Inspired Entertainment, Inc. (NASDAQ:INSE) Q2 2023 Results Conference Call August 9, 2023 9:00 AM ET

Company Participants

Lorne Weil - Executive Chairman

Brooks Pierce - President and Chief Executive Officer

Stewart Baker - Executive Vice President and Chief Financial Officer

Conference Call Participants

David Bain - B. Riley

Barry Jonas - Truist Securities

Jordan Bender - JMP Securities

Edward Engel - ROTH MKM

Chad Beynon - Macquarie

Operator

Good morning, everyone, and welcome to the Inspired Entertainment Second Quarter 2023 Conference Call. [Operator Instructions] Please note, today's event is being recorded.

Please refer to the company's safe harbor statement that appears in the second quarter 2023 earnings press release, which is also available in the Investors section on 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 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 now would like to turn the conference call over to Lorne Weil, the company's Executive Chairman. Mr. Weil, please go ahead.

Lorne Weil

Thank you, operator. Good morning, everyone, and thank you for joining our second quarter earnings call. With me today are Brooks Pierce, our President and CEO; and Stewart Baker, our CFO.

Second quarter EBITDA was $26.2 million, was roughly in line with consensus, slightly up over last year, but at least a couple of million dollars less than we would consider to have been the inherent earnings power in the business in the quarter.

As can be seen in the P&L that was in the earnings release, quarter-to-quarter corporate expense, increased by $800,000 from $6.2 million in 2022 to $7 million this year, with the vast majority of this increase due to the timing of our audit expenses.

As we reported some time ago, we changed auditors during 2023 or for 2023 from Markham to KPMG with the latter now billing us on a different and unavoidably accelerated cycle. In our leisure business, we incurred a statutory $600,000 increase in labor cost in the second quarter due to the U.K. National Living Wage, but we have since reconfigured and reengineered our processes, enabling us to offset this cost going forward beginning with the third quarter. And we had about $1 million of equipment sale EBITDA move out of the second quarter into the second half of this year.