Supplier News
US – Scientific records a loss as it shapes up for sports betting
By Phil - 4 May 2018
Scientific Gaming suffered a $201.8m net loss in the first quarter of 2018 with its evolution into a sports betting provider bringing improved revenues due to the inclusion of NYX Gaming’s revenues as well as the costs of securing that deal.
First quarter revenue increased 12 per cent to $811.8m, up from $725.4m in the year ago period, reflecting the inclusion of $49.2m in revenue from the NYX Gaming Group Limited acquisition completed on January 5, 2018 along with seven per cent growth in lottery revenue and 21 per cent growth in social revenue. Gaming revenue increased one per cent from the prior year, reflecting a 30 per cent increase in gaming machine replacement unit shipments offset by the impact from far fewer new casino openings globally.
Net loss increased to $201.8m from $100.8m in the prior year, reflecting the impact of a $93.2m loss incurred on debt financing transactions associated with its February 2018 refinancing and the change in operating income alongside the acquisition of Spicerack, litigation costs, and $13.5mof acquisition and integration costs related to the NYX acquisition.
The quarter saw the end for Kevin Sheehan, CEO and President of Scientific Games, who is being replaced by Barry Cottle, currently CEO of SG Interactive.
Mr.Sheehan, who will stay on as a senior adviser, said: “Our first quarter results reflect our strength as a global diversified gaming technology provider. Our results reflect the significant success our team achieved during the quarter such as the inclusion of NYX and our refinancing, as well as the underlying robust business fundamentals, such as the 30 percent increase in gaming machine replacement sales. With improving momentum across all our businesses, we are excited by the prospects and opportunities to smartly grow our revenue and AEBITDA during the remainder of 2018 and beyond.”
Michael Quartieri, Chief Financial Officer of Scientific Games, said: “Our continued growth in revenue and AEBITDA, coupled with the lower interest costs resulting from our recent refinancing, establishes a solid platform for increased cash flows. We remain committed to our path of increasing cash flow, de-levering and strengthening our balance sheet.”
Gaming operations revenue declined $11.1m in the first quarter 2018, inclusive of a $4.4m negative impact from adopting the new revenue recognition guidance. The year-over-year decrease also reflected a 480 unit year-over-year decline in the installed base of Wide-Area Progressive (WAP), premium and daily-fee participation gaming machines and a $1.21 decline in average daily revenue per such unit. On a quarterly sequential basis, the installed base of WAP, premium and daily-fee participation units increased 21 units, reflecting the continued replacement of older cabinets with newer platforms such as the Gamescape, TwinStar V75 and TwinStar iReels cabinets, which are performing strongly, while the average daily revenue increased $0.72 per unit.
Gaming machine sales revenue decreased $11.4m year over year, primarily due to a decline in new casino openings and expansions globally, offset by a 30 percent increase year over year of replacement units in the US and Canada driven by ongoing demand for the TwinStar family of cabinets and success of the new content for the Pro Wave cabinet. The average sales price increased 4 percent to $17,722, reflecting a more favorable mix of gaming machines. US and Canadian shipments totalled 4,667 gaming machines, including 3,743 replacement units, 149 units for new casino openings and expansions and 775 VGTs for the Illinois market. In the prior-year period, U.S. and Canadian shipments totaled 5,862 units, which comprised 2,889 replacement units, 1,862 units for new casino openings and expansions, 861 VGTs for the Illinois market and 250 VLT units to Oregon. International shipments decreased 296 units to 2,201 gaming machines, including 261 units for new casino openings, compared with 2,497 units in the prior year, which included 424 units for new casino openings.
Gaming systems revenue increased $13.5m, or 22 per cent, to $75m, from ongoing installations of a new system to casinos in the Canadian provinces of Alberta and Ontario whilst table products revenue increased $12m, or 24 per cent.
Lottery systems revenue increased $4.1m, or 9 per cent, compared with the prior year whilst social revenue grew 21 per cent to $97.4m, compared to the prior year period, primarily reflecting the contribution and growth of the Bingo Showdown app, along with the ongoing popularity of the Quick Hit Slots app and the growing success of the 88 Fortunes app.
