More losses for Scientific Games

Scientific Games has posted its Q2-2015 results, which show that the group’s interactive division delivered another creditable performance despite wider group losses attributed mainly to acquisition and integration related to the company’s $5.1 billion takeover of Bally Technologies last November .

Overall group revenues were up 65.8 percent y-o-y at $691.5 million, but the group recorded an overall loss of $102.2 million compared with a net loss of $72.4 million during the same period in 2014, driving the loss per share losses up from 86 cents to $1.19.

The acquisition of Bally generated around $150 million in annual cost savings through the end of the quarter, although 1,000 jobs were lost in the process of integration. Scientific Games also began to close WMS’ manufacturing facility in Illinois during the quarter, an operation acquired in the takeover of WMS in 2013.

Scientific Games has raised its cost savings target for this year to $200 million – more than its original
estimate of $188 million.

The group’s three divisions generated revenues of $449.7 million (Games division up from Q2-2014 $176.9 million); $51.6 million (Interactive division up from Q2-2014 $32.2 million); and $190.2 million (Lottery division down from Q2-2014 $190.2 million).

The company reported an adjusted EBITDA of $266 million (Q2-2014: $132,1 million), Capex of $70.7 million (Q2-2014: $55.1 million) and Cash of $129.1 million (Q2-2014: $ 171.8 million).

Gavin Isaacs, Scientific Games’ president and CEO commented:

“Our focus on accelerating revenue growth is balanced with our commitment to deliver the realization of anticipated cost savings that will drive expected further enhancement of operating margin and cash flow in the second half of 2015 and beyond.

“Our cost savings progress is reflected in the year-over-year and quarterly-sequential improvement in
AEBITDA and AEBITDA margin. We expect the progress from rapidly implementing our integration strategies during the first half of 2015 will be favorably reflected in our performance during the second half of this year.”

Interactive division financial highlights included:

* Interactive revenue up by $19.4 million, reflecting the inclusion of $8.6 million of revenue from Bally, a $3.2 million increase in real money gaming revenue and higher DAU from both the launch of two new social game apps and continued increases in the Jackpot Party and Gold Fish social casino apps, partially offset by a slight decrease in ARPDAU.

* Operating income increased $5.5 million, benefiting from the higher revenue and improved scale of the legacy Interactive business, partially offset by the impact of acquiring and integrating Bally.

* Launched two new social game apps, Quick Hit Slots and Hot Shot Casino, which is the division’s first integrated game app that includes social game content from across multiple Scientific Games game studios.

* Entered into 14 new agreements with casino operators for the deployment of SG Universe interactive gaming suite of products bringing the total to 48, including the Play4Fun social casino platform and Mobile Concierge marketing capabilities.

* Launched the divisions’s real money gaming products on seven new customer sites, including the launch of several new premium slot games, along with the robust rollout of mobile games, and entry into Denmark and Spain, where the company was one of the providers on the country’s first day of live online slot games.

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