Scientific Games, a major gaming technology company, reported its second-quarter earnings today.
Company: Scientific Games Corp. (NASDAQ: SGMS)
Revenue: $691.5 million, up 65.8 percent from the second quarter of 2014. The company’s revenue — and its loss — was notably affected by its $5.1 billion acquisition of the slot machine company Bally Technologies Inc., which closed in November.
Loss: $102.2 million, compared with a net loss of $72.4 million during the same time period last year.
Loss per share: $1.19, compared with a loss of 86 cents per share last year.
What it means: Scientific Games has grown substantially due to its merger with Bally, which followed the company’s earlier acquisition of WMS Industries Inc. in 2013.
The Bally merger produced about $150 million in annual cost savings through the end of the quarter, the bulk of which came from eliminating duplicate positions and trimming overhead costs, according to a company statement. Chief Financial Officer Scott Schweinfurth said on a conference call with analysts that the company has cut about 1,000 jobs, which has accounted for much of the savings so far. He indicated that no more jobs will be eliminated, at least not for now.
“We have completed the vast majority of global position eliminations arising out of the Bally acquisition, and we have no further planned reductions in force for this year,” he said.
Scientific Games also began to close WMS’ manufacturing facility in Illinois during the quarter and it’s “operationally closed” as of today, the company statement said.
Accordingly, cost savings tied to the Bally merger have grown to about $184 million through the end of July, prompting Scientific Games to raise its cost savings target for this year to $200 million. The company had previously expected the merger to help it implement $188 million in cost savings this year.
CEO Gavin Isaacs said efforts to speedily combine the businesses should be “favorably reflected” in his company’s financial performance for the second half of the year.
Scientific Games is composed of three distinct business segments: Gaming, interactive and lottery. The gaming segment, which includes slot machine sales, grew revenue to $449.7 million from $176.9 million last year, largely thanks to the Bally merger. In the interactive segment, which includes social gaming apps, revenue rose to $51.6 million from $32.2 million last year.
Lottery revenue, meanwhile, fell 8.5 percent to $190.2 million.
At the end of next month, Scientific Games will join other game companies at the annual Global Gaming Expo in Las Vegas. Isaacs said the company will showcase “some exciting nontraditional game content” there that was enabled by Nevada’s recent moves to allow skill in slot machines.