Countrywide casino closures tend to have far-reaching effects across the US, with Las Vegas based AGS being the latest corporation to record impacts from the first quarter.
Despite the widespread North American shutdown the company claims it is approaching the rest of the year “from a position of strength” in the face of the uncertainty and challenges that lie ahead.
Kimo Akiona, CFO of AGS, commented: “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 removal of its 2020 guidance, AGS outlines the consequences experienced through various indicators in its latest financial report due to market uncertainty caused by COVID-19’s global spread and government and business efforts to contain the virus.
With almost all customers closing their operations and ultimately seriously affecting markets, the firm has experienced a series of Q1 decreases.
Income fell 26 percent to $54.3 m (2019: $69.6 m), largely due to reduced income from unit sales and gaming activities in its EGM division as a result of changes to business and closures.
Recurring revenue fell 19 percent to $42.7 m due to income disruptions from leased electronic gaming machines that were non-operational, and slightly offset by increased table products and real-money gaming.
Net loss hit $14.4 million, down from a loss of $100,000 a year ago, with adjusted EBITDA dropping 32 per cent from $36.2 million to $24.5 million.
AGS President and CEO David Lopez 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.”