GS reported on Wednesday operating results for its second quarter ended June 30, 2020.
"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," said AGS President and Chief Executive Officer David Lopez.
During March and April and continuing through mid- to late-May of the current year, nearly all of the company's customers closed their operations due to business disruption caused by the global spread of COVID-19 and the actions by governments and businesses to contain the virus. The markets that AGS serves have been severely impacted, which is the primary reason for the decreases in the company's metrics , specifically revenues, (loss) income from operations, net loss, Adjusted EBITDA, and Adjusted EBITDA margin.
A limited number of customers reopened in mid- to late-May and through June; by June 30, approximately 500 of 650 customers properties in the United States and Canada were partially open. In Mexico, 25 of 320 customers' properties were partially open as of June 30.
Total revenue decreased to $16.8 million, primarily due to decreased gaming operations revenue and unit sales in the EGM segment.
Gaming operations revenue, or recurring revenue, decreased to $10.2 million compared to $53.6 million in the prior-year period, primarily related to our leased EGMs and Table Products that were impacted by closed casinos. This decrease was slightly offset by increased revenue in our Interactive segment.
Net loss of $42.6 million increased year-over-year from net loss of $7.6 million in the prior year, primarily due to the decrease in EGM and Table Products revenue, partially offset by decreases in expenses that were a result of management's actions taken to decrease spending amid COVID-19, including employee furloughs, a reduction in force, and salary reductions. Additional savings resulted from the Company's focus to reduce expenses, primarily in sales and marketing activities, professional fees, and delayed development expenses.
Total Adjusted EBITDA decreased to a loss of $1.2 million compared to $35.7 million in the prior year period, driven by decreases in EGM and Table Products segments and slightly offset by growth in the Interactive segment.
"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," Lopez added. "Prior to and even during COVID-19, we were seeing strong initial performance from our new products, such as the Starwall and Orion Rise, as well as continued momentum from our new titles on Orion Portrait and 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.”
"Our careful management of expenses and capital expenditures during the casino shutdowns in the quarter — in addition to drawing $30 million under the existing revolving credit facility and entering into incremental term loans of $95 million — have resulted in a strengthened liquidity position," added Kimo Akiona, AGS' Chief Financial Officer. "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 organization."
See the company's full Second Quarter 2020 Financial Results here.