AGS remains confident that long-term opportunities remain intact for the firm, with a disinclined approach amid the challenges posed during the year gaining praise in the firm’s latest financial report.
Second quarter revenue for the firm closed at $16.7m, a 77.4 per cent decrease from 2019’s $74.5m, driven by the operational shutdown of almost all AGS customers due to business disruption caused by the global spread of COVID-19.
Providing an update on subsequent re-openings being undertaken, by the June 30 end of the quarter approximately 500 of 650 customer properties across the US and Canada had partially resumed activity in some capacity.
Further south, 25 of 320 client venues reopened across Mexico as per the Q2 cut-off point. AGS also updates that it currently has over 11,000 active electronic gaming machines on lease.
“Although casinos started to reopen in the later part of the quarter, we remained disciplined in how we reintroduced cost back into the business, ramping departments that are essential to run our business, such as field service, R&D and manufacturing,” explained AGS president and chief executive officer David Lopez.
“Initial game performance on EGM units that are in-service has been strong and better than expected, which allows us to lean on our strong recurring revenue footprint in this challenging environment.
“Prior to and even during COVID-19, we were seeing strong initial performance from our new products, such as the Starwalland Orion Rise, as well as continued momentum from our new titles on Orion Portraitand our suite of table game progressives.
“Given the breadth and depth of our current content portfolio, we believe that the long-term opportunities for AGS remain intact, and that we have ample liquidity and the best-in-class team to navigate through near-term uncertainties.”
For the quarter, recurring revenue decreased significantly to $10.2m (2019: $53.6m), primarily related to leased EGMs and table products that were impacted by casino closures. The decrease was slightly offset by increased revenue in the group’s interactive segment.
Net loss during the period increased from $7.6m to $42.6m due to the aforementioned circumstances, but were partially offset by a drop in expenses that were a result of management’s actions taken to decrease spending amid COVID-19.
This included employee furloughs, a reduction in force, and salary reductions, with additional savings resulting from the company’s focus to reduce expenses, primarily in sales and marketing activities, professional fees, and delayed development expenses.
Kimo Akiona, AGS’ chief financial officer, added, “Our careful management of expenses and capital expenditures during the casino shutdowns in the quarter — in addition to drawing $30m under the existing revolving credit facility and entering into incremental term loans of $95m — have resulted in a strengthened liquidity position.
“Although it is hard to predict exactly how the pandemic will continue to impact the macro operating environment, given all of the measures we’ve taken, we believe we are positioned with sufficient liquidity and flexibility to emerge from this a more competitive and more nimble organisation.”