Gaming supplier Everi Holdings Inc. a second-quarter net loss of $68.5 million, compared to net income of $5.5 million in the same quarter last year, and reported a net loss of $13.5 million in the first quarter this year. However, the company’s CEO had better news in a positive pre-tax earnings report, thanks to cost-cutting measures.
The loss was cause by casino closures in its key markets due to the Covid-19 pandemic, the company reported.
The net loss included $14.8 million in pre-tax charges associated with asset write-offs and write-downs, severance, facility consolidation and business restructuring costs to streamline operations and improve the group’s cost structure, Everi said in a press release.
Revenue for the reporting period was US$38.7 million compared to US$129.7 million a year ago. “The closing of casinos due to the Covid-19 pandemic resulted in revenues declining to essentially zero until the casinos began to slowly reopen in May with the pace steadily ramping through June,” the company said in the release.
Adjusted earnings before interest, taxation, depreciation, and amortization (EBITDA) was $3.3 million for the three months to June 30, compared to $64.1 million in the prior-year period. The result was driven by positive contributions from both the games and fintech segments, said Everi.
“We achieved better-than-expected results in the second quarter, including a return to positive adjusted EBITDA more quickly than we anticipated at the beginning of the quarter,” said Everi CEO Michael Rumbolz, in a statement accompanying Tuesday’s earnings release.
He said a variety of “swift actions” to reduce costs and preserve liquidity resulted in the positive EBITDA. “In addition, as our customers began to reopen faster than previously expected, we benefited from our prior investments in technology innovations and game development through the strong performance of our fintech solutions and installed base of recurring-revenue games,” Rumbolz said.
Roth Capital Partners LLC suggested in a July note that the Covid-19 crisis had stimulated casino-industry interest in cashless technology, which would play to Everi’s product strengths.
Everi’s free cash flow was negative US$26.7 million for the second quarter. The company said it expected to generate positive free cash flow in the third quarter this year.
Total net debt was $1.13 billion by quarter-end, compared to $1.01 billion in the opening quarter of 2020.
Rumbolz said the company’s business in the third quarter was returning to the “performance momentum” it had achieved before Covid-19.
“The units in our gaming operations installed base that are active are performing at levels comparable to our experience pre-pandemic,” he said. “Reflecting these trends, as well as the benefit from the 636-unit growth in installed premium games since the beginning of 2020, we expect quarterly sequential growth in the second half of 2020, including a return to free cash flow generation in the third quarter, which is earlier than we had previously anticipated.”
