In a report published earlier this month, Las Vegas based global gaming giant Scientific Games announced a 7% year-on-year increase in revenue to US$768.9m at the end of the third quarter of 2017. The product and services supplier primarily chalks up this achievement to the overall increase in international gaming, lottery and interactive activity over the past year. Scientific Gaming also attributes some of this impressive growth to the $2.1m favourable impact of foreign exchange over the past quarter.
The company has, furthermore, reported a reduction in net loss from US$98m (recorded in the same period last year) to $59m. The Nasdaq-listed Scientific Games attributes this to its drastically improved operating income, which has increased by 170% from US$33m in Q3 2016 to a staggering US$090m in 2017.
The firm emphasises the significance of this increase, which, it says, indicates revenue growth, a more profitable revenue mix, more effective business processes, and lower depreciation and amortisation. Indeed, at this time, the firm’s attributable earnings before taxation depreciation and amortisation have increased by 10% – from US$271.6m in Q3 of 2016 to US$299m.
In addition to this, the completion of the refinancing of Scientific Games’ US$3.283bn in existing long-term loans has brought the applicable interest rate down by 75 basis points, extending loan maturity to 2024. Scientific Games Chief Executive Officer, Kevin Sheehan, says that they are growing their businesses, expanding their product portfolio, improving their processes, enhancing their operating margin, paying down debt, and delivering positive results.
Nevertheless, it is not all smooth sailing for the gaming super company. In spite of the positive financial outcome at the end of Quarter 3, there has been a US$41m decline in the net cash yielded by Scientific Games’ operating activities over this period. For the most part, the company blames this drop to $109m on unfavourable change in working capital accounts to the tune of $107m.
In general, however, Scientific Games’ Chief Financial Officer Michael Quartieri remains optimistic about Scientific Games’ prospects and says that the brand’s improved performance was enabling them to strengthen their balance sheet and lower their cost of capital. He explained that the company’s net debt leverage ratio at quarter end had decreased to 6.7 times trailing 12-month AEBITDA, down from 7.4 times a year ago.
As such, Quartieri says that Scientific Games remains committed to their path of deleveraging, while capitalising on meaningful opportunities to grow their business.
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