Gaming equipment provider Everi Holdings said Tuesday that it had implemented targeted furloughs and company-wide salary reductions in an effort to preserve its cash on hand as the company weathers the nationwide casino shutdown due to the COVID-19 coronavirus pandemic.
Everi, which supplies gaming machines and systems that manage financial transactions and player loyalty programs, said the business disruption caused by the rapid nationwide casino shutdown has reduced all revenue and the associated workload “to near zero and limited visibility as to when our (casino) customers may reopen for business.”
The American Gaming Association said 98% of all casinos in the U.S. – 973 properties – have closed over the past week in an effort to slow the viral outbreak. Las Vegas Strip casinos have announced layoffs and furloughs, but Everi’s actions Tuesday was the first public announcement by a gaming equipment provider.
In a statement, CEO Mike Rumbolz said he would reduce his $750,000 annual salary to zero and the executive team elected to reduce their salaries by 70%. An undisclosed number of employees were furloughed, and other employees took salary cuts.
A timetable was not given for the length of the furloughs or salary cuts, which Rumbolz told CDC Gaming Reports were companywide. He said implementing the furloughs and salary reductions “were the toughest decisions” of his gaming career.
“This is about saving the business and keeping the jobs alive for people when we’re ready to return,” he said. The plan, he said, is to bring employees back as soon as casinos begin reopening.
Earlier this month, Rumbolz agreed to extend his contract through March 2022 and will focus on Everi’s long-term growth initiatives. CFO Randy Taylor was promoted to a newly created position as president and chief operating officer.
Las Vegas-based Everi drew down $35 million on its revolving credit facility last week to provide additional near-term liquidity and canceled or delayed material capital expenditures.
The effect of the furloughs and salary reductions lowered Everi’s future cash payroll expense to less than $2 million per month.
“We have taken decisive actions appropriate for the current level of business and to prepare our company to withstand a potentially prolonged period of minimal industry activity,” Rumbolz said in a statement.
“We believe these are the appropriate steps to preserve our liquidity and manage our business in the current environment,” Rumbolz added. “We expect these to be temporary but prudent steps designed to ensure that Everi is best positioned to withstand this disruption.”
Everi’s revenue for the first two months of the year increased in line with the company’s forecasts. However, Rumbolz said Everi was withdrawing its 2020 financial guidance because of the shutdown’s uncertainty.
“The changes we have had to make across our operations are not easy for those impacted,” Rumbolz said, but were “necessary to ensure Everi comes out in a solid position on the other side of this crisis.”
Shares of Everi, which have fallen 89% in the past month, closed Tuesday at $4.29 on the New York Stock Exchange, up 62 cents or 16.89%.
“I also look forward to seeing a recovery in the gaming industry, so that we can start returning our employees back to work and regain some normalcy in each of our team members’ lives,” Rumbolz said.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at email@example.com. Follow @howardstutz on Twitter.