Scientific Games (SGMS) Misses Q3 EPS by 23c, Beats on Revenues

Scientific Games (NASDAQ: SGMS) reported Q3 EPS of ($0.66), $0.23 worse than the analyst estimate of ($0.43). Revenue for the quarter came in at $768.9 million versus the consensus estimate of $746.78 million.

• Third quarter revenue rose 7 percent to $768.9 million, up from $720.0 million a year ago. The growth was driven by revenue increases in each of the Gaming, Lottery and Interactive segments. Foreign 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 (\"AEBITDA\"), 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 Company entered into a definitive agreement to acquire NYX Gaming Group Limited (\"NYX\") 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.

For earnings history and earnings-related data on Scientific Games (SGMS) click here.

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