Q3 2022 PlayAGS Inc Earnings Call
One of our recent investments in content creation from conception to commercialization was on display for all to see.
The added depth and variety of our content portfolio truly resonated with our customers helping to change the way they think about the <unk> brand.
Outside of <unk> customer interest in our expanded suite of innovative table products was equally as strong.
<unk> SaaS are singled that card shuffler garnered most of the attention our customers continue to look for opportunities to further leverage our industry, leading progressive technology to optimize their table game operations.
I am confident our current table product portfolio, along with our commitment to serve as the innovator and partner of choice within the table products space should allow us to steadily grow both revenue and adjusted EBITDA for many years to come.
All told.
While the demand we saw exiting G III should boost our near term financial performance.
I'm, even more encouraged by what the Big picture takeaways from the show will mean over the coming years.
Here are just a few of those takeaways.
We have demonstrated a significant expansion in our core ECM content portfolio.
Our premium product quality and momentum are making huge strides.
AGM hardware and product innovations are notable and highly competitive within what we saw at the show.
Our continued success and industry product leadership and the table product space is getting more recognition each year.
And finally, our investments in online real money gaming along with continued cultivation of the international AGM market will provide strong opportunities for years to come.
These are just a few examples of the successful work we have done to fuel our future growth and now is the time for our team to execute.
With that I will turn the call over to chemo to walk you through our third quarter results in greater detail.
Thank you David and good afternoon, everyone I would like to start off today's call by reviewing a few highlights from the third quarter and providing some perspective on how we see the business trending as we look ahead into Q4.
Also like to address a few items related to our balance sheet and close by sharing some thoughts on our fourth quarter cash flow outlook. It.
It is important to note my forward looking commentary contemplates no material changes in prevailing global macroeconomic conditions.
Turning first to our domestic <unk> gaming operations business third quarter revenue increased 4% year over year to approximately $46 million.
The recent positive underlying trends within our domestic AGM recurring revenue business continued into the third quarter with domestic ECM, our PD topping $30 for the sixth consecutive quarter and our domestic AGM install base expanding for the second straight quarter.
Our ability to further penetrate the higher yielding premium game market segment continues to simultaneously drive growth in our domestic installed base and reported RTD.
At the end of the third quarter premium games accounted for 14% of our domestic AGM installed base compared to 9% in the prior year period with premium mix, increasing approximately 200 basis points sequentially and.
In addition to the tailwind created by our growing premium game footprint continued implementation of our installed base optimization initiatives and remarkably consistent GTR trends across our served markets further supported our domestic AGM recurring revenue performance in the quarter.
Looking ahead to the fourth quarter, we expect a continued strong performance of our Orion curve premium package and the expanded breadth of our premium segment game content and cabinets configuration offerings to drive further growth in our premium game footprint Adil.
Additionally, we plan to begin leveraging our first ever high denomination in game content to further yield optimize our domestic AGM installed base.
These two strategic growth drivers combined with the historically normal seasonal revenue trends, we have observed quarter to date should allow us to achieve sequential domestic AGM installed base growth for the third consecutive quarter and delivered domestic <unk>, our PD that comfortably exceeds prior year levels, extending our $30 plus.
Our PD streak to seventh consecutive quarter.
Shifting to AGM sales third quarter Global unit sales increased by over 50% versus the prior year eclipsing 1000 units for the first time since Q4 2019.
The strategic broadening of our customer account penetration the harvesting of incremental returns from our accelerated R&D investments.
Further leveraging of our exceptional HHR game performance and complementary unit sales into select international markets drove our improved unit sales performance in the quarter.
Looking ahead to the fourth quarter, we expect the same set of strategic initiatives to underpin our <unk> unit sales performance.
Additionally, we plan to execute a targeted rollout of our new spectra gaming cabinet in high denomination game content in the quarter, both of which are delivering strong initial performance and in turn stimulating robust customer demand.
Finally, we continue to observe relatively normal customary equipment purchasing behavior as concerns over what lies ahead for the global macro economy have not materially impacted market level purchasing demand to date combined.
Combined we believe these factors should allow us to achieve fourth quarter Global AGM unit sales that exceed Q3 2022 levels.
Third quarter global average selling price or ASP.
19000 for the fourth consecutive quarter as our premium priced Orion curve cabinet accounted for a significant portion of our product mix in the quarter.
Additionally continued implementation of our price integrity program further benefited third quarter ASP performance.
Supported by anticipated favorable compositional changes to our overall product mix, including initial sales of our recently launched spectrum Covenant, we expect to achieve modest sequential ASP improvement in the fourth quarter with global ASP on track to eclipse, the 19000 level for the fifth consecutive quarter.
Turning to our international AGM segment total international AGM recurring revenue increased 16% year over year to $4 3 million supported by the continuation of Mexico is consistent macroeconomic recovery.
International <unk> recurring revenue has now increased sequentially for nine consecutive quarters dating back to Q2 of 2020, a trend we expect to continue into the fourth quarter.
During the third quarter, we elected to formally remove the approximately 7% of our international recurring revenue units previously identified as inactive from our reported international Jim installed base as we felt there was a low probability that these units would be turns back on following COVID-19 restriction induced shutdown.
Yes.
Although immaterial to our reported international recurring revenue in the quarter. This did result in over 470 unit reduction in our reported international AGM installed base importantly, as we look ahead, we do not anticipate any additional contraction of scale within our international installed base and believe that.
Ported Q3 level serves as a good base level to forecast the business.
Looking beyond Agm's, our table products business once again delivered record performance with third quarter revenue and adjusted EBITDA, eclipsing $4 million and $2 5 million respectively.
The addition of nearly 70, new progressive units and over 50 unit increase in our <unk> S shuffler footprint paced our record performance in the quarter.
During the third quarter, we conducted a comprehensive review of our table products installed base, which led to a reduction in our reported unit counts.
Following this review we believe our revised installed base reflects a more accurate accounting of the products on lease revenue and adjusted EBITDA were not affected at all by the adjustment to the installed base and most importantly, this kpis revision in no way alters the segment's compelling multiyear revenue and EBITA growth trajectory.
Looking ahead to Q4, despite a less prolific new casino opening and expansion calendar, we expect to achieve modest quarterly sequential table products revenue growth building on the 15% sequential growth achieved in the third quarter.
As we assess the intermediate term outlook for our table products segment, we believe the accelerating shuffler rollout momentum steady progressive product demand and additional site license adoption should sustain the trend of consistent quarterly sequential revenue growth within the business.
Shifting to interactive trends within the business remains stable throughout the quarter as quarterly revenue eclipsed $2 5 million and adjusted EBITDA was positive for the 11th consecutive quarter.
Our efforts to refocus our interactive resources on growth opportunities within the North American real money gaming market continue to bear fruit as revenues within this channel grew by over 35% versus the prior year accounting for over 85% of Q3, RMG revenue compared to 70%.
<unk> in the prior year period.
Looking ahead, we believe the improved flow of Ags content into the online channel should begin to drive incremental interactive revenue growth, perhaps as early as Q4, while the activation of new BDC customer relationships. The introduction of new online only game content and the expansion of our <unk>.
<unk> content reach into additional North American jurisdictions should eventually steepen the rate of revenue growth, we are able to achieve within the business.
Now turning to margins third quarter adjusted EBITDA margin was 44% in line with expectations articulated on our Q2 call.
Our third quarter margin performance reflects a greater mix of AGM unit sales revenue, which carries a lower gross margin as compared to AGM gaming operations revenue.
Further post COVID-19 normalization in our discretionary business operating expenses and market level inflationary cost fluctuations.
Looking ahead to the fourth quarter, while we should begin to realize a modest benefit from ongoing moderation in global supply chain and logistics disruption and the inclusion of our initial run of value engineered spectra cabinets, which should be gross margin accretive we expect our commitment to investing in R&D to support future revenue growth.
Opportunities and a full complement of seasonal <unk> related expenses to produce a Q4 adjusted EBITDA margin that is in line with to slightly below the 44% achieved in the third quarter.
Looking at the balance sheet, we ended the third quarter with just over $73 million of total available liquidity and net leverage stood at four times.
Reported by our steadily improving financial performance through the first nine months of the year the product momentum building within multiple segments of our business and the consistency we continue to observe within the day to day operations. We are highly confident in our ability to deliver upon our previously issued year end 2022 net leverage target of <unk>.
Less than four times.
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 remainder of the year.
Third quarter capital expenditures totaled approximately $20 million, bringing our year to date capital spend approximately $50 million driven by unwavering customer demand for our high performance premium AGM products in the market strong initial response to our new spectra cabinet in high denomination game content.
We now expect full year capital expenditures to a minimum near the top end of our previously issued $62 million to $67 million range.
Free cash flow in the third quarter was negative 2 million measures taken to ensure that we are positioned to fulfill future demand within standard lead times and the timing of Q3 equipment sales created a $7 million working capital drag in the quarter. Additionally, slightly higher debt service costs as a result of <unk>.
Increases in market level rates further affected our quarterly free cash flow performance.
Looking ahead to the fourth quarter, we believe our sustained operational momentum budgeted capital spending plan and anticipated working capital normalization should allow us to generate positive free cash flow, even after taking the higher prevailing interest rate environment into account.
Operator. This concludes our prepared remarks, we would now like to open the lineup for questions.
Thank you.
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Our first question comes from Jeff Central from Stifel. Your line is open.
Hey, great. Thanks afternoon, everyone. Thanks for taking our questions.
Wanted to start on the North America game ops business if possible.
It looks like yields called 31 and change just a tick lower than kind of the $32 50 reported in Q2 can you just kind of frame the puts and takes going into quarterly sequential growth on the one hand got solid expansion in premium content, the consumer feels mostly stable.
But any other kind of levers that got it got it.
To play when we're thinking about that sequential growth rate.
So I'll just comment on the quarter itself and I think you summed up Theres a lot of puts and takes I think theres a lot of movement I think the good news is on one hand, our premium business is doing fantastic.
Very happy with the progress there you can sort of extrapolate and get into the numbers there what kind of progress we've made in the quarter.
But from there I think the key is beyond our our premium businesses that we just see stability I think this movement isn't a whole lot. There is a little bit of seasonality that comes into play for us where I'll go ahead and turn it over to chemo. So he can talk you through that.
The interesting part of I think you hear some commentary out there Jeff Brian like people are starting to see let's call. It normal seasonality in their businesses right and I think that's what we're seeing I think where Q3 ended up with RPT is where we expected it to be so I don't think theres anything other than normal going on I think seasonality normal seasonality.
<unk> seems to be kind of a theme that we're seeing.
Okay, Great. That's helpful. Thank you both.
Switching to the cost side of things margins kind of hanging around that 44% level chemo can you just kind of frame out for us the puts and takes.
As we go into 2023 for getting back to that 45% to 47% range that that you used to guide to how much is supply chain normalizing versus replacement cycle fully getting back in 2019 versus sort of a lagged return on some of the R&D investments you've made over the past couple.
A years versus anything else. They contemplate let me know if that makes sense.
Yes, so I think related to 'twenty three we're still working through our budget process.
Think I'll comment too much on 'twenty, three but I'll say that.
We're seeing what we just saw in the past quarter in Q3 with dramatically pretty similar to Q2 right look I think what's incremental to Q2, maybe was we see the for sale business coming back in as everyone knows for sale of our business carries lower gross margins than the <unk> business, it's a little bit of that.
Margin degradation sequentially is mixed driven I think maybe one other thing is on the for sale side. Specifically is you do see a little bit of degradation there right.
Against ongoing supply chain inflation that we're seeing we have seen some of that up in transportation costs, but on the component side, we still do see inflationary costs costs. There I think on the positive side right as we've fully accepted that it is what it is.
And we've done the best that we can do with it but we're able to fulfill the demand. We're seeing we made some strategic decisions due to Dubai is on inventory.
Fill demand that we see in the markets I think there is a positive there I think a little forward looking we will continue to invest in R&D, So R&D will be.
A similar level going forward, if not maybe a tick higher.
On the macro as we move into 2003, and I'm not going to comment too specifically on 'twenty three I think it's premature, but I will say, it's top of mind right as you look into the future.
Everyone is talking about macroeconomic headwinds and maybe a little bit of a storm ahead, but it's top of mind, but I won't comment too much on that a bit premature.
Okay perfect. That's very helpful. That's all for me I'll pass it on thank you both.
Thanks, Doug.
You may now sensitive Carlo Santarelli from Deutsche Bank. Your line is open.
Thank you David Chemo, Brad Thanks, very much for all the color.
David maybe this one's for you.
I know that I want to be courteous, you guys not getting too much into 2023, but if I. If I ask the question a little bit differently as it pertains to your unit sale opportunities.
If we were to envision a 2023 with flattish replacement flattish expansion demand relative to 2022.
The Spectre cabinet the incremental content that you guys have the momentum that you have.
How do you kind of think about give or take 4000 units you presumably will sell for the full year 'twenty two in terms of the growth trajectory into 'twenty three.
Yes, so I'll answer that the best I can without getting into that exact number obviously.
A smidge really for us there, but I think the good news is as Mike said, we got spectrum <unk> 43.
Our curve is still moving we've got a lot of content at this time.
We've got all seven studio's producing gains that's the first time, we can say that all seven studios have put again into action in the field. So that's great news. So I think the momentum there I think the product is there I think the investment in R&D is there for us to grow.
And do better than we did in the current year I can't get into specifics, obviously as far as numbers go but I think that you are you're warm youre very warm or hot onto the topic of what the momentum looks like what our performance is going to drive and how confident we are just in the businesses and Jen.
On the sales side and you can sort of see that in the numbers and we can see that in our RP.
Our in store the Eilers report and things like that things that are going to drive that momentum, but <unk> was a good bellwether for that.
Customers were pretty hot on our product and again, we're really proud of the work the guys have done in R&D.
<unk> Studios, all performing right now and many much of that.
Production coming out of there is doing fantastic.
<unk> you have anything that is coming.
Im going up because you can't say anymore.
I think you covered all the key points.
Great. Thank you and then if I could just one follow up.
<unk> has been a little choppy, but kind of in that $16 million to $18 million range. As you guys think about kind of the business today and right sized where you are.
Is this kind of a good run rate, albeit presumably some inflation in there as you look ahead and into 'twenty three 'twenty four et cetera are you kind of set with.
Everything you need at this point from an SG&A perspective.
Yes, I think Carlo I think substantially yes, I think we're I think we're pretty set on the SG&A front I think it's a good rate to use going forward the range that you have.
Great. Thank you very much guys.
Thanks Carl.
Our next question comes from David <unk> from B Riley Your line is open.
Great. Thank you and a nice third quarter result.
I guess the first one I would have is the.
<unk>.
Opportunity for Ags in Texas.
Our largest customer there expands.
Could you participate by like a development deal similar to Windsor or any kind of an early read on structure or timing.
Seems like a pretty big.
Opportunity for you guys. So I'm just trying to get a big picture perspective at this point, if you have any kind of comments there.
Yeah. Thanks, David So obviously the tax is opt.
Opportunity.
Fantastic one for us.
<unk> squarely in our wheelhouse, it's class II.
An area, where we have I would say tremendous relationships.
Been very committed to the tribes down there and really providing products and some of the most challenging at times for them. So we're really happy with sort of how things have transpired. We think the opportunity is is fantastic and you've asked the question about development actually get to you.
Question now.
And I think Thats all on the board. Those are those are all some opportunities that are on the board too early to tell exactly what how that will transpire.
How it will come to fruition for us us, but I think that.
That's certainly one of the options that are out there and you referred to it much like another Oklahoma in Oklahoma Casino.
The development agreement happened, yes, I think it is it could but it is a little bit early.
Okay Alright.
And then I know, it's a smaller portfolio, but it's something that continues to grow nicely on the table side is the taxes S. Shuffler rollout momentum and I'm wondering if you could give us maybe just a little bit more depth around kind of the feedback seems like youre, just kind of scratching the surface with shufflers and.
Maybe even take that to the.
Next shuffler extension that can broaden the table universe for you guys is that something that we should view is transformative for this product to kind of complete the portfolio there.
So feedback on the shop floor right now I think is fantastic reliability, there where as fast as we need to be we're probably given us much faster than we need to be we can probably.
Slowed machine down a little bit more but our reliability is there I think our service is on point.
<unk>. This is the first time, we're really selling the schaeffler when it was fully commercially available obviously, so the rollout is going well interest is high.
View, the schaeffler will start I will say that portfolio and that opportunity has been a good one going forward.
Obviously, we've got to shoppers in there right now the most recent one access we have.
High expectations for and we'd love to keep building that out.
Can't sit here today and tell you exactly when that schaeffler would come out, but our view is to build out that portfolio and have it be a substantial part not just of the table games division, but our growth overall, so we got some experience in the area. We've got some great employees. Our Dev team has been doing great service has been awesome.
And so we've been really really proud once again of the work that the team has done and the feedback we're getting from customers.
Okay awesome. Thanks, so much.
Thanks, David.
We know to answer Barry Jonas from Truest. Your line is open.
Hey, guys.
It sounds like the overall operator outlook is pretty consistent for now despite that one quote potential storm on the horizon.
Im just curious if certain types of operators or specific geographies.
Better than others from a justice perspective at this point.
I think that right now.
We don't really see anything.
Out there theres nothing the numbers, there's nothing in the feedback there was nothing at <unk>, where certain customers were coming to us and saying Hey, This is something that's happening in our business.
Trailing off it's.
It's been rather consistent theres been nothing that we've seen or heard of that indicates hain.
That thing around the corner is coming we're not there yet I mean, a lot of numbers continue to be incredibly strong.
So that's sort of where it stands right now I don't want to pick one versus the other and try to be a prognosticator when they haven't indicated anything to us at this point and we certainly don't see it in the numbers.
Understood understood and then just for a follow up you guys have been calling out HHR performance just wondering how big HHR is now for you and how big you think it could be comp.
So we don't break that out.
Ill turn it over to sort of characterize it the best we can but we don't really break out that number at this point yes.
I think the beauty of the HR market is that youre kind of seeing growth everywhere.
We're seeing growth in existing markets, both in existing facilities and with the addition of new facilities.
Youre seeing new jurisdictions come online.
Like in New Hampshire, and it does seem like for the first time that theres, maybe a little bit of legislative momentum in that area that could further expand the market over sort of a multi year period.
So I think for US. The beauty is is that we have a great relationship with our systems partner our games perform well.
And we're just continuing to tap into that market.
And look for areas to continue to grow it as we as we look down the road.
Okay.
Got it alright, thanks I appreciate it.
Thanks Barry.
Our next question comes from David Katz from Jefferies. Your line is open.
Hi afternoon, everyone.
Thanks for including me.
I wanted to talk about the installed base, just a little bit because I know there is.
A variety of pieces here on the premium piece as you grow that becomes increasingly accretive but it does seem.
And I think we're trying to figure out what the arc of that installed base in total.
It looks like.
Going out a little.
Longer term beyond just the fourth quarter and similarly, the RPG on it.
There should be some meaningful accretion there right, which at some point sort of arcs that RPT upward.
At some point and so if you could just help us.
<unk> got a little bit it would be helpful.
So I'll kick it off a bit there thanks, David I think that.
I'll start with obviously performance and we've talked about premium and I know you commented on it just now when you look at our premium growth sequentially and then obviously our premium growth year over year.
Quite substantial.
I think they will we will over time begin to see that really support that our PD and help grow it over time.
Our success there has been nothing short of Fantastic right now and then you look at the actual install base you say hey, we're not growing the installed base. The same rates youre seeing that we are trading off some of the installed base for some newer and much better installs and that's what we're focused on right now we.
Why not to do too much.
We say, we don't really use the pruning term any more.
Think that we're just making sure that we manage the installed base correctly.
Think we can continue to grow the base, but our focus being on premium because that will drive that number and sort of drive that arc that you're referring to chemo do you have anything to add as far as.
A little color on that.
David you've seen us execute on our strategy, we always talked about rates I think early on as we just go back to when we entered the pandemic right I think our strategy was really increasing the health of the base by making some moves that we did and really focusing on how we invest in that base and if you fast forward to today right a lot of our <unk>.
<unk> is going into premium which is the best returns that we can get right within our business, though as we move forward, Yes, I think youll see the total installed base continued to grow but what really we're focused on is just returns right cash returns. So we want to be most mindful of that.
Being in a way that is just getting the best returns on our investment.
Which would mean trying to increase premium as much as we can.
Okay.
Got it and if I could just delve a little deeper into Texas.
Because obviously there is a much larger opportunity out there for you in the future.
But.
I think from some of the commentary in the release there are some units that are sort of growing your footprint in Texas broadly speaking now.
Can you just sort of help us understand where you are in that market and what the opportunities are separate and apart from that one large tribal opportunity that's out there.
I'll kick that over to Brad.
Texas expert.
Yeah sure. Thanks, David So we kind of commented on our last call.
In advance of the ruling in June we started moving back into one of the facilities.
That was partly due to the favorable ruling that was issued by the Supreme Court. So we started moving back into that facility.
In Q2, and we added some more units there in Q3.
I'd say, we are kind of right sized our position.
In that additional facility through in Q3.
And we will look to continue to maybe deliver some incremental growth there, but nothing on a large scale.
So we in addition.
Our largest partner within the state outside of Houston, We did add some additional units in there.
On the back of the ruling as well, but on order of magnitude I would say speaking rock facility in El Paso was really.
The area, where we took advantage of the ruling to sort of broaden our exposure within the state.
Okay. Thank you.
Okay.
Thanks, David.
As a reminder, this ask any further questions. Please press star one on your telephone keypad now.
Now I'll turn to Chad Beynon from Macquarie. Your line is open.
Hi, good afternoon, Thanks for taking my question.
Wanted to start with capital allocation.
Yes.
Talked about your goal of sub four times, you reiterated that and said that you will achieve that by the end of the year. I think you are actually achieving it now from a TTM basis.
But now that you're kind of in that range and should be in that range through the end of the year. How should we think about how the company is run maybe new opportunities that you might take a look at on M&A share repurchases anything different in terms of.
How youll be running the capital from there.
So I'll start off I mean, Chad I think.
It's consistent I would say, it's pretty consistent with what we've said over the course of the last couple of quarters I don't think theres going to be any big changes as far as capital allocation strategy.
In the calculus has always been there.
Talk about the macroeconomic environment next year I think we are not blind that we're living in.
At a time of rising interest rates as well right. So I think that has always been in the calculus as we move through this year and as we enter next year. So I think capital allocation is going to be the same I think we'll continue to invest in the lease business as we see appropriate again, we feel like those are some of our best.
Organic returns that we have and will continue to invest in the R&D franchise as well and continue to support that and we'll be mindful of if theres any small tuck ins or different things out there that exist.
He like small tuck in that we did in table games in the first quarter of this year. So.
I would say if any dramatic changes that youll see going forward related.
The allocation strategy.
Okay. Thanks, and then.
As to kind of frame out spectra, how big this can be can you.
First off can you kind of remind us when we should expect kind of the beginning of the bulk of some of these placements are orders too.
B shift.
Clearly the three times house average opportunity.
Could provide a big opportunity. So so first of all the timing and then secondly is there a way to kind of frame out what the opportunity is I know the question was asked earlier just in terms of could units to be up from a year over year.
Basis, but but.
Youll be selling other units. In addition to the spectra just trying to figure out if it truly is kind of an incremental place on the floor and that could be additive to that.
The areas you're currently selling into.
Hey, Chad. This is this is Brad so as we highlighted in the prepared remarks.
Spectrum will soft launch here in the fourth quarter.
It's not going to.
Really drive the lion's share of the mix in <unk>. The full scale commercial launch is scheduled for the first quarter of next year.
As we said we have 30 titles on offer to support the year. One launch so we feel really good about where we're heading with spectra I think the beauty for US right now is that really for the first time in our company's history. We have two what I would call relatively new cabinets for sale in the market at the same time.
Our high genome content really helps to sort of differentiate our curve product.
So we get some some unique mix opportunities.
Maybe we haven't really had in the past to help drive some incremental volume there. So I think we can we are starting to move down the path of of really truly one building a portfolio I think having that cross sell opportunity as we've seen.
Over time really helps to drive some incremental business. So I think we feel really good about the cabinet lineup that we have in front of us as we look ahead to 'twenty three.
Okay. Thanks, Brad I appreciate it.
We now turn to Edward Engel from Roth Capital. Your line is open.
Hi, Thanks for taking my question within interactive nice to see EBITDA return tests.
Sequential growth here at.
As RMG continues to kind of drive growth from here can margins quickly returned to that 33%. We saw in 2000 22020. While you are are you still kind of ramping your investment there.
Well I'll kick off and I'll turn it over to chemo here. So obviously, we're we think that interactive is going to be substantial going into the future.
It goes without saying that as this rolls out throughout North America, it might be a slow rollout as far as states taking on real money gaming, but we think it's going to be a big part of everyone's business on the vendor side and operator side going forward. So we're going to continue to make those investments. We made some very recent strategic hires we think theyre going to be very good ones.
For to help beef up our business and our content for the business.
So we will see some of that going forward, we will be mindful of our trajectory and revenue and growth as we make those investments, but as far as the margin goes I'll kick that over to chemo and see if he's got anything to add yes, I think will it return yes.
Wouldn't use the word I always caution using the word quick quick it's pretty subjective right, but I would say, yes, it will return to that.
That said, we've always been mindful of how we invest in that business and making sure that we run in an interactive business. That's profitable right. So I think we're making the investments today and increasing kind of our gains production and getting that smoothen out, but we will get back to kind of that 30% margin range that <unk>.
Sided.
Okay.
Okay.
Great. Thanks for that color and then I guess just relative to some of your newer Kpis that you gave out in the table game segment.
Is it a mix shift to more chef players still accretive to that reported average monthly lease price.
Yes, I'll take that one Ed this is Brad.
So we highlighted this a little bit in the earnings release, but.
<unk>.
In a normal sort of fully loaded scenario, we would expect shufflers to be.
Accretive to the LP.
Given sort of where we are in the rollout phase.
We do have a decent number of units that are out on trial.
Generally operators take the unit on a trial basis, and then it converts to a to a revenue generating unit. So.
Over time, you will start to see that mix benefit within ARLP.
And then the only other call out would have is if you look at it year over year you are.
Layering in.
The Lucky Lucky acquisition from earlier this year, which is a side bet. So aside that has a lower yielding table products. So that does influence year over year comparison, but definitely overtime as the shuffler.
Continues to grow and get to a position of some critical mass you will see it start to get reflected accretively in the MLP.
Perfect. Thanks.
This concludes our Q&A and today's conference call.
Thank you for your participation.
May now disconnect your lines.
Okay.
Okay.