Company Leading in Lottery and Digital with Big Contract Wins in the Largest Markets in the U.S. and Around the World and New Premier Partnerships with the Industry Leaders in Sports Betting and iGaming
LAS VEGAS, Feb. 18, 2020 /PRNewswire/ — Scientific Games Corporation (NASDAQ: SGMS) (“Scientific Games,” “SGC” or the “Company”) today reported results for the fourth quarter and year ended December 31, 2019.
Fourth quarter 2019 Financial Highlights:
- Fourth quarter revenue was $863 million compared to $886 million in the prior year period. This was largely driven by lower Gaming revenue primarily due to fewer systems launches in Canada compared to last year and lower machine unit sales.
- Net loss was $37 million compared to net income of $207 million in the prior year period. This quarter included a $40 million loss on a debt financing transaction related to the notes offering and a $12 million loss on remeasurement of Euro denominated debt. The prior year included a $183 million reversal of a reserve related to resolving the Shuffle Tech legal matter and a $14 million gain on remeasurement of Euro denominated debt.
- Consolidated Adjusted EBITDA (“Consolidated AEBITDA”), a non-GAAP financial measure defined below, was $328 million compared to $343 million in the prior year period driven by lower Lottery and Gaming AEBITDA, which was partially offset by Digital AEBITDA of $21 million, representing a 75% increase.
- Net cash provided by operating activities increased by $153 million from the prior year period to $143 million. The prior year included a $152 million payment to resolve the Shuffle Tech legal matter.
- Free cash flow, a non-GAAP financial measure, increased $286 million to $56 million versus the prior year period, which included a $104 million payment for our instant ticket concession in Italy and resolution of the Shuffle Tech legal matter.
- The company remains committed to deleveraging its balance sheet targeting to be at 6.0x or below by the end of 2020, 5.5x in 2021 and continuing to reduce beyond those levels into the future.
Full Year 2019 Financial Highlights:
- Revenue increased $37 million to $3.4 billion compared to the prior year.
- Net loss was $118 million, an improvement of $234 million. The prior year included a $152 million charge related to resolving the Shuffle Tech legal matter.
- Consolidated AEBITDA, a non-GAAP financial measure defined below, increased to $1,334 million from $1,330 million in the prior year, driven by growth in our Lottery, SciPlay and Digital segments largely offset by Gaming.
- Net cash provided by operating activities increased $200 million to $546 million compared to the prior year, which included resolution of the Shuffle Tech legal matter.
- Free cash flow, a non-GAAP financial measure, increased by $483 million from the year ago period to $243 million. Net debt, a non-GAAP financial measure, was $8.6 billion ($8.9 billion in face value of debt outstanding less $313 million of cash and cash equivalents) at year end. Net debt leverage ratio, a non-GAAP financial measure, decreased to 6.4x on a $464 million decrease in net debt.
- In March and November 2019, we completed refinancings that lowered our cash interest costs and extended our debt maturities.
- In May 2019, SciPlay completed an IPO for an 18.0% minority interest in our Social gaming business, after giving effect to the underwriters’ partial exercise of their over-allotment option on June 4, 2019. We received $312 million in net proceeds from the offering (net of $30 million used by SciPlay to pay the IPO fees and balance retained by SciPlay for general corporate purposes) which has enabled us to make substantial payments to reduce our debt.
- On November 20, 2019, we entered into an amendment to refinance the revolving credit facility under our credit agreement and provide for an aggregate of $650 million of revolving credit commitments through 2024.
Barry Cottle, CEO and President of Scientific Games, said, “This past year, we made great strides in developing the best games, attracting industry leading talent, and improving our capital structure. I’m confident we have the right team in place to reach our goal to be the market leader across land-based gaming, lottery, sports and digital gaming driven by leading content and the platforms that enable play anywhere and anytime. Our recent contract and deal wins across our businesses, and the globe, highlight that we are on the right path.”
Michael Quartieri, Chief
SUMMARY CONSOLIDATED RESULTS
|
($ in millions)
|
Three Months Ended December 31,
|
||||||
|
2019
|
2018
|
||||||
|
Revenue
|
$
|
863
|
$
|
886
|
|||
|
Net (loss) income
|
(37)
|
207
|
|||||
|
Net cash provided by (used in) operating activities(1)
|
143
|
(10)
|
|||||
|
Capital expenditures
|
78
|
98
|
|||||
|
Non-GAAP Financial Measures(2)
|
|||||||
|
Consolidated AEBITDA
|
$
|
328
|
$
|
343
|
|||
|
Consolidated AEBITDA margin
|
38
|
%
|
39
|
%
|
|||
|
Free cash flow
|
$
|
56
|
$
|
(230)
|
|||
|
Balance Sheet Measures
|
As of December 31, 2019
|
As of December 31, 2018
|
|||||
|
Cash and cash equivalents
|
$
|
313
|
$
|
168
|
|||
|
Principal face value of debt outstanding(3)
|
8,900
|
9,219
|
|||||
|
Available liquidity
|
906
|
439
|
|||||
|
(1) The three months ended December 31, 2019 includes a $23 million unfavorable change in accrued interest due to refinancing transactions and approximately $3 million of payments related to contingent acquisition consideration. The three months ended December 31, 2018 includes a $50 million unfavorable change in accrued interest due to refinancing transactions and a $152 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) Principal face value of outstanding 2026 Secured Euro Notes and 2026 Unsecured Euro Notes are translated at the constant foreign exchange rate at issuance of these notes. Euro to USD exchange rates at issuance and as of December 31, 2019 were 1.24 and 1.12, respectively, resulting in a $68 million adjustment increasing the principal face value of debt outstanding presented above. Additionally, principal face value excludes $10 million in proceeds received from transactions completed in 2019 which are presented as debt.
|
BUSINESS SEGMENT HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2019
|
($ in millions)
|
Revenue
|
AEBITDA
|
AEBITDA Margin
|
||||||||||||||||||||||||||
|
2019
|
2018
|
$
|
%
|
2019
|
2018
|
$
|
%
|
2019
|
2018
|
PP Change(2)
|
|||||||||||||||||||
|
Gaming
|
$
|
445
|
$
|
470
|
(25)
|
(5)
|
%
|
$
|
209
|
$
|
233
|
(24)
|
(10)
|
%
|
47
|
%
|
50
|
%
|
(3)
|
||||||||||
|
Lottery
|
233
|
231
|
2
|
1
|
%
|
98
|
105
|
(7)
|
(7)
|
%
|
42
|
%
|
45
|
%
|
(3)
|
||||||||||||||
|
SciPlay (1)
|
113
|
114
|
(1)
|
(1)
|
%
|
32
|
24
|
8
|
33
|
%
|
28
|
%
|
21
|
%
|
7
|
||||||||||||||
|
Digital
|
72
|
71
|
1
|
1
|
%
|
21
|
12
|
9
|
75
|
%
|
29
|
%
|
17
|
%
|
12
|
||||||||||||||
|
PP – percentage points.
|
|
(1) As a result of the initial public offering of a minority interest in SciPlay and starting with the first quarter of 2019, we changed the calculation of SciPlay AEBITDA, which now reflects intercompany charges for corporate services and certain royalties paid for by SciPlay to other segments or to Corporate. SciPlay information for the prior comparable period has been recast to reflect these changes.
|
|
(2) As calculations are made using whole dollar numbers, actual results may vary compared to calculations pre
|