Everi expects to show sequential progress in its 2020 fourth quarter and full year performance, but will, however, reflect the continued effect of the COVID-19 pandemic and related casino closures.
The issuance of a trading update is related to the ability to take advantage of favourable market conditions by repicking $735.5m of its first lien term loan due in 2024 to lower its debt rate.
Consolidated revenue in the $117m to $121m range is expected for the fourth quarter, which would mark a quarterly sequential increase from $112.1m in Q3 but a substantial decrease from $145.2m in Q4 2019.
Net quarterly loss
The company estimates its net quarterly loss to be in the range of $1.4m to $300,000, including pre-tax costs of around $1.5m related to the closure of certain facilities and the write-off of certain inventory.
This contrasts with a net loss of $900,000 reported in the third quarter and a net loss of $4.1 million from the same reporting period a year ago, which included the effects of a litigation settlement pre-tax fee of $6.4 million and about $1.6 million of additional fees.
In addition, for the fourth quarter of 2020, adjusted EBITDA is forecast to be in the range of $60m to $62m, compared to $59.8m in Q3 and $63.2m in 2019.
Substantial effect of the pandemic
Reflecting the substantial effect of the pandemic on the casino and hospitality industry over the year, revenue is forecast to be in the range of $381 million to $385 million in 2020, with net losses of $85 million to $83 million, compared to $533.2 million and $16.5 million in 2019.
Everi’s CEO, Michael Rumbolz, explained: “Our preliminary 2020 fourth quarter results reflect quarterly sequential improvement highlighting the ongoing strength and balance of our business, as well as the benefit of our focus on consistent improvement in our operating execution.
“Even with increased casino closures and further restrictions on certain casino activities in the fourth quarter, the sequential progress of our expected financial and operating results demonstrate the significant improvements to our games and fintech product portfolios over the last several years.
“This includes our efforts to innovate new products that help our customers extend the connection with their guests and operate more efficiently. The combination of our improved operating performance and the ongoing benefits of our cost-enhancement initiatives is expected to result in free cash flow that is approximately triple the amount we reported in last year’s fourth quarter.
“We expect our operating strength and momentum to continue in the 2021 first quarter, as casinos again begin to reopen and casino activities improve compared to 2020 fourth quarter levels.”