest expectations for the adjusted EBITDA contributions related to the acquired Player Loyalty assets this year, somewhere in the several million dollars range. This is because it is a very new business for us and we will have less than a full year of results just slightly more than nine months of activity for 2019.

With each day our conviction grows that there is upside to this estimate and a significant opportunity for growth attributable to the Player Loyalty business in future years. Adjusted EBITDA margin for the FinTech segment in the 2019 first quarter was 50% compared to 51.8% for the first quarter of 2018.

This decrease primarily reflects the higher kiosks revenue sales, which has a lower gross margin and an increase in SG&A and R&D expenses. The SG&A and R&D spend is more in line with the fourth quarter 2018, which is what we expected based on the investments that we made in the FinTech segment throughout 2018.

Moving to the balance sheet, the outstanding principal of our long term debt was $1.18 billion and we had no amounts outstanding under our revolving credit facility as of March 31, 2019. The weighted average interest on our total outstanding debt obligations at March 31 was approximately 6.1%.

During the first quarter we paid down a total of $2.1 million on our term loan. In April 2019 we paid an additional $10 million down our term loan. This payment was primarily due to the excess cash flow payment required under the agreement.

Our consolidated secured leverage ratio at quarter end was 3.2x adjusted EBITDA compared to a maximum senior leverage a 4.75x. As of March 31 the outstanding balance of ATM cash utilized by us from our bulk cash providers was approximately $267 million.

For 2019 we expect interest expense of between $83 million and $86 million, which includes interest on bulk cash of approximately $7.5 million and $3.6 million in non-cash amortization of capitalized debt issuance costs.

In the first quarter placement fees totaled $5.3 million and other capital expenditures totaled $22.2 million, excluding the placement fees, game segment CapEx was $19.1 million and FinTech CapEx was $3.1 million.

Game segment capital expenditures related to game and platform design was approximately $7.2 million, gaming equipment CapEx is approximately $11.5 million. This amount includes equipment upgrades, replacement for existing installed base units and new units placed on trial. For the full year we expect placement fees will be approximately $17 million.

As a reminder the quarterly payments of over $5 million related to the placement fee agreement from 2017 and in the third quarter of 2019. After that third quarter payment we expect minimal payment replacement fees to occur for the forcible future.

Our estimate for total 2019 capital expenditures is approximately $107 million, which now includes approximately $3 million to $5 million CapEx related to our newly acquired Player Loyalty products. Games CapEx is expected to be approximately $85 million to $88 million and FinTech CapEx is expected to be $19 million to $22 million.

This afternoon we reaffirmed our outlook for 2019 adjusted EBITDA to be in a range of $252 million to $255 million. For modeling of shares outstanding, we expect to remain profitable in each of the quarters and the full year. Therefore diluted shares outstanding is expected to be at least $75.5 million shares.

Depending on the actual average share price in the quarter, we would expect fully diluted shares to increase slightly if our stock price increases. We expect total depreciation and amortization expense in 2019 to be approximately $132 million to $136 million.

This excludes an initial estimate from our acquisition, but because we have not yet completed our full purchase accounting analysis that amount could change. We expect to record an income tax benefit of between $1 million and $2 million and we expect cash tax payments of approximately $1 million.

Finally we continue to expect the free cash flow will almost double this year, compared to the 2018 free cash flow of nearly $25 million. With that I will now turn it back to the operator for questions. .

Thank you. [Operator Instructions]. And our first question will come from David Katz with Jefferies. .

Hi, afternoon everyone. .

Hi David. .

Hi David. .

Look I’m going to apologize for getting on just a couple of minutes late, so I missed a couple of the prepared remarks.

But you know where I – you know staring at my model for the outlook for the remainder of the year in terms of units sold, would you mind just going back and talking about or repeating for me what you expect in terms of the ark of units sold, what new game concepts are coming out and when.

And you know give us a long term vision for what that game sales line item should look like going forward. .

Well David I would say, you know first of all in the quarter we did 1,259 units and we don’t really give full year unit sales. We in our guidance said there will be an excess of the prior year, but we did say we would have, I would think in access of.

45.13..

Yeah, we had 45.13 last year and we have an increase of I thought we said, did we give the actual increase in our projection for unit sales; I don’t think we did, we said we would be up. So I mean I know you want a little more guidance in that, but I think you know we had a strong quarter, we were up 18% in unit sales.

We do expect to be from last year, but we really haven't given a firm number on the unit sales for the year yet. .

I see, and in terms of you know any impact on pricing, whether that's change in mix or any new product introductions.

Have you made any comments about what to expect pricing to look like ASP?.

So we expect the pricing to remain in that 17,000 price range. So we don’t really expect a lot of change in the ASP. .

But as you know David, if we have turn event as a larger percentage in any give quarter, then that may change the ASP for the quarter. .

And we did have a little bit higher last quarter, so the ASP is down sequentially but compared to last year we're really in line. .

Got it and if I may, just in terms of the cash flow commentary which I did here, you know which should approximate doubling year-over-year, can you talk about the puts and takes or events you know that may or may not result in not being you know better than a double or you're just short of a double.

You know we are still hanging out there variability wise for that. .

So just a little extra guidance as you are kind of looking at, at your information. We did in the press release kind of give a range there, but I would say a couple of things. You know cash interest, you know we gave a range there. Right now we’ve kind of updated that and not really expecting you know any increases for the remainder of the year.

You know we talked about the placement fees, which will end in the third quarter, so that approximately $5 million a quarter will be done. And then really it's you know it's CapEx that's going to drive that differential. We have a little bit more with Atrient, but again you know it’s our EBITDA guidance of $252 million to $255 million.

So between those you'll see – we are kind of given a range of $47 million to $49 million in the back of the – towards the last page of the press release. So hopefully that gives you information. .

I did read the release and I'm not a completely blank slate, but what I'm taking away from this is there is a fair amount of confidence around that sort of doubling the free cash flow and I think that's ultimately what I was getting at..

Sorry David, I wasn’t sure. I didn't know if you - I know you got a couple going on, I didn't mean that. I just want to make sure – look, I think we have kind of laid it out there and feel pretty good about it. I don’t know if there is whole lot of upside over that, but we feel very good about it. .

It’s all good, I appreciate it. Nice quarter. .

Thanks David. .

Next we’ll go to Barry Jonas with SunTrust. .

Hi guys. .

Hey Barry..

Now that you are starting to get some traction in the games business, I'm just wondering if you are seeing more success with bundling or cross selling between games and FinTech..

Barry, we don't really bundle games and FinTech together.

We’ve had a few instances where we've been able to work with the customer that is either looking for games product and didn't necessarily have enough CapEx available for it, where we can have them pay for it as part of their contract in the FinTech side and vice versa, but those have been relatively few and we've never bundled the products. .

Got it, okay that’s helpful and you know I think in my opening remarks you commented about slightly higher cash access commissions coming, but if we look at cash access revenues per dollar processed in the quarter, it looked like they grew for the first time in almost two years.

So just curious what drove that strength in the quarter?.

I’m not sure what you are looking at. We continue to have increases in transaction process and dollars that flow in the same store basis Barry, so that's been pretty consistent and you know we’ve got like 18 quarters there. I think what we were – you know what I was trying to do – again remember we report net.

So under the new accounting rules we net out commissions against our net revenues and we are just are trying to get a little bit of insight there that you know we had a good quarter first quarter, but with these new large customers that we renewed in the last six months, you know generally we're going to pay a higher commissions.

So hopefully you know transactions will continue to offset that and we'll have volume offset. But if everything was you know consistent, you know you’d have some issues growing just because of you know renewing customers that you know will probably pay a little more commissions.

I don't know if that answers your question, but that's really what I was trying to talk to. .

Got it! Yeah, no that helps.

And then just lastly on the games segment for unit sales in the quarter, any new – anything you'd call out, any large shipments or specifically new openings maybe like encore that you could call out?.

I mean the one that we talked about is we did have the – you know we did have the, about 200 units that flipped from installed to sale. So that you know went out of our install unit, installed base into sales. So there was, there’s been a few hundred units there, but other than that I think it was pretty much you know across the board.

There wasn’t anything you know major – I mean we had I think one opening in – we also had the one, although I think that one, the one in border was probably last quarter. .

Right and then win of course. .

Yeah, the win. .

Got it, okay. Thanks so much guys. .

[Operator Instructions]. Our next question will come from John Davis from Raymond James. .

Hey, good afternoon guys. .

Hey John..

Randy, I just wanted to talk on the FinTech business for a second. You know I think it continued to put up double digit growth. I think you know potentially all are organic in the first quarter. I think with the outlook for increased kiosks sales.

You know how sustainable is that double digit revenue growth there and kind of what should we be thinking about its puts and takes as we go through kind of the rest of the year, anything to call out?.

Well look, I think you know, we think we are going to be strong in the kiosk sales.

I think as – and I’ve been wrong forever John, so I’m sure call me on this, but I do think that you know the cash access itself won't be quite as strong as it's been in the past, but I think kiosks, I think we've got upside in compliance we talked about and you know the Atrient will be, you know will be the add in there.

So you know with those three, you know I still think you know we feel really good about you know mid to upper single digits as we stand and then if you add an Atrient, you know I think you'll come up with a obviously a better growth in that. .

Okay and then on the FinTech margins, you know obviously I think the kiosk sales weighed on it this quarter. How should we think about it for the full year, especially considering you know Atrient.

How should we think about that impact on the margin? You know if something is similar to the impact of the first quarter, just kind of help us to think about the margin on a go forward basis. .

Yeah, I think it will be. I think it will be closer to what we have this quarter. I think again we’ll have more kiosks sales throughout the year. And this will weigh a little bit. Again, we’ve invested a little bit there so the R&D and SG&A will be a little bit higher but in line with what we’ve had.

So I think it will be closer to what you’ve seen this quarter. .

Okay, and then last one from me. The installed base, I think you guys had previously said that was flat in the second quarter.

I think it took seven years to go out, but are you guys are still fairly confident that the growth in the second quarter will kind of offset that headwind and we are going back in the right direction as far as installed base from kind of the watermark here in the first quarter. .

I would say two things. I would say, you know I don’t want to get so focused on units. We do expect cadence growth throughout the rest of the year, but I'm as excited about really the – you know the growth in the win per day.

So I'm focused on, hey where we would be and I think we are focused on where we would be at the end of the year and its total revenue growth and we still feel very good about being able to get our targets through both of those levers. .

Okay, alright thanks guys. .

Thank you, John. .

Brad Boyer from Stifel has our next question. .

Hey, thanks for taking the question guys. So just an extension on JDs question there. So if I’d back out some of these onetime items that occurred in the first quarter around your installed base, so the 200 units flipping in Indiana and the 330 of lower performing units.

I mean is that net numbers, is that like a good solid kind of core growth number that we should think about kind of going forward or any more color you can provide there?.

I mean it gives you a target, but the issue is you know you always have some Brad that will come out. So it's not like you know we still have 60 that will come out, 60-plus that will come out on the one customer.

I don't know if you can look at that net being perfect, but I think it's directionally correct that we should be growing in that kind of a range going forward. .

You know Brad I would tell you that if you look at our net backlogs and you don't have any unknown removals or things that are – that we don't have viability till today, than we feel very good about what lies down the road for us. .

Okay, that's helpful. And then just around your yield performance. I mean those numbers are pretty staggering. I guess could you give us some flavor of sort of how games are performing as they sit out in the field.

I mean are some of these newer WAP and premium titles that you have out there, are they sustaining the performance beyond you know the first several weeks of install. Can you give us some flavor there? Thanks. .

Yeah, I mean other than talking about the three time, four average performance we are getting out of our Wicked Wheel. I mean Dean can speak to some of the backlog we've got. These are doing. These are amongst the best products we've ever released and are doing better numbers than any products we released previously.

As a result we have a lot of customers that are looking for more of these products.

But Dean, why don’t you speak to the backlogs that we have in these areas and performance?.

Yeah without – I'm not going to go into specifics by each game, but I would tell you if you look at the backlog right now, it's very, very, very strong. I would say stronger than what our installed base is currently for those respective products, but we feel very good about it.

You know like we talked about before, you can't control unknown removals or anything that we don't have visibility to. But if you snap the chart right now, we feel great about where we are at and how we believe the growth where we currently sit is going to manifest. .

And Brad I’d add that you know we spent a lot of CapEx in ’18 and we are refreshing you know some of the older products and I think that's what you are also seeing reflected in the first quarter. As Mike talked about, it's not use these new products which are doing phenomenal, but even just..

All of our other products. .

All of our other products. You just raise them a little bit and you know again very happy with that increase in win per day per unit and so we think we've got you know a lot to look forward through in the second quarter..

Perfect and then just last one for me. Similar to David, I may have missed some commentary here, but I didn't hear you guys talk much about sort of the cashless product. I think you had a couple of trials out there. Do you have any updates to share there, just kind of sort of how that’s trending or any progression there would be helpful. Thanks. .

Yeah, so this is Darren. We continue to work with our travel counselors, a couple of travel customers with respect the [inaudible] and the number of other conversations with other customers on it.

We are in a sort of a lab, sort of UAT with one large travel customer right now and we are hoping to actually be live with that towards the second half of this year. .

Thanks guys. .

Absolutely!.

Take care Brad..

Our next question will comes from Brian McGill from Telsey Advisors Group. .

Good afternoon. Good quarter..

Hey Brian. .

How are you doing? So I wanted to talk a little bit, the same thing, kind of what they’ve been talking about in the last couple questions on the win per day, which as everyone has noted was very good in the quarter and we were lucky enough today to get two slot companies reporting at the same time. .

And at the same moment. .

Yeah, that’s fantastic. But I do notice that that competitor who changed how they disclosed things was basically saying their U.S., Canada yield came in at $38. And what I’m wondering is you continue to add more premium games in the play levels Dean was just talking about.

Would that type a number longer term be a goal?.

I think our goal may be above that number, but remember they have a lot of the highest grossing wide area progressives in their units, and that's you know the best for the us as well, and we are only as I noted, only at 5% of our installed base in the wide area progressive currently.

So as we expand that, I would expect the numbers to continue to increase. .

And then I guess I’m wondering where are the operators these days in terms of play levels in general of keeping participation games on the floor. I know you just said 3x from any of your newer games that are out there, which is fantastic, but where are they these days on play levels that are keeping....

You know there is no – as you know there is no real rule amongst them. Each one has a slightly different take on it, but they all you know view it as a multiple of house average in order to stay on the floor with a premium product. .

I know, it’s still typically above 2x typically, at lease two usually right?.

I would say that’s typically. .

Alright, thank you. .

Thanks Brian..

And thank you for your questions today. There are no further questions at this time. So I'd like to turn things back to Randy Taylor for closing remarks. .

Well, thanks for joining us today and we look forward to discussing further progress in our business when we report our 2019 second quarter results in August. Thank you. .

That does conclude our conference for today. Thank you for your participation..