All businesses are worried about the impact caused by the forced closures as a result of the coronavirus pandemic, but some are less concerned than others. The gaming industry has been considerably impacted by government orders to close operations, and a number of casinos have already determined that they don’t have the money to withstand a prolonged hiatus. However, some companies with strong ties to the gaming industry, such as Scientific Games (SG), aren’t sweating it. In fact, SG is confident that it can survive with little damage, in spite of the losses the global gaming company is incurring during the shutdown.
SG’s leadership asserts that it has taken measures to ensure that it has the liquidity to help it survive the coronavirus nightmare. It issued a press release yesterday, asserting that it has figured out how to save $100 million and has another $680 million in cash that will give it enough of a cushion to stave off massive cuts anytime soon. SciPlay, of which SG controls 82%, also has a great deal of liquidity, with $130 million at its disposal and no outstanding debt. Another $150 million is available through a revolving credit facility if the company needs to access additional funds.
SG explains, “The Company anticipates that the operational and capital cost-saving measures it has already implemented, together with additional measures now being implemented, will reduce its quarterly costs in Q2 by over $100 million. The workforce cost reductions implemented by the Company, including hour and pay reductions, furloughs, and reductions in force, are expected to result in more than $50 million in cost savings in Q2, while capital expenditures in Q2 are expected to be approximately $50 million lower than previously planned. For 2020 as a whole, the Company now anticipates that capital expenditures will be in the range of $210-240 million, as compared to the $300-330 million estimate set forth in the release accompanying our 2019 10-K. The Company plans additional cost saving initiatives, including reductions in other operating expenses, that will lead to further potential savings.”
The gaming giant just picked up a new contract with the Iowa Lottery that will guarantee sustainable income for the next ten years. Additionally, it has expanded its existing agreement with the Connecticut Lottery Corporation. SG has had an agreement to supply instant games to the organization for over 40 years, but the expansion will see it increase the number of games that are included in the Connecticut Lottery’s portfolio.
In yesterday’s release, SG CEO Barry Cottle, who announced at the end of March that he will forego compensation for the rest of the year, added, “We continue to reduce our costs so that that we can position our Company to be an even stronger competitor as the industry begins to recover. We remain committed to providing our best in class products and services to our customers across lottery, iGaming, sports betting and land-based casinos while innovating for the future. The diversity of our business, serving customers across the industry and around the globe, gives us unique strength in these challenging times.”
