Casino equipment maker and lottery services supplier Scientific Games Corp posted a net loss of US$5.8 million for the second quarter of 2018, compared to US$39.1 million in the prior-year period. The company said in a Wednesday release that the improvement was driven by higher revenue and “more efficient business processes throughout the organisation”.
The second-quarter results also reflected costs of US$33.5 million in restructuring and other charges, offset by a US$34.5 million gain “on remeasurement of Euro denominated debt,” said the gaming supplier.
Second quarter revenue rose by 10.2 percent year-on-year to US$844.7 million, boosted by growth in all of the group’s business segments, including US$50.6 million in revenue from NYX Gaming Group Ltd. Scientific Games completed in January the acquisition of NYX Gaming, a specialist in sports betting.
The company said that its gaming and lottery revenue for the period included a US$10.0 million negative impact from applying a new revenue recognition accounting system.
Consolidated attributable earnings before interest, taxation, depreciation and amortisation (AEBITDA) rose by 8.1 percent year-on-year to US$340.4 million in the three months to June 30. Scientific Games reported an AEBITDA margin of 40.3 percent for the period, down from 41.1 percent in the second quarter of 2017.
“I’m very pleased with our accomplishments this quarter and particularly proud that all four businesses continued to experience growth this quarter and are accelerating our financial momentum,” said Scientific Games’ new chief executive and president Barry Cottle in a prepared statement included in the press release. Mr Cottle took on his current roles on June 1.
Total gaming revenue in the April to June period rose by 3.0 percent from the prior-year to US$470.7 million, reflecting a 25.6-percent increase in sales of gaming systems.
Second quarter revenue from table products grew by 21.7 percent year-on-year, while revenue from sales of gaming machines rose by a more modest 2.6 percent, “driven by strong replacement and new opening demand in the U.S. and Canada, which was offset by lower international sales”.
Scientific Games said the aggregate number of gaming machines shipped during the second quarter increased by 463 units, to a total of 8,241 new gaming machines. International shipments however decreased by 26.9 percent year-on-year to 2,492 units, said the firm.
Revenue from gaming operations declined by 10 percent in the second quarter of 2018, inclusive of a US$6.5-million reduction from the new revenue recognition accounting system, according to the company.
Scientific Games reported a 2.4-percent year-on-year increase in revenue from its lottery segment, to U$207.1 million in the three months to June 30. Revenue from social gaming rose by 9.4 percent to US$99.7 million, while revenue from the digital segment stood at US$67.2 million, compared to US$15.7 million in the second quarter of 2017.
Scientific Games’ net debt stood at approximately US$8.95 billion at the end of the second quarter 2018, compared to nearly US$8.88 billion as of December 31, 2017.
“This quarter marks our 11th consecutive quarter of year-over-year growth in revenue and AEBITDA,” said Michael Quartieri, Scientific Games chief financial officer, in a statement. “The improvement in our operating results, along with lower interest costs, provides us with a clear path of increasing cash flows, deleveraging, and strengthening our balance sheet,” he added.
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Vitaly Umansky, Eunice Lee and Kelsey Zhu
Sanford Bernstein analysts