Sci Games’ EBITDA down slightly on lower gaming revenue
Casino equipment maker and lottery services supplier Scientific Games Corp said its consolidated adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 1.5 percent year-on-year to US$335 million in the second quarter of 2019, “driven by … factors impacting [the firm’s] gaming revenue”.
In its unaudited second-quarter results published on Thursday, Scientific Games said its gaming revenue decreased by 9.3 percent year-on-year, to US$427 million. The firm said the decline was “due to fewer casino openings and systems launches compared to last year, as well as lower [product] replacement sales”.
The company said its gaming operations were negatively affected by a decrease in revenue in its international segment and a reduction in the installed based in the U.S. and Canadian markets.
Revenue from gaming machine sales stood at US$148 million in the second quarter, 11.9 percent down compared to a year earlier. The growth in new unit shipments to international markets was offset by a decline in total new shipments in the U.S. and Canada due to lower replacement units in the latter markets, said Scientific Games.
The company sold 4,671 new machines to North American clients in the three months to June 30, compared to 5,749 units a year ago. The firm shipped 2,730 new units to international markets in the reporting period, compared to 2,492 machines a year earlier.
Scientific Games said sales of its table game products continued to grow, with revenue up US$3 million from the prior year to US$62 million.
The gaming supplier said the decline in gaming revenue was offset by sales in other segments, including digital, lottery and the social gaming arm, SciPlay Corp. The social gaming business saw its revenue grow to US$118 million in the three months ended June 30, up 18 percent from the prior-year period.
Scientific Games completed in May the initial public offering (IPO) of a 17.4-percent minority interest in SciPlay Corp, raising more than US$400 million.
Deleveraging efforts
Group-wide second quarter revenue was flat at US$845 million, but net loss for the period was US$75 million compared to US$6 million in the prior-year period.
Scientific Games said the net loss was primarily driven by an expense of about US$60 million recorded in April regarding a debt financing exercise completed in March. “This quarter also included a US$3 million loss on remeasurement of Euro denominated debt versus a US$34 million gain in the prior-year period,” added the company.
Scientific Games’ president and chief executive Barry Cottle was quoted in the earnings release as saying that the second-quarter results “highlight the diversity” of the group’s business.
“We are pleased with the growth we are continuing to see across lottery, digital, and SciPlay while also stabilising gaming operations driven by the successful launches of several new games,” stated Mr Cottle.
“The entire organisation is laser focused on strengthening our core business and capturing market share in emerging digital markets while making our business more efficient,” added the CEO. “These key focus areas will allow us to deliver the greatest returns for our stakeholders, set ourselves up for profitable growth, and generate significant cash flow to continue on our deleveraging path.”
The company has been focused on restructuring its debt, following a string of acquisitions in recent years. Scientific Games’ net debt stood at approximately US$8.80 billion at the end of the first half, compared to nearly US$8.99 billion as of December 31, 2018.
Michael Quartieri, chief financial officer of Scientific Games, said in a prepared statement: “This quarter, we paid down another US$155 million in debt bringing our year to date total to $300 million, and the SciPlay IPO proceeds will continue to enable us to make substantial payments on our debt as we work toward our deleveraging goal.”
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