Scientific Games has reported year-on-year growth in revenue during the first three months of 2016, despite experiencing an increase in net loss.
First quarter revenue rose four percent to $682m, up from $659m a year ago. The increase was driven by a 55-per cent growth in interactive revenue and is notable given the $7m unfavourable impact from currency translation, a decline in gaming systems revenue and the previously disclosed expiration of the China lottery validation contract.
Operating income in the first quarter increased 178 per cent to $50m from $18m a year ago, reflecting cost synergies from 2015 integration initiatives and lower costs associated with integration and restructuring activities. These savings were partially offset by increased investments in growth and innovation initiatives. Net loss before income taxes declined to $112m from $149m in the prior-year period.
Attributable EBITDA increased to $259m from $252ma year ago driven by higher revenue and the benefit from earlier integration actions, which more than offset increased costs of innovation and other growth initiatives.
“Our focus on strategic priorities – product excellence, profitable growth, and strengthening cash flow – is taking hold, as we have generated positive growth for the past two consecutive quarters. We are building momentum and delivering improved business results, clear evidence of the strength of our comprehensive product portfolio. As we move forward, we are committed to continuous improvement to unlock the power of our brands, leverage our unrivaled innovation and serve our customers to provide meaningful, long-term shareholder value,” said Gavin Isaacs, President and CEO of Scientific Games.
Michael Quartieri, Scientific Games’ Executive Vice President and CFO, added: “Across our global operations, our focus is on fiscal discipline, seeking further process improvements and operating efficiencies, as we continue to prudently invest to sustain our leadership in innovation. By driving profitable growth and increased conversion of AEBITDA into cash flow, we expect to remain on a path to further deleverage in 2016 and beyond.”
Total gaming revenue declined $4.1m, inclusive of a $4m unfavourable foreign currency impact, compared to the year-ago period.
However gaming machine sales revenue increased six perc ent on global shipments of 6,748 new units, comprised of 4,365 units to US and Canadian customers and 2,383 new units to international customers. US and Canadian shipments comprised 3,932 replacement units, inclusive of 840 VLTs to Oregon. Additionally 433 VGTs were shipped to newly licensed locations in the Illinois market. International shipments were all replacement units. Prior-year unit shipments included more than 750 convert-to-sale units from the installed base of other participation and leased units. Average sales price increased to$16,719 per unit, reflecting a mix of high-performing premium gaming machines, which more than offset lower-priced VLT units.
Gaming systems revenue declined to $59.7m, reflecting the quarterly variability inherent in hardware and software sales, even as maintenance revenue increased eight percent.
Table products revenue increased to $43.1m, reflecting steady growth in revenue from leased shufflers, proprietary table games and progressives. The installed base of shufflers increased eight percent to a quarter-end record level of installed units.
Total lottery revenue increased $1.7m, despite a $5.1m unfavorable impact from the expiration of the China Sports Lottery validation contract and a $3m unfavorable foreign currency impact.
Total interactive revenue grew 55 per cent to $72.6m, primarily reflecting a 58-percent increase in social gaming revenue due to the ongoing popularity of Jackpot Party Social Casino, the success of Quick Hit Slots social game app, and the launch of Hot Shot Social Casino. Interactive revenue increased 20 per cent on a quarterly sequential basis.