Intralot - So where are all those savings?

All,

It’s mixed news.

Of its sizeable cash stash, the company burnt a mere E18m in Q1 (coupon quarter) and so was actually FCF positive - mostly thanks to a near complete CapEx freeze.

The company still estimates the EBITDA effect of Covid-19 for 2020 toile around E-25m, with some chance of a lower impact. Some jurisdictions have lifted their lock-downs earlier than anticipated and US data also shows greater resilience in GGR.

With scarce detail on the Q1 EBITDA of E11.9m, we are unable to tell to what extent any unquantifiable impact from Covid-19 may be offsetting any of the earnings improvements the company had been advertising over the last year. As a reminder, we are looking for:

1) US OpEx Savings: +$10m

2) Illinois Q1 (+2 months): +$6m

3) 6 small new contracts: +E6m

4) Identified cost reductions: +E10m

Makes +E30m (aside from various negative adjustments of course)

The company has launched services in Montana and Washington DC and the two extra months in Illinois should be included as well. When subtracting merely the $5m annualisation for the latter, comparable EBITDA has been only E7.5m (vs. Some E12m in Q119). So it does not look like any meaningful achievements in respect of those advertised savings have yet been achieved. We struggle to reason that March alone will have made for E-5m of Coronavirus related losses - 1/5th of the estimated annual impact. It may have of course.

We are looking forward to more detail tomorrow.

Wolfgang