Scientific Games Reports Loss in 1Q - Analyst Blog
Scientific Games Corp. (SGMS)
posted loss of 15 cents in contrast to the Zacks Consensus Estimate
of a profit of 2 cents per share in first quarter of 2013.
Scientific Games had reported earnings of 4 cents in the year-ago
quarter.
Revenues
Revenues decreased 5.0% year over year and 11.9% sequentially to
$219.6 million, which missed the Zacks Consensus Estimate of $228.0
million. The top-line decline was primarily attributed to lower
sales of lottery systems and terminals and lower-than-expected
instant ticket revenues.
Instant ticket revenues remained flat on a year-over-year basis but
declined 2.7% sequentially to $122.8 million. Sales of lottery
systems and terminals plunged 28.4% from the year-ago quarter and
53.4% from the previous quarter to $15.0 million. Service revenues
decreased 5.9% year over year and 9.9% quarter over quarter to
$81.8 million.
Scientific Games' U.S. instant ticket retail sales decreased 2.0%
year over year in the quarter. U.S. lottery systems customer retail
sales plunged 14.9% year over year in the first quarter.
Instant ticket retail sales in Italy (in terms of €) decreased 2.8%
from the year-ago quarter, while China instant ticket retail sales
(in terms of RMB) declined 12.5% during the same period.
Segment-wise, Printed Products Group revenues inched up 0.6% year
over year but declined 2.6% from the previous quarter to $126.3
million. The results were negatively impacted by lower US and
international revenues from price-per-thousand customers and a
decrease in sales to US customers who purchase tickets on a
percentage of sales basis.
Lottery Systems Group revenues decreased 9.8% year over year and
27.9% quarter over quarter to $58.2 million, reflecting lower sales
to international customers. Service revenues decreased $3.0 million
year over year in the reported quarter.
Gaming revenues declined 14.9% year over year and 9.8% from the
previous quarter to $35.1 million. The year-over-year decline was
primarily due to lower service revenues and lower sales from
Barcrest’s gaming terminals.
Margins
Attributable earnings before interest, taxes, depreciation and
amortization (EBITDA) margin jumped 220 basis points (“bps”) from
the year-ago quarter to 35.8%. Sequentially, EBITDA margin declined
50 bps in the previous quarter.
Depreciation & amortization (D&A) expense increased 15.1%
year over year but declined 49.2% sequentially to $32.8 million in
the quarter. Selling, general & administrative expense
(SG&A) increased 11.8% year over year to $50.6 million.
SG&A decreased 1.0% on a sequential basis.
Higher expenses dragged down profit in the quarter. Operating
margin was 5.1% compared with 10.8% in the year-ago quarter.
Scientific Games reported loss of 12.3 million compared with net
income of $3.9 million in the year-ago quarter.
Balance Sheet & Cash Flow
Scientific Games exited the quarter with $90.0 million in cash and
cash equivalents compared with $109.0 million in the prior quarter.
Total debt remained flat at $1.47 billion at the end of the first
quarter.
Recommendation
We believe that the company’s diversified product offerings,
international development activities, recurring revenue business
model, strong growth of the Internet-based business and the pending
WMS Industries (WMS) acquisition
will drive the stock over the long term.
Further, the domestic lottery industry is undergoing a transition,
which involves increasing involvement of private vendors in state
lottery management, higher prize payouts and introduction of tiered
pricing for national jackpot games to add impetus to the sagging
U.S. lottery industry. We believe that Scientific Games is well
positioned to benefit from these transitions going forward.
However, we believe that these measures will take some time before
they start contributing to overall results. Further, stiff
competition from the likes of International Game Technology
(IGT) and Bally Technologies Inc.
(BYI) is expected to hurt profitability
going forward.
Moreover, increasing investments for product development is
expected to hurt profitability in the near term. Additionally a
significant increase in regulatory, professional fees and other
expenses related to the WMS acquisition will hurt margins in the
near term.
Currently, Scientific Games has a Zacks Rank #4 (Sell).
BALLY TECH INC (BYI): Free Stock Analysis Report
INTL GAME TECH (IGT): Free Stock Analysis Report
SCIENTIFIC GAME (SGMS): Free Stock Analysis Report
WMS INDS INC (WMS): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
International Game Techn... (NYSE:IGT)
過去 株価チャート
から 6 2024 まで 7 2024
International Game Techn... (NYSE:IGT)
過去 株価チャート
から 7 2023 まで 7 2024