International edition
September 20, 2019

Growth achieved across gaming, lottery and interactive businesses

Scientific Games posts strong third quarter

Scientific Games posts strong third quarter
During the quarter, each business segment achieved revenue and AEBITDA growth.
United States | 11/02/2017

Third quarter revenue increased 7% to USD 768.9M, up from USD 720.0M a year ago. The company has cited growth within its Gaming, Lottery and Interactive segments as the main reason behind year-on-year revenue growth during the period.

F

oreign exchange had a $2.1 million favorable impact on revenue.

Operating income in the third quarter increased 170 percent to $90.6 million from $33.5 million a year ago, reflecting revenue growth, a more profitable revenue mix, more effective business processes and lower depreciation and amortization. Net loss declined to $59.3 million from $98.9 million in the prior-year period, reflecting the improvement in operating income and a $16.5 million decrease in interest expense, partially offset by an $8.4 million loss from financing transactions and a $15.5 million decrease in income tax benefit.

Attributable EBITDA, a non-GAAP financial measure defined below, increased 10 percent to $299.0 million from $271.6 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 38.9 percent from 37.7 percent a year ago.

Net cash provided by operating activities decreased $41.4 million to $109.5 million from a year ago. The primary driver was an unfavorable change in working capital accounts of $107.1 million, partially offset by a $64.5 million increase in incremental net earnings adjusted for non-cash adjustments and other items.

The company completed a refinancing of its $3.283 billion of existing term loans that lowered the applicable interest rate by 75 basis points and extended maturity to 2024.

The firm entered into a definitive agreement to acquire NYX Gaming Group Limited at a total enterprise value of approximately $631 million; subject to closing, the transaction is expected to ideally position Scientific Games to capitalize on the growing global online gaming and sports betting markets. Subsequent to third quarter end, the company issued $350.0 million aggregate principal amount of 5.000% senior secured notes due 2025 to partially fund this acquisition.

"This quarter each business segment achieved revenue and AEBITDA growth, we showcased industry-altering innovation at NASPL and G2E, we were named 'Industry Land-Based Supplier of the Year' and announced our intent to acquire NYX, the industry leader in digital real-money gaming and sports betting. We are excited by the acquisition of NYX and the opportunities to grow our digital business," said Kevin Sheehan, Chief Executive Officer of Scientific Games. "We are growing our businesses, expanding our product portfolio, improving our processes, enhancing our operating margin, paying down debt, and delivering positive results."

Michael Quartieri, Chief Financial Officer of Scientific Games, added, "Our improved performance is enabling us to strengthen our balance sheet and lower our cost of capital. During the third quarter, we successfully extended our term loan maturity until August 2024 and reduced the term loan interest rate by 75 basis points. Additionally, we established a new benchmark with the issuance of our 5.000% senior secured notes due in 2025. At quarter-end, our net debt leverage ratio decreased to 6.7 times trailing twelve-month AEBITDA, down from 7.4 times a year ago. We remain committed to our path of deleveraging, while capitalizing on meaningful opportunities to grow our business."

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