Scientific Games revenues down 2% as anti-trust settlement hits income
UK analysts believe increasing digital engagement will "do more harm than good" for supplier
Scientific Games has reported a 2% year-on-year drop in its Q419 gaming revenues to $863m on fewer system launches in Canada compared to last year and lower machine unit sales.
The Las Vegas-headquartered supplier disclosed a net loss of $37m during the quarter, compared to a net income position of $207m in Q4 2018.
These losses included a $40m loss on debt financing transactions and a $12m loss based on a revaluing of euro denominated debts, which was later revalued into a $14m gain.
Its biggest loss was due to the payment of costs and settlements related to its legal case against four companies including Shuffle Tech, a dispute that has seen the firm pay $183m in settlements and associated fees.
Revenues from the firm’s gaming business fell by 5% during Q4 2019 to $445m, while lottery revenues rose by 1% to $233m. Digital business revenues were also up by 1% to $72m.
Company consolidated adjusted EBITDA (AEBITDA) fell from a previous Q4 2018 high of $343m to $328m in the fourth quarter of 2019.
Scientific Games has said this is due to lower AEBITDA from its lottery and gaming businesses, which was partially offset by a 75% increase in digital AEBITDA to $21m. Net cash from operating activities rose by $10m to $153m.
Despite the losses, Barry Cottle, Scientific Games CEO and president, claimed the business had made great strides during 2019, highlighting its improved capital structure and games portfolio.
“Our recent contract and deal wins across our businesses, and the globe, highlight that we are on the right path,” Cottle added.
Scientific Games’ full-year 2019 revenues rose by $37m year-on-year to $3.4bn, while company net losses narrowed to $118m during the same period.
In addition to confirming the results, Scientific Games said it has signed a deal with Flutter Entertainment to provide sports betting platform technology for its FanDuel brand.
The operator has also extended its pre-existing partnerships with William Hill and GVC Holdings.
UK analysts Regulus Partners released a note this morning that said: “SG needs a relatively long period of stability to continue its operational improvements and deleverage, but wants increasing digital engagement to drive its growth businesses.
“However, increased digital engagement in the US might end up doing more harm than good to a group still far better at extracting value from traditional retail assets than digital / omni-channel opportunities, in our view,” it said.