Scientific Games sees drop in fourth-quarter revenue

While Scientific Games saw a decline in revenue the last quarter of 2019, the company remains confident moving forward as it continues to form sports betting partnerships and focus on reducing net debt.

The Las Vegas-based company made $863 million in revenue in the fourth quarter of 2019, down from $886 million in the same period the year prior. This drop was largely driven by lower gaming revenue from fewer system launches in Canada compared with the previous year, along with lower machine unit sales, according to a regulatory filing from the company.

“We’re extremely confident we’re going to win in gaming like we are now in lottery and digital,” CEO Barry Cottle told investors Tuesday.

Sports betting deals

In January, Scientific Games announced a deal with DraftKings in New Jersey that would give players access to Scientific Games’ library of U.S.-available titles.

The company announced another partnership with daily fantasy provider FanDuel this month. The deal builds on Scientific Games’ existing partnership with FanDuel’s parent company, Flutter Entertainment, and makes its sports betting engine a core part of Flutter’s global betting platform. The deal is expected to be operational by the third quarter.

“This opens up additional opportunities as Flutter begins to expand,” Cottle said. “We couldn’t be more thrilled by this partnership in all current and future markets.”

The company has also extended partnerships with sportsbook operators William Hill and GVC, and it alluded to more digital deals in the near future. One executive said the company signed with “another important leading state operator that will be announced soon, with others on the way.”

Monitoring the coronavirus

While Scientific Games hasn’t yet seen any impact from the new coronavirus, executives say they’re monitoring the situation.

Three Las Vegas-based companies were forced to shut down casino operations in Macao for 15 days to help impede the spread of the virus, which has so far infected more than 72,000 people in mainland China.

Scientific Games Chief Financial Officer Michael Quartieri said that Scientific Games hasn’t taken a hit yet but that he expects the closure to hurt Macao operators.

“If we look at our supply chains, there have been no interruptions,” he said. But “how much of this will impact the spending habits of our customers? … It’s really a wait-and-see (situation).”

Quartieri said the company doesn’t expect to see any effects from the virus in the first quarter of 2020 but said it’ll be cautious going into the second quarter.

The company also announced that it is easing up on its delevearging initiatives, with a new goal to reduce net debt leverage to six times or below by year-end 2020, a modification to a previous goal to reduce it 5.5 times in that time frame.

Executives said the company wants to “maintain some flexibility” as the company moves forward.

Cash flow from operations in 2019 increased 58 percent from the previous year to $546 million, and the company reduced net debt by $464 million. Net loss was $37 million for the quarter, compared with net income of $207 million in the fourth quarter of 2018.

Contact Bailey Schulz at bschulz@reviewjournal.com or 702-383-0233. Follow @bailey_schulz on Twitter.