Increases in first quarter revenues driven by 55 percent growth in interactive contribution
Scientific Games Corporation has reported results for the first quarter ended March 31, 2016, showcasing a 4 percent year-on-year rise in revenues to $682 million, driven by 55 percent growth in the interactive division despite a $7 million hit from unfavourable currency conversion.
Operating income in Q1-2016 increased 178 percent to $50 million from $18 million a year ago, reflecting cost synergies from 2015 integration initiatives and lower costs associated with integration and restructuring activities.
These savings were partially offset by increased investments in growth and innovation initiatives.
Net loss before income taxes declined to $112 million from $149 million in the prior-year period.
Attributable EBITDA rose to $259 million from $252 million in Q1-2015, driven by higher revenue and the benefit from earlier integration actions, which more than offset increased costs of innovation and other growth initiatives.
Net cash from operating activities rose to $101 million from $78 million a year ago, and free cash flow increased to $42 million, up from $1 million a year ago, leading to a $17 million increase in cash and $28 million in debt repayment during the first quarter.
As of March 31, 2016, the company's cash and availability under its revolving credit facility increased to $605 million.
In Q1-2016, the company made net payments of $27.5 million on its debt, including $15 million of voluntary repayments under its revolving credit facility and $11 million in mandatory amortization of its term loans.
Capital expenditures totalled $51.2 million. For 2016, Management continues to expect that capital expenditures will be within a range of $290-$310 million, based on existing contractual obligations and planned investments, including capital costs to facilitate remaining integration initiatives.
In the interactive division revenue grew 55 percent to $72.6 million, primarily reflecting a 58-percent increase in social gaming revenue due to the ongoing popularity of Jackpot Party Social Casino, the success of Quick Hit Slots social game app, and the launch of Hot Shot Social Casino.
Operating income increased to $11.5 million, reflecting the higher revenue. Selling, general and administrative expense and research and development expense increased due to higher player acquisition marketing expenditures and innovation costs for new product development initiatives.
AEBITDA rose to $15.4 million and AEBITDA margin increased to 21.2 percent, reflecting higher revenue and improved operating leverage, partially offset by higher selling, general, and administrative expense and research and development expense, due to increased marketing costs and innovation initiatives.
Commenting on the results, president and CEO Gavin Isaacs observed:
"Our focus on strategic priorities – product excellence, profitable growth, and strengthening cash flow – is taking hold, as we have generated positive growth for the past two consecutive quarters. We are building momentum and delivering improved business results, clear evidence of the strength of our comprehensive product portfolio."
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