Everi Holdings (NYSE:EVRI) stock is soaring Monday after the gaming machine manufacturer pre-announced second-quarter results that top Wall Street forecasts while revealing plans to refinance debt at favorable terms.
The announcement by the Las Vegas-based company has the shares higher by 7.10 percent in midday, extending a run in which the stock gained 53.58 percent year-to-date — easily enough to make it one of 2021’s best-performing gaming equities.
Everi said it expects second-quarter sales of $167 million to $172 million, up from $139.1 million in the first quarter and well ahead of the $129.7 million posted in the second quarter of 2019. Analysts are measuring gaming companies’ 2021 quarterly results against 2019 numbers because the severity of the 2020 coronavirus shutdown makes last year’s data unreasonable comparisons to this year’s numbers.
The company expects 2021 second quarter net income of $31 million to $34 million compared to $20.5 million in the 2021 first quarter and $5.5 million in the 2019 second quarter,” according to an Everi statement. “Diluted earnings per share are expected to be $0.31 to $0.34 compared to $0.21 per share in the 2021 first quarter and $0.07 per share in the 2019 second quarter.”
The fintech provider adds second-quart adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) will be $87 million to $91 million. That beats the $75.4 million notched in the first quarter and the $64.1 million delivered in the same quarter two years ago.
Analysts Loving Everi Stock
Prior to today’s announcement, analysts were mostly enthusiastic about Everi, but that bullishness is being enhanced by the positive pre-announcement on second-quarter and gaming device maker’s plans to reduce debt.
Three weeks after revealing a $33 price target on Everi stock, B. Riley analyst David Bain ratchets that estimate to $38 on the basis of the company’s earnings update. He raises his 2021, 2022, and 2023 EBITDA forecasts on the name by nine percent, eight percent and seven percent, respectively. His new price outlook implies upside of 79 percent from the June 18 close and he sees another catalyst for the shares.
“Beyond today’s announcement, we believe EVRI continues in advanced-stage discussions with several multi-property, multi-jurisdictional operators with an online presence about digital wallet installations and continue to believe 3Q21 will mark its next major digital wallet installation,” said Bain in a note to clients.
Stifel analyst Jeffery Stantial also delivered bullish commentary on Everi a week after reiterating a “buy” rating on the gaming machine maker with a $25 price target.
“Management’s commentary on gaming ops reinforces our expectations for continued share gains, with notable momentum in the premium segment. EVRI citing Q2 slot shipments up Q/Q is also encouraging, though it is unclear how much is being driven by new openings vs. accelerating replacement rates,” said Stantial in a note. “All told, we continue to see further upside in the shares and reiterate our Buy rating.”
Everi Firming Its Balance Sheet
Thanks to the earnings forecast, Everi expects free cash flow of $32 million to $36 million for the current quarter as cash on hand rose to $360.8 million as of May 31 from $335.1 million on March 31.
Contributing to the upside in Everi stock today is the company’s plan to capitalize on favorable market conditions to reduce its debt burden.
“Everi plans to refinance its $35 million Revolving Credit Facility due 2022 and its $820 million Term Loan Facility due 2024, prepay in full its $125 million Incremental Term Loan Facility due 2024, and redeem the $285.4 million of Unsecured Notes due 2025,” according to the company.
By refinancing $1.14 billion in debt, Everi will have $1 billion in outstanding obligations and access to a new $125 million credit revolver.