Supplier News
US – Scientific Games welcomes new chapter with ‘strong’ results
By Phil - 15 November 2013
An historic third quarter for Scientific Games, which saw the completion of the deal to buy WMS Gaming, also saw results reflect the strong overall performance of its core businesses, leading to a four per cent increase in revenue and 12 per cent rise in attributable EBITDA year-over-year.
“Our strong third quarter results and recent contract wins and extensions reflect the strength of our core businesses and our focus on delivering results,” Chairman and Chief Executive Officer A. Lorne Weil explained. “We are also elated to welcome WMS employees to the Scientific Games family. Closing the WMS acquisition marks a new chapter for all of us. The strength and momentum of our combined operations establishes an excellent platform for near- and long-term growth. We are uniting two companies with highly complementary businesses and excellent management and operating talent to create a leading lottery and gaming company with a comprehensive portfolio of products and services for customers around the world.”
In connection with the WMS acquisition, the company terminated its prior credit agreement and entered into new senior secured credit facilities in an aggregate principal amount of $2.6bn, comprised of a $300m revolving credit facility and a $2.3bn term loan facility.
Third quarter instant ticket and draw game retail sales of the company’s US customers increased 4.2 per cent and 7.6 per cent, respectively. Instant ticket performance was generally stronger in states where the company provides instant game product management services while draw game sales benefited from two large Powerball jackpots in the quarter.
The company’s licensed properties business, including its Properties Plus program, was also an important contributor to the quarter’s results and benefited from several promotional games, anniversary-themed games and linked games.
Jeffrey Lipkin, Senior Vice President and Chief Financial Officer, added: “We are proud of our team for delivering strong quarterly operating results, while also remaining focused on the execution of a number of important contract wins and completing the acquisition of WMS. We are now well underway in executing on our comprehensive integration plans and remain confident in our ability to deliver on the expected synergies. We expect the combined company to benefit from the strength of both companies’ innovative content and offerings, visible and recurring revenue streams and a solid capital structure.”
Instant ticket retail sales results in Italy continued to demonstrate signs of stabilization. Third quarter retail sales increased 0.4 per cent compared to the prior-year period, reflecting an improvement on the year-over-year decreases that occurred in the first and second quarters of 2013. In China, instant ticket retail sales declined 2.3 per cent in the third quarter compared to the prior-year period. The Company is pursuing a number of initiatives to further diversify its business in China.
The company’s UK gaming business faced difficult year-over-year comparisons against strong gross win levels in the prior-year period. Additionally, we believe weather-related and economic conditions in the U.K. affected player activity and gross win in betting shops, resulting in a 4.7 per cent year-over-year decline in gross win per terminal per day in the third quarter. Betting shop results were most significantly impacted by weather conditions in July. However, the company recently completed its roll-out of more than 7,000 Infinity terminals to the entire Gala Coral estate and is seeing a positive player response to the enhanced functionality of the terminal. The Company is planning the roll-out of approximately 9,000 new Clarity terminals to Ladbrokes’ entire UK estate in the first half of 2014.
A number of important company initiatives for 2013 recently launched, including sales of instant games in Panama and the Dominican Republic, andNorthstar New Jersey’s commencement of marketing and sales services for the New Jersey Lottery, and the Delaware Lottery’s launch of iGaming, with Scientific Games and 888 Holdings serving as the primary vendor.
