Scientific Games said it was slicing costs in the second quarter by $100 million as the Las Vegas-based gaming equipment provider deals with lost revenues and cash flow due to the COVID-19 coronavirus pandemic.
In a statement Tuesday, Scientific Games said job reductions, employee furloughs and trimming operating expenses would help it deal with nationwide casino closure due to the pandemic, which has shut down operations at nearly 1,000 commercial and tribal properties in 43 states.
The company said it drew down $480 million of its credit facilities, which was added to the $200 million in cash the company had on hand at the end of March.
The balance sheet will allow Scientific Games “to take advantage of opportunities to strengthen the business as the gaming industry begins to recover from the pandemic,” the company said. It plans additional cost-saving initiatives, including reductions in other operating expenses, that “will lead to further potential savings.”
Scientific announced on March 31 it was furloughing an undisclosed number of employees, reducing pay and work hours for others, and slicing the salaries of executive leadership by 50%. The company said cost savings from furloughs and reductions in the workforce would add up to $50 million for the quarter ending June 30.
The equipment developer is also lowering its capital expenditure plans in the three-month period by $50 million.
“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,” Scientific Games CEO Barry Cottle said in a statement. Cottle gave up his entire salary for the year to help the company weather the pandemic’s impact.
Scientific Games provides gaming equipment to casinos, sports betting operations and lotteries. The company said its SciPlay subsidiary, of which the company owns 82%, had $130 million in cash and $150 million available in a revolving credit facility. SciPlay, which provides social gaming products, does not have any outstanding debt.
“The diversity of our business, serving customers across the industry and around the globe, gives us unique strength in these challenging times,” Cottle said.
Scientific Games said in March it had established a Hardship Relief Fund to provide short-term assistance to employees and immediate families who incur “unexpected and onerous personal, family, or living expenses as a result of the COVID-19 crisis.”
Scientific Games announced the cost cuts after the stock markets closed Tuesday. Shares of the company closed at $10.06, up $1.01 or 11.16% on the Nasdaq. Shares rose 5.5% in after-hours trading.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
