Scientific Games reports revenue growth for Q2 2016

"Thanks to the hard work of the entire Scientific Games team, we delivered our third consecutive quarter of year-over-year increases in revenue, operating income and cash flow from operating activities. We're on a roll -- executing on our business strategies, delivering improved results, and paying down debt," said Gavin Isaacs.

"Our performance demonstrates the ongoing success of our business and the value from our diverse revenue streams. Our Interactive division is on fire, gaming machine sales were strong, and the Lottery segment's instant games revenue turned in an exceptional performance. We remain focused on driving innovation and fiscal discipline to support future cash flow growth to create meaningful and sustained long-term shareholder value."

2016 Second Quarter Financial Highlights:

• Revenue increased 5 percent, or $37.7 million, year over year to $729.2 million, despite the impact from $5.3 million of unfavorable currency translation and $6.6 million due to the previously disclosed January 2016 expiration of the China lottery validation contract. Revenue growth included a 62-percent increase in Interactive revenue, an 11-percent increase in gaming machine sales revenue, and an 11-percent increase in instant games revenue.
• Operating income increased to $59.1 million from essentially breakeven in the year-ago quarter, reflecting the higher revenue, the benefit of cost synergies from 2015 integration initiatives, lower costs associated with integration and restructuring activities, and lower impairment charges. Net loss declined 49% to $51.7 million, reflecting the improved operating income as well as a $25.2 million gain on early extinguishment of debt, compared to a net loss of $102.2 million in the prior-year period.
• Attributable EBITDA ("AEBITDA"), a non-GAAP financial measure as defined below, reached $279.7 million, a 5-percent increase driven by higher revenue and a benefit from completed integration actions.
• Net cash from operating activities more than doubled to $90.8 million from $36.6 million in the year-ago quarter. Free cash flow, a non-GAAP financial measure as defined below, increased to $15.0 million from a negative $12.4 million use of cash in the year-ago quarter.
• Scientific Games continued to de-lever in the second quarter with a $79.8 million reduction in the principal face value of its debt, which included the repurchase of $65.9 million aggregate principal face value of the Company's subordinated 6.250% Notes due 2020 and 6.625% Notes due 2021 at a discount.
• Cash and availability under our revolving credit facility was $558.8 million as of June 30, 2016.

Michael Quartieri, Scientific Games Executive Vice President and Chief Financial Officer, said, "Across our global operations, we continue to manage costs and execute on our strategies to deliver consistent revenue growth. Our ongoing implementation of process improvements is generating operating efficiencies which, combined with fiscal discipline in our capital spending and a focus on improving our core working capital, is leading to higher cash flow and reducing our leverage. Since closing on the Bally acquisition in 2014, our total debt has been reduced by more than $250 million."