Executives from gaming equipment provider Everi Holdings said Tuesday that the company has long been focused on product innovation.
As the nation’s casino industry begins a slow recovery from a two-and-a-half-month shut down due to the coronavirus pandemic, Las Vegas-based Everi has now moved much of its development to the forefront.
“We anticipated that there would be a demand for new solutions that are contactless and cashless, and that support social-distancing,” Everi CEO Mike Rumbolz said Tuesday. “Even as we took significant actions to reduce costs and capital spending, we also furthered the progress we were making in our innovation and development projects that align with the new normal.”
Everi became the first company to report quarterly results after casinos returned to operation.
The pandemic, which caused the closures of nearly 1,000 casinos in 43 states, took a toll on
Everi’s first quarter, which ended March 31. It also delayed earnings reporting because many employees were either furloughed or on a work-at-home policy.
Everi saw revenues fell 8% in the quarter to $113.3 million, while its net loss of $13.5 million compared with net income of $5.9 million in the quarter a year earlier. Everi’s cash flow in the quarter declined 14% to $52.3 million.
Everi President Randy Taylor said the company’s revenues were up more than 20% during the first two months of the quarter, likening the company to a “Ferrari with the throttle wide open on an open stretch of road.” Then the pandemic shut down the casino industry and Everi re-tooled its operations.
Taylor told analysts on a conference that the company’s second-quarter results “should be the bottom” and that Everi will work its way back up over the year.
Everi, in the early days of the crisis, took “significant actions” to reduce the company’s costs and spending, furloughing 80 percent of its workforce while continuing to cover health care plans and associated costs. Rumbolz and the company’s board reduced their salaries to zero, and the executive team reduced their salaries by approximately 70 percent.
In March, the company drew down $35 million on its revolving credit facility to provide additional near-term liquidity and canceled or delayed material capital expenditures. The drawdown gave Everi $161 million in total liquidity. In April, the company secured a further $125 million financing agreement and obtained changes in its credit agreements with its existing lenders.
“We acted aggressively to preserve cash and improve our liquidity position to allow the company to achieve our long-term goals as our customers’ operations begin to reopen,” Rumbolz said.
Taylor said payroll was reduced to $2 million a month and the company’s cash burn rate for operating costs was approximately $5 million per month.
As of Tuesday, Rumbolz estimated 32 percent of all U.S. casinos had reopened.
“Importantly, players were eager to enter and enjoy the entertainment options on their casino’s floor,” Rumbolz said.
While casinos were closed, the company jumped into discussions with operators about its digital gaming products, including a mobile wallet and a product that allows players to insert their debit card into a kiosk and receive a ticket that can be directly inserted into a slot machine, enabling them to bypass any handling of cash.
Rumbolz, who has held a variety of positions in his 40-plus years in the gaming industry, said at the outset of his remarks that he’s witnessed his share of tragic and recessionary conditions.
“I can honestly say that I have never experienced anything close to the impact from this pandemic,” Rumbolz said, adding that the company “embraces this time as an opportunity to be a catalyst for change.”
Shares of Everi, traded on the Nasdaq, closed at $6.70, up 33 cents or 5.18%.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
