Gambling in the USA
Scientific Games Reports Fourth Quarter Results and Full Year 2018 Results
Operating results provide strong finish to year with path set for growth and deleveraging in 2019
Scientific Games Corporation today reported results for the fourth quarter and year ended December 31, 2018.
Fourth Quarter 2018 Financial Highlights:
- Fourth quarter revenue rose 8 percent to $885.7 million, up from $823.0 million in the year ago period, reflecting $51.7 million in revenue from NYX, along with growth in our Lottery and Social businesses.
- Net income was $206.8 million compared to a net loss of $43.1 million in the prior year period, driven by improvement in operating income and due to a $183.1 million reversal of 55% of the previously established reserve related to the Shuffle Tech legal matter.
- Consolidated Adjusted EBITDA (“Consolidated AEBITDA”), a non-GAAP financial measure defined below, increased 6 percent to $343.5 million from $324.5 million in the prior year period, primarily driven by higher revenue and continued operational efficiencies. Consolidated AEBITDA margin, a non-GAAP financial measure defined below, was 38.8 percent, compared to 39.4 percent in the prior year period reflective of a shift in revenue mix primarily driven by NYX.
- Net cash (used in) provided by operating activities decreased to ($9.8) million from $118.1 million in the year ago period, driven primarily by making a $151.5 million payment to resolve the Shuffle Tech legal matter.
- Social Gaming IPO Filing: On December 17, 2018, our Social gaming business confidentially submitted a draft registration statement on Form S-1 to the Securities and Exchange Commission (“SEC”) relating to a possible initial public offering of a minority interest in our Social business (the “contemplated IPO”). The Company anticipates that the proceeds from the contemplated IPO would primarily be used to repay debt. On February 14, 2019, our Social gaming business confidentially submitted Amendment No. 1 to its draft registration statement on Form S-1.
Full Year 2018 Financial Highlights:
- Revenue increased 9 percent, or $279.6 million, year over year to $3,363.2 million.
- Net loss was $352.4 million compared to a net loss of $242.3 million a year ago, driven by $253.4 million in restructuring and other charges primarily consisting of the $151.5 million payment to resolve the Shuffle Tech legal matter and $27.5 million for contingent consideration associated with the higher-than-expected results from the 2017 acquisition of Spicerack.
- Consolidated AEBITDA, a non-GAAP financial measure as defined below, increased 9 percent to $1,329.7 million compared to $1,224.9 million in the prior year.
- Net cash provided by operating activities was $346.1 million compared to $507.1 million in the prior year, reflective of the $151.5 million payment to resolve the Shuffle Tech legal matter and a $52.4 million unfavorable change in accrued interest, due to the timing of our interest payments, which were modified in connection with our refinancing transactions.
Barry Cottle, CEO and President of Scientific Games, said, “This is a very exciting time for Scientific Games. We’re focused on developing the best games and the most innovative platforms to deliver outstanding gaming experiences wherever and whenever players choose to play. We are building momentum and continuing to grow our business while at the same time operating more efficiently. The entire organization is enthused about 2019 and focused on helping our customers win, which will drive our free cash flow and create meaningful value for our shareholders.”
Michael Quartieri, Chief Financial Officer of Scientific Games, added, “We continue to grow our top line driven by the strength of our products. We believe there are opportunities for further growth in 2019, both on a top line and bottom line basis as we are firmly committed to maximize free cash flow and delever our balance sheet.”
SUMMARY CONSOLIDATED RESULTS
|
Three Months Ended December 31, |
||||||||
|
($ in millions) |
2018 |
2017 |
||||||
|
Revenue |
$ |
885.7 |
$ |
823.0 |
||||
|
Net income (loss) |
206.8 |
(43.1) |
||||||
|
Net cash (used in) provided by operating activities |
(9.8) |
(1) |
118.1 |
|||||
|
Capital expenditures |
97.7 |
79.6 |
||||||
|
Non-GAAP Financial Measures (2) |
||||||||
|
Consolidated AEBITDAÂ |
$ |
343.5 |
$ |
324.5 |
||||
|
Consolidated AEBITDA margin |
38.8% |
39.4% |
||||||
|
Free cash flow |
$ |
(229.2) |
(3) |
$ |
9.7 |
|||
|
Balance Sheet Measures |
As of Dec 31, 2018 |
As of Dec 31, 2017 |
||||||
|
Cash and cash equivalents |
$ |
168.2 |
$ |
788.8 |
||||
|
Principal face value of debt outstanding (4) |
9,218.8 |
8,869.4 |
||||||
|
Available liquidity |
438.7 |
1,009.4 |
||||||
|
(1) Includes a $151.5 million payment to resolve the Shuffle Tech legal matter. |
||||||||
|
(2) The financial measures “Consolidated AEBITDA”, “Consolidated AEBITDA margin”, and “free cash flow” are non-GAAP financial measures defined below under “Non-GAAP Financial Measures” and reconciled to the most directly comparable GAAP measures in the accompanying supplemental tables at the end of this release. |
||||||||
|
(3) Includes a $151.5 million payment to resolve the Shuffle Tech legal matter, $104.2 million for the final LNS concession funding contribution, and an approximate $49.5 million change in accrued interest. |
||||||||
|
(4) Principal face value of outstanding 2026 Secured Euro Notes and 2026 Unsecured Euro Notes are presented at the constant foreign exchange rate at issuance of these notes. |
||||||||
GAMING HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2018
|
Three Months Ended December 31, |
Increase/(Decrease) |
|||||||||||||
|
($ in millions) |
2018 |
2017 |
Amount |
% |
||||||||||
|
Revenue |
||||||||||||||
|
  Gaming operations(1) |
$ |
151.4 |
$ |
169.2 |
$ |
(17.8) |
(11) |
% |
||||||
|
  Gaming machine sales |
166.7 |
189.8 |
(23.1) |
(12) |
% |
|||||||||
|
  Gaming systems |
91.6 |
83.5 |
8.1 |
10 |
% |
|||||||||
|
  Table products |
60.1 |
50.0 |
10.1 |
20 |
% |
|||||||||
|
$ |
469.8 |
$ |
492.5 |
$ |
(22.7) |
(5) |
% |
|||||||
|
AEBITDA |
$ |
233.2 |
$ |
237.8 |
$ |
(4.6) |
(2) |
% |
||||||
|
AEBITDA margin |
49.6% |
48.3% |
||||||||||||
|
(1)Â Gaming operations includes $6.8 million in WAP jackpots as a reduction to revenue in 2018, compared to the 2017 presentation in which $5.4 million of WAP jackpots was classified as cost of services. This change in classification has no impact on AEBITDA. |
||||||||||||||
- Total gaming revenue decreased $22.7 million, including an unfavorable $6.8 million impact on Gaming operations from revenue recognition accounting effective in 2018. AEBITDA decreased 2 percent, or $4.6 million, to $233.2 million, but reflects a 130 basis point improvement in the AEBITDA margin to 49.6 percent driven by product mix shift in the comparable quarter to higher margin table products and gaming systems.
- Gaming operations revenue declined $17.8 million in the fourth quarter of 2018, including the negative impact from the new revenue recognition accounting. Our WAP, premium and daily-fee participation ending installed base was impacted on a year over year basis by the long-term strategic relationship we entered into in Oklahoma in the third quarter. On a quarterly sequential basis, we experienced a 111 unit increase in the installed base and a $1.65 increase in average revenue per day. Our installed base on a quarterly sequential basis of other leased and participation games increased by 121 units with average daily revenue down $0.34, which reflects additional lower yielding units in Greece.
- Gaming machine sales revenue decreased $23.1 million year over year. The prior year included 884 units for new opening and expansion units and 700 VLT units to Canada versus only 286 units in this year’s quarter for new openings and expansions. The average sales price was $16,113, in the fourth quarter reflecting a greater mix of lower priced units.
- Gaming systems revenue increased $8.1 million to $91.6 million, primarily due to ongoing systems installations in Canada, coupled with increased hardware sales, primarily the iVIEWÂŽ4.
- Table products revenue increased $10.1 million to $60.1 million, reflecting strong global demand for shufflers and table products.
LOTTERY HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2018
|
Three Months Ended |
Increase/(Decrease) |
|||||||||||||
|
($ in millions) |
2018 |
2017 |
Amount |
% |
||||||||||
|
Revenue |
||||||||||||||
|
  Instant products |
$ |
150.2 |
$ |
151.1 |
$ |
(0.9) |
(1) |
% |
||||||
|
  Lottery systems  (1) |
80.5 |
66.1 |
14.4 |
22 |
% |
|||||||||
|
$ |
230.7 |
$ |
217.2 |
$ |
13.5 |
6 |
% |
|||||||
|
AEBITDAÂ |
$ |
105.0 |
$ |
94.6 |
$ |
10.4 |
11 |
% |
||||||
|
AEBITDA margin |
45.5% |
43.6% |
||||||||||||
|
(1)Â Lottery systems revenue includes $20.4 million in product sales revenue, compared to $21.5 million in 2017. |
||||||||||||||
- Total lottery revenue increased $13.5 million, or 6 percent, to $230.7 million. AEBITDA increased 11 percent to $105.0 million, compared to $94.6 million in the prior year, with AEBITDA margin improving to 45.5 percent, primarily reflecting the increased margins on domestic lottery systems revenue.
- Instant products revenue of $150.2 million was essentially flat from the prior year.
- Lottery systems revenue increased $14.4 million, or 22 percent, to $80.5 million, driven by a combination of organic growth, higher multi-state jackpot activity in the quarter, a new contract in Kansas and the addition of keno in Pennsylvania.
SOCIAL HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2018
|
($ in millions) |
Three Months Ended |
Increase/(Decrease) |
|||||||||||||
|
Revenue |
2018 |
2017 |
Amount |
% |
|||||||||||
|
  Mobile |
$ |
91.2 |
$ |
72.0 |
$ |
19.2 |
27 |
% |
|||||||
|
  Web and other |
22.5 |
23.5 |
(1.0) |
(4) |
% |
||||||||||
|
$ |
113.7 |
$ |
95.5 |
$ |
18.2 |
19 |
% |
||||||||
|
AEBITDA |
$ |
28.3 |
$ |
21.8 |
$ |
6.5 |
30 |
% |
|||||||
|
AEBITDA margin |
24.9% |
22.8% |
|||||||||||||
- Social revenue grew 19 percent to $113.7 million, reflecting the ongoing popularity of Bingo ShowdownTM, the success of the recently launched MONOPOLY themed casino app and continued growth in Jackpot PartyÂŽ Social Casino from new game features on our mobile platform.
- AEBITDAÂ rose 30 percent to $28.3 million, and AEBITDA margin increased to 24.9 percent, primarily reflecting our continued scalable growth in revenue.
DIGITAL HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2018
|
Three Months Ended |
Increase/(Decrease) |
||||||||||||||
|
($ in millions) |
2018 |
2017 |
Amount |
% |
|||||||||||
|
Revenue(1) |
|||||||||||||||
|
  Sports and platform |
$ |
33.3 |
$ |
– |
$ |
33.3 |
 nm |
||||||||
|
  Gaming and other |
38.2 |
17.8 |
20.4 |
115 |
% |
||||||||||
|
$ |
71.5 |
$ |
17.8 |
$ |
53.7 |
302 |
% |
||||||||
|
AEBITDA |
$ |
11.8 |
$ |
5.1 |
$ |
6.7 |
131 |
% |
|||||||
|
AEBITDA margin |
16.5% |
28.7% |
|||||||||||||
|
nm – not meaningful |
|||||||||||||||
|
(1) Includes the results of NYX since the completion of its acquisition on January 5, 2018. |
|||||||||||||||
- Total digital revenue increased to $71.5 million, due in part to $51.7 million of revenue from NYX.
- AEBITDA was $11.8 million and AEBITDA margin was 16.5 percent, reflecting the addition of NYX and the investment we are making in our domestic and international sports and platform business.
LIQUIDITY
|
Three Months Ended |
Increase/ |
|||||||||||||
|
($ in millions) |
2018 |
2017 |
(Decrease) |
|||||||||||
|
Net income (loss)Â |
$ |
206.8 |
$ |
(43.1) |
$ |
249.9 |
||||||||
|
Non-cash adjustments included in net income (loss) |
136.0 |
169.7 |
(33.7) |
|||||||||||
|
Non-cash interest |
6.6 |
3.8 |
2.8 |
|||||||||||
|
Changes in deferred income taxes and other |
(33.5) |
(9.6) |
(23.9) |
|||||||||||
|
Distributed earnings from equity investments |
8.5 |
12.9 |
(4.4) |
|||||||||||
|
Change in legal reserves (1) |
(334.6) |
– |
(334.6) |
|||||||||||
|
Changes in working capital accounts |
0.4 |
(15.6) |
16.0 |
|||||||||||
|
Net cash (used in) provided by operating activities (2) |
$ |
(9.8) |
$ |
118.1 |
$ |
(127.9) |
||||||||
|
(1) Includes reversal of a portion of the previously established legal reserve. |
||||||||||||||
|
(2) Includes a $151.5 million settlement payment to resolve the Shuffle Tech legal matter. |
||||||||||||||
- Net cash (used in) provided by operating activities decreased to ($9.8) million from $118.1 million in the year ago period, principally related to the $151.5 million payment to resolve the Shuffle Tech legal matter and a $49.5 million impact from the timing of our interest payments, which were modified in connection with our refinancing transactions.
- Capital expenditures totaled $97.7 million in the fourth quarter of 2018, compared to $79.6 million in the prior-year period. The increase from the prior year was related to several long-term and highly accretive projects, including ongoing platform development in Digital, the acceleration of our installed base of participation games and WAP games, including the successful rollout of our James Bond franchise, and our 7-year contract extension with Ladbrokes Coral in the U.K.
- For 2019, we expect capital expenditures to be below 2018 and within a range of $345–$375 million, based on existing contractual obligations and planned strategic investments that we believe will be highly accretive to our future cash flow generation.
About Scientific Games:
Scientific Games Corporation (NASDAQ: SGMS) is a leading developer of technology-based products and services and associated content for the worldwide gaming, lottery, social and digital gaming industries. Our portfolio of revenue-generating activities primarily includes supplying gaming machines and game content, casino-management systems and table game products and services to licensed gaming entities; providing instant and draw-based lottery products, lottery systems and lottery content and services to lottery operators; providing social casino solutions to retail consumers and regulated gaming entities, as applicable; and providing a comprehensive suite of digital RMG and sports wagering solutions, distribution platforms, content, products and services. We also gain access to technologies and pursue global expansion through strategic acquisitions and equity investments.
Source: Scientific Games Corporation
Gambling in the USA
Snoqualmie Casino Announces Exciting Rebranding to Snoqualmie Casino & Hotel Ahead of Major Expansion
Snoqualmie Casino has announced its rebranding to Snoqualmie Casino & Hotel, reflecting an exciting new chapter in the venueâs history as it embarks on a much-anticipated expansion. Set for completion in mid-2025, this project promises to elevate the guest experience, making Snoqualmie Casino & Hotel a premier destination for entertainment, relaxation, and culinary excellence.
The cornerstone of the expansion is the construction of a luxurious hotel, which will offer guests unparalleled comfort and stunning views of the Snoqualmie Valley and Mount Si. With a focus on sustainability and modern design, the hotel will feature upscale accommodations, a full-service destination spa, and amenities that cater to both leisure and business travelers. Plus, there are architectural details inspired by Snoqualmie culture from a modern slant roof hotel design representing the original longhouses of the Snoqualmie Tribeâs ancestors to carefully chosen artwork placed throughout for guests to enjoy.
Snoqualmie Casino & Hotelâs destination spa will offer an immersive escape that blends relaxation with the healing power of nature. Nestled in the serene landscapes of the Pacific Northwest, the spa provides a range of rejuvenating treatments. Experience the perfect blend of wellness and nature where luxury, tradition and innovation come together for an incredibly transformative experience.
âIt is my honor and privilege to announce that Snoqualmie Casino has now become Snoqualmie Casino and Hotel. Over the past three years, the Snoqualmie Tribe and Casino have been diligently working to bring a one-of-a-kind, world-class hotel to the Snoqualmie Valley,â said Interim CEO Mary Lou Patterson.
In addition, Snoqualmie Casino & Hotel will expand its gaming floor, introducing an array of new options to enhance the entertainment experience for guests. This expansion will include the latest slots, electronic and traditional table games, as well as a dedicated high-limit gaming area for discerning players seeking a more exclusive gaming experience.
One of the highlights of the expansion is the development of a state-of-the-art 2000-seat entertainment and convention center. This versatile venue will host a variety of events, from concerts to conferences, positioning Snoqualmie Casino & Hotel as a key player in the regionâs entertainment landscape. With cutting-edge technology and a focus on guest comfort, the center will attract top-tier talent and events, making it a must-visit destination.
In addition to the award-winning Vista Prime Steaks & Seafood, 12 Moons, and Falls Buffet, a new sports bar and grill will be introduced to provide patrons with the ultimate game day experience. Other new dining options, set to open later, will showcase local ingredients and flavors, ensuring a memorable culinary experience for guests.
Snoqualmie Casino & Hotel recently launched a brand-new valet garage. The dual level indoor and outdoor structure, with 600 additional spaces, doubles the previous capacity for valet parking creating easier access into the casino. This is the first piece of new development at Snoqualmie Casino & Hotel that has opened for immediate use. The entire project anticipates creating numerous job opportunities for local residents, contributing to the economic growth of the Snoqualmie area.
Wind Creek Chicago Southland has announced that it will open to the public on November 11. The state-of-the-art casino represents the first step toward delivering a full-scale integrated resort experience, scheduled for completion in spring 2025.
Spanning an impressive 70,000 square feet, Wind Creek Chicago Southland features over 1400 slot machines, 56 table games, high-limit slot areas, a high-limit table games salon, a poker room, a dynamic sportsbook, and 4 âHidden Gemsâ throughout the casino floorâoffering visitors a unique and customizable private gaming and event microenvironment. Designed with an emphasis on curated entertainment spaces, this new offering aims to redefine leisure and hospitality for the entire region.
âThe opening of Wind Creek Chicago Southland underscores our dedication to making a positive economic impact in the communities we serve. Weâre committed to create opportunities that support the region, offer competitive benefits for Team Members, and further strengthen the vibrant Southland community,â said Jay Dorris, President and CEO of Wind Creek Hospitality.
Wind Creek Chicago Southland is expected to create more than 1000 full-time jobs in fields ranging from hospitality to technology. Roles will include security, gaming attendants, food service, IT technicians, and environmental services, reinforcing Wind Creekâs commitment to strengthening the local economy. Additionally, Homewood and East Hazel Crest will benefit from gambling revenue, along with 42 other south suburban communitiesâfunding essential local services within the immediate and surrounding communities.
âWind Creek Chicago Southland is more than a casinoâitâs a community-driven destination. The Tribe and Wind Creek will continue to prioritize the Villages of Homewood and East Hazel Crest as we are committed to uplifting our neighbors,â said Stephanie Bryan, Tribal Chair and CEO, Poarch Creek Indians.
On Nov. 6th and Nov. 7th, the Illinois Gaming Board visited the casino for two mandatory test days, which also included an extended invitation to family friends and local dignitaries. Wind Creek Hospitality received notice of approval on Nov. 8th to operate on Monday, Nov. 11th at approximately 11:00 a.m.
The Nov. 11th opening marks only the beginning of what will become a flagship destination. High-limit gaming rooms, a hotel, spa, poker room, a sportsbook and more will be available for Guests seeking diverse experiences. Wind Creekâs partnership with Fabio Viviani Hospitality Group will also introduce an exceptional range of signature restaurants and food & beverage offerings to the highly anticipated property.
âWhether youâre looking for elevated dining, quick-service eateries, or something in betweenâyou wonât be disappointed as weâre creating something truly unforgettable,â said Fabio Viviani.
âFrom the start, our mission has been to create jobs, spur economic growth, and offer the ultimate entertainment escape. Weâre thrilled to welcome our Guests on Nov. 11th to experience the excitement firsthand,â said Roger Kuehn, EVP and General Manager of Wind Creek Chicago Southland.
Gambling in the USA
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