It was déjà vu all over again for Galaxy Gaming. The second quarter’s downward trends continued in the third quarter as the company had a loss, reversing year-earlier income, and posted drops in revenue and cash flow.
But as in the second quarter, Galaxy Gaming officials saw future benefits from its $12.4 million acquisition of Progressive Games Partners, which closed earlier this year.
In a 10-Q filing with the Securities and Exchange Commission on Tuesday, a Las Vegas-based casino table games and systems developer, manufacturer and distributor, said its net loss was $1.3 million, or 6 cents per diluted share, for the three months ended Sept. 30, reversing year-earlier income of $580,234, or 3 cents per diluted share, a year earlier.
Adjusted earnings before interest, taxes, depreciation, and amortization, a cash flow measure that excludes one-time costs, fell to $35,703 from $2.2 million.
Revenue fell 66.7% to $1.8 million from $5.4 million.
“In the physical casino segment, we saw a significant improvement over Q2, but it’s clear that the industry is not out of the woods yet,” Galaxy Gaming CEO Todd Cravens said in a statement. “We will continue to support our clients as they adjust to the continuing changes brought on by the pandemic.”
Also in the statement, Galaxy Chief Financial Officer Harry Hagerty said although the company used a significant amount of cash to acquire PGP, the company’s liquidity remained sufficiently adequate.
On March 17, Galaxy said it would suspend billing to casino customers that had closed to flatten the coronavirus infection curve and reaped no revenue from them during the shutdown. Galaxy said it earned revenue from online gaming customers who license Galaxy games through our distributor.
Many land-based casinos have begun to reopen with reduced occupancy and limitations as mandated by state health and government officials. Given uncertainties around casino reopenings, Galaxy said it instituted phased billing for its clients through fiscal 2020. As a result, the company said it will realize substantially less revenue than it might have expected.
“In addition,” Galaxy said in its SEC filing, “because of COVID-19-related financial pressures on our physical casino customers, there can be no assurance that our accounts receivable we will be paid timely (or at all) for revenues earned prior to the shutdowns.”
Galaxy said some of its casino clients have said they will lengthen payment terms after reopening as they work to preserve their own liquidity.
Galaxy Gaming shares were 8 cents or 7% Thursday to close at $1.33 on the Over-the-Counter Bulletin Board. The share price has fallen 27.5 percent in 2020.
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