What:Shares of Scientific Games Corp were down 12.5% as of 2:15 p.m. Tuesday after the lottery and gaming products company announced mixed second-quarter results.
So what:Quarterly revenue rose 65.9% year over year to $691.5 million, primarily thanks to Scientific Games' acquisition of gaming equipment provider Bally Technologies late last year. Meanwhile, that translated to a net loss of $102.2 million, or $1.19 per share. On an adjusted basis, however, which excludes asset impairment costs and non-recurring charges, Scientific Games' net loss came in at $0.79 per share. Analysts, on average, were anticipating a wider net loss of $0.98 per share, but on higher revenue of $715.7 million.
Now what:Scientific Games CEO Gavin Isaacs addressed the concerns, stating, "Throughout the second quarter we made further significant progress on implementing our key initiatives targeting revenue growth opportunities, advancing our comprehensive integration efforts and implementing our planned cost savings."
For perspective, recall Scientific Games only just closed on its $5.1 billion acquisition of Bally in November 2014. At the time, the company anticipated generating $235 million in total annual cost savings, with around $188 million achieved in 2015.Sure enough, Isaacs noted Scientific Games was already well ahead of schedule by implementing around $184 million in savings by the end of July 2015. As a result, the company is raising its expected Bally-related cost savings target for this year to $200 million, while at the same time implementing another $30 million in savings from its previous purchase of WM Industries by the end of 2015. This progress, according to Isaacs, should be "favorably reflected in our performance during the second half of this year."
Nonetheless, Scientific Games can't reduce costs forever, and its revenue shortfall lends credence to investors' concerns over the broader sluggish expansion of the gambling industry. For now, and until Scientific Games can show progress seizing those aforementioned revenue growth opportunities, I can't blame Scientific Games shareholders for taking some of their chips off the table today.
The article Why Scientific Games Corp Stock Plunged Today originally appeared on Fool.com.
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