Scientific Games has recorded its seventh consecutive quarter of year-on-year growth as the company announces intent to refinance a portion of its debt.
Scientific Games Corporation has released its second quarter 2017 results for the second quarter ended June 30, 2017 and announced plans to take advantage of favorable market conditions to refinance a portion of its debt to lower cash interest costs, extend debt maturities, and generally lower its cost of capital.
Second quarter revenue rose 5 percent to $766.3 million, up from $729.2 million a year ago. The growth was driven by revenue increases in the gaming and interactive segments. Foreign exchange had an $8.0 million, or 1 percent, unfavorable impact on revenue.
Operating income in the second quarter doubled to $117.3 million from $59.1 million a year ago, reflecting revenue growth, a more effective organizational structure and lower depreciation and amortization. Net loss declined to $39.1 million from $51.7 million in the prior-year period, reflecting the increase in operating income and a $14.1 million decrease in net interest expense, partially offset by a $26.0 million increase in the income tax provision. In addition, the prior year included a $25.2 million gain on early extinguishment of debt.
Attributable EBITDA (“AEBITDA”), a non-GAAP financial measure defined below, increased 13 percent to $314.8 million from $279.7 million a year ago driven by higher revenue and a more effective organizational structure, which was partially offset by $7.7 million of lower EBITDA from equity investments. The AEBITDA margin, a non-GAAP financial measure defined below, improved to 41.1 percent from 38.4 percent in the prior-year period.
Net cash flow from operating activities increased $77.7 million to $168.5 million, from $90.8 million a year ago. The primary driver was a $61.4 million increase in net income after adjustments for non-cash items, reflecting operating improvements across the Company.
“Second quarter results represent our seventh quarter of consecutive year-over-year growth, including $169 million of cash flow from operating activities, as a result of ongoing improvements in our gaming, lottery and interactive operations,” said Kevin Sheehan, Chief Executive Officer of Scientific Games. “We achieved year-over-year revenue growth in global gaming machine sales, gaming systems, table products and interactive; as well as in U.S. instant games revenue. In addition, as a result of our improving organizational structure, we increased our AEBITDA margin by 270 basis points.
“Across the Company, we are maintaining a laser focus on executing our strategies and capitalizing on our many opportunities,” Sheehan added. “I am proud of all of our dedicated team members who daily commit themselves to empower our customers with the best gaming and lottery experiences in the world, while remaining focused on delivering our financial goals.”
Michael Quartieri, Chief Financial Officer of Scientific Games, added, “Our focus on innovative new products, continuous process improvement and fiscal discipline have enabled us to grow operating income and cash flow, leading to a reduction in our net debt. This has resulted in our net debt leverage ratio at June 30, 2017 declining to 6.8 times twelve-month AEBITDA. With our strengthened performance, we are well positioned to further improve our capital structure and lower our cost of capital.”
To view the full report, visit: http://www.scientificgames.com/investors/quarterly-earnings