"Goodwill impairment charges" distract from Scientific Games' progress

"Goodwill impairment charges" distract from Scientific Games' progress

Monday, March 6, 2017
Expenditure from Bally and WMS acquisitions still making an impact

Closing its full-year 2016 performance, Nasdaq-listed Scientific Games Corp (SGC) has reported an operating net loss of US$110 million for Q4 2016 (period ending 31 December). The losses were incurred despite SGC governance reporting its fifth straight quarter of revenue growth to $752 million (Q4 2015 $737 million).

The casino games manufacturer continues to pay hefty 'goodwill impairment charges' and restructuring costs attached to its 2014 acquisitions of competitors WMS Gaming and Bally Technologies.

Presenting its full-year 2016 financial results, SGC has recorded a reduced group operating loss of $353 million (FY 2015: -$1.39 billion). The company revealed that it had paid a $69.0 million non-cash goodwill impairment charge as well as $57.0 million of restructuring and further acquisition expenses.

The gaming machines manufacturer also said that it had reduced its corporate debt to circa $8 billion, following 2016 total contributions of $170 million.

Updating investors, SGC governance detailed that the company had refined its combined enlarged business processes which would improve product operating margins and core metric performance for 2017.

Scientific Games CEO Kevin Sheehan commented on corporate performance: "With 2017 off and running, we are maintaining focus on playing smart to galvanize our business growth. We are driving innovation to create new, differentiated products for our customers, improve financial performance to accelerate deleveraging, and build a culture open to new ideas and committed to exceeding the expectations of our customers and stakeholders."

Totally Gaming says: The acquisitions of Bally and WMS were major milestones for Scientific Games, but it must be hoping that the cost doesn't run for much longer as it is distracting from the group's impressive continuing growth at an underlying level. With Kevin Sheehan talking about outperforming stakeholder expectations, it is important that the legacy costs from the acquisitions doesn't continue to take away their focus.

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