WMS acquisition costs sees SciGames revenues decline
Scientific Games' total Q1 revenues fall $11.6m year-on-year, with gaming revenues decreasing 14.85%
Scientific Games’ revenues for the first quarter of 2013 dropped 5% year-on-year with the company’s CFO Jeffrey Lipkin citing costs associated with the forthcoming WMS acquisition as a key factor.
In an analyst call discussing the results, Lipkin revealed the games, technology and service provider had to pay approximately US$4m in fees and expenses related to the WMS acquisition, with the $1.5bn deal announced in January.
SciGames’ total revenue fell to $219.6m for the three months ended 31 March, down from $231.2m for the same period in 2012. Gaming revenue also decreased 14.85% year-on-year from US$41.23m in the corresponding period last year to $35.11m, with the company attributing this decrease to difficult economic conditions harming player activity.
Attributable EBITDA was down 9.23% compared to Q1 2013, decreasing from $86.7m to $78.7m and SciGames also posted a $13.2m net loss in the quarter, compared to a $1.8m profit in Q1 last year.
Revenue from lottery sales decreased $3.3m year-on-year too following lower sales to SciGames’ international customers.
Scientific Games CEO Lorne Weil said in the analyst call the WMS acquisition will be “far and away the most transformative development in our history” and he defended the disappointing first quarter results.
“Our Q1 results were in line with our budget,” he said. “The first quarter has historically been a seasonally lower quarter. Our Q1 results last year had an anomaly and reflected some unusual items that benefited the quarter.
“I am very happy with the direction in which the company is heading. We are highly focused on executing on the number of significant business initiatives and we anticipate momentum will accelerate as the year progresses. Looking ahead we continue to lay the ground work for opportunities in 2013 and beyond including joining forces with WMS,” he added.
SciGames also announced a meeting has been scheduled with WMS stockholders for 10 May to discuss the pending acquisitions, while applications have been filed in each of the 50 jurisdictions required to close the deal.
Since the first quarter, SciGames has won two new contracts. Last week the Delaware Lottery selected a joint bid by Scientific Games, 888 and Williams Interactive to provide it with online gambling services, with the online gaming site set to go live by the end of the year. Last month Northstar Lottery Group, a coalition of Scientific Games and GTECH, was the winning bidder for the New Jersey state lottery contract.