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Scientific Games Corp (SGMS)
Q4 2012 Earnings Call
March 11, 2013 5:00 p.m. ET
Cindi Buckwalter – IR
A. Lorne Weil - Chairman and CEO
Jeff Lipkin - SVP and CFO
Mike Chambrello - CEO of Asia-Pacific Region
Steven Wieczynski - Stifel Nicolaus
Mike Malouf - Craig-Hallum Capital Group
Todd Eilers - Eilers Research
Previous Statements by SGMS
» Scientific Games Q3 2009 Earnings Call Transcript
» Scientific Games Q4 2008 Earnings Call Transcript
» Scientific Games Corp. Q3 2008 Earnings Call Transcript
» Scientific Games Corp. Q2 2008 Earnings Call
Thank you, operator. Welcome and thank you all for joining us this afternoon. During this call, we will discuss our fourth quarter and year end results followed by a question-and-answer period. Please refer to our press release for further details.
As a reminder, this call is being simultaneously webcast and is accompanied by a slide presentation. They’re both available along with our press release in the investor information section of our website at www.scientificgames.com. A replay of the call and the accompanying slide presentation will be archived in the investor information section of our website.
This conference call will contain statements that constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially. For certain information regarding these risks and uncertainties please refer to our earnings press release and materials relating to the costs posted on our website and our filings with the SEC, including our most recent annual report on Form 10-K and our subsequent reports filed with the SEC.
During this call, we will discuss certain non-GAAP financial measures. A description of each non-GAAP measure and a reconciliation of each non-GAAP financial measure to the most comparable GAAP financial measure can be found in our earnings press release.
Now I’ll turn the call over to Lorne Weil, Chairman and CEO.
A. Lorne Weil
Thanks Cindi. Good morning everyone. And thank you for joining our fourth quarter 2012 earnings call. With me this evening as usually are Jeff Lipkin, our CFO and Mike Chambrello who runs our Asia-Pacific business. Also here is Jack Sarno, our chief legal officer, in case anyone has a question in that direction.
We were pleased with the results of the quarter and the full year. Our year-over-year revenue grew 4% in the quarter and 7% for the year and our attributable EBITDA increased 13% in the quarter and 5% for the year. Notably attributable EBITDA from our wholly-owned operations, that’s to distinguish them from our interests in joint ventures, increased by 17% year-over-year in the fourth quarter.
We benefited from solid lottery retail sales not only in the U.S. but also in Italy where instant ticket sales grew year-over-year for the first time in calendar year 2012. More importantly, we feel very confident about the way the business is developing strategically with much of that confidence stemming from our recent development activity and most importantly, our pending acquisition of WMS. As I think probably most of you on the call know at the end of January, we reached an agreement to acquire WMS Industries -- far and away the most transformative development in our history. This merger would bring together lottery instant tickets and services, gaming machines, lottery and gaming systems, license products for lottery and gaming markets and an array of online products and services.
At the time of the conference call announcing the merger back at the end of January, we explained that its uniqueness lay in the fact that although there is very significant complementarity of functional capability and resources between the two companies the two companies have virtually no competitive overlap. Regarding the latter I am pleased to say that earlier today we were officially informed of the termination of the waiting period under Hart-Scott-Rodino, one of our conditions to closing.
Viewing through a slightly different lens, the merger is special because we believe it leverages the strategic dimensions about the broad scale and scope - scale through the integration of functional resources like engineering, manufacturing and content development, and scope through the application of the core competencies of each partner to generate new revenue streams in the markets of the other.
We understand that integrating the two companies in a way that derives the maximum benefits of scale and scope will be a demanding task. But we’re also confident that in the period between now and close, we will complete the development of a comprehensive plan to successfully do so.
During the fourth quarter our consortium in Greece increase was provisionally awarded a 12-year concession for the exclusive rights to operate and manage the instant ticket lottery in Greece with Scientific Games expected to be the exclusive instant ticket supplier. We think that implementing the best practices we have successfully used with lotteries around the world will result in the successful relaunch of instant tickets which have been absent from Greece for a little more than 10 years.
Let me now turn to a closer look at the fourth quarter. Generally the quarter was a strong close to a very successful year for the U.S. lottery industry. Our customers’ retail sales of instant tickets rose over 5% and sales of draw games grew nearly 11% benefiting from a record Powerball jackpot of over $587 million in the quarter.