Global gaming giant Scientific Games says it expects its net cash outflow for the three months to 30 June 2020 to total between US$70 million and US$90 million, or almost US$1 million per day, but is confident of returning to at least breakeven by the end of the year.
The update was provided during the company’s 1Q20 earnings call on Tuesday morning (Macau time), with Scientific Games having reported a 13% year-on-year decline in revenue to US$725 million, 39% drop in Adjusted EBITDA to US$200 million and a substantially increased loss of US$155 million (from US$24 million) for the quarter.
“We are in a very strong financial position,” said President and CEO Barry Cottle in response to questions regarding the ongoing closure of casinos globally.
“Our business is very well diversified with lottery, digital and social all going strong and as a result of that we are continuing to generate significant revenue even in this environment.
“We expect only US$70 million to US$90 million cash outflow in Q2 which is less than US$1 million per day.”
Asked when the company expects to return to cash flow positive, Cottle replied, “We should be able to get very close to cash flow positive near the end of the year. Given the current discussions going on now regarding reopening we expect Q2 to be the trough of this and improving from there.
“Obviously there is a lot of uncertainty due to COVID but with our portfolio and the cost actions being taken we feel very confident in our ability to weather the storm for as long as it takes.”
Aiding the Scientific Games cause, Cottle said, have been recent refinancing measures which have pushed the majority of debt maturities back to 2024 and beyond. A US$341 million senior notes debt maturity is upcoming in May 2021. With current liquidity of US$967 million, the company isn’t expecting to require any further financing as a result of the COVID-19 pandemic.
Scientific Games also noted the strong performance of its digital arm, SciPlay, during the stay at home orders implemented across the globe. In New Jersey, where almost half of SciPlay’s wagers are processed, online revenue increased 65% in March, helping generate 1Q20 segment revenue of US$118 million, a 125% increase in net income to US$31 million and 40% increased in Adjusted EBITDA to US$35 million. SciPlay revenue also achieved another revenue record in April, up 20% over March, the company said.
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