Scientific Games Corp. reported a 13 percent drop in revenue in the first quarter amid the global COVID-19 pandemic, and executives expect the financial crisis will get worse before it gets better.
CFO Michael Quartieri told investors on Monday that he expects the company will see the lowest revenue levels of the year in quarter two, between April and June.
Even so, President and CEO Barry Cottle remains confident Scientific Games has enough cash to withstand the pandemic’s blows. The company expects between $70 to $90 million in net cash output in the second quarter, burning under $1 million per day.
“We are in a very strong financial position. Our business is very well diversified. … As a result of that, we continue to generate significant revenue profit even in this environment,” Cottle said. “Obviously there’s a lot of uncertainty due to COVID, but with our diverse portfolio and cost actions taken we feel very confident in our ability to weather storm as long as it takes.”
Scientific Games reported $725 million in revenue between January and March, down from $837 million in the same period last year.
Quartieri said he expects most U.S. casino properties will come online around Memorial Day weekend or June, albeit with social distancing measures that would have certain slot machines covered or powered down.
Scientific Games’ diverse business model — which includes lottery, gaming and digital — could be its saving grace amid the pandemic, according to its executives.
“The diversity of our business has always been and will continue to be a strength, and that is even more evident during this period,” Quartieri said, adding that iLottery, iGaming and SciPlay — the company’s online game segment — were doing “excellent” during the global shutdowns.
Cottle said the company will continue to look at expanding its sports betting offerings, and has four sports contract “blockbuster deals” that have yet to be announced.
‘Ready to win’
The Las Vegas-based slot machine manufacturing company said in April it had “a strong liquidity position” after cutting more than $100 million in quarterly costs, half of which came from workforce cost reductions.
The workforce reductions included hour and pay reductions and furloughs and were expected to save the company more than $50 million during the second quarter. The company said capital expenditure estimates in 2020 had dropped from up to $330 million to as low as $210 million, and capital expenditures in the second quarter alone should drop by about $50 million.
“While we cannot predict exactly how long this crisis will last, we know people have been wagering for thousands of years, and COVID-19 will not be the end of this reality,” Cottle said. “Casinos will reopen, demand will return and we will exit this crisis leaner, well positioned and ready to win.”
Scientific Games results
Fourth-quarter revenue and earnings for Scientific Games (NASDAQ: SGMS)
Q1 2020: $725 million
Q1 2019: $837 million
Q1 2020: ($155 million)
Q1 2019: ($24 million)
Earnings/(Loss) per share
Q1 2020: ($1.69)
Q1 2019: (26 cents)