Scientific Games Corporation has posted its Q1 financials for the period ended March 31, 2020, with the COVID-19 pandemic taking its inevitable toll on the headline figures. First quarter revenue, reported the firm, decreased 13% to $725m versus $837m year-on-year.
Updating investors, SG confirmed that gaming revenue had been negatively impacted by the temporary closures of casino operations in jurisdictions globally, while lottery revenue was described as lower as the prior year included significant equipment sales.
Net loss was $155m compared to $24m in the prior year, due to lower revenue and the effects of COVID-19. The loss included a $54m goodwill impairment charge related to the firm’s legacy UK gaming reporting unit and a negative impact of $37m related to gaming business segment receivable credit allowances and inventory write-down charges. All of those factors were driven by COVID-19 disruptions.
Consolidated adjusted EBITDA fell 39% to $200m from $328m year-on-year, driven by the previously mentioned $37m charge 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.
According to SG, operational and capital cost-savings measures are expected to improve quarterly cash flows in the second quarter by over $150m. The company implemented these cost-savings measures as a result of the COVID-19 disruptions. The cost reductions are related to lower capital expenditures, workforce related savings, and reduced expenses.
President and CEO Barry Cottle said: “We are working around the clock to take care of our employees, customers, shareholders and other key stakeholders in these difficult times, while providing uninterrupted products and services to those customers who continue to operate.
“I am confident that the measures we are implementing now will allow us to take advantage of opportunities to strengthen our business and prepare us to come out of the crisis even stronger than before. We have a diverse portfolio of assets, products and services, and our previous investments in digital gaming technologies uniquely position us to navigate and ultimately excel, as we emerge from this challenging environment.”
CFO Michael Quartieri added: “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. I’m confident that our streamlined cost structure will allow for accelerated cash flow generation and deleveraging in the future.”