LAS VEGAS, Feb. 28, 2018 /PRNewswire/ -- Scientific Games Corporation (NASDAQ: SGMS) ("Scientific Games" or the "Company"), today reported results for the fourth quarter and year ended December 31, 2017.

Fourth Quarter 2017 Financial Highlights:

• Fourth quarter revenue rose 9 percent to $823.0 million, up from $752.2 million in the year ago period. Growth was achieved in all three business segments: Gaming segment revenue increased 7 percent to a quarterly record $492.5 million, driven by global shipments of 10,249 new gaming machines; Lottery segment revenue rose 9 percent to $217.2 million led by a quarterly record level of instant games revenue; and the Interactive segment generated ongoing strong revenue growth of 24 percent to $113.3 million. Foreign exchange had a $10.3 million favorable impact on revenue.
• Operating income in the fourth quarter increased to $97.2 million from an operating loss of $12.3 million a year ago, reflecting revenue growth, a more profitable revenue mix, more effective business processes and lower depreciation and amortization. The prior year operating loss included the impact of a $69.0 million non-cash goodwill impairment charge. Net loss declined to $43.1 million from $110.8 million in the prior-year period, reflecting the improvement in operating income and a $14.8 million decrease in interest expense. The improvement was partially offset by a $62.1 million decline in income tax benefit.
• Attributable EBITDA ("AEBITDA"), a non-GAAP financial measure defined below, increased 11 percent to $324.5 million from $293.5 million a year ago, primarily driven by higher revenue, a more profitable revenue mix and more effective business processes. AEBITDA margin, a non-GAAP financial measure defined below, improved to 39.4 percent from 39.0 percent a year ago.
• Net cash provided by operating activities increased $41.9 million to $118.1 million from a year ago, partially reflecting a favorable change in working capital accounts of $12.2 million and a $26.5 million increase in net earnings adjusted for non-cash adjustments and other items.
• Additionally, the Company recently completed refinancing transactions that will result in an approximate $69 million reduction in annualized cash interest costs at current interest rates and extended a portion of its debt maturities.

Full Year 2017 Financial Highlights:

• Revenue increased 7 percent, or $200.2 million, year over year to $3,083.6 million.
• Operating income was $393.1 million compared to $130.6 million in the prior year, which included the $69.0 million goodwill impairment. Net loss was $242.3 million compared with a net loss of $353.7 million a year ago, reflecting the improvement in operating income and a $51.7 million decrease in interest expense. These improvements were partially offset by a $38.1 million loss on debt financing transactions and a $139.5 million decline in the income tax provision primarily related to a valuation allowance recorded against certain domestic deferred tax assets. The 2016 net loss included a $25.2 million gain on debt financing transactions.
• AEBITDA, a non-GAAP financial measure as defined below, increased 11 percent to $1,224.9 million compared with $1,103.6 million in the prior year.
• Net cash from operating activities increased to $507.1 million compared with $419.0 million in the prior year. Free cash flow, a non-GAAP financial measure as defined below, rose to $179.5 million from $120.0 million in the prior year.

"Our results in the fourth quarter 2017 reflect the improvements achieved in revenue, operating income and AEBITDA growth by each of our business segments," said Kevin Sheehan, CEO and President of Scientific Games. "For 2018, we believe the Company is well positioned to continue to grow and build on the success attained in the past year."

Michael Quartieri, Chief Financial Officer of Scientific Games, said, "Our improved performance and strong future prospects enabled us to successfully refinance a portion of our capital structure in 2017 and 2018 that significantly lowers our cost of capital and increases future cash flow.  We believe there is potential to achieve further improvements in 2018 and beyond, and we remain committed to our path of deleveraging and growing our business."

GAMING SEGMENT HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2017

• Total gaming revenue increased $31.6 million, or 7 percent, compared to the strong results of the year-ago period, inclusive of a $6.3 million favorable foreign exchange impact.
• Operating income improved $27.2 million to $97.6 million. The increase primarily reflected the benefit of higher revenue and lower depreciation and amortization compared to the 2016 fourth quarter.
• AEBITDA increased 9 percent to $237.8 million with an AEBITDA margin of 48.3 percent, compared with 47.5 percent in the prior year period, reflecting the higher revenue and improved business processes.
• Gaming operations revenue declined $3.4 million, or 2 percent, in the fourth quarter 2017, a smaller decline than the preceding third quarter 2017 of 4 percent. The decrease reflected a 2 percent year-over-year decline in the installed base of Wide-Area Progressive ("WAP") and premium participation gaming machines and essentially flat daily average revenue. On a quarterly sequential basis, the installed base of WAP and premium participation units declined 419 units, largely reflecting the impact of an accelerated replacement of older cabinets in the installed base, and the daily average revenue decreased $2.30 per unit, reflecting a typical quarterly sequential seasonal decline associated with the fourth quarter. The installed base of other participation and leased gaming machines declined on a quarterly sequential basis, as the roll-out of more than 1,000 VLTs in Greece was offset by nearly fifteen hundred units being offline in the Caribbean region as a result of hurricane-related effects. The $0.44 decrease in the average daily revenue per unit of other leased and participation units included the impact from lower-yielding Greek VLTs.
• Gaming machine sales revenue increased $20.3 million, or 12 percent, year over year, largely due to a 23-percent increase in shipments of U.S. and Canadian replacement gaming machines that reflects the strong performance of the TwinStar® family of gaming machines, along with continued strong sales of the Pro Wave™ cabinet. The increase in replacement units more than offset the impact from lower global sales related to fewer new casino openings and expansions. The average sales price increased to $16,858 from $16,268 in the prior year, reflecting a more favorable mix of gaming machines. U.S. and Canadian shipments totaled 5,840 gaming machines, including 4,421 replacement units, 884 units for new casino openings and expansions and 535 VGTs for the Illinois market. In the prior-year period, U.S. and Canadian shipments totaled 5,115 units, which comprised 3,604 replacement units, 1,229 units for new casino openings and expansions and 282 VGTs for the Illinois market. Total international shipments increased 290 units, or 7 percent, to 4,409 units, including 208 units for new casino openings, compared with 4,119 units in the prior year, which had included 404 units for new casino openings.
• Gaming systems revenue increased $19.6 million, or 31 percent, to $83.5 million, primarily due to the initial installations of a new system to casinos in the province of Alberta, coupled with increased hardware sales, reflecting shipments of innovative new iVIEW®4 player-interface display units. The rollout of the new system to additional casinos across Alberta is expected to continue throughout 2018, as well as the ongoing deployment of a new system to casinos across Ontario.
• Table products revenue decreased $4.9 million to $50.0 million, reflecting a decline in sales of new shufflers and other table game products from the record sales level a year ago to casinos primarily in international markets, while revenue generated by the installed base of shufflers, proprietary table games and progressives increased by $5.9 million.

LOTTERY SEGMENT HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2017