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Scientific Games (SGMS) Q4 Earnings Beat, Revenues Rise Y/Y

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Scientific Games Corporation SGMS reported fourth-quarter 2021 earnings (from continuing operations) of 58 cents per share, which beat the Zacks Consensus Estimate by 261.1%. The company had reported a loss of $1.57 per share in the year-ago quarter.

Fourth-quarter total revenues were $580 million, up 20.8% year over year, driven by strong growth in the Gaming business. The top line beat the consensus estimate by 3.3%. Services revenues surged 25% year over year to $425 million. Product sales grew 10.7% to $155 million.

In 2021, revenues increased 26.7% year over year to $2,153 million, benefiting from solid growth across all businesses. Gaming performance was primarily driven by North America Premium Gaming Operations and the market recovery.

Scientific Games Corp Price, Consensus and EPS Surprise

Scientific Games Corp Price, Consensus and EPS Surprise
Scientific Games Corp Price, Consensus and EPS Surprise

Scientific Games Corp price-consensus-eps-surprise-chart | Scientific Games Corp Quote

Quarter in Detail

Gaming revenues (64.1% of total revenues) surged 30.1% year over year to $372 million, driven by growth in Gaming operations due to an increase in premium installed base and growth in Game Sales and Table Games business.

SciPlay revenues (26.6% of revenues) grew 4.8% year over year to $154 million. The performance was driven by strong monetization metrics with the fifth consecutive record quarter at Gold Fish Casino as well as strong growth at Quick Hit and Jackpot Party.

iGaming (9.3% of revenues) revenues increased 14.9% year over year to $54 million. The performance was driven by the strength of its original content, with new U.S. states coming online.

Consolidated adjusted EBITDA (AEBITDA) surged 67.4% year over year to $216 million. AEBITDA margin was 37%, significantly higher than 27% reported in the year-ago quarter. Gaming AEBITDA was $186 million, up 80.6%. SciPlay AEBITDA grew 6.6% to $48 million. iGaming AEBITDA was up 25% from the year-ago quarter to $15 million.

Total operating expenses increased 17.8% year over year to $577 million.

Notable Development

On Mar 1, 2022, the company announced its intention to rebrand Scientific Games Corporation to Light & Wonder, as part of the Lottery sale and to align with its vision of becoming the leading cross-platform global game company.

Its legal name “Scientific Games Corporation” is expected to be changed to “Light & Wonder, Inc.” during the second quarter of 2022, upon satisfying all requirements in Nevada.

As part of this transformation, the company’s new website featuring iGaming and land-based casino products, technology and services will now be lnw.com.

Cash Flow & Liquidity

In 2021, the company generated $304 million of cash from operating activities compared with $33 million in 2020. As of Dec 31, 2021, it had $585 million in cash and cash equivalents with $8,646 million of long-term debt. Net debt leverage ratio was 6.2 times at the end of the year.

Zacks Rank & Stocks to Consider

Scientific Games currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Clearfield, Inc. CLFD is a better-ranked stock in the broader Zacks Computer and Technology sector, sporting a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has been revised 20.5% upward over the past 60 days.

Clearfield delivered a trailing four-quarter earnings surprise of 50.7%, on average. It has gained 84.9% in the past year.

Qualcomm, Inc. QCOM, carrying a Zacks Rank #2 (Buy), is another solid pick for investors. The consensus estimate for current-year earnings has been revised upward by 12.2% over the past 60 days.

Qualcomm delivered a trailing four-quarter earnings surprise of 12.2%, on average. It has appreciated 24.3% in the past year.

Sierra Wireless, Inc. SWIR also carries a Zacks Rank #2. The consensus mark for current-year earnings has been revised upward by 237.5% over the past 60 days.

Sierra Wireless pulled off a trailing four-quarter earnings surprise of 58%, on average. The stock has returned 17.3% in the past year.


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