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Scientific Games Corporation Message Board

soxfan10131013 1 post  |  Last Activity: May 12, 2014 11:31 AM Member since: Aug 3, 2004
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  • soxfan10131013 by soxfan10131013 May 12, 2014 11:31 AM Flag

    Instead of trying to wade thru all the BS in the recent SGMS earnings press release, this is all you need to know about SGMS:

    - SGMS now has $3.4 Billion in debt on the balance sheet (12x book equity!), thanks to all-debt financing of WMS purchase. SGMS is now over-levered with very little financial flexibility in its balance sheet.

    - SGMS now has only $285 Million in shareholders' equity left on the balance sheet after nearly a decade of massive write-offs, which continued even in this most recent quarter. Book equity is still probably overstated because of the massive amounts of goodwill and intangible assets still on the balance sheet.

    - SGMS now pays $200 Million/year in interest expense (this will grow as rates rise), an average interest rate of nearly 7%. In the most recent quarter, Interest expense ran at a rate equal to 13% of Total Revenue and 40% of Attributable EBITDA, which means interest expense will obliterate earnings quarter after quarter.

    - The SGMS lottery unit has flat revenue overall (now steadily declining in China and Italy) and faces strong competition everywhere. Real growth unlikely.

    - The WMS gaming unit has relatively flat revenue overall and faces strong competition everywhere. Real growth unlikely.

    - SGMS management team is weaker than ever (incredible, but true!)

    - SGMS, Lottomatica, Intralot all over-levered and going nowhere fast!

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