Author: Joe Kizlauskas
Last Updated: 11th May 2021
President and CEO Barry Cottle of Scientific Games Corporation said he’s ‘extremely pleased’ with the company’s growth in the first quarter of 2021, as it announced sales increases in its lottery, SciPlay, and digital businesses.
Scientific Games recorded $729 million in combined sales for the three months ending March 31, up 1 percent from $725 million in the same timeframe the previous year.
Barry Cottle, President and CEO, stated: “I am extremely pleased with our progress this quarter. Despite the continued challenges, our teams’ dedication and focus enabled us to build on our gains from last year. We delivered another strong quarter, enabling us to return to growth on both the top and bottom lines.”
The company’s lottery, SciPlay, and digital businesses all saw double-digit sales growth as its portfolio and content drove customer engagement.
Its lottery income was $248 million, up 17 percent from $212 million in the first quarter of 2020.
As compared to the $78 million posted in the same quarter last year, the vertical’s AEBITDA increased by 53 percent to $119 million. Scientific Games claims that its development was fuelled by instant game sales in the United States, big Powerball and Mega Millions jackpots, and market strength in Europe.
Enhanced Partnership programme
Due to the success of the Scientific Games Enhanced Partnership programme in some jurisdictions, the company’s lottery instant merchandise revenue was $26 million higher in Q1 2020 than in Q1 2020.
Due to record performance in igaming, led by original content, as well as its strong launch in Michigan and strength in Europe, Scientific Games’ digital revenue increased by 12 percent to $86 million (Q1 2020: $77 million) and the vertical’s AEBITDA increased by 26 percent.
SciPlay’s revenue increased by 28 percent to $151 million (Q1 2020: $118 million), and the channel’s AEBITDA increased by 32 percent to $46 million (Q1 2020: $35 million), thanks to strong growth in social casino games that outpaced the industry and record player conversion.
Restrictions and closures
Casino restrictions and closures continued to have an effect on the company’s gaming income, with revenues falling from $318 million in Q1 2020 to $244 million as a result of global COVID-19 restrictions.
The vertical’s AEBITDA increased by 13 percent to $108 million (Q1 2020: $96 million). A more favourable product mix, cost behaviour, as well as some credit receivable allowance and inventory charges that impacted the prior year, all contributed to this increase.
As casino capacity constraints remain, the company’s gaming operations revenue fell 5 percent from the previous year. Revenue from gaming operations in North America increased sequentially, and the company expects new cabinet releases to help demand as restrictions loosen.
Strength of content and franchise
According to Cottle: “Our new gaming strategy and product roadmap continues to have success and our lottery, SciPlay, and digital businesses delivered strong growth in the quarter. Our results demonstrate the strength of our content and franchises, engaging players on any platform they want to play.
“The executive team and our Board are continuing to work together and are making great progress as we look to optimise our portfolio, deleverage our balance sheet and capitalise on key areas of growth in order to unlock value for our shareholders.”
Scientific Games lost $9 million in the first quarter of 2021, compared to $155 million the year before, owing to receivable credit allowances, inventory, and goodwill impairment costs, which totaled $91 million the year before.
Its consolidated AEBITDA increased by 35 percent year over year to $270 million, from $200 million, thanks to double-digit AEBITDA growth across all segments.
Meanwhile, the company’s net cash generated by operating activities increased to $123 million in 2019 from $120 million in 2020, owing to better operating results partly offset by an unfavourable improvement in working capital accounts and the timing of cash interest payments.
Scientific Games’ free cash flow rose to $80 million in Q1 2021, up $25 million from the previous year. At quarter’s end, available liquidity, including SciPlay, totalled $1.3 billion. The business made a $150 million voluntary repayment on SGI’s revolving credit facility after quarter-end.
Michael Eklund, Executive Vice President and Chief Financial Officer, added: “The team has really stepped up to make meaningful progress on our key initiatives. We remain laser focused on delivering revenue and AEBITDA growth, and strengthening our balance sheet. Our continued focus on operational efficiency is enhancing our cash flows. We are executing at a high level and I could not be more excited about the path forward for Scientific Games.”