Scientific Games Earnings: Here’s Why Investors Don’t Like These Results

Scientific Games Corporation (NASDAQ:SGMS) had a loss and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 1.64%.

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Scientific Games Corporation Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased to $-0.16 in the quarter versus EPS of $0.02 in the year-earlier quarter.

Revenue: Decreased 6.39% to $219.6 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Scientific Games Corporation reported adjusted EPS loss of $0.16 per share. By that measure, the company missed the mean analyst estimate of $0.02. It missed the average revenue estimate of $227.59 million.

Quoting Management: “We are highly focused on executing on a number of significant new business developments, including our consortium’s provisional award of the Greece instant ticket concession, the launch of instant tickets in Panama, the start-up of the Properties Plus® loyalty and rewards program in Maryland, and the opportunity in New Jersey for our joint venture. We anticipate that momentum will accelerate as the year progresses based on the planned launch and ramp up of these and other incremental revenue opportunities later in 2013,” Chairman and Chief Executive Officer 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, Senior Vice President and Chief Financial Officer, added, “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; however, our first quarter 2012 results benefited from a few items which caused our results to be anomalous relative to our first quarter trends historically. Looking ahead, we continue to lay the groundwork for new growth opportunities that we expect will benefit our Company.”

Key Stats (on next page)…

Revenue decreased 11.89% from $249.24 million in the previous quarter. EPS decreased to $-0.16 in the quarter versus EPS of $-0.29 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.07 to a profit $0.05. For the current year, the average estimate has moved down from a profit of $0.31 to a profit of $0.23 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at]