Scientific Games (SGMS) is a leading innovator in the global lottery and regulated gaming industries. Beginning with the breakthrough technology that launched the world’s very first secure instant lottery game in 1974, the company has continued to advance the games, technology, programs, marketing research and security that have been a driving force behind the success of more than 300 customers on six continents over the last 40 years.

SGMS serves customers from advanced-technology manufacturing and operational facilities in North America, South America, Europe and Asia, with additional facilities located throughout the U.S. and around the world based on customer requirements. SGMS is the industry’s only full-service provider offering diverse products, technology and services that can be customized to meet the unique requirements of virtually any lottery or gaming jurisdiction.

The world’s top-performing lotteries and gaming organizations partner with SGMS for game content, technology, customized programs and managed services that engage today’s players in new and exciting ways, provide solutions for both traditional and interactive channels – and ultimately, increase revenues.

After revolutionizing lottery sales and marketing around the globe, SGMS continues to innovate with patented gaming technology and research-driven programs delivered to customers with the highest level of security, integrity and ethical standards. The company is committed to worldwide responsible gaming principles and has received international certifications for environmental sustainability.

SGMS announced its Q115 results on 07 May 2015, its first set of results which includes the Bally merger. Margins improved markedly, testament to management’s effort and progress in its strategies to integrate Bally operations and unify the newly formed company as a whole. Company CEO stated that SGMS’ ability to offer the most extensive portfolio of products, systems and services to its gaming, lottery and interactive customer offers is in line with its strategy.

Having already implemented actions to achieve approximately $90mn in Bally-related annualized savings through 31 March 2015, management expects to achieve its goal to implement initiatives to generate approximately 80% of the anticipated $235mn of annual cost savings and another $30 million of WMS-related annual cost savings by the end of 2015. (WMS was another acquisition by SGMS, completed in 2013). "We are firmly focused on driving revenue opportunities enabled by leveraging the synergies created by our combined strengths in technology and product development. Our capital allocation strategy prioritizes the use of free cash flow for debt reduction, while supporting appropriate investments in innovation and high-return growth projects as we seek to create great entertainment experiences for our customers and players. We expect our debt reduction to accelerate in the second half of 2015 and beyond."

In its Q115 statement, SGMS added that management is ahead of plan in consolidating nearly 40 additional facilities around the globe by the end of 2015, whilst management expects to incur $20mn to $25mn of additional operating costs to achieve anticipated cost savings and $15mn to $20mn capital expenditures. In addition to the Bally integration savings, the Company realized approximately $6mn of incremental cost savings in the 2015 first quarter from the second year of integration actions taken related to the WMS acquisition. The Company expects to achieve the expected $115mn of annualized cost savings from the WMS acquisition by the end of 2015, as originally planned.

We remain comfortable with the way the WMS and Bally acquisitions are integrating into the overall business strategy, which has clearly resulted in marked cost savings and an increase in margins, most notably in the first quarter of 2015. We are optimistic that the synergies between SG / Bally / WMS will continue to materialise and have long term benefits for the newly formed force within the casino and gaming industry, and are confident that this will ultimately result in improved margins, healthier FCF, deleveraging, and further spread compression (and out-performance) from this point forth, as clearly evidenced in the first earnings release of 2015.