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US – AGEM Index increases in March

By - 9 April 2017

The AGEM Index reached another record high in March, continuing the momentum from previous months. The composite index stood at 361.28 points at the close of March 2017, which represents an increase of 9.84 points, or 2.8 percent, when compared to February 2017.

The AGEM Index reported a year-over-year increase for the 18th consecutive month, rising 136.93 points, or 61.0 per cent, when compared to March 2016.

During the latest period, nine of the 13 global gaming equipment manufacturers reported month-to-month increases in stock price, with three up by more than 10 percent. Four manufacturers reported decreases in stock price during the month with three experiencing double-digit losses.

The broader stock markets produced mixed results in March. The S&P 500 reported a slight month-to-month decrease, falling 0.04 percent to 2,362.72. Additionally, the Dow Jones Industrial Average decreased 0.7 per cent to 20,663.22, while the NASDAQ increased 1.5 per cent during the period to 5,911.74.
Aristocrat Technologies (ALL) contributed 8.58 points due to an 8.25 per cent increase in stock price to AU$17.97.

Scientific Games Corporation (SGMS) reported a 14.53 per cent increase in stock price, rising to $23.65 and contributing 3.91 points.

Crane Co. (CR) contributed 2.02 points due to a 3.51 per cent increase in stock price to $74.83.

With its stock price falling 12.22 per cent to $23.70, International Game Technology (IGT) contributed negative 7.52 points.

Gaming Partners International (GPIC) contributed negative 0.13 points to the index due to a 12.51 per cent decline in stock price to $10.00.

Several gaming suppliers recently released their year-end and fourth quarter results. Selected highlights from those reports suggest shifts in revenue and profitability are taking place.
International Game Technology (IGT) reported total revenue of $5.2bn for the 2016 calendar year. Revenue increased 9.9 per cent from 2015, while adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 8.9 percent to $1.8bn. Though revenue for the year was strong, IGT’s fourth quarter revenue and earnings reported year-over-year declines as gaming service revenue offset growth in IGT’s global lottery segment. Fourth quarter revenue declined three per cent to $1.3bn, while adjusted EBITDA fell six per cent to $422m.

Everi Holdings (EVRI) reported a four per cent increase in annual revenues from $826.9m in 2015 to $859.5m in 2016. While game revenue declined, Everi’s payment revenue segment increased five per cent year over year to $646.2m. Adjusted EBITDA for Everi’s payment segment increased 5.7 per cent year over year, but total adjusted EBITDA for 2016 was down 1.2 per cent as Everi’s game segment reported a 5.7 per cent drop in EBITDA over the same period. Game and payment revenue were both up year over year for the fourth quarter of 2016. The company reported total fourth quarter revenue of $217.5m, with game revenue of $54.6m (+8.1 per cent) and payment revenue of $162m (+5.8 per cent). Adjusted EBITDA for the quarter saw similar growth as game EBITDA increased 7.2 per cent year over year to $28.4m, and payment revenue increased to $21m (+8.3 per cent) over the same period.

Aristocrat Technologies (ALL) reported strong revenues and earnings in 2016. Revenue increased 34.5 per cent from 2015 to AU$2.1 billion. EBITDA increased 54.1 per cent year over year to AU$806m. Though changes in the Australian dollar’s exchange rate helped boost results, revenue and EBITDA were both up 30.5 percent and 48.0 percent, respectively, on a constant currency basis. Revenue growth was driven by every major strategic segment as Aristocrat’s Premium Class III installed base grew 39 per cent in its gaming operations business, and daily active users continued to grow in its digital segment.

Scientific Games (SGMS) reported $2.9bn in revenue for the year, a 5 percent increase over 2015. While a 2.7 per cent increase in Scientific Games’ lottery unit offset losses in its gaming unit, the 58 per cent revenue increase in its interactive unit drove the majority of revenue growth for the year. EBITDA for the year increased three per cent to $1.1bn. Fourth quarter results showed similar results as revenue increased two per cent to $752.2m while EBITDA remained flat at $293.5m.

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