Scientific Games reports strong 2015 4Q and full year results

Fourth quarter revenue rose to $737 million (a 10 percent increase over the third quarter), driven by 8,990 gaming units shipped globally, including 5,366 units to North America customers (a 46 percent increase over the third quarter), and an increase in Interactive revenue to $60 million (an 18 percent increase over the third quarter). 2015 revenue increased to $2.8 billion.

Fourth quarter Attributable EBITDA ("AEBITDA" and as further defined below) increased to $293 million and fourth quarter AEBITDA margin (as defined below) increased to 40 percent, driven by higher revenue and lower costs due to integration actions implemented earlier in the year. 2015 AEBITDA increased to $1,075 million.

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We completed the heavy lifting of integration, benefited from $231 million of implemented annualized cost synergies, and built a strong foundation for our future, stated Gavin Isaacs, Scientific Games CEO.

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Fourth quarter net loss was $128 million, including the impact from $137 million of unusual pre-tax charges ($86 million after-tax) composed of a $68 million non-cash goodwill impairment charge, $62 million of non-cash long-term asset and other asset impairment charges, and $7 million of restructuring, integration and legal contingencies and settlements costs, partially offset by the favorable effect of integration cost synergies. Full year 2015 net loss was $1,394 million, including the impact from $1,271 million of unusual pre-tax charges ($1,144 million after-tax), composed of $1,003 million of non-cash goodwill impairment charges, which are discussed below, $205 million of non-cash long-term asset and other asset impairment charges, and $63 million of restructuring, integration and legal contingencies and settlements costs, partially offset by the favorable effect of integration cost synergies. The impairment charges had no effect on consolidated revenues or cash flows of the Company.

2015 annual results benefited from $231 million of implemented annualized cost synergies.

Total debt, as of December 31, 2015, declined by $33 million from September 30, 2015, including $20 million of voluntary payments made on the Company's revolving credit facility in the fourth quarter, while cash and cash equivalents increased by $27 million from September 30, 2015. As of December 31, 2015, the Company's cash and availability under the revolving credit facility totaled $583 million.

Fourth quarter net cash provided by operating activities rose to $159 million compared to a $30 million use of cash in the prior year period. 2015 net cash provided by operating activities rose to $414 million compared to $204 million for 2014.

"2015 was a transformational year for Scientific Games, culminating in a strong finish for our fourth quarter operating results," said Gavin Isaacs, Scientific Games' President and Chief Executive Officer. "We completed the heavy lifting of integration, benefited from $231 million of implemented annualized cost synergies, and built a strong foundation for our future. We are one company, with one mission and three strong businesses, offering the broadest product portfolio in the industry. Our innovation was showcased at G2E, NASPL, and most recently at ICE. We believe that our innovation has helped generate our improved fourth quarter performance, and is already driving our momentum into 2016. Our winning edge consists of our people, our innovative new products led by our new TwinStar and Dualos cabinets, our Lottery contract awards, our systems successes, our electronic table growth, and our booming social gaming business. We will not rest on our laurels; we will continue to innovate and to improve our business processes in order to increase cash flow and reduce leverage."

"Fiscal discipline, strengthening cash flow, and operational excellence are key strategic priorities for Scientific Games," said Michael Quartieri, Scientific Games' Executive Vice President, Chief Financial Officer, and Corporate Secretary designee. "We made meaningful progress during 2015, as evidenced by the improved margins and cash flow achieved in the second half of the year. After incurring costs associated with accelerating implementation of integration actions early in the year, in the second half of 2015, we increased AEBITDA margin to 40 percent and reduced debt by $105 million. Moving forward, we will remain diligent in reviewing our operational practices to identify additional opportunities for continuous improvement and to drive shareholder value."

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