Countrywide casino closures continue to have far reaching consequences across the US, with Las Vegas headquartered AGS the latest firm to document the first quarter impacts.
Despite the widespread North American shutdown the company asserts that, in the face of the uncertainty and challenges that lie ahead, it’s approaching the rest of the year “from a position of strength”.
Kimo Akiona, AGS’ CFO, explained: “In addition to the operational savings and cash-saving programs that we have implemented, we have taken measures to ensure that the company is in the best possible liquidity position given the current operating environment.
“These measures included drawing the full $30m under the existing revolving credit facility during the quarter and postponing substantially all capital expenditures and related projects. On May 1, 2020, we entered into an incremental agreement in which we incurred incremental term loans of $95m and obtained covenant relief on our net first lien leverage ratio for the remaining periods in 2020.”
Maintaining the withdrawal of its 2020 guidance, AGS emphasises the effects felt across several metrics in its latest financial report, due to business disruption caused by the global spread of COVID-19 and the actions by governments and businesses to contain the virus.
With nearly all customers closing their operations, and markets subsequently being severely impacted, a series of Q1 decreases have been felt by the firm.
Revenue dropped 26 per cent to $54.3m (2019: $69.6m), primarily due to decreased unit sales and gaming operations revenue in its EGM segment as a result of business disruptions and casino closures.
Recurring revenue dropped 19 per cent to $42.7m due to disruptions in revenue from leased electronic gaming machines that were non-operational, and slightly offset by increased table products and real-money gaming.
Net loss reached $14.4m, falling from a loss of $100,000 a year earlier, with adjusted EBITDA decreasing 32 per cent from $36.2m to $24.5m.
David Lopez, AGS president and CEO, explained, “As a result of the global impact of COVID-19, particularly near the end of the quarter, the gaming industry was significantly impacted with essentially all North American gaming facilities closed at the end of March. Casino closures resulted in significant revenue interruptions and increased business uncertainty.
“Our team took early steps to formulate and implement a comprehensive plan that included costs savings through company-wide salary reductions, layoffs, and furloughs, capital expenditure reductions, and strengthening our liquidity position.
“Through these initial steps, we were able to reduce our estimated monthly cash outflow nearly 80 per cent to approximately $4m, which does not include our monthly debt service costs of $3.8m.
“We are approaching the uncertainty and challenges in the second quarter and the rest of 2020 with resolve and from a position of strength given the recent reinforcement of our balance sheet and operational initiatives.
“With our strong culture underpinning our recovery efforts, we are focused on not simply managing through the crisis, but building a strong future for our employees, customers, and shareholders.”