Scientific Games' revenue drops by 13 percent in Q1

Scientific Games reported Monday the results for the first quarter ended March 31, 2020, which according to the company, were adversely impacted by the coronavirus pandemic disruptions.

"We are working around the clock to take care of our employees, customers, shareholders and other key stakeholders in these difficult times while providing uninterrupted products and services to those customers who continue to operate. I am confident that the measures we are implementing now will allow us to take advantage of opportunities to strengthen our business and prepare us to come out of the crisis even stronger than before. We have a diverse portfolio of assets, products and services, and our previous investments in digital gaming technologies uniquely position us to navigate and ultimately excel, as we emerge from this challenging environment," said Barry Cottle, President and Chief Executive Officer of the company

First-quarter revenue decreased 13 percent to $725 million, down from $837 million in the year-ago period. Lottery revenue was lower as the prior year included significant equipment sales.

Net loss was $155 million compared to $24 million in the prior year, due to lower revenue and the effects of COVID-19. 2020 Net loss includes a $54 million goodwill impairment charge related to the legacy U.K. Gaming reporting unit and a negative impact of $37 million related to Gaming business segment receivable credit allowances and inventory write-down charges, all driven by COVID-19 disruptions.

Consolidated Adjusted EBITDA, a non-GAAP financial measure, decreased 39 percent to $200 million from $328 million in the prior-year period, driven by the previously mentioned $37 million charges related to receivables credit allowances and inventory write-down charges and the time between the sudden drop in revenue from COVID-19 and the benefits of the cost savings measures implemented late in the quarter.

Net cash provided by operating activities was $120 million versus $167 million in the year ago period.

Operational and capital cost-savings measures are expected to improve quarterly cash flows in the second quarter by over $150 million. The Company implemented these cost-savings measures as a result of the COVID-19 disruptions. The cost reductions are related to lower capital expenditures, workforce-related savings, and reduced expenses.

Second-quarter projected consolidated net cash outflow, a non-GAAP financial measure, is expected to be approximately $70 million - $90 million. The COVID-19 impact accelerated in the latter half of March 2020 and the Company expects this trend to reach its peak in the second quarter.

Available liquidity, including SciPlay at quarter-end was $967 million.

"We have made swift and meaningful reductions to our cost structure in response to the current environment. We believe these changes in conjunction with our available liquidity provide us the tools to withstand the impact from COVID-19. I'm confident that our streamlined cost structure will allow for accelerated cash flow generation and deleveraging in the future," said Michael Quartieri, Chief Financial Officer.