Foresight and liquidity helped Galaxy Gaming avoid a first-quarter loss, but the company still felt the coronavirus crush.
The Las Vegas-based casino table games and systems developer, manufacturer and distributor’s first-quarter 2020 earnings statement read much like its fourth-quarter 2019 statement. Galaxy reiterated that it had stopped billing customers forced to shut down for coronavirus curve flattening and repeated that it drew down $1 million from its revolving line of credit to supplement cash balances.
Galaxy added that it got a dash of government help, $835,000, under the Small Business Administration’s Paycheck Protection Program.
Fiscal results fell across the board, but Galaxy did, as mentioned, avoid a loss. The company said its net income was $16,605, or 1 cent per diluted share, for the three months ended March 31, compared with net income of $460,664, or 1 cent per diluted share, a year earlier.
Earnings before interest, taxes, depreciation and amortization, a cash flow measure excluding one-time costs, fell 25% to $1.5 million from $2 million.
Revenue fell 15% to $4.5 million from $5.3 million.
“Given the uncertainties around casino reopenings, we instituted a phased billing approach for our clients through fiscal year 2020, which will result in us realizing substantially less revenue than we might otherwise expect,” the company said in a 10-Q filing with the Securities and Exchange Commission.
Furthermore, Galaxy said, because of clients’ COVID-19-related financial pressures, it couldn’t assure that accounts receivable would be paid on time (or at all) for preshutdown revenues earned. Galaxy said casino clients have said they’ll lengthen payment terms as they work to preserve their own liquidity.
The company declined to say how many clients are expected to extend payments, or for how long they plan to do so.
“The industry we serve experienced unprecedented disruption beginning in the middle of March… Almost every one of our clients in the physical casino world closed in response to the COVID-19 pandemic,” Galaxy President and Chief Executive Officer Todd Cravens said in the aforementioned statement. “During this time, our focus was on the health and safety of our team who, while working remotely, went above and beyond to assist each other and our clients in working through these new challenges and constraints.”
In an 8-K SEC filing on June 18, ahead of the earnings news, Galaxy said its executive leadership team, including Cravens and Chief Financial Officer Harry Hagerty, will take a temporarily 20% deferment of their base salaries, that the company’s board will temporarily defer their annual director’s cash compensation, and that “certain team members” will temporarily defer base salaries by 10 percent. There were no further specifics.
Meanwhile, Galaxy in the 10-Q warned of coming uncertainty.
“The public health impact of the outbreak continues to remain largely unknown and still evolving,” the company wrote. “The related health crisis could continue to adversely affect the global economy, resulting in continued economic downturn that could impact demand for our products.”
Galaxy Gaming shares rose 2 cents, or 1.52%, Tuesday to close at $1.34 on the Over-the-Counter Bulletin Board. The company’s share price has risen 11.7 percent in 2020.
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