NEW YORK, May 18, 2020 /PRNewswire/ --
- First Quarter Revenue Increased 55.4% Year-Over-Year, to
$52.3 Million, Despite Disruption
from the Ongoing COVID-19 Global Pandemic That Has Impacted the
Company's Land-Based Business
- First Quarter Adjusted EBITDA1 of $10.1 Million Declined Year-Over-Year Primarily
Due to the Abrupt Nature of the Customer Closures Related to
COVID-19 and the Delay in Realizing Effects from Associated Expense
Reductions
- 161 Valor™ Terminals Sold in North America During the
First Quarter
- Strong Demand in Interactive Business with April
Recurring Revenues from Interactive Increasing 30% and 100% over
March and February, Respectively
- Virtuals in Greek Retail Shops Re-Launched May 11th
Inspired Entertainment, Inc. ("Inspired") (NASDAQ: INSE) today
reported financial results for the first quarter ended March 31, 2020.
Financial results comparison for the first quarter 2020
versus first quarter 2019 on a reported basis:2
Total Revenue increased to $52.3
million, from $33.7 million
during the first quarter of 2019, primarily driven by $27.4 million in revenue from the recently
acquired Novomatic Gaming Technology Group ("Acquired
Businesses"). However, this increase was significantly offset
by the lag in sales and temporary suspension of the Company's
land-based business due to the ongoing COVID-19 global pandemic
("COVID-19 Closures") and the decrease in revenue in the UK
Licensed Betting Office ("LBO") market primarily caused by the
reduction in maximum B2 stakes to £2 implemented on April 1, 2019 (the "Triennial
Implementation").
Adjusted EBITDA1 decreased to $10.1 million, from $13.7
million during the first quarter of 2019. First quarter 2020
results included $2.8 million from
the Acquired Businesses (in its seasonally weakest quarter as
leisure parks are closed in the winter months throughout the UK
estate). The impact of the COVID-19 global pandemic was
greater on Adjusted EBITDA than it was on Revenue due to the abrupt
nature of the closures, which caused the Company to incur
significant costs which had no associated revenues.
"The year got off to a strong start, building on the momentum
from outstanding organic growth, increased profitability across our
businesses and better-than-expected initial results from our
transformative acquisition which we realized in the fourth quarter
of 2019," said Lorne Weil, Executive
Chairman of Inspired. "However, the COVID-19 global pandemic
resulted in the temporary closure of the land-based retail
businesses of our customers with continuation of many of the
associated expenses, which had a material negative impact on our
first quarter results."
Summary of
Consolidated First Quarter 2020 Financial Results
(unaudited)
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Functional
|
|
|
Quarter
Ended
|
|
Currency
|
Currency
|
|
|
March
31
|
Change
|
Movement
|
Growth
|
|
|
2020
|
2019
|
(%)
|
2020
|
(%)
|
(In $ millions,
except per share figures)
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|
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|
|
|
GAAP
Measures:
|
|
|
|
|
|
|
Revenue
|
|
$
52.3
|
$
33.7
|
55.4%
|
$
(0.8)
|
57.8%
|
Net operating (loss)
income
|
|
$
(7.2)
|
$
(0.7)
|
NM2
|
$
0.2
|
NM2
|
Net (loss)
|
|
$
(17.4)
|
$
(5.0)
|
NM2
|
$
0.6
|
NM2
|
Net (loss) per
diluted share
|
|
$
(0.78)
|
$
(0.24)
|
NM2
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|
|
Non-GAAP
Financial Measures1:
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|
Adjusted
EBITDA
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|
$
10.1
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$
13.7
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(26.4)%
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$
(0.2)
|
(25.2)%
|
|
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1Reconciliation to GAAP shown
below.
2Percentage change is not
meaningful.
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Management Commentary Regarding COVID-19
The ongoing COVID-19 global pandemic has had an impact on our
business with our different businesses and geographies affected to
varying degrees. Revenue from our land-based retail customers
declined, ultimately to near zero, as their respective physical
locations closed during the last two-thirds of March as follows,
Italy on or about March 10th, Greece on or about March 14th and the UK on or about
March 20th.
Interactive revenues have performed well with April recurring
revenues across our interactive channels increasing approximately
30% and 100% over March and February, respectively.
Weil continued, "We are pleased that our interactive business
has shown not only resilience, but also strength during these
unprecedented times with sales from our interactive channels
helping to compensate for declines in revenue from our land-based
retail business. Our Virtual Sports content has helped to
provide content given the lack of live sports content that
currently exists and has, in some cases, taken center stage, as
witnessed by the successes of the high-profile 'The Kentucky Derby:
Triple Crown Showdown' and 'Virtual Grand National'. These
products have helped to drive demand for additional channels from
existing customers and an influx of potential new customers.
We have a pipeline of customers ready to launch the new V-Play Plug
& Play™, our complete end-to-end online virtual sportsbook
product that allows 14 channels of Virtuals with minimal
integration effort. We are encouraged by this strong
momentum, particularly in North
America, as we look to build upon these opportunities to
drive results in the future."
Management has taken an aggressive range of actions which lead
us to believe we are well positioned to weather the impacts of
COVID-19. The Company has implemented cost-saving measures across
its workforce and delayed non-essential capital expenditures.
Additionally, management agreed to an indefinite delay in the
payment of accrued executive bonuses payments for 2019. In an
elective decision to preserve cash and provide for additional
flexibility, the Company agreed with its lenders to extend the
grace period for the interest payment that was due April 1, 2020 to 75 days. In addition, we
have applied to access certain UK Government-sponsored lending
programs, which have the stated goal of buffering the liquidity
position of companies such as Inspired as these companies "reopen"
their businesses in the future.
"During these unprecedented times, we are confident we have
taken the necessary actions to reduce our expenditures and optimize
our cash position," said Stewart
Baker, Executive Vice President and Chief Financial Officer
of Inspired. "As of May 15, 2020, we
had GBP£39.6 million, or $48.4
million3, in cash on the balance sheet and we
were able to generate positive Adjusted EBITDA in April based upon
our preliminary view of results for the month. Given our
efforts to preserve liquidity, we believe we will be able to manage
through this crisis and create stockholder value by executing on
our key strategic initiatives and increasing returns on investment
through disciplined capital allocation."
The Company is well prepared for our customers' properties to
reopen and the associated process of restarting their respective
normalized operations. We believe our geographically
diversified portfolio of customers that focus on their respective
generally locally-based end users will play an important role in
our recovery. We have started to see restrictions being
lifted in certain jurisdictions in which we operate. For
example, on May 11, 2020, the Greek
government reopened OPAP shops, with both live and virtual sports
betting, and we have seen what we believe to be promising results
to date.
"We have benefited from both our product diversity and the
aggressive actions our management team has taken. We will be
prepared to relaunch land-based retail operations in each of our
markets as soon as conditions permit. We are confident we will
emerge from this crisis in a strong position and we remain excited
about our long-term growth prospects, where we continue to see
upside from North American penetration, accelerated UK Pub and
Leisure digitization, additional customers coming onboard in
Virtual Sports and Interactive, as well as the benefits of the
integration of our recent acquisition," concluded Weil.
Recent Highlights (through May 15, 2020)
Server Based Gaming ("SBG")
- 161 Valor™ Terminals Sold in Illinois in the first quarter – Prior to
the shutdown, in the venues where data has been supplied, Inspired
had the top performing terminal on the key metric of "Funds In"
across the Illinois route market
and had sold 277 machines in total.
Virtual Sports
- High-Profile Virtual Sports Events
-
- "The Kentucky Derby: Triple Crown Showdown" – On
May 2, 2020, 1.7 million viewers
watched Inspired's virtual Kentucky Derby featuring the 13 Triple
Crown winners from the past century as part of Churchill Downs'
nationwide Kentucky Derby at Home Party featured on NBC.
- Virtual Grand National – Inspired's Virtual Grand
National took center stage on national television when the Aintree
Grand National was cancelled. With substantial media coverage and a
primetime broadcast slot on April 4,
2020, 4.8 million viewers tuned in. Bookmakers united and
raised £2.6 million for the National Health Services in the
UK.
- New Virtual Sports Contracts
-
- Oregon Lottery – After the end of the quarter,
Inspired signed an agreement to provide the Oregon Lottery with
Virtual Sports delivered via SBTech's sportsbook platform and then
subsequently migrating to Inspired's V-Play Plug & Play™
interactive RGS solution.
- DraftKings – After the end of the quarter, Inspired
signed a contract to provide its new V-Play Plug & Play™
solution to DraftKing's New Jersey
customers.
- FanDuel – Subsequent to the end of the quarter, the
Company signed a multi-year contract with FanDuel to provide its
Virtual Plug & Play™ to FanDuel customers in New Jersey.
- BetMGM, Borgata and PartyPoker – In May 2020, Inspired signed a contract to provide
its V-Play Plug & Play™ to the three New Jersey online brands associated with Roar
Digital, GVC's joint venture with MGM Resorts International.
- Stoiximan – After the end of the first quarter, Inspired
signed a contract to provide its full spectrum of RGS content,
including slots, table games, Virtuals on demand and Virtual Plug
& Play™, to the largest Greek online operator. This creates an
opportunity for Inspired in Greece, where its content is already popular
as a leading provider of gaming machines and Virtuals.
- Ladbrokes – On April
21st, Ladbrokes launched Inspired's online
Virtuals in Belgium, which is a
strong retail Virtuals market.
- New Virtual Sports Channels
-
- Bet365 Launched New Channels – During the period, Bet365
launched with two streams of V-Play Basketball and an additional
stream of V-Play Cricket, which have proven to be successful.
- V-Play Soccer 3.0 – This Spring OPAP is set to launch
V-Play Soccer 3.0, the latest addition to our most popular series
of games and the first product to feature bets for individual goal
scorers in the match.
Interactive (Results Included within Virtual
Sports)
- Launched Four New Customers – During the quarter,
Inspired interactive content went live with 888, British Columbia
Lottery Corporation, Resorts Casino New Jersey and Sky Vegas.
- Expanded Portfolio of Interactive RGS Aggregators – In
addition to previous contracts with Playtech and Scientific Games,
Inspired has signed distribution deals with several aggregators to
provide its interactive online slots, Virtuals and table games,
including Microgaming, Relax Gaming, iForium and Pariplay (during
the first quarter) and SBTech and GAN (subsequent to the end of the
quarter).
- New Game Launches – Stacked Fire 7's™, Prison Escape™,
Chocolate Cashpots™ and Anubis Wilds™ were launched during the
quarter and contributed significantly to the strong performance in
the quarter.
- Collaboration with Gaming Realms to Launch Slingo
Centurion™ – Gaming Realms launched our collaborative Slingo
Centurion™ to its distribution partners in February and it became
their second-best game ever.
Acquired Businesses
- Digital Conversions Tracking Positively Pre-COVID 19
– Digital conversion increased to 68.2% of the Pub
estate on March 31, 2020 from 66.2%
on December 31, 2019.
- Secured Contract Extension with Top Pub Supplier –
Signed a long-term extension with top pub supplier in terms of
volume.
- Contract Renewal with Everards – Inspired to continue to
supply 60% of the Everards estate.
Overview of First Quarter Results Versus Prior Year First
Quarter
SBG Service Revenue declined by $7.5 million, or 35.8%, in the first quarter, of
which approximately $4.4 million of
the decline is estimated to have resulted from the Triennial
Implementation and approximately $2.1
million is estimated to have resulted from COVID-19
Closures. The estimated impact of the decrease related to COVID-19
Closures by market was approximately $1.1 million in the UK,
approximately $0.6 million in Greece, and approximately $0.3 million in
Italy. Additionally, revenue in Italy decreased by $0.9
million, primarily due to the introduction of player cards
and increased taxes. Revenue in Greece increased by $0.8 million as a result of the continued rollout
of contracted VLTs. UK LBO Customer Gross Win per unit per
day declined approximately 32.3% year-over-year divided between the
approximate 23.0% adverse impact from the Triennial Implementation
and the approximate 9.3% adverse impact for COVID-19 Closures.
SBG Hardware Revenue increased by $0.5 million, or 16.4%, driven by our Valor™
cabinet sales in North America of
$2.3 million. This was partly
offset by "Sabre Hydra" sales in the UK Electronic Table Games
market of $1.7 million in the prior
year quarter that did not recur.
Virtual Sports Revenue decreased by $1.0 million, or 10.1%, primarily driven by a
$1.0 million decline in retail
recurring revenue due to COVID-19 Closures. A $0.5 million increase in recurring revenue from
scheduled online Virtuals and a $0.4
million increase in recurring revenue from Interactive were
mostly offset by a $0.7 million
one-time adjustment for a payment of historically
under-reported revenue share in the prior year.
Acquired Businesses Service Revenue was $21.4 million in the first quarter, of which
approximately $9.7 million was
generated from Pub customers for gaming machines and other rental
products. The Company's average installed base within the Pub
business included 8,483 Category C gaming machines. Digital gaming
machines accounted for 68.2% of the total Category C gaming
machines as of March 31, 2020, which
was an increase from 52.4% at the end of the comparable period in
2019, reflecting the continued conversion of Category C gaming
machines from analog to digital in the UK Pub estate.
Leisure parks contributed approximately $1.9 million in revenue, which is typically its
weakest quarter given leisure parks are generally closed in the
winter months throughout the UK estate. Revenue from Motorway
Service Areas and Adult Gaming Centers was $5.8 million in the quarter and included 5,042
machines on a rental basis. Software license fee revenue was
$1.4 million in the quarter.
Acquired Businesses Hardware Revenue was
$6.0 million and includes the sale of
930 machines as well as spare parts and repairs.
SG&A expenses increased by $14.4 million, or 97.5%, to $29.1 million. Incremental SG&A expenses from
the Acquired Businesses amounted to $16.9
million, which was partially offset by a $2.0 million decrease in SG&A for the Legacy
Inspired Business.
Adjusted EBITDA was $10.1
million, a year-over-year decrease of 26.4%. The
Acquired Businesses contributed $2.8
million in Adjusted EBITDA (in its seasonally weakest
quarter, as leisure parks are closed in the winter months
throughout the UK estate). The Legacy Inspired Business Adjusted
EBITDA decreased $6.4 million which
includes the negative impact of the COVID-19 Closures and the
adverse results from the Triennial Implementation.
Net Cash Provided by Operating Activities Less Cash from
Investing Activities during the quarter decreased to an
inflow of $0.1 million from an inflow
of $3.1 million in the prior year
period. This is primarily due to an increase in capital
expenditures related to the Acquired Businesses, such funds used
for the continuing digitization of the UK pub estate and to prepare
for peak season for the leisure estate.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures, including Adjusted
EBITDA, to analyze our operating performance. We use these
financial measures to manage our business on a day-to-day basis. We
believe that these measures are also commonly used in our industry
to measure performance. For these reasons, we believe that these
non-GAAP financial measures provide expanded insight into our
business, in addition to standard U.S. GAAP financial measures.
There are no specific rules or regulations for defining and using
non-GAAP financial measures, and as a result the measures we use
may not be comparable to measures used by other companies, even if
they have similar labels. The presentation of non-GAAP financial
information should not be considered in isolation from, or as a
substitute for, or superior to, financial information prepared and
presented in accordance with U.S. GAAP. You should consider our
non-GAAP financial measures in conjunction with our U.S. GAAP
financial measures.
We define our non-GAAP financial measures as follows:
Adjusted EBITDA is defined as net loss
excluding depreciation and amortization, interest expense, interest
income and income tax expense, and other additional specified
exclusions and adjustments. Such additional excluded amounts
include stock-based compensation, U.S. GAAP charges where the
associated liability is expected to be settled in stock, and
changes in the value of earnout liabilities and income and
expenditure in relation to legacy portions of the business (being
those portions where trading no longer occurs) including closed
defined benefit pension schemes. Additional adjustments are made
for items considered outside the normal course of business,
including (1) restructuring costs, which include charges
attributable to employee severance, management changes,
restructuring, dual running costs, costs related to facility
closures and integration costs (2) merger and acquisition costs and
(3) gains or losses not in the ordinary course of business. This
does not include any losses related to COVID-19.
We believe Adjusted EBITDA, when considered along with other
performance measures, is a particularly useful performance measure,
because it focuses on certain operating drivers of the business,
including sales growth, operating costs, selling and administrative
expense and other operating income and expense. We believe Adjusted
EBITDA can provide a more complete understanding of our operating
results and the trends to which we are subject, and an enhanced
overall understanding of our financial performance and prospects
for the future. Adjusted EBITDA is not intended to be a measure of
liquidity or cash flows from operations or a measure comparable to
net income or loss, because it does not take into account certain
aspects of our operating performance (for example, it excludes
non-recurring gains and losses which are not deemed to be a normal
part of underlying business activities). Our use of Adjusted EBITDA
may not be comparable to the use by other companies of similarly
termed measures. Management compensates for these limitations by
using Adjusted EBITDA as only one of several measures for
evaluating our operating performance. In addition, capital
expenditures, which affect depreciation and amortization, interest
expense, and income tax benefit (expense), are evaluated separately
by management.
Functional Currency at Constant
rate. Currency impacts shown have been calculated as
the current-period average GBP: USD rate less the equivalent
average rate in the prior period, multiplied by the current period
amount in our functional currency (GBP). The remaining difference,
referred to as functional currency at constant rate, is calculated
as the difference in our functional currency, multiplied by the
prior-period average GBP: USD rate, as a proxy for functional
currency at constant rate movement.
Currency Movement represents the difference
between the results in our reporting currency (USD) and the results
on a functional currency at constant rate basis.
Reconciliations from net loss, as shown in our Consolidated
Statements of Operations and Comprehensive Loss included elsewhere
in this release, to Adjusted EBITDA are shown below. The
2018/2019 EBITDA comparison does not include the Acquired
Businesses in the 2019 numbers.
Conference Call and Webcast
Inspired management will host a conference call and simultaneous
webcast at 10:00 a.m. ET /
3:00 p.m. UK on Monday, May 18, 2020 to discuss the financial
results and general business trends.
Telephone: The dial-in number to
access the call live is 1-844-746-0725 (US) or 1-412-317-5264
(International). Participants should ask to be joined into the
Inspired Entertainment call.
Webcast: A live audio-only webcast of the
call can be accessed through the "Events and Presentations" page of
the Company's website at www.inseinc.com under the Investors
link. Please follow the registration prompts.
Replay of the call: A telephone replay
of the call will be available one hour after the conclusion of the
call until May 25, 2020 by dialing
1-877-344-7529 (US) or 1-412-317-0088 (International), via replay
access code 10143795. A replay of the webcast will also be
available on the Company's website at www.inseinc.com.
About Inspired Entertainment, Inc.
Inspired offers an expanding portfolio of content, technology,
hardware and services for regulated gaming, betting, lottery, and
leisure operators across retail and mobile channels around the
world. The Company's gaming, virtual sports, interactive and
leisure products appeal to a wide variety of players, creating new
opportunities for operators to grow their revenue. The Company
operates in approximately 35 jurisdictions worldwide,
supplying gaming systems with associated terminals and content
for more than 50,000 gaming machines located in betting shops,
pubs, gaming halls and other route operations; virtual sports
products through more than 44,000 retail channels; digital games
for 100+ websites; and a variety of amusement entertainment
solutions with a total installed base of more than 19,000
devices. Additional information can be found
at www.inseinc.com.
Forward Looking Statements
This news release may contain "forward-looking statements"
within the meaning of the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as
"anticipate," "believe," "expect," "estimate," "plan," "will,"
"would" and "project" and other similar expressions that indicate
future events or trends or are not statements of historical
matters. These statements are based on Inspired's management's
current expectations and beliefs, as well as a number of
assumptions concerning future events.
Forward-looking statements are subject to known and unknown
risks, uncertainties, assumptions and other important factors, many
of which are outside of Inspired's control and all of which could
cause actual results to differ materially from the results
discussed in the forward-looking statements. Accordingly,
forward-looking statements should not be relied upon as
representing Inspired's views as of any subsequent date, and
Inspired does not undertake any obligation to update
forward-looking statements to reflect events or circumstances after
the date they were made, whether as a result of new information,
future events or otherwise, except as required by law. You are
advised to review carefully the "Risk Factors" section of
Inspired's annual report on Form 10-K for the fiscal year ended
December 31, 2019 and in Inspired's
subsequent quarterly reports on Form 10-Q, which are available,
free of charge, on the U.S. Securities and Exchange Commission's
website at www.sec.gov. In addition, the statements made by
the Company with respect to the potential future impact of COVID-19
on the Company's business and operations, and the Company's
expected responses thereto, are forward-looking statements. The
Company encourages investors to visit its website from time to
time, as information is updated and new information is posted. The
Company does not undertake to update its forward-looking
statements, except as may be required by law.
Contact:
For Investors
Aimee Remey
aimee.remey@inseinc.com
+1 646 565-6938
For Press and Sales
inspiredsales@inseinc.com
INSPIRED
ENTERTAINMENT, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (in millions, except share
data)
|
|
|
|
March 31,
2020
|
|
|
December 31,
2019
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash
|
|
$
|
48.5
|
|
|
$
|
29.1
|
|
Accounts receivable,
net
|
|
|
32.3
|
|
|
|
24.2
|
|
Inventory,
net
|
|
|
16.4
|
|
|
|
18.8
|
|
Prepaid expenses and
other current assets
|
|
|
16.9
|
|
|
|
23.2
|
|
Total current
assets
|
|
|
114.1
|
|
|
|
95.3
|
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
75.1
|
|
|
|
79.3
|
|
Software development
costs, net
|
|
|
43.0
|
|
|
|
46.9
|
|
Other acquired
intangible assets subject to amortization, net
|
|
|
8.3
|
|
|
|
9.9
|
|
Goodwill
|
|
|
75.7
|
|
|
|
80.9
|
|
Right of use
asset
|
|
|
8.8
|
|
|
|
9.4
|
|
Investment
|
|
|
—
|
|
|
|
0.6
|
|
Other
assets
|
|
|
5.5
|
|
|
|
5.1
|
|
Total
assets
|
|
$
|
330.5
|
|
|
$
|
327.4
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Deficit
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
25.6
|
|
|
$
|
22.2
|
|
Accrued
expenses
|
|
|
36.6
|
|
|
|
31.2
|
|
Corporate tax and
other current taxes payable
|
|
|
6.0
|
|
|
|
6.6
|
|
Deferred revenue,
current
|
|
|
10.0
|
|
|
|
10.1
|
|
Operating lease
liabilities
|
|
|
3.3
|
|
|
|
3.6
|
|
Other current
liabilities
|
|
|
2.3
|
|
|
|
1.9
|
|
Current portion of
long-term debt
|
|
|
24.8
|
|
|
|
2.6
|
|
Current portion of
finance lease liabilities
|
|
|
—
|
|
|
|
0.1
|
|
Total current
liabilities
|
|
|
108.6
|
|
|
|
78.3
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
258.4
|
|
|
|
270.5
|
|
Deferred revenue, net
of current portion
|
|
|
15.3
|
|
|
|
17.7
|
|
Derivative
liability
|
|
|
1.3
|
|
|
|
—
|
|
Operating lease
liabilities
|
|
|
5.0
|
|
|
|
5.2
|
|
Other long-term
liabilities
|
|
|
1.4
|
|
|
|
5.2
|
|
Total
liabilities
|
|
|
390.0
|
|
|
|
376.9
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficit
|
|
|
|
|
|
|
|
|
Preferred stock;
$0.0001 par value; 1,000,000 shares authorized
|
|
|
—
|
|
|
|
—
|
|
Series A Junior
Participating Preferred stock; $0.0001 par value; 1,000,000 shares
authorized; 49,000 shares
designated; no shares issued and outstanding at March
31, 2020 and December 31, 2019
|
|
|
—
|
|
|
|
—
|
|
Common stock; $0.0001
par value; 49,000,000 shares authorized; 22,397,727 shares and
22,230,768 shares
issued and outstanding at March 31, 2020 and December
31, 2019, respectively
|
|
|
—
|
|
|
|
—
|
|
Additional paid in
capital
|
|
|
347.6
|
|
|
|
346.6
|
|
Accumulated other
comprehensive income
|
|
|
51.5
|
|
|
|
45.1
|
|
Accumulated
deficit
|
|
|
(458.6)
|
|
|
|
(441.2)
|
|
Total
stockholders' deficit
|
|
|
(59.5)
|
|
|
|
(49.5)
|
|
Total liabilities
and stockholders' deficit
|
|
$
|
330.5
|
|
|
$
|
327.4
|
|
INSPIRED
ENTERTAINMENT, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS (in millions, except share
data) (Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Revenue:
|
|
|
|
|
|
|
Service
|
|
$
|
43.2
|
|
|
$
|
30.8
|
|
Hardware
|
|
|
9.1
|
|
|
|
2.9
|
|
Total
revenue
|
|
|
52.3
|
|
|
|
33.7
|
|
|
|
|
|
|
|
|
|
|
Cost of sales,
excluding depreciation and amortization:
|
|
|
|
|
|
|
|
|
Cost of
service
|
|
|
(6.6)
|
|
|
|
(5.4)
|
|
Cost of
hardware
|
|
|
(7.0)
|
|
|
|
(1.6)
|
|
Selling, general and
administrative expenses
|
|
|
(29.1)
|
|
|
|
(14.7)
|
|
Stock-based
compensation expense
|
|
|
(1.0)
|
|
|
|
(2.1)
|
|
Acquisition and
integration related transaction expenses
|
|
|
(3.2)
|
|
|
|
(0.9)
|
|
Depreciation and
amortization
|
|
|
(12.6)
|
|
|
|
(9.7)
|
|
Net operating
loss
|
|
|
(7.2)
|
|
|
|
(0.7)
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
0.3
|
|
|
|
—
|
|
Interest
expense
|
|
|
(6.1)
|
|
|
|
(4.4)
|
|
Change in fair value
of earnout liability
|
|
|
—
|
|
|
|
(2.3)
|
|
Change in fair value
of derivative liability
|
|
|
—
|
|
|
|
1.2
|
|
Loss from equity
method investee
|
|
|
(0.5)
|
|
|
|
—
|
|
Other finance income
(expense)
|
|
|
(3.7)
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
Total other
expense, net
|
|
|
(10.0)
|
|
|
|
(4.4)
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
|
(17.2)
|
|
|
|
(5.1)
|
|
Income tax (expense)
benefit
|
|
|
(0.2)
|
|
|
|
0.1
|
|
Net
loss
|
|
|
(17.4)
|
|
|
|
(5.0)
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income/(loss):
|
|
|
|
|
|
|
|
|
Foreign currency
translation gain (loss)
|
|
|
3.1
|
|
|
|
(0.5)
|
|
Change in fair value
of hedging instrument
|
|
|
(1.5)
|
|
|
|
(2.1)
|
|
Reclassification of
gain on hedging instrument to comprehensive income
|
|
|
0.4
|
|
|
|
1.5
|
|
Actuarial gains on
pension plan
|
|
|
4.4
|
|
|
|
0.9
|
|
Other
comprehensive income/(loss)
|
|
|
6.4
|
|
|
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
|
$
|
(11.0)
|
|
|
$
|
(5.2)
|
|
|
|
|
|
|
|
|
|
|
Net loss per
common share – basic and diluted
|
|
$
|
(0.78)
|
|
|
$
|
(0.24)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding during the period – basic and
diluted
|
|
|
22,384,268
|
|
|
|
20,959,626
|
|
INSPIRED
ENTERTAINMENT, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)
(Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(17.4)
|
|
|
$
|
(5.0)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
12.6
|
|
|
|
9.7
|
|
Amortization of right of use
asset
|
|
|
0.9
|
|
|
|
—
|
|
Stock-based compensation
expense
|
|
|
1.0
|
|
|
|
2.1
|
|
Change in fair value of derivative
liability
|
|
|
—
|
|
|
|
(1.2)
|
|
Change in fair value of earnout
liability
|
|
|
—
|
|
|
|
2.3
|
|
Impairment of investment in equity
method investee
|
|
|
0.7
|
|
|
|
—
|
|
Foreign currency translation on
senior bank debt
|
|
|
3.9
|
|
|
|
(2.8)
|
|
Foreign currency translation on
cross currency swaps
|
|
|
—
|
|
|
|
1.7
|
|
Reclassification of gain on hedging
instrument to comprehensive income
|
|
|
0.4
|
|
|
|
—
|
|
Non-cash interest expense relating
to senior debt
|
|
|
0.5
|
|
|
|
0.6
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(10.0)
|
|
|
|
(2.4)
|
|
Inventory
|
|
|
1.3
|
|
|
|
0.7
|
|
Prepaid
expenses and other assets
|
|
|
5.7
|
|
|
|
1.9
|
|
Corporate
tax and other current taxes payable
|
|
|
0.1
|
|
|
|
(0.3)
|
|
Accounts
payable
|
|
|
4.9
|
|
|
|
4.4
|
|
Deferred
revenues and customer prepayment
|
|
|
(0.5)
|
|
|
|
(3.5)
|
|
Accrued
expenses
|
|
|
7.5
|
|
|
|
0.7
|
|
Operating
lease liabilities
|
|
|
(0.8)
|
|
|
|
—
|
|
Other
long-term liabilities
|
|
|
0.3
|
|
|
|
(0.6)
|
|
Net cash
provided by operating activities
|
|
|
11.1
|
|
|
|
8.3
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
|
(8.4)
|
|
|
|
(1.5)
|
|
Disposals of property
and equipment
|
|
|
1.0
|
|
|
|
0.2
|
|
Purchases of capital
software
|
|
|
(3.6)
|
|
|
|
(3.9)
|
|
Net
cash used in investing activities
|
|
|
(11.0)
|
|
|
|
(5.2)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from
issuance of revolver
|
|
|
22.3
|
|
|
|
—
|
|
Repayments of finance
leases
|
|
|
(0.1)
|
|
|
|
(0.2)
|
|
Net
cash provided by (used in) financing activities
|
|
|
22.2
|
|
|
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
|
|
(2.9)
|
|
|
|
0.1
|
|
Net increase in
cash
|
|
|
19.4
|
|
|
|
3.0
|
|
Cash, beginning of
period
|
|
|
29.1
|
|
|
|
16.0
|
|
Cash, end of
period
|
|
$
|
48.5
|
|
|
$
|
19.0
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow disclosures
|
|
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
$
|
0.1
|
|
|
$
|
4.0
|
|
Cash paid during the
period for income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash paid during the
period for operating leases
|
|
$
|
1.0
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of noncash investing and financing
activities
|
|
|
|
|
|
|
|
|
Lease liabilities
arising from obtaining right of use assets
|
|
$
|
(0.9)
|
|
|
$
|
—
|
|
Adjustment to
goodwill arising from adjustment to fair value of assets
acquired
|
|
$
|
(0.3)
|
|
|
$
|
—
|
|
INSPIRED
ENTERTAINMENT, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(Unaudited)
|
|
|
|
For the
Three-Month
Period ended
|
|
|
|
Unaudited
|
|
|
Unaudited
|
|
|
|
Mar
31,
|
|
|
Mar
31,
|
|
(In
millions)
|
|
2020
|
|
|
2019
|
|
Net loss
|
|
$
|
(17.4)
|
|
|
$
|
(5.0)
|
|
Items Relating to
Discontinued Activities:
|
|
|
|
|
|
|
|
|
Pension
charges
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
Items outside the
normal course of business:
|
|
|
|
|
|
|
|
|
Costs of
group restructure
|
|
|
0.1
|
|
|
|
1.5
|
|
Acquisition and integration related
transaction expenses
|
|
|
3.2
|
|
|
|
0.9
|
|
Impairment on interest in equity method
investee
|
|
|
0.7
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
1.0
|
|
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
12.6
|
|
|
|
9.7
|
|
Total other expense,
net
|
|
|
9.5
|
|
|
|
4.4
|
|
Income tax
|
|
|
0.2
|
|
|
|
(0.1)
|
|
Adjusted
EBITDA
|
|
$
|
10.1
|
|
|
$
|
13.7
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
£
|
7.8
|
|
|
£
|
10.5
|
|
|
|
|
|
|
|
|
|
|
Exchange Rate - $
to £ (5)
|
|
|
1.28
|
|
|
|
1.30
|
|
INSPIRED
ENTERTAINMENT, INC. SEGMENT PERFORMANCE
(Unaudited)
|
Three Months Ended
March 31, 2020
|
|
|
Server Based
Gaming
|
|
|
Virtual Sports
|
|
|
Acquired Businesses
|
|
|
Intergroup
Eliminations
|
|
|
Corporate Functions
|
|
|
Total
|
|
|
|
(in
millions)
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
|
$
|
13.4
|
|
|
$
|
9.0
|
|
|
$
|
21.4
|
|
|
$
|
(0.6)
|
|
|
$
|
—
|
|
|
$
|
43.2
|
|
Hardware
|
|
|
3.3
|
|
|
|
—
|
|
|
|
6.0
|
|
|
|
(0.2)
|
|
|
|
—
|
|
|
|
9.1
|
|
Total
revenue
|
|
|
16.7
|
|
|
|
9.0
|
|
|
|
27.4
|
|
|
|
(0.8)
|
|
|
|
—
|
|
|
|
52.3
|
|
Cost of sales,
excluding depreciation
and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of service
|
|
|
(3.6)
|
|
|
|
(0.9)
|
|
|
|
(2.7)
|
|
|
|
0.6
|
|
|
|
—
|
|
|
|
(6.6)
|
|
Cost of hardware
|
|
|
(1.8)
|
|
|
|
—
|
|
|
|
(5.2)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(7.0)
|
|
Selling, general and
administrative
expenses
|
|
|
(5.0)
|
|
|
|
(1.7)
|
|
|
|
(16.9)
|
|
|
|
—
|
|
|
|
(5.5)
|
|
|
|
(29.1)
|
|
Stock-based
compensation expense
|
|
|
(0.2)
|
|
|
|
(0.1)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.7)
|
|
|
|
(1.0)
|
|
Acquisition and
integration related
transaction expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3.2)
|
|
|
|
(3.2)
|
|
Depreciation
and amortization
|
|
|
(6.2)
|
|
|
|
(1.4)
|
|
|
|
(4.8)
|
|
|
|
—
|
|
|
|
(0.2)
|
|
|
|
(12.6)
|
|
Segment operating income
(loss)
|
|
|
(0.1)
|
|
|
|
4.9
|
|
|
|
(2.2)
|
|
|
|
(0.2)
|
|
|
|
(9.6)
|
|
|
|
(7.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(7.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at
March 31, 2020
|
|
$
|
69.5
|
|
|
$
|
66.0
|
|
|
$
|
149.8
|
|
|
$
|
—
|
|
|
$
|
45.2
|
|
|
$
|
330.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total goodwill at
March 31, 2020
|
|
$
|
—
|
|
|
$
|
43.6
|
|
|
$
|
32.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
75.7
|
|
Total capital
expenditures for the
three months ended March 31,
2020
|
|
$
|
1.1
|
|
|
$
|
1.6
|
|
|
$
|
6.8
|
|
|
$
|
—
|
|
|
$
|
2.3
|
|
|
$
|
11.8
|
|
|
|
Three Months Ended
March 31, 2019
|
|
|
Server Based
Gaming
|
|
|
Virtual Sports
|
|
|
Acquired Businesses
|
|
|
Intergroup
Eliminations
|
|
|
Corporate Functions
|
|
|
Total
|
|
|
|
(in
millions)
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
|
$
|
20.8
|
|
|
$
|
10.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30.8
|
|
Hardware
|
|
|
2.9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.9
|
|
Total revenue
|
|
|
23.7
|
|
|
|
10.0
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33.7
|
|
Cost of sales,
excluding
depreciation
and amortization:
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Cost of service
|
|
|
(4.4)
|
|
|
|
(1.0)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5.4)
|
|
Cost of hardware
|
|
|
(1.6)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1.6)
|
|
Selling, general
and
administrative expenses
|
|
|
(6.6)
|
|
|
|
(2.2)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5.9)
|
|
|
|
(14.7)
|
|
Stock-based
compensation
expense
|
|
|
(0.4)
|
|
|
|
(0.3)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1.4)
|
|
|
|
(2.1)
|
|
Acquisition and
integration
related transaction expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.9)
|
|
|
|
(0.9)
|
|
Depreciation and
amortization
|
|
|
(7.7)
|
|
|
|
(1.5)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.5)
|
|
|
|
(9.7)
|
|
Segment operating income
(loss)
|
|
|
3.0
|
|
|
|
5.0
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(8.7)
|
|
|
|
(0.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
operating loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at
December
31, 2019
|
|
$
|
80.8
|
|
|
$
|
66.8
|
|
|
$
|
156.7
|
|
|
$
|
—
|
|
|
$
|
23.1
|
|
|
$
|
327.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total goodwill at
December
31, 2019
|
|
$
|
—
|
|
|
$
|
46.4
|
|
|
$
|
34.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
80.9
|
|
Total capital
expenditures
for the three months ended
March 31, 2019
|
|
$
|
2.9
|
|
|
$
|
1.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
4.5
|
|
1
|
The financial measure
"Adjusted EBITDA" is a non-GAAP financial measure defined below
under "Non-GAAP Financial Measures" and reconciled to the most
directly comparable GAAP measures in the accompanying supplemental
table at the end of this release.
|
2
|
Currency movements in
the period did not materially affect the reported
position.
|
3
|
Using prevailing
foreign exchange rates as of market close on May 14,
2020.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/inspired-reports-first-quarter-2020-results-301060780.html
SOURCE Inspired Entertainment, Inc.