Inspired Entertainment, Inc. (NASDAQ:INSE) Q1 2020 Earnings Conference Call - Final Transcript
May 18, 2020 • 10:00 am ET
Good morning, everyone, and welcome to Inspired Entertainment First Quarter 2020 Conference Call. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions].
I'll begin today's conference call by referring you to the Company's Safe Harbor statement that appears in the first quarter 2020 earnings press release, which is also available in the Investors section of the Company's website at www.inseinc.com. This Safe Harbor statement also applies to today's conference call as the Company's management will be making certain statements that will be considered forward-looking under securities laws and the rules of the SEC.
These statements are based on management's current expectations or beliefs and are subject to risks, uncertainties and changes in circumstances. In addition, please note that the Company will discuss both GAAP and non-GAAP financial measures. A reconciliation is included in the earnings press release.
With that completed, I would like to now turn the conference over to Lorne Weil, the Company's Executive Chairman. Mr. Weil, please go ahead.
Thank you, operator. Good morning, everybody, and thank you for joining our first quarter conference call. With me virtually are Brooks Pierce; Stewart Baker; and Dan Silvers. I'll begin my remarks by briefly discussing the first quarter in the context of the plan that we had been implementing with COVID-19 hit.
Then I'll discuss the positive revenue and cost trends that we've been seeing over the last eight weeks or so, and the impact they have had on our liquidity and our outlook going forward. And finally, I'll talk a little bit about how we see our retail business coming back. At that point, I'll turn it over to Brooks to discuss some of these revenue and cost developments in more detail. In the departure from our usual conference call format, Stewart will not do a detailed review of the financials. All of the necessary detail is in the press release and 10-K, and Stewart is, of course, available this morning to answer questions.
When we last spoke in early March during our fourth quarter earnings call, we were tracking ahead of our internal budget for the first quarter of 2020, and nicely on plan relative to 2020 full year consensus estimates of EBITDA, which would have been in the mid-$70 million. Because of the significant seasonality in the acquired Novomatic business, EBITDA, what would have been the seasonally weakest first quarter, would then have jumped sharply to EBITDA well into the 20s in the second and third quarter, and then leveling out the fourth.
But of course, the entire scenario changed dramatically during March, when literally 100% of our retail business in all geographies was shut down. As expected and previously discussed, first quarter EBITDA was impacted by a number of concurrent factors. The residual impact of the triennial review, which did not go into effect until April 2019, but fortunately, as of the end of March has now finally been lapped deliberately increased spending levels during the first quarter in anticipation of