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PlayAGS, inc (NYSE:AGS)
Q2 2021 Earnings Call
Aug 5, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello everyone and welcome to the play ACS q2 2021 earnings call. My name is Charlie and I'll be coordinating the call today, you will have the opportunity to ask a question at the end of the presentation. If you'd like to register a question, please press star followed by one on your telephone keypad. I'll now hand over to Brad Boyer, head of investor relations to begin, Brad, please go ahead.

Brad Boyer -- Vice President of Investor Relations

Thank you, operator and good afternoon everyone. Welcome to the plate ABS incorporated second quarter 2021 earnings conference call. With me today are David Lopez CEO and cmo at IANA CFO. A slide presentation reviewing our key operational and financial highlights for the second quarter of 2021 can be found on our Investor Relations website, investors that play a GS com. On today's call, we will provide an overview of our q2 2021 financial performance and our 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 or 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 actual results to differ materially from forward looking statements, please refer to the earnings release that we issued today, as well as the risks described in our annual report on form 10k, particularly in the section of the documents type of risk factors. Our commentary today will also include non GAAP financial measures. We believe that 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 measure measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with gap. reconciliations between gap and non gap metrics for reported results can be found in our earnings 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.

David Lopez -- Chief Executive Officer, President and Director

Thanks, Brad and good afternoon, everyone. Over the past several weeks, I have frequently been asked by investors and business colleagues is this as good as it gets for the US land based gaming industry. After reflecting long and hard, I often reply with a definitive maybe in my over 20 year career in gaming, I cannot recall a time in which so many records were being shattered in such a widespread fashion. It seems that with each domestic gaming operators earnings report, long standing records for margin or EBIT da are being broken. Similarly, estates report monthly gaming revenue data, more often than not, records are being rewritten. As it relates to aegs. We're able to leverage our over 15,000 unit domestic eg m installed base to benefit from the market strength throughout the second quarter, and in turn, set some records of our own. Notably, our second quarter domestic AGM rpd, and domestic AGM gaming ops revenue each establish new records for the company. Although encouraged by our record setting gaming off performance, and despite some of the broader market strength continuing into July, we continue to believe that unique macro economic factors are influencing the overall domestic gaming market. While we expect the market to eventually graduate to a new normal as support influences taper off, we believe our improved execution and product momentum across all three of our business segments position OS for growth and share taking in this quarters ahead. As you may remember, I commented on a recent earnings call, but I believe we had the best new product lineup in our company's history.

While simply a prognostication of the time, I'm proud to say that the enhancement made to our product portfolio, business practices, and personnel that gave me the confidence to make my original con are already beginning to bear fruit. To that end of desire to broaden our presence and the lucrative premium recurring revenue slot segment remains one of the most prominent and compelling strategic growth initiatives at aegs. During the second quarter, we achieved two major milestones within our premium game business. First, we leverage our one of a kind led kavus display and consistent game performance to grow our Orion star wall install base to over 500 games. As you may recall, we've only been actively placing Star Wars into the field without the overhang of COVID related casino closures for effectively two quarters making the ascent to over 500 games an impressive accomplishment. More importantly, supported by the steady game performance and introduction of additional product configurations, demand for the star wall continues to build, which should allow for further growth in the quarters ahead. As a follow on the star wall, our team recently executed a thoughtful and successful commercial launch of our second premium game concept, the Orion curve premium. Although early in the product lifecycle, initial curve, premium installs have been performing well above house average, helping to further solidify operator demand for the product. Ultimately, I envision our premium game strategy benefiting our company in three unique ways.

First, when executed well and as we have witnessed with our initial installs, premium games can deliver rpds well ahead of our historical game average in both class two and class three markets. Second, we should be able to leverage the strong rpd performance and the capital efficiency benefits derived from using our core portrait and curved screen cabinets to louver our premium games to dramatically improve our returns on invested capital and free cash flow generation over time. Finally, our premium strategy broadens the overall addressable market for our products as we now have the products to penetrate the over $1 billion domestic premium game market, a capability did not exist prior to the initial COVID outbreak. Turning to our core EDM business, I'm encouraged by the early indications of improved execution and accelerating product momentum being achieved throughout our game development organization. To that end, our recently released Captain Rich's title, a member of our ultimate choice jackpots family of games, and available on our Orion curve cabinet achieved a top 15 ranking in the July eilers game performance reports new core video reel category. looking beyond Captain riches, we have watched additional game themes that we believe have the potential to help further improve our product momentum and recapture replacement market share. All told, we expect our ECM sales visits to recover over the coming quarters led by our improved game content execution and performance, further strengthening of the North American replacement demand and our continued success and capitalizing upon new product adjacency opportunities such as HHR. looking beyond e gems, I'm equally as encouraged by the momentum in our table game products and interactive businesses, both of which delivered record adjusted Eva in the quarter.

Within tables, we continue to leverage our strong performing and expanding suite of unique content to grow our table product install base. Additionally, we were live with 10 ajs Arsenal site license contracts at the end of the second quarter with the sign deals generating over 2 million of high margin and recurring annualized revenue. Looking ahead, I believe unwavering demand for our core table products strengthened by our recently launched bonus spin extreme progressives, along with the ongoing site license discussions and the pending introduction of our PACs s card shopware have the potential to steepen the growth trajectory we're able to achieve within our table products business. With respect to interactive, we continue to execute our strategy to accelerate growth within our real money gaming business. RMG revenues and adjusted EBIT da established a new record in the second quarter driven by successful launches into the new regulated jurisdictions, back end integrations with additional b2c operators and the introduction of additional HS content into the online domain. Importantly, the momentum we saw on the second quarter has continued into July, which highlights our RMG team's improved execution. Although relatively small today in terms of absolute EBIT dot dollars generated, we continue to believe that the superior growth attributes and strong pure play trading multiples should allow our table product and interactive businesses to meaningfully enhance shareholder value moving forward. In closing, I would like to thank all of our AGF team members for their contributions and commitment to the company during what continues to be a uniquely challenging and stressful time for many. Your efforts have not gone unnoticed, as HGS was recently named the best and brightest company to work for in both the Atlanta and national categories for the fifth consecutive year. Although it's become in vogue way for companies to tout strong growth corporate culture, I believe our recognition by the best and brightest programs speaks to our employees dedication and commitment to fostering a welcoming and inclusive corporate work environment.

With that, I will turn the call over to Kimo to provide additional perspective on our financial results, liquidity position, and current outlook for the business.

Kimo Akiona -- Chief Financial Officer, Chief Accounting Office and Treasurer

Thank you, David. And good afternoon, everyone. While an accommodative domestic gaming environment bolstered our second quarter operating results, our performance also benefited from early indication of improved game content development, enhanced product management capabilities, and strengthened capital deployment processes. Also, I believe the continuous improvement being achieved in these three areas sets us up on a path to deliver more consistent financial performance, improving our capital returns, and leverage profile, and most importantly, strengthening shareholder value over time. With that said, I would like to start off today's call by reviewing our second quarter results, and providing some forward looking perspective for each of our operating segments. Although not anticipated, it is important to note my forward looking commentary assumes no material changes with respect to COVID related operating restrictions or casino closures. Turning to our results, total second quarter ECM revenue was 61 point 2 million up over 20% on a quarterly sequential basis. We sold a total of 613 units in the quarter 175 of which were associated with new casino openings and expansions. Domestic average selling price or ASP was approximately 16,900, reflecting a higher mix of convert to sale units sold in the quarter. Excluding the Convert to sale units, we estimate our ASP would have been approximately 18,200. looking out over the balance of the year, we are encouraged by evidence of operators recent strong financial performance, accelerating the recovery in industry wide replacement unit demand. Additionally, as our game content execution continues to improve, we believe we could begin to gradually achieve greater replacement unit market share. Finally, we feel we're well positioned to further leverage our exceptional game performance to take advantage of opportunities and existing and soon to open HR markets. Taken together, we believe these items should allow our second half unit sales to exceed the 902 units sold in the first half of 2021. With respect to ASP, we expect our premium price Orion curve cabinet to increasingly comprise a greater mix of our total units sold, in turn, helping us to achieve a stronger ASP in the back half of the year. Turning to our domestic gaming operations business second quarter rpd reached a new company record of 3311 up more than 20% over the 2710 achieved in the first quarter of 2021 strength in the broader domestic gaming revenue environment.

As David discussed earlier in his prepared remarks. The growing mix of higher yielding premium games within our domestic installed base, improving core content execution and our recent strategic pruning initiatives all contributed to our record domestic rpd performance in the quarter. Domestic ECM installed base included 15,446 units at the end of the second quarter, representing in modest quarterly sequential decrease of 10 units. Looking ahead, we expect the combination of a strong initial customer response to our recently released Orion curve premium cabinet consistent with demand for our Orion star wall and scheduled new casino openings and expansions to drive modic sequential growth in our domestic install base as we progress throughout the year as it pertains to our outlook for domestic rpd.

Although the strength in the broader domestic gaming macro environment has continued into July, we expect trends to moderate toward a new normal over time, triggering a corresponding moderation in our domestic rpd performance. That said, we believe the structural changes we have already made and intend to make to the composition of our domestic installed base, led by our premium game and strategic pruning initiatives could allow us to exceed our 2019 rpd performance in the back half of 2021 even if macro trends were to moderate shifting to our international ECM business. Although we continue to see signs of improvement throughout the Mexico market the pace of progress has been much slower relative to what we are experiencing in our domestic business.

Second quarter international rpd was $4.66, up nearly 60% over the $2.94 achieved in the 2021 first quarter, but still well below the levels we were achieving prior to COVID. At the end of the second quarter, we estimate approximately 65% of our 7879 units international installed base with active marketing a considerable increase relative to the approximate 36% of units that were active at the start of the year. Off code in a supportive macro economic climate, and stringent COVID related operational protocols continue to protract the recovery within our Mexico gaming operations business. Although indications of improving customer demand, I have a feeling cautiously optimistic about potential for international rfpd to continue to modestly improve as we progress throughout the remainder of 2021. We believe it could require a couple of years for international rpd to return to pre COVID levels. Having said that, despite a smaller revenue base, our team has remained extremely diligent at managing expenses within our international segment to ensure the business continues to positively contribute to our consolidated ease of performance. Our table product segment remains a model of consistency. With second quarter adjusted EBIT da establishing another all time record. The table products installed base grew to 4458 units at the quarter end, representing an increase of 96 units on a quarterly sequential basis. Looking ahead, we believe in growing interest in our suite of industry leading progressive products and our AGF Arsenal site license offering combined with the highly anticipated launch of our packs as card shuffler have the potential to simultaneously expand our table product installed base and increase our average lease price as we progress throughout 2021.

Finally, our interactive segment delivered record revenues and adjusted EBIT da in the second quarter led by our outsized growth within our real money gaming business RMG revenues more than doubled year over year, so a record 2.2 million, well ahead of the previous 1.4 million record set in the first quarter of 2021. Perhaps more importantly, our interactive segment delivered positive adjusted EBIT da for the sixth consecutive quarter supported by improved revenue performance and our commitment to profitably scaling our rMz business. looking out over the remainder of the year, we view our success, integrating our online content with additional b2c operators, introducing additional AGF titles into the online domain and expanding our suite of online content to include our first online table game offering as the keys to further strengthening our interactive segment revenue performance. Although we remain focused on profitably scaling RMG business investments intended to support our future interactive growth initiatives could temporarily dampen our segment level margins in the back half of the year. Before moving on to your questions, I'd like to provide additional color on how we see margins, cashflow and leverage shaping up for the full year. We achieved and adjusted EBIT Dom margin of 48% in the second quarter, supported by the strength witness in our higher margin gaming operations business, and the gradual return of sales and marketing expenses, followed the relaxation of COVID travel restrictions. Looking ahead to the full year, we continue to expect our adjusted EBITDA margin to land nearer to the low end of our targeted 45 to 47% range, as we anticipate making additional investments in our r&d franchise to support our future growth initiatives. Experiencing further normalization in sales and marketing expenses, and recognizing a greater mix of lower margin smart sales revenue as the year progresses. Second quarter cap back total 11 point 5 million bringing our year to date capital spends 21 point 4 million for the first six months of the year we generated 14 point 5 million of positive free cash flow looking out over the remainder of 2021. We continue to expect our second half capital spend to increase relative to the level incurred in the first half of the year. Our current cap x outlook reflects the anticipated timing of new products launches and strengthening customer demand, supported by our improved game content execution.

Consistent with the first half of the year, we expect to allocate a disproportionate share of our second half capital spend to support our freemium game growth initiatives. Additionally, we expect to continue to thoroughly analyze all of our new game placement decisions to ensure we are allocating our capital to its highest and best use. For the full year, we believe cap x should come in slightly below the level incurred in 2019. Although we currently expect cap X to ramp over the remainder of the year, we would remind investors that we do have discretion over the timing in which the majority of our cap x is incurred. Therefore, to the extent the broader gaming macro economic environment were to deviate materially from the current trend, we could elect to temporarily moderate or suspend the incremental capital spend in favor of bolstering our liquidity position. Having said all of that, our strong second quarter financial performance, the accommodative North American gaming industry macroeconomic environment, and early indications of improving demand for our products provide us with greater confidence in our ability to generate positive free cash flow for the full year. Finally, our net leverage at June 30 2021, was five times down from 7.5 times at the start of the year. Our adjusted net leverage covenant for compliance purposes was 4.1 times, placing us firmly in compliance with our six times leverage covenant. Looking forward, we remain laser focused on restoring the balance sheet flexibility we have prior to the COVID pandemic, when our balance sheet was levered well inside of four times. Additionally, we continue to carefully manage our leverage and liquidity position to ensure we can execute on opportunities to lower our borrowing costs as they present themselves. To that end, I'm pleased to announce that subsequent to quarter end, we successfully extended our revolver maturity to November 2023. We saw strong interest among lenders throughout the revolver extension process, which could bode well as more meaningful refinancing opportunities arise.

Operator, this concludes our prepared remarks. We would now like to open the line up to questions.

Questions and Answers:

Operator

Our first question comes from David bane of the Riley. David, Your line is now open.

David Bane -- Riley -- Analyst

Great, thank you. Very nice quarter. First, if I could David Kimo, you mentioned HHR, briefly, but twice, and I'm wondering if you could frame the departmental opportunity for aegs maybe speak to the potential next year as it differs from the normal replacements or new openings. And you know, what, what that market could look like for you specifically in terms of additional machine market?

Brad Boyer -- Vice President of Investor Relations

Hey, Thanks, David. Um, you know, we'll stay away from absolute specifics here. But the HHR market for us is, you know, it's been strong. And we see that continuing into the second half of the year, and a bit more into 2022. In addition to just the existing customers, we you know, we see a little bit of expansion there, where that that expansion into new states lands, and when that might happen, is TBD. But we know that there's been a couple more jurisdictions that will come online, but with the performance of our games, and what we're seeing so far, we just don't we do believe that this will be a continuing trend. It's just really a, it validates what we did about a year and a half, two years ago when we said hey, we're going to continue to find new ways to leverage our content into new areas and performance is fantastic. You know, versus the competition in the space and that's what's driving a lot of what's going on right now.

David Bane -- Riley -- Analyst

Okay, great. And then switching to I guess, have a couple of premium the premium footprint what what inning wall in, in your view and you know, looking at the initial performance and feedback of current premium versus like a start walling you mentioned you know the launch timing for saw all but to the best, you can compare the two it might be helpful just given kind of the potential impact upside You know, etc, or rpd model be great if you can speak to that.

Kimo Akiona -- Chief Financial Officer, Chief Accounting Office and Treasurer

And so we'll try to try to frame this the best we can. I'll start with sort of how proud I am of the r&d team, Product Management and our sales team to get these to just make this happen. We, you know, largely, we weren't in the premium space, I know, we say that just about every quarter and, and now we're just a couple of quarters into it, you know, with the exception of big red. And, you know, we mentioned in the prepared remarks, how quickly we've gotten to the number four star wall. So just I think, largely, if you just talk about premium, David, it's, you know, Brad, and I were in the bullpen Still, if you will, right, and represent a very small percentage of our install game off space. on it, obviously, it's overweight, as far as you know, it produces much more than the percentage that it occupies. So I think we're in the mid single digits, as far as percentage of base, but as far as revenue goes, it accounts for about 10% of our revenue. So when you think about mid single digits of our install base, that means we have a lot of runway ahead of us. And that sort of has proven out as we look forward, throughout the second half of the year, a big chunk of our installs are starting to pop up in the corporate space. And that's a very good indication, our gains in class two, class two premium is really doing very well for us. I'm really happy with the results there, which was expected. But you know, now we're getting now we're breaking in the class three in the corporate space. So opportunity is great. We, you know, we look forward to second half of the year and then obviously 2022, because this is a needle mover. We talked about it in prepared remarks, we know that it's going to continue to meet the needle, but mid single digits is where we're at right now. So there's a there's a lot more runway for us.

David Bane -- Riley -- Analyst

Okay, great. Thank you so much.

Operator

Thanks. Our next question comes from Barry Jonas of truist. securities. Barry, Your line is now open.

Barry Jonas -- Truist Securities -- Analyst

David, we've heard commentary from some operators, both around reducing slot floor sizes, but also around potentially increasing investment for slots. I know there's a bit of crystal ball here. But at a high level, I'd love to get any thoughts you have on where do you think the market could be headed between now and the next few years?

Kimo Akiona -- Chief Financial Officer, Chief Accounting Office and Treasurer

So so we'll hit both those questions, I think. I think those things sort of make sense together, it might sound like as a headline, if an operator were to say, Oh, this is what we're looking at, I think it makes a lot of sense reducing the floor, the footprint of thoughts on the floor. From what I can see. And this is the majority of casinos in the US not all casinos in the US. There's a lot of dead floor space, there's machines that are out there that are really just taking up space on the floor to fill out a floor. So if they were to reduce the footprint on the floor, I think that makes things more efficient and effective for them. But to increase spend in the space means they're going to refresh a larger percentage of their floor. And I think that's, that's great for them. That's great for the supply side. It's just great for the industry in general. So as far as like the crystal ball answer, and you know, mine's not perfect, obviously, I could see that it going that direction. And it really I know it sounds crazy, but being good, a little bit good for everybody.

Barry Jonas -- Truist Securities -- Analyst

Great, that's really helpful. And then just wanted to touch upon m&a. How active is the pipeline right now for you guys? Are there any specific areas you could be looking to focus on?

David Lopez -- Chief Executive Officer, President and Director

So I think there's sort of two ways to look at investment for us right now. You know, Kimo mentioned in his remarks, that we're going to continue to invest in our r&d franchise. You know, we we dove in headfirst and oz or Well, excuse me, Australia. We dove in headfirst in Australia a couple years ago. Now, going back probably a little bit longer. We knew that that investment would take time to pan out and show return just because getting over fire, getting everything set up getting the first games out and then really becoming effective. When you get to game two, three and four and beyond and our team down there. Again, really proud of the work they've put put in the are fantastic. And it's just a nice addition to Atlanta and Reno in Austin and in the abilities in productivity we get from there. So one, one way to look at, you know, investment is, is organic investment. And we're going to continue to do that, because we know that there's a great return on that when it comes to m&a. And I know it took me a minute to get to your actual question, but we like to focus more on from an m&a perspective, you know, on the new stuff, which is interactive, and the like, we're always looking, I think that that's been a discipline we've had over the past, you know, five, six years. So we're always active in the space but nothing eminent and and but I you know, it's a frame sort of put some guardrails on what we look at a lot of online stuff, is what we're interested in.

Barry Jonas -- Truist Securities -- Analyst

Perfect. Thanks so much. Yeah.

Operator

Our next question comes from Jeff Stanfield or stifle Jeff, Your line is now open.

Jeffrey Stantial -- Stifel -- Analyst

Great, good afternoon. Thanks for taking my questions. I wanted to start on the gaming app footprint, it sounds like between the curve premium and some of the expansion activity, we should be expecting sequential growth in the back half of the year. If you strip out some of that some of those openings and those expansions, it's fair to say the install base could largely show sequential growth from here on out, you know, it sounds like premium store walls that are all resonating with their customers. But I want to better understand what's left for the pruning of the footprint, and sort of how that plays into the ram cadence here for your total installs.

Brad Boyer -- Vice President of Investor Relations

So yeah, only is gonna obviously be part of the second half game ops growth. But if you know, you mentioned two things, hey, how's premium gonna look in the second half and beyond and, and then pruning. And it's difficult to say exactly how much we might prune, because it just, it just comes down to the effectiveness of going in removing a unit in various jurisdictions. And putting in, let's say, for example, a premium unit, I say the best example that is in class two. So although we may have a lot of success with premium, some of that might come along with some pruning. So yes, some modest, you know, progression and growth there in the second half of the year, due to oni and premium. But from the premium perspective, we're gonna watch that very closely and try to be efficient with our footprint to just try to get the best returns, we can on our capital. So you know that that'll be a little bit of a TBD on the second half of your question. But either way, it will be very effective for RVD.

Jeffrey Stantial -- Stifel -- Analyst

Great, and that's my follow up team. I appreciate all the color on margins for the back of the year. I did want to drill in a little bit more there. You know, specifically, we've heard some peers call out costs inflation from supply chain friction, you know, is that something you're seeing expecting to see with this baked into some of your comments on an operating cost inflation? Just, you know, can you help us understand? You know, that that notion and how that impacts, you know, how you're thinking about margins, the back of the year?

Brad Boyer -- Vice President of Investor Relations

Yeah, I think the, you know, all of the above, I think we're obviously seeing like many people in the industry and not just gaming, right, it's across manufacturing in different sectors, like we are seeing some inflation, whether it's wages or parts and components and whatnot. I think other part of margin right is, you know, you break things apart, and you look at our commentary, maybe a little bit on moderation of rpd rights in gaming play levels, you know, that that plays into part of it than other part of the equation just naturally as we ramped here, right. And we do investment the business like David said, and you know, higher in r&d, you know, we continue to online sales and marketing fan will have sequential growth last year. But still, you know, we live in a land the year similar to what we said last quarter. Last year closer to 45. Set, solid.

Jeffrey Stantial -- Stifel -- Analyst

Perfect. That's all for me really appreciate the color. I'll pass it on.

Brad Boyer -- Vice President of Investor Relations

They do all thanks

Operator

Our next question comes from Chad Beyon of maclary. Chad, Your line is now open.

Chad Beynon -- Macquarie Research -- Analyst

And thanks for taking my question. What it wanted to ask about a product sales chemo, you noted that you guys are expecting to age to essentially near one h in terms of sales. Within that comment, can you kind of talk about what your expectations are for market share? If you expect to stay the same increase, decrease? And then related to that the conversations that you're having with operators, given they've generated significant revenues and even done in the second quarter? Do you think the replacement cycle could actually start to improve in the near term, assuming a lot of those conversations will will start at GTV. But any initial color there? Thanks.

Kimo Akiona -- Chief Financial Officer, Chief Accounting Office and Treasurer

So I see in the prepared remarks that we sort of alluded to h2 looks to be better than than h1 for us. And you know, and build into that, right is, is sentiment we're seeing on the marketplace, right? We see, you know, we don't want to want to exaggerate it, but we do see right replacement cycle picking up, you know, we see operators having great performance. So we you know, from talking to sales, and whatnot, we do see the funnel or the pipeline picking up for the back half of the year. And there's also some new openings and expansions that will we'll see in h2 as well.

Brad Boyer -- Vice President of Investor Relations

And then and then, you know, Chad, I think that when we look at second half of the year, we often get the question about, hey, what, you know, how do we see the market shaking out? What's going on? And really, you know, we see the macro trends, continuing and we I allude to it in the prepared remarks that, Hey, is this the best that gets in and now it's like an absolute maybe, because who knows what it's going to do from here, we anticipate perhaps a new normal at some point, but I know you've commented on market share. But if I only knew the denominator, you know, I can tell you what the share is. But we're focused on the numerator. And I think that's what we're really going to focus on, is doing what we do best, we're really pleased, you know, again, give a kudos to to the product management, sales and r&d teams, that you know, the effective way they've run the business here. So we're going to we're and I look forward to improve second half. And hard to say what that denominator is going to be. But I know gt will be good for us, the lineup of products that we have this year, you know, I think it is the strongest, I think the games are performing both on the core and premium side. So I am excited to see what the boys have put together and how things go from here.

Chad Beynon -- Macquarie Research -- Analyst

Perfect. Thanks. Understand. And yeah, sorry for that clarification. And then on the table side, just given, you know, probably wasn't the best time to be selling table products, particularly in the socially distance measures that that casinos experienced for some time for the past year. Can you talk about, you know, the Pax x shuffler? How that's been received? Maybe, if you're if you're still confident, you'll be able to deploy that at a number of casinos. If that was slightly pushed back, just given everything that happened? Thanks.

Brad Boyer -- Vice President of Investor Relations

So Pax asked, and we'll just talk in general about about tables. You know, I think, on the table side, again, pleased with our progress, we believe in this business, I think it's going to be a real contributor. We know it's, we know, it's a small part and absolute dollars of what we do. But we also think that it's a grower. So we're pleased we're at the progressives are out there doing an amazing job. So again, same thing as with the SWAT team, our table team has put together great products, the performance is fantastic. And the sales teams really kicking butt doing what they need to do out there. facts as the you know, demand for it is is going to be fantastic. We've got folks waiting, willing and ready to fire away when the time comes. We've You know, we've tested it out there in a live environment. And we're going to continue our testing here in the second half and release at the right point. And I'll focus a little bit on my words, the right point, Chad, as you know, I've been down this path before, played through these movies. And the one thing we want to do and I certainly want the team to do is do a full release at the right time when we're reading because you know that that is what generates the most momentum and the most success for that type of product launch. So I hope that sort of answers your question there. But that's where we see it right now.

Chad Beynon -- Macquarie Research -- Analyst

Yep, Thanks, everyone, congrats on the quarter.

Brad Boyer -- Vice President of Investor Relations

Thanks, appreciate it.

Operator

Our next question comes from David Katz of Jefferies. David, Your line is now open.

David Katz -- Jefferies -- Analyst

Hi, everyone. Thanks for taking my question. You've covered a lot. So I just want to spend one second if we can on the Oklahoma installed base. Can you just talk about sort of where that, you know, where that number? Turns out? You know, is that a number that is that, you know, grows over time, or is relatively stable? And, you know, within the rpd? You know, how supportive or stable you know, is that number within it for assuming, obviously, the premium games are very strong and dragging the number higher. But, you know, within that, are they creative, diluted? or neutral? I guess, is the nature of the question. Thanks.

Brad Boyer -- Vice President of Investor Relations

So, you're asking a premium is sort of a creative and an Oklahoma. And so there's, there's a few things here. It's sort of in that question. So I think the install base that stuff itself, David, will be stable to maybe a little bit of modest growth. But the caveat to that is gonna be a little bit of what I said earlier, when we go in with more premium into the class to Oklahoma market, it's sort of a deal where we're going, some will be replacements, some will be new units. But we want to see how you know, those premium games do versus whatever our product management team, along with sales is, you know, laser focused on finding the right items to swap or prune. So that install base I'll say will be stable, but it's going to do in many ways, what we want to do, as far as the unit quantity go goes, but our premium is going to be a big part of improvement. And it's not just that we're super focused on core, we've got a team and in particular, beyond our regular core games, we have a team in Austin, and a developer there that's really focused on that market and performing well in that market. So we have hopes and plans to improve our PD there because that's, that's a bit of a needle mover for us. If we do that, again, stable base, improve, improve our PD, improve, returns on our cash that's invested there.

David Katz -- Jefferies -- Analyst

Okay, perfect. Thanks very much.

Operator

[Operator Closing Remarks]

Duration: 43 minutes

Call participants:

Brad Boyer -- Vice President of Investor Relations

David Lopez -- Chief Executive Officer, President and Director

Kimo Akiona -- Chief Financial Officer, Chief Accounting Office and Treasurer

David Bane -- Riley -- Analyst

Barry Jonas -- Truist Securities -- Analyst

Jeffrey Stantial -- Stifel -- Analyst

Chad Beynon -- Macquarie Research -- Analyst

David Katz -- Jefferies -- Analyst

More AGS analysis

All earnings call transcripts

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