The first-quarter net loss at casino equipment, lottery services and online games provider Scientific Games Corp widened to US$159 million, from US$24 million a year earlier, the firm said in a Monday filing.
Group revenue decreased 13.4 percent to US$725 million, down from US$837 million in the prior-year period.
The United States-based firm said in an accompanying press release that the increase in net loss was linked to factors including revenue being “negatively impacted by the Covid-19 disruptions that resulted in temporary closures of casino operations in jurisdictions globally”.
Scientific Games said it expected that second-quarter net cash outflow – a non-generally-accepted accounting principles (non-GAAP) measure – would be between US$70 million and US$90 million due to Covid-19 disruption; i.e., as much as approximately US$1 million daily in the three months to June 30.
“The Covid-19 impact accelerated in the latter half of March 2020 and the company expects this trend to reach its peak in the second quarter,” the firm stated in its press release.
In the first quarter, revenue in the traditional gaming segment fell 24.6 percent, to US$318 million, from US$422 million. But in the SciPlay digital social games segment, revenue held steady, at US$118 million; while the separate digital segment saw a 10.0-percent growth in revenue, to US$77 million, from US$70 million in the prior-year quarter.
In the international market for gaming machine sales – including the Asia-Pacific region – new unit shipments fell 3.8 percent, to 2,003, from 2,083 in first quarter 2019.
Shipment of replacement gaming machine units in the international market declined 12.3 percent to 1,827, from 2,083 a year earlier.
The group’s first-quarter net loss included a US$54-million goodwill impairment charge related to its legacy United Kingdom gaming reporting unit and a negative impact of US$37 million related to “gaming business segment receivable credit allowances and inventory write-down charges, all driven by Covid-19 disruptions”.
Group consolidated adjusted earnings before interest, taxation, depreciation and amortisation (AEBITDA), a non-GAAP financial measure, decreased 39.0 percent to US$200 million from US$328 million in the prior year period, driven by the US$37 million in write-downs “and the time between the sudden drop in revenue from Covid-19 and the benefits of the cost savings measures implemented late in the quarter”.
Operational and capital cost-savings related to “lower capital expenditures, workforce-related savings, and reduced expenses,” were “expected to improve quarterly cash flows in the second quarter by over US$150 million,” said the firm.
First-quarter net cash provided by operating activities was US$120 million versus US$167 million in the prior-year quarter.
The group’s cash, cash equivalents and restricted cash at the end of the first quarter was US$400 million, compared to just under US$1.27 billion a year earlier. The 2019 quarterly figure had included US$942 million provided by financing activities.
Scientific Games’ net debt as of March 31 was down 4.9 percent year-on-year, to just under US$8.52 billion, from nearly US$8.96 billion a year earlier.
The group’s available liquidity by the end of the first quarter was US$967 million, versus US$906 million in the prior-year period.
Michael Quartieri, chief financial officer of Scientific Games, was quoted as saying in the press release: “We have made swift and meaningful reductions to our cost structure in response to the current environment. We believe these changes in conjunction with our available liquidity provide us the tools to withstand the impact from Covid-19.”
He added he was “confident” that the group’s “streamlined cost structure” would allow for “accelerated cash flow generation and deleveraging in the future”.
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