U.S.-based gaming and lottery supplier Scientific Games Corp is poised “to meet or slightly exceed” consensus for its 2015 fourth quarter financial results, said a note from David Bain, an analyst at brokerage Sterne Agee CRT.
The expected “solid” earnings will be driven by several factors, including further cost synergies and the sold-out delivery of Scientific Games’ new TwinStar cabinet, according to Sterne Agee’s note on Monday.
“Solid fourth quarter of 2015 results should combine with new gaming platform traction (ArgOS/TwinStar/Dualos), a vast majority of its planned US$230 million in cost synergy savings rolling forward to the benefit of calendar year 2016 and solid systems and lottery pipeline,” said Mr Bain.
Nasdaq-listed Scientific Games posted a net loss of US$678.2 million in the third quarter of 2015, or US$7.88 a share. The figure compared with a loss of US$69.8 million a year earlier, or US$0.82 a share.
Mr Bain said the fourth quarter of 2015 would “represent an ‘execution quarter’ for Scientific Games,” following “significant downward stock pressure after small quarterly earnings shortfalls in the past”.
“Importantly, we believe the fourth quarter of 2015 will also show positive free cash flow despite its semi-annual interest payment on its US$2.2 billion, 10-percent senior unsecured during the quarter,” he added.
As of September 30, 2015, Scientific Games said it had implemented US$194 million of the US$200 million of annual cost savings related to the US$5.1-billion acquisition of Bally Technologies Inc in November 2014.
In 2013, Scientific Games took over U.S.-based slot-machine maker WMS Industries Inc for US$1.5 billion. Scientific Games said it had also implemented “more than 85 percent of the expected second-year WMS-related synergies of US$30 million” by the end of September.
Scott Schweinfurth, Scientific Games’ chief financial officer, said in November that the company anticipated implementing approximately US$10 million of incremental costs savings in the three months ended December 31.
In December, Scientific Games said its new TwinStar dual-screen cabinet had just received its first regulatory approvals in the United States. The company announced on Monday that the Nevada Gaming Commission had approved the new cabinet, which is now licensed for sale and play in more than 16 jurisdictions in the United States.
TwinStar is capable of delivering WMS and Bally games. The cabinet is the first to incorporate Scientific Games’ new ArgOS operating system, and was launched with new versions of the popular games Goldfish Deluxe and Quick Shot Dwanwu, by WMS and Bally respectively, the firm said.
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Ambrose So Shu Fai
Vice-chairman and chief executive at Macau casino operator SJM Holdings