Scientific Games Corporation has posted Q1-2017 results, reporting that growth was achieved through good performances by the interactive and machine sales divisions.
First quarter revenue rose 6 percent to $725.4 million, up from $682 million a year ago, led by a 24 percent increase in global new unit shipments of gaming machines and a 33 percent increase in interactive revenue.
However foreign exchange had an $8.1 million, or 1 percent, unfavourable impact on revenue.
Operating income in the first quarter increased 75 percent to $88 million from $50.3 million a year ago as a result of the revenue growth and lower cost structure. Net loss was $100.8 million compared with $92.3 million in the prior-year period, as the increase in operating income was offset by a $29.7 million loss on extinguishment and modification of debt and a $35.9 million increase in the income tax provision.
Attributable EBITDA increased to $286.6 million from $258.8 million a year ago driven by the higher revenue and lower cost structure; and AEBITDA margin improved to 39.5 percent from 37.9 percent in the prior-year period.
Net cash from operating activities rose to $111 million, inclusive of $12.6 million of cash payments related to the business improvement initiatives implemented in the 2016 fourth quarter, from $101.1 million a year ago.
Capex was higher at $61.3 million (Q1-2017: $51.2 million).
The company completed refinancing transactions during the first quarter 2017 that lowered cash interest costs at current rates, reduced exposure to variable interest rates, and extended a substantial portion of its debt maturities.
At March 31, 2017, the company had fully repaid borrowings under its revolving credit facility, and its cash and availability under its revolving credit facility was $657.7 million.
On the Interactive front, SG reported:
Total interactive revenue grew 33 percent to $96.3 million, primarily reflecting a 33 percent increase in social gaming B2C revenue due to the ongoing popularity and growth of Jackpot Party Social Casino coupled with the success of more recent apps, including the most recent introduction of 88 Fortunes.
Operating income increased 50 percent to $17.2 million, primarily reflecting the higher revenue. Selling, general and administrative expense and research and development expense increased primarily due to higher player acquisition and marketing expenditures to support ongoing growth, and pre-launch development expenses for apps not yet launched.
AEBITDA rose to $23 million and AEBITDA margin increased to 23.9 percent, primarily reflecting higher revenue and improved operating leverage, partially offset by increased marketing costs and ongoing development initiatives underlying the rapid growth.
Chief executive officer Kevin Sheehan said in his report:
“This is a great start to the year, with all three of our business segments contributing to growth. We have a tremendous global team firmly focused on unlocking the power of our brands, strengthening our commitment to innovation, and executing a disciplined fiscal approach to enhance long-term shareholder value. We are building for our future.”