Strong early quarter, promise of cashless systems boost Everi

Strong early quarter results and the promise of customers embracing cashless gaming options in the future propelled Everi Holdings Inc. to a first-quarter revenue downturn that wasn’t as severe as its industry peers.

The Las Vegas-based gaming equipment manufacturer that focuses on transacting money as well as developing slot machines on Tuesday reported an 8.5 percent decline in revenue for the quarter that ended March 31.

Everi was the last gaming company to report first-quarter earnings. Companies across the industry have mostly reported double-digit percentage drops in revenue as the coronavirus outbreak has affected markets worldwide.

“Overall we had very strong performance in the first part of the quarter, like a Ferrari with the throttle wide open on an open stretch of road,” Everi President and Chief Operating Officer Randy Taylor said in a conference call with investors. “The first two months, consolidated revenue was up more than 20 percent year over year. In gaming operations, the year-over-year revenue increase of over 30 percent in the first two months helped drive an increase for the full quarter period.”

Everi CEO Michael Rumbolz, who isn’t taking his salary during the outbreak, said he’s never seen anything like the effect of the virus.

“I’ve been in the gaming industry now for more than 40 years, and during that time I’ve held a number of different positions and had a wide range of business responsibilities,” Rumbolz told analysts. “While having seen my share of tragic and recessionary conditions, I can honestly say to you that I have never experienced anything close to the impact of this pandemic.”

Everi — which was in the midst of field-testing a new digital wallet product in Nevada when Gov. Steve Sisolak ordered the closure of nonessential businesses, including casinos, on March 17 — reported a net loss of $13.5 million, 16 cents a share, on revenue of $113.3 million. In the same period a year earlier, the company showed net income of $5.9 million, 8 cents a share, on revenue of $123.8 million.

With an estimated $5 million-a-month cash burn rate, Everi used its existing credit line and borrowed another $125 million to survive “even the most negative of scenarios,” Rumbolz said.

Everi, whose biggest market is Oklahoma tribal casinos, expects companies will want products that promote the use of cashless transactions as consumers become wary of germs attaching themselves to dollar bills.

While the company is expecting the second quarter to be the low-water mark financially with just 32 percent of casinos currently open, positive cash flow is expected by the fourth quarter.

“In just three months, the virus has tragically turned the world upside down,” Taylor said. “However, the first green shoots of revival are being seen in the gaming industry as well as in communities across the country.”

Everi shares were up 5.2 percent, 33 cents a share, to $6.70 in average trading Tuesday on the New York Stock Exchange. After hours, shares dipped 7 cents, 1 percent, to end at $6.63 a share.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.