NEW YORK, Aug. 13, 2020 /PRNewswire/ --
- Second Quarter Online Revenue1 More
than Doubled Year Over Year on a Pro Forma Basis2
and Strength Continues with July Online Revenues
Increasing 82% Year Over Year
- Second Quarter Revenue of $15.6
Million and Adjusted EBITDA3 of $2.1 Million Despite Customer Closures Related to
COVID-19, Due to Extensive Cost Containment and Strong Demand for
Online Offerings
- Approximately 90% of Server Based Gaming Machines Were
Available for Play as of August
1st with Encouraging Results; July Average
Customer Gross Win Per Unit Per Day Increased Year Over Year and
Was Tracking At or Above Pre-COVID
Levels4
- Liquidity Position Remains Strong with Cash of
$40 Million at Quarter End Following
Agreement with Lenders to Amend Covenants without Requirement to
Raise Additional Capital
Inspired Entertainment, Inc. ("Inspired") (NASDAQ: INSE) today
reported financial results for the second quarter ended
June 30, 2020.
Total Revenue and Adjusted EBITDA3 were $15.6 million and $2.1
million in the second quarter of 2020, despite the
temporary suspension of the Company's worldwide land-based business
resulting from the ongoing COVID-19 global pandemic ("COVID-19
Closures"), mainly due to the aggressive cost containment efforts
implemented by management. The Company's total online
business across its gaming and Virtual Sports online channels
showed strength and resilience in the quarter with revenues
increasing by $4.9 million from the
second quarter of 2019 on a pro forma basis, demonstrating the
growing presence and popularity of the Company's online offerings.
"We are pleased with the fundamentals of our business as we have
navigated the impact of the COVID-19 Closures. Given these
closures, we expected a negative impact in the second quarter,
however the implementation of aggressive cost-savings measures and
the strong demand in our online business, which more than doubled
on a pro forma basis versus last year's second quarter, helped to
compensate for the retail closures and we were able to achieve
EBITDA profitability during the quarter," said Lorne Weil, Executive Chairman of
Inspired.
Summary of
Consolidated Second Quarter 2020 Financial Results
(unaudited)
|
|
|
|
|
|
|
|
|
Functional
|
|
|
Quarter
Ended
|
|
Currency
|
Currency
|
|
|
June
30
|
Change
|
Movement
|
Growth
|
|
|
2020
|
2019
|
(%)
|
2020
|
(%)
|
(In $ millions,
except per share figures)
|
|
|
|
|
|
|
GAAP
Measures:
|
|
|
|
|
|
|
Revenue
|
|
$
15.6
|
$
26.7
|
(41.6)%
|
$
(0.6)
|
(39.6)%
|
Net operating (loss)
income
|
|
$
(13.9)
|
$
(4.5)
|
NM2
|
$
0.5
|
NM2
|
Net (loss)
|
|
$
(24.5)
|
$
(10.7)
|
NM2
|
$
0.8
|
NM2
|
Net (loss) per
diluted share
|
|
$
(1.09)
|
$
(0.48)
|
NM2
|
|
|
Non-GAAP
Financial Measures1:
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|
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|
|
|
|
Adjusted
EBITDA
|
|
$
2.1
|
$
8.9
|
(76.4)%
|
$
(0.1)
|
(76.0)%
|
|
|
|
|
|
|
|
1Reconciliation to GAAP shown
below.
2Percentage change is not
meaningful.
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"At this point, many of our customers' retail venues have
re-opened and we are encouraged by the initial results. Server
Based Gaming retail recovered faster than we had expected with July
Customer Gross Win per unit per day tracking ahead of
year-over-year comparisons and at or above pre-COVID levels,
however the number of machines in use is still below pre-COVID
levels. Pubs and leisure parks did not start to open until
July, but we have experienced an improving trend in most of our
retail businesses each week since re-openings commenced. We
believe we are well-positioned to recover, assuming no further
COVID measures are implemented in our markets, given (1) our focus
on local, smaller retail venues, which, we believe, are less travel
dependent and better situated than larger venues to adapt to social
distancing measures, and (2) our European-concentrated business
which appears to be better positioned than the United States in managing the COVID-19
health crisis."
"Subsequent to the end of the quarter, the performance of the
online business continues to exhibit resiliency, with July revenues
across our online channels increasing by approximately 82% year
over year. We have recently signed agreements with several new
customers, including Draft Kings, FanDuel and the Oregon Lottery,
which has advanced our North American footprint and represents an
attractive monetization opportunity going forward."
"We are now well into a re-normalization of our operations and
continue to be diligent with our cost-saving measures and capital
allocation strategies. We are taking a prudent approach to
returning staff from furlough and have been successful at keeping
our labor costs strictly controlled," said Stewart Baker, Executive Vice President and
Chief Financial Officer of Inspired. "During the quarter we
finalized an agreement with our lenders to amend our debt covenants
without the requirement to raise additional capital. We
believe this strong cost containment and cash management
demonstrates our team's ability to effectively navigate our
business over the long term and will directly contribute to future
margin improvements as the economy begins to reopen."
Weil continued, "As we look ahead, we remain confident in the
long-term fundamentals of our business. Between the return of our
land-based business and the continued growth in our online
business, we are upbeat on the outlook for the third quarter and
beyond. While the COVID-19 global pandemic will remain challenging
and unpredictable, we remain focused and disciplined on our long
term strategy, where we continue to see upside from North American
penetration, accelerated UK Pub and Leisure digitization,
additional customers coming onboard our digitally distributed
business lines and the benefits of the integration of our recent
acquisition."
Recent Highlights (through August 12, 2020)
Server Based Gaming ("SBG")
- First Valor™ VLT Units Sold in Canada – Subsequent to the end of the
quarter, Western Canada Lottery Corporation ("WCLC"), acting on
behalf of the Saskatchewan Liquor and Gaming Authority, selected
Inspired to provide 100 Valor™ terminals.
Virtual Sports
- Launched Virtual Plug & Play™ with First Customers –
Our complete end-to-end online virtual sportsbook product that
allows 14 channels of Virtuals with minimal integration effort
launched subsequent to the end of the quarter with several
customers.
- New Virtual Sports Contracts – During the quarter,
Inspired signed key contracts for its Virtual Plug & Play™
solution with DraftKings, FanDuel, GVC US, Stoiximan, Aspire,
Lottoland, SunCasino, BGO and Tote.
- High-Profile Virtual Events – During the quarter,
Inspired's Virtual Grand National and "The Kentucky Derby: Triple
Crown Showdown" were featured on national television in the UK and
the U.S., respectively, with substantial media coverage and
impressive viewership.
- First Free-to-Play Virtual Sports Launched in the U.S. –
Subsequent to the end of the quarter, Inspired launched its Virtual
Sports on FendOff.com, a new social sports prediction game
available to customers in 49 U.S. states that is free to play and
managed by the same developers who created Chumba Casino.
- New Scheduled Virtuals Customers – In the second
quarter, Inspired signed on to launch its Scheduled Virtuals with
the Oregon Lottery via SBTech's sportsbook platform, Fortuna
(Croatia and Slovakia) and through a distribution agreement
with Scientific Games.
- New Games Launched – In addition to launching our first
branded NFL Alumni Virtuals products during the quarter, OPAP
launched V-Play Soccer 2.5, the latest addition to our most popular
series of games, which is delivering incremental revenues.
Interactive (Results Included within Virtual
Sports)
- Launched 11 New Customers in the Quarter – Our
Interactive content launched with several new customers including
Lottoland, Boylesports, Harrah's New
Jersey and Casumo.
- Expanded Portfolio of Interactive RGS Aggregators –
Pariplay, iForium NJ and Relax integrations were completed during
the quarter.
- New Game Launches – 11 new games were launched during
the quarter including our two summer blockbuster titles, Centurion
Megaways™ and Reel King Megaways™. Both titles have shown strong
performance since launch.
- Collaboration with Gaming Realms to Launch Slingo Reel King™
– It was announced during the quarter that Gaming Realms is set
to launch our collaborative Slingo Reel Kings™ to its distribution
partners in early 2021.
Overview of Second Quarter Results Versus Prior Year Second
Quarter on a Reported Basis2
SBG Revenue was $4.0
million, a decrease of 77.1% compared to $17.5 million in the second quarter 2019,
primarily due to the adverse impact of the COVID-19 disruptions and
the related closures of land-based gaming venues for the majority
of the second quarter 2020. SBG Service
Revenue was $3.6 million compared to $16.4 million in the second quarter 2019.
The COVID-19 impact on revenue in the second quarter 2020 by
region was $8.9 million in the UK,
$1.7 million in Greece and $1.6
million in Italy. SBG Hardware Revenue declined
to $0.4 million from $1.1 million in the second quarter 2019.
Revenue during the quarter was attributable to spare part sales in
Italy. The second quarter 2019 included the sale of SSBTs in
the UK LBO market ($0.3 million) and
Flex cabinet sales in the UK leisure market ($0.7 million). Phased re-openings for the
SBG business commenced June 8, 2020
in Greece and June 15, 2020 in the UK and Italy with approximately 75% of pre-COVID
machines in operation on June 15,
2020 and over 80% of pre-COVID machines by the end of
June 2020 showing strong
performance. On average in July
2020, the UK, Italy and
Greece VLTs were operating at or above pre-COVID levels on a
per-unit basis.
Virtual Sports Revenue, which includes Interactive,
increased 6.4% to $9.8 million from
$9.2 million in the second quarter
2019. Retail Virtual Sports were suspended for most of the
second quarter with phased re-openings beginning May 11, 2020 in Greece and June 15,
2020 in the UK and Italy,
resulting in a $3.6 million decline in retail recurring
revenue from the COVID-19 shutdowns. Due to the COVID-19
stay-at-home orders and growing migration to gaming online,
Scheduled Online Virtuals increased $2.9
million and Interactive increased $1.3 million year over year.
Acquired Business Service Revenue was $1.8 million in the second quarter, of which
approximately $1.2 million was
generated from the online business. Pubs, leisure parks,
motorway service areas ("MSAs") and adult gaming centers ("AGCs")
were all closed for the entirety of the second quarter. Many
locations in England were
permitted to reopen beginning July 4,
2020 with social distancing in place. Locations in
Scotland have not yet been
permitted to turn on machines. July machine play indicated
roughly 60% of pre-COVID machines are being made available for play
due to social distancing requirements. July performance from
MSAs and AGCs has been encouraging with approximately 60% of
machines in MSAs and approximately 75% of machines in AGCs open
compared to pre-COVID levels. Forward bookings for the
Leisure Parks appear to be strong, albeit generally capped at 75%
of capacity, with the potential for an extended season into
September and October.
SG&A expenses decreased by $2.2 million, or 17.3%, to $10.6 million. Incremental SG&A
expenses from the Acquired Businesses amounted to $3.6 million, which was more than offset by a
$4.6 million decrease in SG&A for
SBG and Virtual Sports attributable to COVID-19 cost containment
efforts, including furloughing a large percentage of staff.
Adjusted EBITDA was $2.1
million, a year-over-year decrease of 76.4%. The
Legacy Inspired Business contributed $4.9
million to Adjusted EBITDA, which includes the negative
impact of the COVID-19 Closures. The Acquired Businesses
generated a loss of $2.8 million in
Adjusted EBITDA.
Net Cash Provided by Operating Activities Less Cash from
Investing Activities during the quarter decreased to an
outflow of $5.4 million from an
inflow of $6.8 million in the prior
year period representing a $12.2
million decrease in cash generation primarily due to the
significant impact in the most recent four months of the COVID-19
pandemic. During the middle of March, as land-based businesses
began entering lockdown, until the end of June, excluding financing
movements, cash decreased $5.0
million, including restructuring/integration payments of
$7.3 million. The trading cash
increase of $2.3 million excluding
these payments, shows the effectiveness of the cash containment
efforts.
___________________________
|
2 Currency
movements in the period did not materially affect the reported
position.
|
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 adjustments 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.
Pro Forma financial information is intended
to illustrate the combined impact of the Company's Acquired
Business by showing how the specific transaction might have
affected historical financial statements had the acquisition
occurred at the beginning of the acquirer's most recently completed
fiscal year.
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 9:00 a.m. ET /
2:00 p.m. UK on Thursday, August 13, 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 August 20, 2020 by dialing
1-877-344-7529 (US) or 1-412-317-0088 (International), via replay
access code 10146490. 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,
social 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)
|
|
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash
|
|
$
|
39.9
|
|
|
$
|
29.1
|
|
Accounts receivable,
net
|
|
|
18.6
|
|
|
|
24.2
|
|
Inventory,
net
|
|
|
19.0
|
|
|
|
18.8
|
|
Prepaid expenses and
other current assets
|
|
|
17.0
|
|
|
|
23.2
|
|
Total current
assets
|
|
|
94.5
|
|
|
|
95.3
|
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
68.4
|
|
|
|
79.3
|
|
Software development
costs, net
|
|
|
41.0
|
|
|
|
46.9
|
|
Other acquired
intangible assets subject to amortization, net
|
|
|
7.3
|
|
|
|
9.9
|
|
Goodwill
|
|
|
75.4
|
|
|
|
80.9
|
|
Right of use
asset
|
|
|
12.7
|
|
|
|
9.4
|
|
Investment
|
|
|
—
|
|
|
|
0.6
|
|
Other
assets
|
|
|
4.0
|
|
|
|
5.1
|
|
Total
assets
|
|
$
|
303.3
|
|
|
$
|
327.4
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Deficit
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
21.3
|
|
|
$
|
22.2
|
|
Accrued
expenses
|
|
|
26.7
|
|
|
|
31.2
|
|
Corporate tax and
other current taxes payable
|
|
|
6.0
|
|
|
|
6.6
|
|
Deferred revenue,
current
|
|
|
9.2
|
|
|
|
10.1
|
|
Operating lease
liabilities
|
|
|
3.3
|
|
|
|
3.6
|
|
Other current
liabilities
|
|
|
1.4
|
|
|
|
1.9
|
|
Current portion of
long-term debt
|
|
|
24.7
|
|
|
|
2.6
|
|
Current portion of
finance lease liabilities
|
|
|
0.6
|
|
|
|
0.1
|
|
Total current
liabilities
|
|
|
93.2
|
|
|
|
78.3
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
268.4
|
|
|
|
270.5
|
|
Long term finance
lease liabilities
|
|
|
0.5
|
|
|
|
—
|
|
Deferred revenue, net
of current portion
|
|
|
13.9
|
|
|
|
17.7
|
|
Derivative
liability
|
|
|
1.6
|
|
|
|
—
|
|
Operating lease
liabilities
|
|
|
9.2
|
|
|
|
5.2
|
|
Other long-term
liabilities
|
|
|
8.3
|
|
|
|
5.2
|
|
Total
liabilities
|
|
|
395.1
|
|
|
|
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 June 30, 2020 and December 31, 2019
|
|
|
—
|
|
|
|
—
|
|
Common stock; $0.0001
par value; 49,000,000 shares authorized; 22,405,376 shares and
22,230,768 shares issued and outstanding at June 30, 2020 and
December 31, 2019, respectively
|
|
|
—
|
|
|
|
—
|
|
Additional paid in
capital
|
|
|
348.6
|
|
|
|
346.6
|
|
Accumulated other
comprehensive income
|
|
|
42.7
|
|
|
|
45.1
|
|
Accumulated
deficit
|
|
|
(483.1)
|
|
|
|
(441.2)
|
|
Total
stockholders' deficit
|
|
|
(91.8)
|
|
|
|
(49.5)
|
|
Total liabilities
and stockholders' deficit
|
|
$
|
303.3
|
|
|
$
|
327.4
|
|
INSPIRED
ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(in millions,
except share data)
(Unaudited)
|
|
|
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
|
$
|
15.2
|
|
|
$
|
25.6
|
|
|
$
|
58.4
|
|
|
$
|
56.4
|
|
Hardware
|
|
|
0.4
|
|
|
|
1.1
|
|
|
|
9.5
|
|
|
|
4.0
|
|
Total
revenue
|
|
|
15.6
|
|
|
|
26.7
|
|
|
|
67.9
|
|
|
|
60.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales,
excluding depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
service
|
|
|
(3.1)
|
|
|
|
(5.3)
|
|
|
|
(9.7)
|
|
|
|
(10.7)
|
|
Cost of
hardware
|
|
|
(0.3)
|
|
|
|
(1.0)
|
|
|
|
(7.3)
|
|
|
|
(2.6)
|
|
Selling, general and
administrative expenses
|
|
|
(10.6)
|
|
|
|
(12.8)
|
|
|
|
(39.7)
|
|
|
|
(27.5)
|
|
Stock-based
compensation expense
|
|
|
(1.0)
|
|
|
|
(2.3)
|
|
|
|
(2.0)
|
|
|
|
(4.4)
|
|
Acquisition and
integration related transaction expenses
|
|
|
(1.2)
|
|
|
|
(0.7)
|
|
|
|
(4.4)
|
|
|
|
(1.6)
|
|
Depreciation and
amortization
|
|
|
(13.3)
|
|
|
|
(9.1)
|
|
|
|
(25.9)
|
|
|
|
(18.8)
|
|
Net operating
loss
|
|
|
(13.9)
|
|
|
|
(4.5)
|
|
|
|
(21.1)
|
|
|
|
(5.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.4
|
|
|
|
0.1
|
|
Interest
expense
|
|
|
(8.1)
|
|
|
|
(4.0)
|
|
|
|
(14.2)
|
|
|
|
(8.5)
|
|
Change in fair value
of earnout liability
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2.3)
|
|
Change in fair value
of derivative liability
|
|
|
—
|
|
|
|
(1.3)
|
|
|
|
—
|
|
|
|
(0.1)
|
|
Loss from equity
method investee
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.5)
|
|
|
|
—
|
|
Other finance income
(expense)
|
|
|
(2.5)
|
|
|
|
(0.9)
|
|
|
|
(6.2)
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other
expense, net
|
|
|
(10.5)
|
|
|
|
(6.1)
|
|
|
|
(20.5)
|
|
|
|
(10.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
|
(24.4)
|
|
|
|
(10.6)
|
|
|
|
(41.6)
|
|
|
|
(15.7)
|
|
Income tax
expense
|
|
|
(0.1)
|
|
|
|
(0.1)
|
|
|
|
(0.3)
|
|
|
|
—
|
|
Net
loss
|
|
|
(24.5)
|
|
|
|
(10.7)
|
|
|
|
(41.9)
|
|
|
|
(15.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive (loss)/income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation gain
|
|
|
0.4
|
|
|
|
0.7
|
|
|
|
3.5
|
|
|
|
0.2
|
|
Change in fair value
of hedging instrument
|
|
|
(0.8)
|
|
|
|
2.4
|
|
|
|
(2.3)
|
|
|
|
0.3
|
|
Reclassification of
gain on hedging instrument to comprehensive income
|
|
|
0.3
|
|
|
|
(2.6)
|
|
|
|
0.7
|
|
|
|
(1.1)
|
|
Actuarial losses on
pension plan
|
|
|
(8.7)
|
|
|
|
(2.0)
|
|
|
|
(4.3)
|
|
|
|
(1.1)
|
|
Other
comprehensive loss
|
|
|
(8.8)
|
|
|
|
(1.5)
|
|
|
|
(2.4)
|
|
|
|
(1.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
|
$
|
(33.3)
|
|
|
$
|
(12.2)
|
|
|
$
|
(44.3)
|
|
|
$
|
(17.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per
common share – basic and diluted
|
|
$
|
(1.09)
|
|
|
$
|
(0.48)
|
|
|
$
|
(1.87)
|
|
|
$
|
(0.73)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding during the period – basic and
diluted
|
|
|
22,400,107
|
|
|
|
22,193,955
|
|
|
|
22,392,218
|
|
|
|
21,583,648
|
|
INSPIRED
ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
|
|
|
|
Six Months
Ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(41.9)
|
|
|
$
|
(15.7)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
25.9
|
|
|
|
18.8
|
|
Amortization of right
of use asset
|
|
|
2.0
|
|
|
|
—
|
|
Stock-based
compensation expense
|
|
|
2.0
|
|
|
|
4.4
|
|
Change in fair value
of derivative liability
|
|
|
—
|
|
|
|
0.1
|
|
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
|
|
|
6.6
|
|
|
|
0.3
|
|
Foreign currency
translation on cross currency swaps
|
|
|
—
|
|
|
|
(0.6)
|
|
Reclassification of
gain on hedging instrument to comprehensive income
|
|
|
0.5
|
|
|
|
—
|
|
Non-cash interest
expense relating to senior debt
|
|
|
1.2
|
|
|
|
0.9
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
3.7
|
|
|
|
0.8
|
|
Inventory
|
|
|
(1.4)
|
|
|
|
(0.5)
|
|
Prepaid expenses and
other assets
|
|
|
5.7
|
|
|
|
4.5
|
|
Corporate tax and other
current taxes payable
|
|
|
0.1
|
|
|
|
(0.5)
|
|
Accounts
payable
|
|
|
0.8
|
|
|
|
4.4
|
|
Deferred revenues and
customer prepayment
|
|
|
(3.8)
|
|
|
|
(2.1)
|
|
Accrued
expenses
|
|
|
9.3
|
|
|
|
2.4
|
|
Operating lease
liabilities
|
|
|
(1.6)
|
|
|
|
—
|
|
Other long-term
liabilities
|
|
|
0.4
|
|
|
|
0.2
|
|
Net cash provided
by operating activities
|
|
|
10.2
|
|
|
|
19.7
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
|
(8.8)
|
|
|
|
(2.2)
|
|
Disposals of property
and equipment
|
|
|
—
|
|
|
|
0.2
|
|
Purchases of capital
software
|
|
|
(6.7)
|
|
|
|
(7.8)
|
|
Net cash used in
investing activities
|
|
|
(15.5)
|
|
|
|
(9.8)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from
issuance of revolver
|
|
|
22.3
|
|
|
|
9.3
|
|
Debt fees
incurred
|
|
|
(3.1)
|
|
|
|
—
|
|
Repayments of finance
leases
|
|
|
(0.6)
|
|
|
|
(0.3)
|
|
Net cash provided
by financing activities
|
|
|
18.6
|
|
|
|
9.0
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
|
|
(2.5)
|
|
|
|
(1.2)
|
|
Net increase in
cash
|
|
|
10.8
|
|
|
|
17.7
|
|
Cash, beginning of
period
|
|
|
29.1
|
|
|
|
16.0
|
|
Cash, end of
period
|
|
$
|
39.9
|
|
|
$
|
33.7
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow disclosures
|
|
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
$
|
0.4
|
|
|
$
|
8.2
|
|
Cash paid during the
period for income taxes
|
|
$
|
0.1
|
|
|
$
|
—
|
|
Cash paid during the
period for operating leases
|
|
$
|
1.2
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash investing and financing
activities
|
|
|
|
|
|
|
|
|
Lease liabilities
arising from obtaining right of use assets
|
|
$
|
(6.1)
|
|
|
$
|
—
|
|
Adjustment to
goodwill arising from adjustment to fair value of assets
acquired
|
|
$
|
(0.3)
|
|
|
$
|
—
|
|
Capitalized interest
payments
|
|
$
|
10.6
|
|
|
$
|
—
|
|
Property and
equipment acquired through finance lease
|
|
$
|
1.5
|
|
|
$
|
—
|
|
Additional paid in
capital reclassified from derivative liability
|
|
$
|
—
|
|
|
$
|
0.8
|
|
INSPIRED
ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(Unaudited)
|
|
|
|
|
For the
Three-Month
Period ended
|
|
For the
Six-Month
Period ended
|
|
|
|
|
Unaudited
|
|
|
|
Unaudited
|
|
|
Unaudited
|
|
|
Unaudited
|
|
|
|
|
June
30,
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
June
30,
|
|
(In
millions)
|
|
|
2020
|
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net loss
|
|
|
$
|
(24.5)
|
|
|
|
$
|
(10.7)
|
|
|
$
|
(41.9)
|
|
|
$
|
(15.7)
|
|
Items Relating to
Discontinued Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
charges
|
|
|
|
0.2
|
|
|
|
|
0.1
|
|
|
|
0.4
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items outside the
normal course of business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of group
restructure
|
|
|
|
0.3
|
|
|
|
|
1.1
|
|
|
|
0.4
|
|
|
|
2.7
|
|
Acquisition and
integration related transaction expenses
|
|
|
|
1.2
|
|
|
|
|
0.7
|
|
|
|
4.4
|
|
|
|
1.6
|
|
Impairment on
interest in equity method investee
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
0.7
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
|
1.0
|
|
|
|
|
2.3
|
|
|
|
2.0
|
|
|
|
4.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
13.3
|
|
|
|
|
9.1
|
|
|
|
25.9
|
|
|
|
18.8
|
|
Total other expense,
net
|
|
|
|
10.5
|
|
|
|
|
6.1
|
|
|
|
20.0
|
|
|
|
10.5
|
|
Income tax
|
|
|
|
0.1
|
|
|
|
|
0.1
|
|
|
|
0.3
|
|
|
|
(0.0)
|
|
Adjusted
EBITDA
|
|
|
$
|
2.1
|
|
|
|
$
|
8.9
|
|
|
$
|
12.1
|
|
|
$
|
22.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
£
|
1.7
|
|
|
|
£
|
6.9
|
|
|
£
|
9.5
|
|
|
£
|
17.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Rate - $
to £
|
|
|
|
1.24
|
|
|
|
|
1.29
|
|
|
|
1.27
|
|
|
|
1.30
|
|
Scheduled Online
Virtual Sports and Interactive Total Pro Forma
Revenue
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
July
(Preliminary)
|
|
Change
|
|
30-Jun
|
|
Change
|
|
30-Jun
|
|
Change
|
(In millions of
GBP)
|
2020
|
|
2019
|
|
%
|
|
2020
|
|
2019
|
|
%
|
|
2020
|
|
2019
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue £'m -
Scheduled Online Virtuals
|
£1.2
|
|
£0.7
|
|
77.3%
|
|
£5.2
|
|
£2.4
|
|
114.4%
|
|
£7.9
|
|
£5.3
|
|
48.3%
|
Total Revenue £'m -
Interactive
|
£0.6
|
|
£0.2
|
|
181.3%
|
|
£1.8
|
|
£0.7
|
|
145.5%
|
|
£2.8
|
|
£1.4
|
|
101.6%
|
Total Revenue £'m -
Interactive (Acquired Business)(1)
|
£0.3
|
|
£0.3
|
|
10.6%
|
|
£1.0
|
|
£0.8
|
|
26.0%
|
|
£1.7
|
|
£1.3
|
|
28.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Total
Revenue £'m - Scheduled Online Virtuals and
Interactive
|
£2.1
|
|
£1.1
|
|
82.4%
|
|
£7.9
|
|
£3.9
|
|
103.2%
|
|
£12.3
|
|
£8.0
|
|
54.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in millions of
USD
|
$2.6
|
|
$1.4
|
|
85.2%
|
|
$9.9
|
|
$5.0
|
|
96.3%
|
|
$15.7
|
|
$10.3
|
|
51.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Rate - $
to £
|
1.27
|
|
1.25
|
|
|
|
1.24
|
|
1.29
|
|
|
|
1.27
|
|
1.30
|
|
|
(1) For 2020 periods,
Interactive (Acquired Business) revenue is reported within Acquired
Business segment. For 2019 periods, Interactive (Acquired Business)
revenue is shown on a pro forma basis.
|
INSPIRED
ENTERTAINMENT, INC. SEGMENT PERFORMANCE
(Unaudited)
|
Three Months Ended
June 30, 2020
|
|
|
Server Based
Gaming
|
|
|
Virtual Sports
|
|
|
Acquired Businesses
|
|
|
Intergroup
Eliminations
|
|
|
Corporate Functions
|
|
|
Total
|
|
|
|
(in
millions)
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
|
$
|
3.6
|
|
|
$
|
9.8
|
|
|
$
|
1.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15.2
|
|
Hardware
|
|
|
0.4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.4
|
|
Total
revenue
|
|
|
4.0
|
|
|
|
9.8
|
|
|
|
1.8
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15.6
|
|
Cost of sales,
excluding depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
service
|
|
|
(1.0)
|
|
|
|
(1.2)
|
|
|
|
(0.9)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3.1)
|
|
Cost of
hardware
|
|
|
(0.3)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.3)
|
|
Selling, general and
administrative expenses
|
|
|
(2.0)
|
|
|
|
(1.1)
|
|
|
|
(3.6)
|
|
|
|
—
|
|
|
|
(3.9)
|
|
|
|
(10.6)
|
|
Stock-based
compensation expense
|
|
|
(0.1)
|
|
|
|
(0.1)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.8)
|
|
|
|
(1.0)
|
|
Acquisition and
integration related transaction expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1.2)
|
|
|
|
(1.2)
|
|
Depreciation
and amortization
|
|
|
(6.0)
|
|
|
|
(1.4)
|
|
|
|
(5.6)
|
|
|
|
—
|
|
|
|
(0.3)
|
|
|
|
(13.3)
|
|
Segment operating
income (loss)
|
|
|
(5.4)
|
|
|
|
6.0
|
|
|
|
(8.3)
|
|
|
|
—
|
|
|
|
(6.2)
|
|
|
|
(13.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
operating loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(13.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at
June 30, 2020
|
|
$
|
64.2
|
|
|
$
|
64.7
|
|
|
$
|
135.7
|
|
|
$
|
—
|
|
|
$
|
38.7
|
|
|
$
|
303.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total goodwill at
June 30, 2020
|
|
$
|
—
|
|
|
$
|
43.4
|
|
|
$
|
32.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
75.4
|
|
Total capital
expenditures for the three months ended June 30,
2020
|
|
$
|
0.5
|
|
|
$
|
2.0
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
3.6
|
|
|
|
Three Months Ended
June 30, 2019
|
|
|
Server Based
Gaming
|
|
|
Virtual Sports
|
|
|
Acquired Businesses
|
|
|
Intergroup
Eliminations
|
|
|
Corporate Functions
|
|
|
Total
|
|
|
|
(in
millions)
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
|
$
|
16.4
|
|
|
$
|
9.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25.6
|
|
Hardware
|
|
|
1.1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1.1
|
|
Total
revenue
|
|
|
17.5
|
|
|
|
9.2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
26.7
|
|
Cost of sales,
excluding depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Cost of
service
|
|
|
(4.4)
|
|
|
|
(0.9)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5.3)
|
|
Cost of
hardware
|
|
|
(1.0)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1.0)
|
|
Selling, general and
administrative expenses
|
|
|
(6.0)
|
|
|
|
(2.1)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4.7)
|
|
|
|
(12.8)
|
|
Stock-based
compensation expense
|
|
|
(0.5)
|
|
|
|
(0.3)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1.5)
|
|
|
|
(2.3)
|
|
Acquisition and
integration related transaction expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.7)
|
|
|
|
(0.7)
|
|
Depreciation
and amortization
|
|
|
(7.2)
|
|
|
|
(1.4)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.5)
|
|
|
|
(9.1)
|
|
Segment operating
income (loss)
|
|
|
(1.6)
|
|
|
|
4.5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(7.4)
|
|
|
|
(4.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
operating loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(4.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 June 30,
2019
|
|
$
|
2.1
|
|
|
$
|
1.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
4.2
|
|
_________________________________
|
1 Online
Revenue includes revenue derived from the Company's Scheduled
Online Virtuals, Interactive online and Acquired Business
online.
|
2 The
financial measure "pro forma" 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 the release.
|
3 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.
|
4 Based on Server Based Gaming
machines in actual operation.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/inspired-reports-positive-second-quarter-2020-results-301111779.html
SOURCE Inspired Entertainment, Inc.