Revenues up in Q1-2018 at Scientific Games

Scientific Games Corporation reported Thursday on its results for the first quarter ended March 31, 2018, highlighting:

* Revenues up 12 percent y-o-y at $811.8 million, reflecting the inclusion of $49.2 million in revenue from the NYX Gaming Group Limited acquisition completed on January 5, 2018, along with 7 percent growth in lottery revenue and 21 percent growth in social revenue.

* Gaming revenue increased 1 percent from the prior year, reflecting a 30 percent increase in gaming machine replacement unit shipments offset by the impact from far fewer new casino openings globally..

* Operating income in the first quarter was down at $49.4 million compared to $88 million in the prior year period, reflecting $52.2 million in restructuring and other charges that included an $18.0 million accrual for contingent consideration associated with higher-than-anticipated results from the 2017 acquisition of Spicerack, a $15 million charge related to certain litigation costs, and $13.5 million of acquisition and integration costs related to the NYX acquisition, along with the unfavorable impact of higher depreciation and amortization expense, inclusive of a $19 million facilities impairment charge. These costs were partially offset by the benefit from higher revenue, the inclusion of NYX results and more efficient business processes.

* Net loss increased to $201.8 million from $100.8 million in the prior year, due to the impact of a $93.2 million loss incurred on debt financing transactions and the change in operating income.

* Attributable EBITDA increased 12 percent y-o-y to $320.1 million, primarily driven by higher revenue, the inclusion of NYX and more efficient business processes throughout the organisation.

* Net cash from operating activities decreased to $29.9 million from $111 million in Q1-2017, reflecting the impact of $49.5 million associated with a change in accrued interest due to the timing of the February 2018 refinancing and $30.2 million related to the NYX acquisition;

* In the 2018 first quarter, the company completed refinancing transactions that resulted in an approximately $69 million reduction in annualised cash interest costs at then-prevailing interest rates and extended a portion of its debt maturities from 2022 to 2024, 2025 and 2026.

* Total digital revenue increased to $69.7 million, boosted by $49.2 million of revenue from the NYX acquisition and a 27 percent organic increase in revenue from existing B2B online business. During the first quarter the company successfully launched content across five new client sites and signed three new customers. The development pipeline remains strong, with 48 customer commitments that have not yet launched;

* Social revenue grew 21 percent y-o-y to $97.4 million, thanks to 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. The Jackpot Party Social Casino app was reintroduced on a new, improved technology platform and the mid-quarter relaunch of the app, revenue and daily paying player numbers showed a significant improvement;

Kevin Sheehan, CEO  reported: “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.”

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