Closure of land-based casinos and other retail gaming outlets did not affect the gaming companies only, but their technology solutions providers, too.
In a statement regarding its financial position amid the ongoing health crisis, Scientific Games /SG/ reported it had implemented during the second quarter of 2020 cost savings to the extent of $100 million.
Significant Q2 Cost Savings
Half of these cost savings would come from workforce cost reduction, after the company has undertaken all possible steps to reduce its labour costs, from hourly and pay cuts to furloughs and corporate salary cuts. SG’s CEO Barry Cottle even decided to give up his pay till June 30 to help the company, while other executives volunteered to 50% salary cuts.
The other $50 million SG will achieve through a reduction of its capital expenditure program. Initially, the gaming solutions provider wanted to spend between $300 million and $330 million during the current year, but now the numbers have been revised downwards to the range of $210 -$240 million.
Scientific Games ended 2019 on a high, reporting a rise in its revenue and a reduction in its annual net loss, despite having its gaming and social revenues falling, and at the end of March 2020, the company was well positioned to face adversities.
Additional Liquidity Provided
The Las Vegas-based slots and gaming content provider reported it was sitting on a $200 million of cash, a liquidity base it boosted by another $480 million, drawn under its Revolving Credit Facilities, which together with the $100 million of estimated cost savings would allow it to kick-start operations as soon as the health crisis subsided and the business started to recover.
“…We remain committed to providing our best in class products and services to our customers across lottery, iGaming, sports betting and land-based casinos while innovating for the future. The diversity of our business, serving customers across the industry and around the globe, gives us unique strength in these challenging times.”Barry Cottle, CEO, Scientific Games
Subsiduary Financial Position Strong
The financial position of SciPlay, a Las Vegas-headquartered company in which SG owns 82% of shares, is also strong. The social gaming products provider is currently sitting on $150 million in cash, with another $150 million available through its revolving credit facility, on top of no outstanding debt.
Despite having to implement strict measures such as to place employees on temporary furloughs, Scientific Games did not forget how to show concern for its people. Amid the cost reductions, the company created a Hardship Relief Fund, to offer short-term assistance for furloughed employees and their families that were facing adversities due to the coronavirus crisis situation. SG’s executive staff would be among the first to contribute to the fund.