Scientific Games revenue up 9%

Business News

Scientific Games Corporation, today reported results for the fourth quarter and year ended December 31, 2017.

Fourth Quarter 2017 Financial Highlights:

  • Fourth quarter revenue rose 9 percent to $823.0 million, up from $752.2 million in the year ago period. Growth was achieved in all three business segments: Gaming segment revenue increased 7 percent to a quarterly record $492.5 million, driven by global shipments of 10,249 new gaming machines; Lottery segment revenue rose 9 percent to $217.2 million led by a quarterly record level of instant games revenue; and the Interactive segment generated ongoing strong revenue growth of 24 percent to $113.3 million. Foreign exchange had a $10.3 million favorable impact on revenue.
  • Operating income in the fourth quarter increased to $97.2 million from an operating loss of $12.3 million a year ago, reflecting revenue growth, a more profitable revenue mix, more effective business processes and lower depreciation and amortization. The prior year operating loss included the impact of a $69.0 million non-cash goodwill impairment charge. Net loss declined to $43.1 million from $110.8 million in the prior-year period, reflecting the improvement in operating income and a $14.8 million decrease in interest expense. The improvement was partially offset by a $62.1 million decline in income tax benefit.
  • Attributable EBITDA (“AEBITDA”), a non-GAAP financial measure defined below, increased 11 percent to $324.5 million from $293.5 million a year ago, primarily driven by higher revenue, a more profitable revenue mix and more effective business processes. AEBITDA margin, a non-GAAP financial measure defined below, improved to 39.4 percent from 39.0 percent a year ago.
  • Net cash provided by operating activities increased $41.9 million to $118.1 million from a year ago, partially reflecting a favorable change in working capital accounts of $12.2 million and a $26.5 million increase in net earnings adjusted for non-cash adjustments and other items.
  • Additionally, the Company recently completed refinancing transactions that will result in an approximate $69 million reduction in annualized cash interest costs at current interest rates and extended a portion of its debt maturities.

Full Year 2017 Financial Highlights:

  • Revenue increased 7 percent, or $200.2 million, year over year to $3,083.6 million.
  • Operating income was $393.1 million compared to $130.6 million in the prior year, which included the $69.0 million goodwill impairment. Net loss was $242.3 million compared with a net loss of $353.7 million a year ago, reflecting the improvement in operating income and a $51.7 million decrease in interest expense. These improvements were partially offset by a $38.1 million loss on debt financing transactions and a $139.5 milliondecline in the income tax provision primarily related to a valuation allowance recorded against certain domestic deferred tax assets. The 2016 net loss included a $25.2 million gain on debt financing transactions.
  • AEBITDA, a non-GAAP financial measure as defined below, increased 11 percent to $1,224.9 million compared with $1,103.6 million in the prior year.
  • Net cash from operating activities increased to $507.1 million compared with $419.0 million in the prior year. Free cash flow, a non-GAAP financial measure as defined below, rose to $179.5 million from $120.0 million in the prior year.

“Our results in the fourth quarter 2017 reflect the improvements achieved in revenue, operating income and AEBITDA growth by each of our business segments,” said Kevin Sheehan, CEO and President of Scientific Games. “For 2018, we believe the Company is well positioned to continue to grow and build on the success attained in the past year.”

Michael Quartieri, Chief Financial Officer of Scientific Games, said, “Our improved performance and strong future prospects enabled us to successfully refinance a portion of our capital structure in 2017 and 2018 that significantly lowers our cost of capital and increases future cash flow.  We believe there is potential to achieve further improvements in 2018 and beyond, and we remain committed to our path of deleveraging and growing our business.”