Sci Games 1Q loss narrows to US$24mln on better income
Casino equipment maker and lottery services supplier Scientific Games Corp posted a net loss of US$24 million in the first quarter of this year, an improvement on the US$202-million loss registered in the first quarter of last year.
The Las Vegas, Nevada-based company said on Tuesday the improvement was driven by better operating income, partly due to a US$45-million reduction in restructuring and other expenses. The company’s first-quarter revenue rose 3.1 percent to US$837 million, up from US$812 million in the period a year earlier, reflecting growth in the lottery and social gaming businesses.
Scientific Games said its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) also increased by 2.5 percent to US$328 million in the first quarter, compared to US$320 in the same period last year.
The company has focused on restructuring its debt and the increase in first quarter’s net cash flows, to US$167 million, up from US$30 million in the corresponding period last year, reflected the group’s lower restructuring expenses and a US$66 million improvement in accrued interest, among other factors.
Meanwhile, the company said it completed the initial public offering of a 17.4-percent minority interest in its social gaming business, SciPlay Corp. SciPlay trades on the Nasdaq Global Select Market under the ticker symbol SCPL.
The IPO had been in the works for some time and had been presented as a way to restructure debt at the parent company.
A gross figure at the top range of the IPO was estimated at US$404.8 million. Scientific Games said it received US$301 million in proceeds from the offering, which it will use to pay down net debt, which stood at about US$8.96 billion as of March 31.
“We successfully took SciPlay public as a new company, which accelerates our ability to pay down debt. All of these actions support our steadfast commitment to smartly grow our business, drive free cash flow and create meaningful value for our stakeholders,” said Barry Cottle, Scientific Games president and chief executive, in prepared comments released with the results.
Scientific Games chief financial officer Michael Quartieri added: “This quarter, we paid down $145 million in debt and completed a major refinancing that lowered our borrowing costs and extended our debt maturities.”
The company’s major business is selling and operating slot machines as well as the systems they run on. In this business line, revenue shrank by 4.7 percent in year-on-year terms the first quarter, from US$443 million last year to US$422 this year. Revenues in the fourth quarter of last year were US$470 million.
The number of machines on U.S. and Canadian gaming floors fell by 627 units, with a 206 unit improvement in the number of installations elsewhere. Scientific Games’ international slot-machine business includes Macau, Singapore and the Philippines.
Overall, the company said it had a similar number of machines installed in North America and elsewhere at March 31 – 32,958 machines versus 33,950 machines – but the units outside North America generated less income. The company sold 1,607 new machines to North American clients either for new venues or expanding one in the first quarter, but no machines to new or expanding venues among global gaming operators. Scientific Games sold 3,194 replacement units in North America, and 2,083 replacement units in international markets.
The company’s fastest growing business line was social gaming, where revenue increased by 21.6 percent year-on-year, from US$97 million last year to US$118 million in the quarter ended March 31.
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