GGRAsia – Sci Games reduces 3Q loss, posts revenue increase

Sci Games reduces 3Q loss, posts revenue increase

Nov 02, 2017 Newsdesk Industry Talk, Latest News, Top of the deck

U.S.-based Scientific Games Corp on Wednesday reported third quarter revenue of US$768.9 million, up by 6.8 percent in year-on-year terms. The casino equipment maker and lottery services provider said the revenue growth was driven by its gaming, lottery and interactive segments.

“Foreign exchange had a US$2.1 million favourable impact on revenue,” the Nasdaq-listed firm stated in a release.

Scientific Games’ net loss for the third quarter declined to US$59.3 million from US$98.9 million in the prior-year period, reflecting an improvement in operating income and a US$16.5-million decrease in interest expense, partially offset by an US$8.4-million loss from financing transactions and a US$15.5-million decrease in income from tax benefits.

The company’s operating income in the three months to September 30 soared by 170.4 percent year-on-year to US$90.6 million. Such increase reflected “revenue growth, a more profitable revenue mix, more effective business processes and lower depreciation and amortisation,” Scientific Games said.

Attributable earnings before interest, taxation, depreciation and amortisation (AEBITDA) in the third quarter increased 10 percent year-on-year, to US$299.0 million. Attributable EBITDA margin improved to 38.9 percent from 37.7 percent in the prior-year period, said Scientific Games.

“This quarter each business segment achieved revenue and AEBITDA growth,” the chief executive of Scientific Games, Kevin Sheehan, said in a statement included in Wednesday’s release. “We are growing our businesses, expanding our product portfolio, improving our processes, enhancing our operating margin, paying down debt and delivering positive results,” he added.

At the end of September, Scientific Games had total net debt of US$7.98 billion.

“Our improved performance is enabling us to strengthen our balance sheet and lower our cost of capital,” Michael Quartieri, chief financial officer of Scientific Games, said in comments also included in the firm’s results announcement release.

He added: “At quarter-end, our net debt leverage ratio decreased to 6.7 times trailing 12-month AEBITDA, down from 7.4 times a year ago. We remain committed to our path of deleveraging, while capitalising on meaningful opportunities to grow our business.”

Scientific Games’ third-quarter earnings beat market consensus, said J.P. Morgan Securities Australia Ltd in a note on Thursday. Analysts Donald Carducci, Shaun Cousins and Shalin Doshi said Scientific Games’ revenue for the period was above the consensus estimates of US$748.2 million.

The firm’s gaming segment – which includes gaming operations, gaming machine sales, gaming systems, and table products – recorded total revenue of U$454.6 million for the three months ended September 30, up 1.4 percent from a year earlier.

Gaming machine sales revenue increased by 2.1 percent year-on-year to US$163.1 million in the third quarter, “largely due to a 30-percent increase in shipments of U.S. and Canadian replacement gaming machines that reflects the strong performance of the ‘TwinStar J43’ gaming machine,” Scientific Games said.

The company shipped 7,602 new gaming machines between July and September, including 4,662 new units shipped to North America customers and 2,940 units to international customers.

Revenue from sales of table products increased 10.5 percent year-on-year, to US$53.5 million. But revenue from gaming operations fell by 3.5 percent year-on-year, to US$176.0 million.

Third-quarter revenue for Scientific Games’ lottery business went up 8.7 percent year-on-year to US$202.9 million. Total revenue for the interactive segment increased by 30.8 percent year-on-year, to US$111.4 million, the Nasdaq-listed firm said.

Scientific Games’ wholly-owned subsidiary Scientific Games International Inc conducted in October a private offering for US$350 million in senior secured notes due 2025.

The net proceeds of the notes, together with cash on hand and borrowings under the company’s existing revolving credit facility are to be used to finance the planned acquisition of sports wagering specialist NYX Gaming Group Ltd and its subsidiaries, and to refinance some debt of the target business, according to previous announcements from Scientific Games.