PlayAGS, Inc. (NYSE:AGS) Q3 2023 Earnings Call Transcript

David Lopez: Yes. I think that, this is a nice, like, a bit of a debate that we all have sort of examined, perhaps, and, I don’t want to say the end of COVID, because I just had COVID last week. But it’s something that we all sort of been talking about for a couple of years now. And I think it’s just as it depends on the region, regionals might do one thing, Vegas trip, type destination will be another thing, and then there’s always tribal and Canada. And, I think for us, we know that we can put them into segments, some of those will be much more conservative, David. And then I think that there’s others that sort of is in the middle, and then I’ll just be specific, tribal, and Canada tend to, carry the day, they continue, they usually tend to be very consistent, and at times even aggressive, because their businesses, they seem to really hum almost under, I don’t want to say any circumstances, but a mild pullback, they tend to do very well.

And they continue to be aggressive through those times. I don’t know if that’s helpful, but I think we, that’s how we break it down into three areas there, which are all told, probably amounts to a fair bit of stability, David.

David Katz: Right. And so just to make sure, I’m not paraphrasing incorrectly, when operators are making decisions about whether to renovate this or that, or extend this or that those should be treated, in most cases as a discrete decision set versus, how many slots we’re going to buy and why. Is that fair?

David Lopez: I mean, if you’re talking about, it’s interesting if you’re talking about CapEx spend on property, specifically, well, across the entire property, and not specifically spots, I’d say that if you put us up against those, a lot of operators post COVID, during COVID may have just looked at things a little differently and said, hey, if we’re going to spend money, let’s invest on the casino floor, where we want to be competitive against our operational competitors in the region or on this trip or any of the like, and I think that manufacturers, slot machines, table equipment, et cetera have gotten a bit of a nod over maybe some new carpet, or some other, I’ll call it not as an operator and not as an expert. They’re non-revenue generating CapEx investments. So I do think like specifically this question, this comment you just made about paraphrasing it, I think that we get the nod on a bunch of that stuff as CapEx can tighten.

Operator: Our next question this evening comes from Jeff Stantial from Stifel.

Jeff Stantial: Hey, good afternoon, guys. Thanks for taking our questions. Maybe starting out here on the EGM business, perfect domestic game often installs about flat quarter-on-quarter if I’m hearing you right, I think the narrative, it sounds like, some of your optimization efforts used to be called pruning kind of offset the gross add for curve premium and for Spectra 43. Is that a fair way to kind of characterize Q3 trends? And then if so, as we looked at 2024, should we expect overall similar albeit lumpy levels of kind of optimization? Is this more of a tapering trend? Just any thoughts there would help as we think about the outlook for net growth in the domestic installed base?

David Lopez: Thanks. Hey, thanks. So Q3 is probably a little bit different than what you mentioned there, maybe not so much on the optimization front, and the second half of the year here and in Q3, we saw, right towards the end of the quarter, I’d call it some opportunistic converting to sales by customers, that their budgets reset at the end of Q3. For us our Q3, the end of their account, or the end of their fiscal year is the end of their Q3 calendar year. So some of them, let’s say, had some extra CapEx that may fall under the term use it or lose it. And I would say, although I don’t love convert to sales, we’re honored that they’re selecting our product, because that means our product presents value, and buying at that point in time.