Revenue growth of 7 percent y-o-y but net losses widen
Scientific Games Corporation reported results for the third quarter ended September 30, 2018 Thursday, noting that revenue rose 7 percent y-o-y to $821.0 million, with a healthy contribution of $46.5 million in from NYX, along with growth in the Lottery and Social businesses.
Other Q3-2018 highlights included:
- Net loss was $351.6 million compared to $59.3 million in the prior year period, primarily driven by $338.7 million in restructuring and other charges. These restructuring and other charges are inclusive of $309.6 million recorded during the quarter related to the verdict in the Shuffle Tech legal matter, which did not result in any cash outflow as the verdict is subject to post-trial motions and the appeal process;
- Consolidated Attributable EBITDA increased 9 percent to $325.7 million, primarily driven by higher revenue and continued operational efficiencies. Consolidated AEBITDA margin was 39.7 percent, compared to 38.9 percent in the prior year period;
- Net cash provided by operating activities increased to $223.5 million from $109.5 million last year, driven primarily by improvements in operating results, working capital and timing of interest payments resulting from the February 2018 refinancing;
- Free cash flow, a non-GAAP financial measure, increased by $95.4 million from the year ago period to $123 million;
- Net debt leverage ratio was down 0.3x from the prior quarter to 6.7x;
Management reported that it is mulling a possible initial public offering of a minority interest in its social gaming business in 2019.
The social gaming business reportedly continues to experience rapid growth and has reached significant scale, and the directors believe an IPO would provide greater flexibility to pursue additional growth initiatives specifically designed for its social gaming business, as well as unlocking additional value for Scientific Games stakeholders. The company anticipates that the proceeds from the IPO would primarily be used to repay debt.
Barry Cottle, CEO and president of Scientific Games, said “We are very pleased with the growth we are seeing across our businesses as we continue to lead our industry into the future. Our investments in digital, sports betting, and new games are producing the most innovative and engaging products in the market and we are excited about the customer response here in the U.S. and around the world.
“For our rapidly growing social business, an IPO would give us greater flexibility to pursue growth for the business and drive value for stakeholders. We remain focused on delivering for our customers and running our business efficiently and effectively to drive revenue, reduce costs and continue to build momentum across the company.”