PlayAGS, Inc. (AGS) Earnings Call Transcript & Summary

Good afternoon. Thank you for attending today's AGS Q4 322 Earnings Conference Call. My name is Tamia, and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you. It is now my pleasure to pass the conference over to your host, Brad Boyer, Senior Vice President of Investor Relations.

Thank you, operator, and good afternoon, everyone. Welcome to the PlayAGS Inc. Fourth Quarter and Full Year 2022 Earnings Conference Call. With me today are David Lopez, CEO; and Kimo Akiona, CFO. A slide presentation reviewing our key operational and financial highlights for the fourth quarter and full year ended December 31, 2022, can be found on our Investor Relations website, investors.playags.com. On today's call, we will provide an overview of our Q4 and full year 2022 financial performance and offer perspective on our current financial outlook for the business. This conference call will include the use of forward-looking statements. Any statement that refers to expectations, projections or other characterizations of future events, including financial projections or future market conditions, is a forward-looking statement based on assumptions today. Actual results may differ materially from those expressed in these forward-looking statements, and we make no obligation to update our disclosures. For more information about factors that may cause our actual results to differ materially from our forward-looking statements, please refer to the earnings press release we issued today as well as risks described in our annual report on Form 10-K, particularly in the section of these documents titled Risk Factors. Our commentary today will also include non-GAAP financial measures. We believe the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends in our business. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliation between GAAP and non-GAAP metrics for our reported results can be found in our earning release issued today. Please refer to our filings with the SEC for more information. With that, I would like to turn the call over to our CEO, David Lopez.

Thanks, Brad, and good afternoon, everyone. Q4 2022 was a record-setting quarter for AGS on many fronts. That said, I would like to highlight a few of the many impressive accomplishments from the quarter. Total company revenue increased 16% year-over-year to a record $82 million. Net income and adjusted EBITDA grew to quarterly records of $2.5 million and $37.3 million, respectively. Domestic EGM recurring revenue grew by 8% year-over-year to a record of over $47 million. Global EGM unit sales increased by more than 35% year-over-year to over 1,100 units. Our premium EGM installed base increased by nearly 60% year-over-year, and table product revenue was up more than 20% year-over-year to approximately $4 million. All of the highlights I just described were directly driven by the investments we have made into our R&D, sales and product management teams over the past several years. Looking back, it is remarkable to think how far we have come in such a short period of time. The payoff from these investments is not only reflected in our record-setting fourth quarter results, but also in the consistent improvement in our financial performance over the past several years. Here are a couple of high-level examples. First, total company revenues have now increased sequentially in each of the past 8 quarters, while adjusted EBITDA has made similar progress by growing in 7 of 8 quarters. Drilling a little deeper, domestic EGM RPD has held above the $30 level for the past 7 quarters, while our domestic EGM installed base has grown sequentially for 3 consecutive quarters. Looking ahead to 2023, I see a set of company-specific growth catalysts forming within all 3 segments of our business that should allow our operating momentum to continue. Turning first to EGM sales. Our recently launched Vector cabinet continues to serve as the star of the show. Spectra has now achieved top billing in the Isles Cabinet report for 5 consecutive months with reported performance consistently exceeding 2x house average. Spectra's launch titled, Long Valeo and Shamrock Fortunes continue to support the Cabinets chart-topping performance with each theme achieving a top 15 ranking for Aisles. In addition to Spectra, our first 2 high-denomination games, Mega-Diamond and Golden Inferno continue to deliver strong game performance both inside and outside of the high limit route. Spectra and our High Denon Gamepack, Sirius 12 punch by enabling us to attack various segments of the operator's floor, contributing to an increase in our average order size. Shifting to the people side of the EGM business, recent investment in R&D, product management and sales should not only provide our team with a deeper and more diverse portfolio of products to sell, but it will also enhance market penetration in turn, strengthening returns on our investments. In 2023, we intend to nearly double our core game content releases as compared to the number launched in 2019, allowing for more shots on goal with our customers. Finally, we recently received state-level regulatory approval to begin selling our products into Colorado, Minnesota and Missouri, 3 states that collectively represent an addressable market of over 40,000 units. We plan to make our initial sales into these markets later this year. Ultimately, I believe our unique blend of products, people and new market growth at Catalyst should allow us to increase our share of the domestic slot sales market in 2023. Moving on to our domestic EGM recurring revenue business. Although we have produced 12 consecutive quarters of premium footprint growth, we estimate we have only penetrated 65% of the addressable casino market for our products. That said, when viewed in conjunction with the over 25 new premium titles scheduled to launch throughout 2023, and the added diversity of our product offerings, we intend to expand upon our 15% premium unit mix as the year progresses. Additionally, we plan to further leverage the expanded scope of our core product portfolio and added capabilities of our product management team to further optimize the performance of our core unit footprint. All told, I believe the steady performance of our existing premium footprint, the opportunity for additional premium unit growth and our unique set of core unit optimization tools should allow us to improve upon our record 2022 recurring revenue performance. Although it is still very early in the year, I would note, 2023 is off to a very encouraging start as we set new all-time monthly record for domestic EGM recurring revenue in January and trends through February remain on a similar trajectory. Looking beyond EGMs, I'm equally excited about the outlook for our Table Products business. PAX, our recently launched single-deck card shufflers off to a strong start with our footprint expanding to nearly 150 units at year-end. With PAX approval in all major North American markets and supported by the overwhelmingly positive customer feedback we continue to receive on the product, we believe we remain in the very early stages of realizing the product's true growth potential. In addition to PAX, we also see accelerating demand for our bonus spin at extreme table game progressing. At year-end, BSX was installed in nearly 20 different gaming jurisdictions throughout the United States and Canada with an installed base of over 400 units. Last but certainly not least, the growth prospects for our Interactive segment are as bright as they've ever been. Following the recent announcement of several impactful new customer wins, including Draft Kings and BCLC, our portfolio of over 30 proven AGS titles is now live in nearly every active North American jurisdiction and with all 5 of the highest revenue-generating operators in the United States, a group that collectively accounts for over 80% of market-wide GGR. Additionally, we believe recent strategic new hires on our technical and commercial teams should meaningfully transform the trajectory of the business by accelerating the flows of AGS game content into the online channel. In summary, I believe that with the investment we have made in people, along with the momentum and potential we have in all 3 product lines, we are on pace to challenge our record full year adjusted EBITDA performance in 2023. Before closing, I would like to address the topic that is usually reserved for Kimo, the balance sheet and deleveraging, an area where I'm happy to report achievement of our year-end net leverage target of less than 4x. I want to reinforce our investors that as an organization, we are intently focused on increasing cash flow and reducing the amount of leverage on our balance sheet, the asset expense management, and the careful and calculated reinvestment in our products and installed base. To wrap up my comments, I would like to thank our AGS team members for their hard work and dedication throughout 2022. Without you, we cannot deliver the type of record results we reported today. I truly believe we have the strongest team and deepest product lineup in my tenure as CEO, and I am greatly encouraged by what lies ahead for our company in 2023 and beyond. With that, I will turn the call over to Kimo.

Thank you, David, and good afternoon, everyone. I would like to start off today's call by reviewing a few highlights from the fourth quarter and providing some perspective on how we see each of our business segments trending as we look forward into 2023. I will also address a few items related to our balance sheet and close by sharing some thoughts on our free cash flow outlook for the current year. Unless otherwise noted, all of my forward-looking commentary contemplates macroeconomic conditions that are relatively consistent with those we are experiencing today. Turning first to our domestic EGM gaming operations business, Fourth quarter revenue increased 8% year-over-year and 13% versus Q4 of 2019 to a new company record of approximately $47 million. Our domestic EGM installed base increased sequentially for the third consecutive quarter, while domestic EGM RPD exceeded $30 for the seventh quarter in a row. Further penetration of the higher-yielding premium game market segment continues to simultaneously drive growth in our domestic installed base and reported RPD. At the end of the fourth quarter, premium games accounted for 15% of our domestic EGM installed base compared to 10% in the prior year period. In addition to our sustained premium unit momentum, the successful launch of our initial games in the higher-yielding high-denomination games segment, the strong performance of our launch titles on the recently introduced Spectra Cabinet, continued implementation of our installed base optimization initiatives and consistent GGR trends across our served markets further supported our record-setting recurring revenue performance in the quarter. Looking ahead to 2023, we expect a strong pipeline of premium unit demand and an increasingly stable core unit footprint to support consistent sequential growth in our domestic EGM installed base at a level similar to what we achieved over the past several quarters. As it relates to domestic RPD we believe we are uniquely positioned heading into 2023 as our ability to leverage multiple company-specific catalysts should allow us to consistently deliver performance that exceeds broader industry-level revenue trends similar to what is reflected in our Q4 2022 results. While encouraged by our sustained premium gain momentum to date, our enthusiasm does not stop there as we see an equally compelling opportunity to leverage our new chart-topping Spectra gaming cabinet, increasingly deep and diverse core game content portfolio, including our first-ever High-Denom games and the enhanced capabilities of our product management team to further optimize the RPD performance of our core unit footprint. All told, we believe these catalysts position us to comfortably sustain our domestic EGM RPD above the $30 level for all 4 quarters of 2023, even in a scenario in which market level GGR trends were to moderate slightly from 2022 levels. Shifting to EGM equipment sales, fourth quarter global unit sales eclipsed 1,000 units for the second consecutive quarter, reaching their highest levels since Q4 2019. We successfully launched our chart-topping Spectra gaming cabinet during the quarter with over 150 units sold into the market. Additionally, we benefited from the introduction of our first ever high-denomination game content as we continue to leverage the added product diversity resulting from our recent R&D investments to capture a greater share of our customers' slot capital spend. Finally, our strategic focus on broadening our customer account penetration, both inside and outside of North America, further supported our Q4 unit sales performance. As we look ahead to 2023, overall market level purchasing demand continues to prove resilient as we have yet to observe any material change in our customers' purchasing behavior to date. That said, provided the current purchasing resiliency persists throughout the remainder of the year, we believe the company-specific catalysts David laid out earlier in his prepared remarks, uniquely position us to achieve global EGM and unit sales that far exceed 2022 levels. Turning to pricing. Fourth quarter global average selling price, or ASP, eclipsed 19,000 for the fifth consecutive quarter. Q4 benefited from initial sales of our premium-priced Spectra Cabinet, which carries a higher ASP relative to Orion Curve. Additionally, we were able to leverage our price integrity initiatives and the strong performance of our newly launched plan denomination games to hold the line on current pricing throughout the quarter. Looking out over 2023, as Spectra grows to comprise a greater portion of overall sales unit mix, we would expect ASP to drift slightly ahead of full year 2022 levels, all else being equal. Moving to our international EGM segment. Total international EGM recurring revenue increased 12% year-over-year to $4.4 million, supported by the consistent macroeconomic recovery we continue to observe throughout Mexico. Additionally, our holistic approach to optimizing our global fleet of recurring revenue EGM units has allowed us to continuously strengthen the quality of our Mexico installed base in a capital-efficient manner, further supporting the consistent improvement in our Mexico performance. To that end, international EGM recurring revenue has now increased sequentially for 10 consecutive quarters dating back to Q2 of 2020, a trend we expect to continue throughout the current year. Looking beyond AGM, our table products business remains on an encouraging trajectory with fourth quarter revenue and adjusted EBITDA each increasing by over 20% versus the prior year. While we achieved year-over-year growth across all of the table products verticals, shoppers and progressives remain our 2 largest strategic growth drivers. Our PAX single card shuffler footprint approached 150 units at quarter end, nearly doubling versus the prior sequential quarter, while our progressive installed base increased by over 25% year-over-year, surpassing 1,800 units for the first time. Looking ahead to 2023, we expect further customer adoption of our PAX shuffler, Bonus Spin Xtreme Progressive and AGS Arsenal site license program to result in consistent sequential growth in both our Table products revenue and adjusted EBITDA as we progress throughout the year. Shifting to Interactive. Trends within the business remained stable throughout the fourth quarter as revenue exceeded $2.5 million for the third consecutive quarter, while adjusted EBITDA was positive for the 12th quarter in a row. RealMoney Gaming or RMG revenues increased by 7% versus the prior year, supported by continued outsized growth within the North American RMG channel, which accounted for over nearly 90% of Q4 R&D revenue mix compared to 67% in the prior year period. Looking ahead, as David indicated in his comments, we're excited by the growth prospects for our RMG business in 2023. Turning to margins. Fourth quarter adjusted EBITDA margin was approximately 46%, nicely ahead of the expectations articulated on our Q3 call. We attribute our relative outperformance in the quarter to a combination of revenue upside, better-than-anticipated EGM sales gross margin performance and the timing of new hires. For the full year, adjusted EBITDA margin was approximately 45%. Looking ahead to 2023, we expect our full year adjusted EBITDA margin to land in the 44% to 4.85% range. Our current margin outlook contemplates the following: mix headwinds resulting from an anticipated increase in EGM product sales revenue to exceed the rate of growth in our EGM recurring revenue business, additional investment into our R&D organization, albeit at a more moderate rate than in 2022 to support our future growth initiatives and the impact of market level inflationary cost adjustments on our business. We believe the realization of improved EGM product sales gross margins driven by a greater mix of our value-engineered Spectra Cabinet sales and further supply chain normalization and implementation of additional operating efficiency measures should help to offset a significant portion of the impact of items I described to have on our reported margin performance. While it is too early to formally comment on our outlook for 2024, we do believe the operating leverage we are expecting to realize as we progress throughout 2023, should continue into the next year, all else being equal, allowing for additional margin expansion. Looking at the balance sheet. We ended the year with total liquidity of just under $80 million, inclusive of the $40 million available under our undrawn revolving credit facility. Net leverage at year-end was 3.8x, in line with our expectation to exit the year with net leverage inside of 4x. Supported by the company-specific catalysts emerging across all 3 operating segments of our business, the resilient trends we continue to observe within our day-to-day operations and our cautiously optimistic outlook for the remainder of the year, we expect to exit 2023 with net leverage in the range of 3.25x to 3.75x. I would note the assumptions underpinning the 3.5x midpoint of our targeted leverage range contemplated a modest pullback in prevailing market level conditions as compared to those encountered in 2022 and in the 2023 year-to-date period. That said, should broader market conditions or trends remain consistent with those we are currently experiencing, we would expect to exit 2023 with net leverage in the bottom half of the range. Looking beyond 2023, our organization remains squarely focused on reducing net leverage to inside of 3x, a goal we believe is attainable over the next 18 to 24 months based upon the current trajectory of the business. Before closing, I would like to address a few items related to our cash flow performance in the quarter and provide some perspective on our outlook for the current year. Fourth quarter capital expenditures totaled $19 million, bringing full year 2022 capital spend to approximately $70 million. Looking ahead to 2023, we expect to incur full year capital expenditures of $65 million to $70 million, inclusive of anticipated capitalized R&D expenditures. As a reminder, we continue to target cash-on-cash payback of less than 12 months on all equipment-related capital deployments. We generated approximately $6 million of free cash flow in the fourth quarter, pushing full year free cash flow to $8.5 million. Excluding onetime cash costs associated with our February 2022 debt refinancing, full year free cash flow would have been approximately $15 million. Turning to 2023. Although recent moves higher in market level interest rates are expected to increase our debt service costs relative to the levels incurred in the prior year, we believe the anticipated growth we expect to achieve in our operating cash flows, coupled with our targeted level of capital investment should allow us to deliver a year-over-year increase in our normalized free cash flow output. From a quarterly cadence perspective, we expect to be free cash flow positive in all 4 quarters of 2023 after normalizing for seasonal employee bonus payments in Q1 and expect free cash flow generation to build sequentially throughout the year with Q4 serving as the high watermark for the year. Operator, this concludes our prepared remarks. We would now like to open the line-up for questions.

Absolutely. We will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from David Bain with B. Riley.

First, I just want to congratulate you on the quarter and where I believe you guys are now. It seems like the last few years have been about stabilization, execution improvements and just a lot of building blocks being put in place. And we're kind of a new position now. And I guess the question is, you commented David and Kimo, a little bit about the differences in product and positioning today versus '19. In '19, you printed about I think it was $146 million of EBITDA. Maybe you can walk through some of the largest -- and again, you may repeat yourself here, but segment differences today versus then. And one reason I ask is when we look at consensus, it's at 142, I look at your 4Q run rate, which is about 19 levels and your quarter-over-quarter track record of growth here. Maybe there are some other factors outside of macro that we should consider there. So I'm just trying to understand if the trends and setup looks good, if not better, in that period from a company's specific perspective.

All right. David, I appreciate the question. I think I know... That's a multipart question there, I think. But just from a -- I'm going to talk about products just a little bit, and then I'll turn it over to Kimo, if he's got anything in reflection to your 2019 EBITDA commentary and everything. So obviously, from a product perspective, quite a bit has changed on a few fronts, right? Table games was in its infancy. Also, we did not have the PAX Shuffler. We were nowhere near the momentum we have now on our progressive. So that's a big change in the business there. If you turn the clock back, I mean we're just talking about -- we're comparing and comping to 2019. The premium business wasn't really in its infancy. It didn't exist. And so we've come quite a ways there now when you look at the number of premium units we have installed rather impressive. So that's -- that mix has changed for us considerably on the slot side. And then as we know, interactive as well, that's a whole new line of business for us compared to 2019 from a real money gaming perspective. So I think the setup is good for us. I think when you look at our product mix and between new products and -- that didn't exist back then, but even just thinking in the last year or so, you look at the product mix with premium and the setup we have there and how it's still a new business and we've got a lot of white space ahead of us. I think we're sitting pretty well. I mean even I'll sort of pivot a little bit to Q4 and Q1, if you don't mind, Q4, if you look at Macro GGR numbers, not us, but Macro GGR numbers. I think year-over-year, if you look at that, Macro GGR was up I mean, 1% or 2%. And if you look at Q3 to Q4, Macro GGR will argue flat or down a smidge. And in both those instances, we were up 8% year-over-year, and I think we're up about 2% Q3 to Q4 from a game ops perspective. So I think all the fruits of the labor and everything are working out and going back to 2019, we might have had 2 studios up and running. And I think we're right around 7% now. And as I've always said, hey, well, we've got 7 studios with only 5 cylinders aspiring, we got 7 out of 7 now. And not only are they all firing away and making games, but they now all each and every one of those 7 are producing content and their content is in the field. Now I'm going to turn it over to Kimo for part of your question I missed. And maybe he can snap that, I'm not sure.

Maybe just a little add-on to what David already said. If you look at frame up 2022, right, like David, if you look at what we've already achieved on the revenue front, we've exceeded 2019 levels. I think like your comment specific to EBITDA, if you go into kind of some forward-looking language that was in the prepared remarks, we talk about our leverage range, right? -- being specific to something I'd say in there. If you look at the midpoint of our leverage guidance, so call it, 3.5x, in that, we're already saying that we have some macro pool back in the, call it, the back half of the year. But I think implicit in that, right? I think you kind of get to a point where you can see us -- I'll use the word challenge 2009 EBITDA, right? I won't say fairly easily, but we're already talking about being back at that level. So '22, we exceeded '19 level of revenues based on investments that we've made, right, primarily in R&D and our commercial team, EBITDA has lagged a little bit compared to '19. But I think we feel really, really great about the 23 setup as it relates to EBITDA compared to 2019.

Awesome. I promise this one will be short. The Spectra Cabinet, I mean top cabinet performer according to some surveys -- it's within the portrait category, which is the deepest I believe. So how do you really support that? I mean, you talked about 30 games. Can you compare that 30 titles, can you compare that to other cabinet launches that you've done in terms of being able to support it with content? And I ask, I know that we're doing 1,000 games historically per quarter so it's going to have a -- should have a nice differential to you, but is this something that can really break if we have enough content and where we stand there?

Yes, David, I'll take that. This is Brad. Great being with you today. So I think Spectra is really a combination and reflection of all the changes we've put in place as an organization. This product was very carefully launched with content that we sort of knew featured form factors that were very prominent and relevant in the market. We tested it extensively. As you may recall, we had it in the market with some prominent operators prior to G2E. So we were able to sort of sell that performance, so to speak, at the show to customers. And not only that, so not only the preparation on the front end, but we supported it on the back end as well, right? We're expecting to launch this cabinet with over 30 titles in year 1 to support it. So we have a depth of content to support the launch that we've never had before. So from the front-end side, those are some highlights. I would also add, I think it's equally as important. This is a cabinet that our operation and production team have sort of anticipated in the design of from day 1. So it's a very value-engineered cabinet, very margin-friendly cabinet. And so in this current day and age of some inflationary cost pressures that everyone likes to talk about, having this value engineered cabinet has really helped us. You saw it a little bit in Q4. If you look at our product sales margin, they were up a couple of hundred basis points sequentially. And as we highlighted in the prepared comments, as we move into '23 and Spectra grows to comprise a greater portion of the mix, you should see that gross margin on or start to move even higher. So just a lot of really good things going on with Spectra, a lot of content, well tested before it ever went out into the market commercially. We're really excited about the prospects for it here in Q1 and beyond.

The next question comes from David Katz with Jefferies.

I wanted to just go into the product sales number, which obviously was -- stood out as having some strength. And I think you made some mention about some international sales. Can you unpack for us where those are? And I'll throw my follow-up in, which is what are you hearing from operators in terms of their comfort with budgets, given the economy question that's out there that has yet to be answered.

Thanks, David, and thanks, and I think Good morning where you are. So I appreciate you calling in...

Just fairly...

Yes. It's either so late that it's early or so early that it feels late. I'm not sure. But... So on the... Yes, the -- I think it's really Latin American sales that you're referring to. It's still pretty to sort of very small. So there's not a whole lot there to unpack at the moment. I think the potentials there in the future, aspirationally, those numbers will be much higher going into the second half of '23 and I think into '24, but I'll refer to those as aspirational numbers. But it is something that we're focused on. I know that our product as an update I just got, what, 2 or 3 days ago, our product performs very well down in Latin America in a couple of countries, in particular, but we got some updates there. So that's going great. From the capital perspective, game sales perspective, like I think it's the same thing every quarter. We don't see anything at this point in time. We're waiting as everyone that watches CNBC, we wake up every morning, and we see the news and then we see numbers. We look at numbers real time here, pretty close to real time. January, we mentioned in the prepared remarks, it's a record January. Again, -- so we have a record January for game ops. Game sales are strong. Customers aren't indicating that they're trimming anything. There's nothing that's been said to us at this point. So as I like to say, the gaming industry has not linked. I know that it seems like the stock market has and watchers of CNBC have plunged, but right now, gamblers have not plant.

Understood. So if I can just follow that up quickly, right? With respect to the quarter and the game sales, we always look for sort of large chunks or lumps that may have driven some upside? Or would you consider it just kind of a normal kind of growth across the board of your customer base?

I'll give that one to Brad for he likes to hit this depth and breadth answer. It's different than it used to be.

Yes. I think it's the latter, David. I think it's a function of really key strategic priority of ours on the sales side is to open more doors. So we're -- it's really twofold. We're opening more doors selling into more customers. And given the added breadth of our content portfolio supported by some High-Denom games, we're able to drive up our average order size. So that's really sort of the method to the badness, open more doors and sell more units into each customer. So that's what you see in that quarter. There's really no large outliers or anything in that number.

Our next question comes from Chad Beynon with Macquarie.

Just a follow-up, Brad, on the open more doors category. At the outset, David, you talked about some new markets, Colorado, Minnesota, Missouri, these are pretty big markets with good order flow. Does this kind of put you at the point where you've kind of colored in all the white space? Are there any markets left after that? And then could you just kind of remind us when you historically have gotten licensed in markets, how long it takes for you to maybe get close to what your market share is?

Yes. Chad, I can take that one. So yes, that's all 3 good markets for us. That sort of closes the book, so to speak, from a level of reality perspective of markets where we could get licensed. So we're pretty much ready to roll everywhere now in the U.S. From a timing perspective, I mean, I think conservatively speaking, probably looking more to the back half, right? There's a twofold process in licensing on is to get your license and then you have to submit your products to get them licensed as well. So we've already started that process here in Q1 on the product side. So I think I'd expect to start to see some lift there in the back half. The beauty of 2 of those markets is they're generally dominated by operators that we have existing relationships within other jurisdictions. If you look at Missouri, Colorado, there's a lot of sort of multi-jurisdiction operators in those markets. So they know our product, and so we can hit the ground running there. And one other thing I would just add on your opening doors comment, I think it ties into this a little bit. If you look at it today, our sales team is effectively double the size it was in 2019. We have a new head of corporate accounts, a position that we didn't have back in 2019. We have regional sales directors overseeing all the regions. Our touch points are greater than they've ever been. And so that's really playing a key role in helping us sell into more customers. And I think you see that in the numbers.

Just to add a tinier. Obviously, our sales team is firming up nicely, and I think we've got a lot of strong players. But obviously, with core games performing in some of the figures that -- on multiples of 3x and up and our premium business doing very well. I think between the salespeople and the performance of the games' opening the door should be rather quick and easy, but sales people listening, I don't know that all very easy, but the games are doing fantastic. So we've got great opportunities there.

Appreciate it. And then a follow-up question just on your leverage guidance, which kind of implies EBITDA, I guess, somewhere between 22% EBITDA in 2019 EBITDA. Was there any assumption for kind of a Texas windfall? I know we've talked about that over the past couple of quarters. Could you just kind of update us in terms of where that is in the process and if anything factored into your outlook there?

No. Thanks, Ted. No windfall revenue in our numbers. As a matter of fact, when we do our planning over the next 3 and 4 years, we just take windfall stuff out of the equation, and we plan all our growth absent of that. Not that we don't think it's going to happen, but we don't like to count on things like that. As far as approvals and I think you're referring specifically more to one of the tribes in Texas. Nothing as of yet. They're still in the planning phases. We have always thought that it would be sometime in the first half. So we're sticking to that time frame. We think we'll hear about their plans sometime in the first half of this year. And obviously, when that happens, I think it will not only come from us, but it will be rather public and they'll be announcing that via press release when that time comes. But none of -- our numbers do not include Texas expansion.