Scientific Games Slashes Q2 Spending by $100m

  • The company has reduced the pay and hours of many employees amid the COVID-19 pandemic
  • Executive leaders halved their pay and CEO Barry Cottle is going without remuneration
  • The workforce cost cuts will save the gaming and lottery provider's business $50m in Q2
  • Capital expenditure will drop by another $50m, backed by sufficient liquidity
hand holding scissors cutting through the word cost written on a blackboard
Scientific Games plans to save $100m in costs in Q2 amid the ongoing coronavirus pandemic. [Image:]

Cost-cutting measures

Scientific Games plans to save more than $100m in Q2 through a number of moves it is making in response to the ongoing coronavirus pandemic. The company is acting in an effort to protect the jobs of its workers and to help its operations to continue into the future. 

lowered the pay and reduced the working hours of its employees

As part of the cost-cutting measures, Scientific Games has lowered the pay and reduced the working hours of its employees. Those holding support roles have been furloughed. The executive leadership has voluntarily halved its salaries while company CEO Barry Cottle has forgone all remuneration. 

Total savings calculated

In total, the measures to reduce workforce costs will result in approximately $50m worth of savings. Scientific Games will also spend $50m less than was initially budgeted for capital expenditure in the second quarter.

approximately $50m worth of savings

This will mean that for the entire year, the company’s capital expenditure will be closer to the $210m-$240m range than the initial pre-pandemic estimates of $300m to $330m. 

The CEO said of the strategy: “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.” Cottle believes the company can position itself to be even stronger after the COVID-19 crisis is over.

Liquidity situation

Scientific Games also plans to cut other forms of operating expenses to generate further savings. It has taken out about $480m from its revolving credit lines to help it navigate through the current situation. As the world gets back to normal, it will use cash reserves and the borrowed funds to avail of potential opportunities that could help strengthen its business into the future. 

The company’s SciPlay subsidiary is also very liquid. It has accessible cash reserves of $130m, zero outstanding debt, and access to $150m through a revolving credit facility.

The core business

Scientific Games is a publicly traded company headquartered in Las Vegas, Nevada. It provides a wide range of gambling products to operators around the world, including mechanical slot machines, table games, iLottery and igaming products, instant lotteries, lottery systems, and sports betting. 

With most casinos in the United States and Europe shut down, as well as most sporting events postponed, companies in the gambling industry have been taking similar cost-cutting actions. Many have issued profit warnings and cut dividends in recent weeks.

Leave a Reply

Your email address will not be published. Required fields are marked *