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Great Canadian Set to Reopen Casinos as Revenue Suffers
In two weeks, Great Canadian Gaming Corporation will reopen a significant number of its casinos in Ontario and New Brunswick. And it cannot happen soon enough for this entertainment company.
A quick look at the 2020 financials thus far shows that the revenue is necessary for Great Canadian Gaming to begin to regain its footing after the coronavirus pandemic virtually wiped out its second quarter this year.
Openings in Progress
When the coronavirus pandemic hit the shores of Canada and began spreading earlier this year, the Canadian government met with health officials and decided to order the closure of all nonessential businesses. Casinos were high on that list.
Great Canadian Gaming closed its 25 casino properties on March 16 in compliance with those orders.
The first of the casinos to unlock the doors will be in Ontario as a part of its Stage 3 reopening process. Eleven Great Canadian Gaming properties will open on September 28. Initial restrictions include capping the number of guests at 50 and not offering any table games or other amenities. That includes poker.
Great Canadian will also open its Casino New Brunswick on September 28 per that province’s reopening guidelines. This property, too, will adhere to very strict guidelines at the beginning. The casino can only allow 25% of its normal capacity as guests, and it can only turn on about 50% of its slot machines. All other amenities, like table games and bars, will remain off limits for the time being.
Casino Nova Scotia will reopen in Sydney and Halifax on October 5. As with the others, there will be limits. Safety protocols will be in place, and the casinos may only allow about one-third of its normal customer capacity. They may turn on about 60% of their slot machines for guests, but most other amenities remain closed. This includes poker and other table games.
The British Columbia government has yet to allow casinos to play for their reopenings. That means the company’s 10 properties remain closed for the foreseeable future.
According to CEO Rod Baker, the BC casinos will continue to “manage its assets in the closed state.”
As for the other properties on the verge of limited reopenings, Baker expressed excitement to bring employees back to work and provide paychecks again. Even so, he noted that the restrictions will limit the revenue greatly. In particular, in the most restrictive areas, he noted, “We expect no material financial benefit to the company from our 11 Ontario locations.”
Second Quarter 2020 Results
Last month, Great Canadian Gaming Corporation reported its second quarter financials for the period ending June 30, 2020. There was no denying the coronavirus-inflicted harm.
The only highlight in the second quarter updates, which was actually a lowlight, was one statistic. Shareholders experienced a net loss from continuing operations of $0.57 per common share to $31.4 million, down from $48 million year-on-year.
The company reduced its operating expenses since the March 16 closure, especially after it became apparent that the closures would last longer than initially expected. CEO Baker said, “Since the temporary closures took effect, we have ensured that each of our operating agreements remain in good standing with our Provincial Crown corporations.”
During the second quarter, when none of the Great Canadian Gaming properties were open for business, Baker noted that they amended credit agreements. “As of June 30, 2020,” Baker said, “Great Canadian continues to remain in stable capital and liquidity position with a cash balance of $498.2 million…”
First and Second Quarter Contrasts
No one at Great Canadian Gaming would put its Q1 2020 into the history books. However, they look like a CEO’s dream compared to those for Q2.
- Revenue Q1: $273.8 million (down 10% year-on-year)
- Revenue Q2: $62.8 million (down 82% year-on-year)
- Adjusted EBITDA Q1: $103 million (down 6% YOY)
- Adjusted EBITDA Q2: $31.8 million (down 79% YOY)
- Net earnings Q1: $28.5 million (down 32% YOY)
- Net earnings (loss) Q2: negative $36.4 million
- Cash Q1: $881.9 million (up 167% from previous quarter ending December 31, 2019)
- Cash Q2: $498.2 million
- Total assets Q1: $3.5 billion (up 23% from previous quarter)
- Total assets Q2: $3.12 billion
- Long-term debt Q1: $1.5 billion (up 71% from previous quarter)
- Long-term debt Q2: $1.24 billion
As is the case with so many other companies around the world, Great Canadian’s financials will be off kilter for quite some time to come. The coronavirus pandemic will continue to keep companies from their previous status and growth trajectories for one to two years – at a minimum – going forward.