Gaming-business surge, debt reduction factor in upbeat quarter for Scientific Games

Gaming-business surge, debt reduction factor in upbeat quarter for Scientific Games

  • Matthew Crowley
August 10, 2021 4:12 PM
  • Matthew Crowley
  • Other

A 300% gaming business surge and continued debt reduction contributed to a strong second quarter for Scientific Games. The Las Vegas-based instant-win lottery-ticket maker reversed its year-earlier loss and posted higher cash flow and revenue. Earnings per share and revenue both topped Wall Street forecasts.

In a statement, Scientific Games said its net income was $109 million, or $1.10 per diluted share, for the three months ended June 30, reversing a year-earlier loss of $203 million, or $2.13 per share.

The latest result topped the $1.07-per-share consensus average forecast of analysts polled by Seeking Alpha.

Adjusted earnings before interest, taxes, depreciation and amortization, a cash-flow measure that excludes one-time costs, surged 217% to $383 million from $121 million.

Revenue rose 63.2% to $880 million from $539 million and topped the $771.7 million forecast of Seeking Alpha.

Record gross gaming revenue in the United States stoked the aforementioned surge in gaming business to yield the company’s highest quarterly gaming revenue total since 2019. Revenue for Scientific Games’ lottery business (up 27% to $266 million) and digital business (also up 27% to $93 million) also rose in the quarter.

Investors pushed Scientific Games shares higher on the news. The stock rose $5.93, or 9.26% to close at $69.97 on the Nasdaq.

Chief Financial Officer Michael Eklund said debt reduction — Scientific Games has paid down $500 million in debt since October — would help boost shareholder value. He added that the company is targeting $50 million more in permanent cost savings in production and procurement, reducing its facilities footprint and upgrading technology.

Scientific Games also said last week’s acquisition of Sydney-based slot developer Lightning Box would foster a move toward digital markets. (Financial terms for the Lightning Box deal weren’t disclosed.) Scientific Games in July began supplying its online casino and digital sports betting to FireKeepers Hotel-Casino in Battle Creek, Michigan, and deployed its sports betting engine across 10 states with FanDuel.

Scientific Games said in June that it would divest its lottery and sports betting businesses and would seek to increase its focus on digital markets.

“These intended divestitures will enable us to continue to materially and quickly deliver the balance sheet, while providing us with the dry powder to invest, to grow, both organically and inorganically,” CEO Barry Cottle said in a conference call with analysts and journalists. “The process and the interest we’re seeing from the outside confirm we are on the right path to unlock value for our shareholders.”

Also in a push toward digital gaming, Scientific Games last month said it plans to buy the 19% of digital game company SciPlay that it didn’t already own in an all-stock deal. SciPlay went public in 2019.

“We are uniquely positioned with a number of significant catalysts,” Cottle said. “We are currently seeing continued momentum in our businesses. And over the coming years, we see meaningful growth on both our top and bottom lines.”

Follow Matthew Crowley on Twitter @copyjockey


Follow Matthew Crowley on Twitter @copyjockey.