Scientific Games fourth-quarter revenue grows, but so does loss

People try out the Space Invaders slot machine by Scientific Games during the Global Gaming Expo (G2E) at the Sands Expo Center Tuesday, Sept. 29, 2015. The slots include a skill-based bonus round.

Slot machine and lottery company Scientific Games reported its fourth quarter and full-year earnings today.

Company: Scientific Games Corp. (NASDAQ: SGMS)

Revenue: $737 million in the fourth quarter, up 30.3 percent from the fourth quarter of 2014. For the full year, the company reported $2.76 billion in total revenue, up 54.4 percent from the year before.

Scientific Games completed its $5.1 billion merger with Bally Technologies Inc. in November 2014.

Loss: $127.5 million in the fourth quarter, compared to a net loss of $47.1 million during the same time period one year earlier. For the full year, Scientific Games reported a net loss of $1.39 billion, compared to a net loss of $234.3 million in 2014.

The company said in a statement that for both the quarter and the full year, it felt the impact of “unusual pre-tax charges” that included noncash goodwill impairment charges and other costs. The pre-tax charges totaled $137 million in the fourth quarter and $1.27 billion for the full year.

Loss per share: $1.48 in the fourth quarter, compared to a loss of 55 cents per share in the fourth quarter of 2014. For the full year, Scientific Games reported a loss of $16.23 per share, compared to a loss of $2.77 per share one year earlier.

What it means: The company said its fourth quarter revenue was also up 10 percent compared to the third quarter of 2015, driven by strong gaming unit shipments and a boost in revenue from its interactive segment.

At the company’s gaming segment, which includes much of the results from Bally, revenue jumped from $301.7 in the fourth quarter of 2014 to $469 million in the fourth quarter last year. That’s because the fourth quarter of 2014 only included 40 days of Bally results, according to Scientific Games. On a more comparable basis, gaming revenue increased 7 percent year over year.

In the lottery segment at Scientific Games, meanwhile, fourth quarter revenue fell 6.1 percent to $207.7 million, a decline that included $6 million in “unfavorable foreign currency impact,” the company said. Revenue from product sales also fell $11.7 million because of lower international hardware sales and services revenue fell $3.1 billion largely due to the “cessation of a provincial contract in China” that resulted in lower international service revenue, according to the company statement.

At the same time, fourth quarter interactive revenue rose 40.2 percent to $60.3 million. That reflected a 28 percent boost in daily active users of the company’s social gaming products, as well as a 56 percent boost in real money interactive gaming.

Scientific Games CEO Gavin Isaacs said in the statement that 2015 was a “transformational year” for his company. Having completed the “heavy lifting of integration” with Bally, Scientific Games implemented $231 million of annualized cost savings, Isaacs said.

The company also said it cut its total debt by $33 million in the fourth quarter.

Gaming

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