Weak Q1-2013 Results For Scientific Games

Wednesday May 8,2013 : SCIENTIFIC GAMES POSTS WEAK FIRST QUARTER 2013 RESULTS
 
Online activity increases as group moves forward on $1.5 billion WMS acquisition
 
Scientific Games Corporation has posted its results for the first quarter ended March 31, 2013, highlighting:
 
* Revenues down at $219.6 million (Q1-2012 $231.2 million)
 
* EBITDA down at $78.7 million (86.7 million in Q1 last year)
 
* Net income loss of $13.2 million (Q1-2012: $1.8 million profit)
 
* Capital expenditure up at $36.3 million (Q1-2012: $21.8 million)
 
* Gaming revenues down at $35.1 million (Q1-2012: $41.2 million.
 
* At March 31, 2013, cash and cash equivalents of $90 million and availability under revolving credit facility of $205.7 million
 
* Total debt of $1,467.7 million as of March 31, 2013 compared to $1,468.2 million at December 31, 2012.
 
* Received $2.2 million in cash dividends from equity investments in first quarter of 2013.
 
Much of the report is focused on the company's terrestrial lottery activities, but it highlights its recent selection by the Delaware Lottery as primary vendor with 888 Holdings to operate internet gaming systems and services for an initial period of five years; Williams Interactive, a subsidiary of WMS Industries Inc. will provide game content.
 
"We anticipate that momentum will accelerate as the year progresses based on the planned launch and ramp up of incremental revenue opportunities later in 2013," chairman and CEO A. Lorne Weil commented. "In addition, we are excited about the opportunities presented by our pending acquisition of WMS, which is proceeding as expected and which we believe will be transformational for our company."
 
Jeffrey S. Lipkin, chief financial officer for the company said: "Our quarter's results reflected challenging comparisons to the prior-year period in our lottery and gaming businesses and also included incremental costs related to the pending acquisition of WMS. Our first quarter is typically a seasonally slower quarter.
 
The company is clearly pleased with its Delaware selection, reporting:
 
"Scientific Games had been selected with its partners as the primary vendor team to operate internet gaming systems and services for the Delaware State Lottery. Delaware is the first U.S. state to implement comprehensive intrastate iGaming including poker, slots and bingo.
 
"For this bid, we teamed up with 888 and Williams Interactive, a subsidiary of WMS, to provide a full turnkey solution for the gaming platform, content and operational services. This joint effort combines 888's decade-long experience at the forefront of the online gaming industry with Scientific Games' proven ability to provide added value, turnkey solutions to government-sponsored and commercial gaming operators, and Williams Interactive's premium iGaming products and services.
 
"We believe this joint effort with WMS is a prime example of the type of opportunities that can be achieved by Scientific Games' acquisition of WMS.
 
"In connection with the pending WMS acquisition, we incurred regulatory costs, professional fees and other expenses totaling approximately $3.8 million in the first quarter of 2013, with additional transaction-related fees and expenses anticipated to be incurred throughout the balance of 2013."
 
Scientific Games has obtained commitments for a term loan facility of $2.3 billion and a revolving credit facility of $300 million to finance the acquisition and continues to expect the transaction to close by the end of 2013.