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Scientific Games (SGMS) Q4 Revenues Top, Loss Narrows Y/Y
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Scientific Games Corporation reported fourth-quarter 2017 loss of 48 cents per share narrower than the year-ago quarter’s loss of $1.26. The Zacks Consensus Estimate was pegged at a loss of 28 cents.
Revenues increased 9.4% from the year-ago quarter to $823 million and surpassed the Zacks Consensus Estimate of $810 million. The growth was driven by higher services (up 8.2%), product sales (up 10.2%) and instant game sales (up 7.5%).
Scientific Games’ shares have gained 93.4% in the past year, substantially outperforming the industry’s 32.3% rally.
Quarter Details
Gaming Segment (59.8% of total revenues) revenues increased 6.9% year over year to $492.5 million in the fourth quarter. The increase can primarily be attributed to growth in Gaming Machine sales and Gaming Systems of 12% and 30.7%, respectively. This was partly offset by lower revenues in Gaming operations and Table Products that decreased 2% and 8.9%, respectively. Favorable foreign currency exchange also impacted revenues by $6.3 million.
During the quarter, replacement unit shipments in the United States and Canada increased 23% on a year-over-year basis to 4,421 units, driven by high adoption of the TwinStar J43 and Pro Wave cabinets. International shipments increased 7% to 4,409 units. Average Selling Price (ASP) increased nearly 3.6% year over year to $16,858 in the reported quarter.
The year-over-year growth in Gaming Systems revenues was driven by increased system installation in casinos based in Alberta as well as a rise in hardware sales backed by shipment of new iVIEW4 player-interface display units.
However, Table Products suffered from a decline in new shufflers sales and other table game products. In the last year, international sales due to opening of new casinos mainly in Asia had driven results. Besides, Gaming Operations revenues fell due to a decline in installed base of WAP and premium participation gaming machines.
Lottery Segment (26.4% of total revenues) revenues were up 8.8% from the prior-year quarter to $217.2 million. Revenues from Instant Games, Services and Product sales increased 7.5%, 3.3% and 31.8% from the year-ago quarter, respectively. The surge in Product revenues was driven by an increase in hardware and software sales in international markets. Holiday-themed games and Willy Wonka Golden Ticket instant games drove revenues in the United States.
Interactive Segment (13.8% of total revenues) revenues surged 23.7% year over year to $113.3 million on the back of robust performance from Social Gaming–B2C, which grew 27.7%.
Social gaming B2C revenue growth reflected a robust performance from apps like Jackpot Party Social Casino, Quick Hit Slots, 88 Fortunes and Bingo Showdown, which contributed significantly.
Scientific Games Corp Price, Consensus and EPS Surprise
Attributable earnings before interest, taxes, depreciation and amortization (AEBITDA) increased 11% from the year-ago period to $324.5 million driven by higher revenues, profitable revenue mix and increasing operating efficiency. AEBITDA margin expanded 40 basis points (bps) to 39.4%.
Gaming AEBITDA increased 9% year over year to $237.8 million. Gaming AEBITDA margin expanded 80 bps to 48.3%.
Lottery AEBITDA increased 20% from the year-ago quarter to $94.6 million. Lottery AEBITDA margin expanded 400 bps to 43.6% driven by higher revenues and a profitable revenue mix.
Interactive AEBITDA surged 37% to $26.9 million and margin expanded 220 bps to 23.7%.
SG&A increased 22.4% year over year to $167.7 million in the reported quarter. However, research & development (R&D) expenses declined almost 7.3% to $45.8 million.
As a result, reported operating income in the quarter was $97.2 million. In the year-ago quarter, the company reported operating loss of $12.3 million.
Interest expense declined almost 9% from the prior-year quarter to $150.2 million in the reported quarter.
Balance Sheet & Cash Flow
Scientific Games exited the quarter with cash and cash equivalents of $788.8 million compared with $196.4 million in the previous quarter. The company’s long-term debt was $8.7 billion compared with nearly $8.1 billion at the end of previous quarter.
Cash flow from operations was $118.1 million, compared with $109.5 million in the previous quarter.
Long-term earnings growth for NVIDIA, Lam Research and Paycom is projected to be 10.3%, 14.9% and 10%, respectively.
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Scientific Games (SGMS) Q4 Revenues Top, Loss Narrows Y/Y
Scientific Games Corporation reported fourth-quarter 2017 loss of 48 cents per share narrower than the year-ago quarter’s loss of $1.26. The Zacks Consensus Estimate was pegged at a loss of 28 cents.
Revenues increased 9.4% from the year-ago quarter to $823 million and surpassed the Zacks Consensus Estimate of $810 million. The growth was driven by higher services (up 8.2%), product sales (up 10.2%) and instant game sales (up 7.5%).
Scientific Games’ shares have gained 93.4% in the past year, substantially outperforming the industry’s 32.3% rally.
Quarter Details
Gaming Segment (59.8% of total revenues) revenues increased 6.9% year over year to $492.5 million in the fourth quarter. The increase can primarily be attributed to growth in Gaming Machine sales and Gaming Systems of 12% and 30.7%, respectively. This was partly offset by lower revenues in Gaming operations and Table Products that decreased 2% and 8.9%, respectively. Favorable foreign currency exchange also impacted revenues by $6.3 million.
During the quarter, replacement unit shipments in the United States and Canada increased 23% on a year-over-year basis to 4,421 units, driven by high adoption of the TwinStar J43 and Pro Wave cabinets. International shipments increased 7% to 4,409 units. Average Selling Price (ASP) increased nearly 3.6% year over year to $16,858 in the reported quarter.
The year-over-year growth in Gaming Systems revenues was driven by increased system installation in casinos based in Alberta as well as a rise in hardware sales backed by shipment of new iVIEW4 player-interface display units.
However, Table Products suffered from a decline in new shufflers sales and other table game products. In the last year, international sales due to opening of new casinos mainly in Asia had driven results. Besides, Gaming Operations revenues fell due to a decline in installed base of WAP and premium participation gaming machines.
Lottery Segment (26.4% of total revenues) revenues were up 8.8% from the prior-year quarter to $217.2 million. Revenues from Instant Games, Services and Product sales increased 7.5%, 3.3% and 31.8% from the year-ago quarter, respectively. The surge in Product revenues was driven by an increase in hardware and software sales in international markets. Holiday-themed games and Willy Wonka Golden Ticket instant games drove revenues in the United States.
Interactive Segment (13.8% of total revenues) revenues surged 23.7% year over year to $113.3 million on the back of robust performance from Social Gaming–B2C, which grew 27.7%.
Social gaming B2C revenue growth reflected a robust performance from apps like Jackpot Party Social Casino, Quick Hit Slots, 88 Fortunes and Bingo Showdown, which contributed significantly.
Scientific Games Corp Price, Consensus and EPS Surprise
Scientific Games Corp Price, Consensus and EPS Surprise | Scientific Games Corp Quote
Operational Details
Attributable earnings before interest, taxes, depreciation and amortization (AEBITDA) increased 11% from the year-ago period to $324.5 million driven by higher revenues, profitable revenue mix and increasing operating efficiency. AEBITDA margin expanded 40 basis points (bps) to 39.4%.
Gaming AEBITDA increased 9% year over year to $237.8 million. Gaming AEBITDA margin expanded 80 bps to 48.3%.
Lottery AEBITDA increased 20% from the year-ago quarter to $94.6 million. Lottery AEBITDA margin expanded 400 bps to 43.6% driven by higher revenues and a profitable revenue mix.
Interactive AEBITDA surged 37% to $26.9 million and margin expanded 220 bps to 23.7%.
SG&A increased 22.4% year over year to $167.7 million in the reported quarter. However, research & development (R&D) expenses declined almost 7.3% to $45.8 million.
As a result, reported operating income in the quarter was $97.2 million. In the year-ago quarter, the company reported operating loss of $12.3 million.
Interest expense declined almost 9% from the prior-year quarter to $150.2 million in the reported quarter.
Balance Sheet & Cash Flow
Scientific Games exited the quarter with cash and cash equivalents of $788.8 million compared with $196.4 million in the previous quarter. The company’s long-term debt was $8.7 billion compared with nearly $8.1 billion at the end of previous quarter.
Cash flow from operations was $118.1 million, compared with $109.5 million in the previous quarter.
Zacks Rank & Stocks to Consider
Scientific Games carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are NVIDIA (NVDA - Free Report) , Lam Research (LRCX - Free Report) and Paycom Software (PAYC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for NVIDIA, Lam Research and Paycom is projected to be 10.3%, 14.9% and 10%, respectively.
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The most popular cryptocurrency skyrocketed last year, giving some investors the chance to bank 20X returns or even more. Those gains, however, came with serious volatility and risk. Bitcoin sank 25% or more 3 times in 2017.
Zacks has just released a new Special Report to help readers capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
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