Nasdaq-listed gaming technology provider Scientific Games Corporation posted $766.3 million revenue in the second quarter, beating analysts’ expectations.
In a regulatory filing on Monday, the US-based firm announced that its revenue during April to June 30, 2017 rose 5.1 percent from $729.2 million on the back of robust gaming and interactive segments.
Earnings before interest, taxation, depreciation and amortization (EBITDA) in the second quarter jumped 13 percent year-on-year, to $314.8 million, with EBITDA margin improving to 41.1 percent from 38.4 percent in the prior-year period. Deutsche Bank Securities said in its Monday’s note that earnings were above the market consensus of $736.2 million.
This was the seventh quarter of consecutive year-over-year growth, according to Scientific Games CEO Kevin Sheehan.
“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,” Sheehan said. “Across the company, we are maintaining a laser focus on executing our strategies and capitalizing on our many opportunities.”
Gaming machine sales grew 6 percent to $8.9 million despite no new casino openings, thanks to a 24-percent increase in shipments of U.S. and Canadian replacement machines.
Gaming systems and table products rose 13 percent to $67.1 million and 15 percent to $48.4 million respectively.
The company attributed the rise of gaming systems revenue to the increase in software and hardware sales, including shipment of innovative new iVIEW4 player-interface display units, and the installation of new systems at the Ilani tribal casino, the Baha Mar Resort and the Aliante Casino Hotel.
Table products figures reflected growth in leased shufflers, proprietary table games, and progressives, including a benefit from the acquisition of DEQ Systems Corp. completed on January 18, 2017.
Scientific Games also managed to narrow its net loss to $39.1 million from $51.7 million in the prior-year period as a result of the increase in operating income. Operating income doubled to $117.3 million from $59.1 million.
In a related development, Scientific Games announced plans to refinance a portion of its debt to lower cash interest costs, extend debt maturities, and generally lower its cost of capital.
The company wants to take advantage of favorable market conditions to refinance a portion of its outstanding debt worth $8.18 billion.
“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,” CFO Michael Quartieri explained. “This has resulted in our net debt leverage ratio at June 30, 2017 declining to 6.8 times twelve-month EBITDA. With our strengthened performance, we are well positioned to further improve our capital structure and lower our cost of capital.”
