GGRAsia – Sci Games 2Q loss widens, virus hampers gaming revenue

Sci Games 2Q loss widens, virus hampers gaming revenue

Jul 24, 2020 Newsdesk Latest News, Top of the deck, World

Casino equipment, lottery services and online games provider Scientific Games Corp said its second-quarter net loss attributable to shareholders widened to US$203 million, from US$77 million a year earlier, according to a Thursday filing.

Group revenue decreased 36.2 percent to US$539 million, down from US$845 million in the prior-year period.

The United States-based firm said in an accompanying press release that the increase in net loss was “due to lower revenue and the effects of Covid-19” during the reporting period. That was a reference to disruptions that resulted in temporary closures of casino operations in jurisdictions globally.

The company said revenue from its gaming and lottery segments was “negatively impacted” by the health crisis. But the group stated that the SciPlay digital social games and the digital real-money gaming businesses “grew in the quarter.”

Group consolidated adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA), decreased 63.9 percent to US$121 million from US$335 million in the prior year period, “driven by Covid-19 disruptions” and impacted by a US$33-million charge related to receivables in the form of credit allowances in the gaming segment.

In the second quarter, revenue in the traditional gaming segment fell 78.7 percent year-on-year, to US$91 million. That included an 89.3-percent decline in the gaming operations segment; and a 64.2-percent fall in revenue from sales of gaming machines. The gaming segment recorded an adjusted EBITDA loss of US$31 million, compared to a positive result of US$215 million a year earlier.

In the international portion of the group’s market for gaming machine sales – including the Asia-Pacific region – new unit shipments in the three months to June 30 grew 6.8 percent, to 2,917. But aggregate shipments fell 41.3 percent year-on-year, to 4,348, due to a decline in units shipped in the United States and Canada markets.

In the SciPlay segment, revenue rose by 40.7 percent year-on-year, to US$166 million; while the separate digital segment saw a 5.8-percent growth in revenue, to US$73 million. The digital and SciPlay segments saw nearly 70 percent and 80 percent adjusted EBITDA growth, respectively, “driven by new launches and the continued ‘stay at home’ environment,” said Scientific Games.

The release quoted Barry Cottle, Scientific Games’ president and chief executive, as saying that the company had been able to implement “strong cost containment and cash management,” which allowed the group “to deliver better than expected cash flow for the quarter.”

Second-quarter net cash outflow was US$16 million, which the company said was better than prior expectations of between US$70 million to US$90 million.

Mr Cottle added: “The diversity of our businesses and our position on the forefront of digital gaming were critical to allow us to successfully navigate the worst of this environment.”

The group said it had available liquidity of US$943 million at the end of the second quarter. Total liquidity increased by approximately US$200 million in July, following a private offering of senior notes, it added.

Scientific Games’ net debt as of June 30 was nearly US$8.53 billion, from US$8.65 billion a year earlier.

Michael Eklund, executive vice president and chief financial officer of Scientific Games, was quoted as saying in the release: “Streamlining our cost structure and focusing on operating efficiencies to drive free cash flow generation and de-lever our balance sheet is our top priority.