Uniquely Positioned With Unmatched Asset Mix
and Leading Market Positions to Capitalize on Cross-Platform
Opportunity in Estimated $70 Billion Market
Company Provides Targets Including Targeted
2025 Consolidated AEBITDA(1) of $1.4 Billion and Targeted Total
Capital Creation of $10 Billion from 2022 to 2025
Significantly De-Levered and Strengthened
Credit Profile with Adjusted Net Debt Leverage Ratio(1)(2) Reduced
to 3.7x and Clear Path to Targeted Net Debt Leverage Ratio Range(1)
of 2.5x to 3.5x
Company Continues to Actively Repurchase
Shares Under Its $750 Million Share Repurchase Program
Light & Wonder, Inc. (NASDAQ: LNW), formerly known as
Scientific Games Corporation (“Light & Wonder” or the
“Company”), is hosting its 2022 Investor Day today and providing an
in-depth review of its strategy to drive sustainable double-digit
growth and to drive long-term shareholder value.
As part of the investor day, Light & Wonder is providing the
following financial targets for 2022 through 2025:
- Double-digit growth with targeted 2025 Consolidated AEBITDA(1)
of $1.4 billion or a CAGR(3) of 15%.
- Reaffirmed its targeted net debt leverage ratio range(1) of
2.5x to 3.5x, further strengthening the Company’s balance sheet and
credit profile.
- Significant cash flow generation, reflecting a targeted free
cash flow conversion rate(1) of 45% by 2025.
- Targeting a total of $10 billion of available capital to deploy
through the Company’s balanced and opportunistic capital allocation
priorities.
“Over the last eighteen months we have transformed our business
and paved the way for significant shareholder value creation,” said
Light & Wonder Chief Executive Officer Barry Cottle. “As we
look ahead, there is no better time to be in the industry, which is
huge, growing, and converging. We have transformed ourselves to
take full advantage of our unmatched market position to capitalize
on this opportunity. Our unique asset mix and leading market
positions provide unparalleled advantages to deliver games fully
cross-platform.
“This results in an enviable and durable financial profile,
which includes double-digit growth, a high mix of recurring
revenues and robust margins, all translating into robust cash flow
generation. With a clear roadmap to take market share and drive
long-term shareholder value creation, I’m very confident that Light
& Wonder will be the one to lead the future of the game
industry.”
Light & Wonder Chief Financial Officer Connie James added,
“We are at an inflection point in our journey. We’ve moved rapidly
to transform our Company and our balance sheet, significantly
de-levering and positioning us to win. Our new path forward will
lead to significant capital creation and with our balanced and
opportunistic approach, we will continue to prioritize debt
paydown, and return capital to shareholders through share
repurchases and disciplined investments in our largest growth
opportunities to unlock tremendous shareholder value.”
At today’s event, Light & Wonder is highlighting that it
is:
- Uniquely positioned to take advantage of estimated $70
billion game market TAM opportunity with a clear roadmap and
strategy to win in a converging gaming world
- Best talent in the industry creating hit games and franchises
that players can enjoy anywhere provides a sustainable
differentiation and a competitive advantage.
- Only company with leadership positions across land-based,
iGaming and social, with content that can be delivered
anywhere.
- Greatest collection of IP and content, highlighting the breadth
of Light & Wonder’s evergreen franchises.
- Unrivaled aggregation platform and industry leading insights on
players.
- Deep relationship with operators, players and studios positions
the Company to disproportionately benefit by connecting players
across land-based and digital to create a seamless player
experience.
- Expanding into high-growth digital markets investing
organically and inorganically.
- Executing a balanced and opportunistic capital allocation
strategy to unlock value
- Paying down debt with the proceeds of the Lottery business sale
and pending Sports Betting business divestiture to further
strengthen Light & Wonder’s financial profile and transform
Light & Wonder into an equity story.
- Returning substantial capital to shareholders by actively
repurchasing shares under the Company’s $750 million share
repurchase authorization.
- Investing in key growth opportunities, prioritizing organic
investments and taking a disciplined approach to M&A that
delivers significant long-term value.
Event Webcast Details and Replay
A live webcast of the presentations, including the
question-and-answer session after the prepared remarks, will begin
at 9 a.m. ET and conclude at approximately noon ET. To access the
live webcast, please visit the Company’s website and click on the
webcast link. The live webcast will also be available directly at
newworldsofplay.com.
A replay of the webcast will be available approximately one hour
after the webcast and will be archived on the Company’s
website.
About Light & Wonder, Inc.
Light & Wonder, Inc. (formerly known as Scientific Games
Corporation), is the global leader in cross-platform games and
entertainment. The Company brings together 5,000 employees from six
continents to connect content between land-based and digital
channels with unmatched technology and distribution. Guided by a
culture that values daring teamwork and creativity, the Company
builds new worlds of play, developing game experiences loved by
players around the globe. Its OpenGaming™ platform powers the
largest digital-gaming network in the industry. The Company is
committed to the highest standards of integrity, from promoting
player responsibility to implementing sustainable practices. To
learn more, visit lnw.com.
_____________________________________ (1) Represents a non-GAAP
financial measure. Additional information on non-GAAP financial
measures presented herein is available at the end of this release.
(2) Adjusted net debt leverage ratio represents net debt leverage
ratio as of March 31, 2022, adjusted for April 2022 refinancing
transactions and the Lottery Business sale, and excluding certain
immaterial continuing operations equity method investments. (3)
CAGR based on 2021 Consolidated AEBITDA.
Forward-Looking Statements
In this press release, the Company makes “forward-looking
statements” within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements can be
identified by words such as “will,” “may,” “target,” “estimate,”
“continue,” “could,” “opportunity,” "should" or similar
terminology. These statements are based upon management's current
expectations, assumptions and estimates and are not guarantees of
timing, future results or performance. Therefore, you should not
rely on any of these forward-looking statements as predictions of
future events. Actual results may differ materially from those
contemplated in these statements due to a variety of risks,
uncertainties and other factors, including those factors described
in our filings with the Securities and Exchange Commission (the
“SEC”), including the Company’s current reports on Form 8-K,
quarterly reports on Form 10-Q and its annual report on Form 10-K
that was filed with the SEC on March 1, 2022 (including under the
headings “Forward-Looking Statements” and “Risk Factors”).
Forward-looking statements speak only as of the date they are made
and, except for the Company’s ongoing obligations under the U.S.
federal securities laws, the Company undertakes no obligation to
publicly update any forward-looking statements whether as a result
of new information, future events or otherwise.
Non-GAAP Financial Measures
LIGHT & WONDER, INC. AND SUBSIDIARIES (Unaudited, in
millions, except for ratios) RECONCILIATION OF NET
INCOME ATTRIBUTABLE TO L&W TO CONSOLIDATED AEBITDA - CONTINUING
OPERATIONS Twelve Months Ended March 31, 2022 Net
income attributable to L&W
$
412
Net income attributable to noncontrolling interest
15
Net income from discontinued operations, net of tax
(382
)
Net income from continuing operations
45
Restructuring and other
182
Depreciation, amortization and impairments
409
Other income, net
(24
)
Interest expense
473
Income tax benefit
(318
)
Stock-based compensation
109
Gain on remeasurement of debt and other
(23
)
Consolidated AEBITDA - continuing operations
$
853
RECONCILIATION OF NET INCOME FROM DISCONTINUED
OPERATIONS, NET OF TAX TO AEBITDA FROM DISCONTINUED OPERATIONS AND
COMBINED AEBITDA Twelve Months Ended March 31,
2022 Net income from discontinued operations, net of tax
$
382
Income tax expense
81
Restructuring and other
10
Depreciation, amortization and impairments
53
EBITDA from equity investments
76
Earnings from equity investments
(38
)
Stock-based compensation and other, net
(43
)
AEBITDA from discontinued operations(1)
$
521
EBITDA from equity investments - continuing operations(2)
9
Combined AEBITDA(2)
$
1,383
RECONCILIATION OF PRINCIPAL FACE VALUE OF DEBT
OUTSTANDING TO NET DEBT AND NET DEBT LEVERAGE RATIO As
of March 31, 2022 Combined AEBITDA(2)
$
1,383
Total debt
$
8,833
Add: Unamortized debt discount/premium and deferred financing
costs, net
77
Add: Impact of exchange rate(3)
73
Less: Debt not requiring cash repayment and other
(3
)
Principal face value of debt outstanding
8,980
Less: Combined Cash and cash equivalents(4)
582
Net debt
$
8,398
Net debt leverage ratio
6.1
(1) AEBITDA from discontinued operations, a non-GAAP
measure, is derived based on the historical records and includes
only those direct costs that are allocated to discontinued
operations. See below for further description and disclaimers
associated with this non-GAAP measure. (2) Combined AEBITDA
consists of Consolidated AEBITDA - continuing operations, AEBITDA
from discontinued operations and EBITDA from equity investments
included in continuing operations. Refer to non-GAAP financial
measure definitions below for further details. (3) Exchange rate
impact is the impact of translating our outstanding 2026 Secured
Euro Notes and 2026 Unsecured Euro Notes translated at constant
foreign exchange rate at issuance of these notes as compared to the
current exchange rate. (4) Includes cash and cash equivalents of
both continuing operations and discontinued operations, as the
combined amount is available for debt payments.
RECONCILIATION
OF EARNINGS FROM EQUITY INVESTMENTS TO EBITDA FROM EQUITY
INVESTMENTS AND COMBINED EBITDA FROM EQUITY INVESTMENTS
Twelve Months Ended March 31, 2022
ContinuingOperations DiscontinuedOperations Earnings
from equity investments
$
5
$
38
Add: Income tax expense
-
11
Add: Depreciation, amortization and impairments
1
31
Add: Interest income, net and other
3
(4
)
EBITDA from equity investments
$
9
$
76
Combined EBITDA from equity investments(1)
$
85
(1) Combined EBITDA from equity investments consists of
EBITDA from both discontinued and continuing operations equity
investments.
RECONCILIATION OF ADJUSTED NET DEBT REFLECTING
REFINANCING TRANSACTIONS AND THE LOTTERY BUSINESS SALE &
ADJUSTED NET DEBT LEVERAGE RATIO REFLECTING REFINANCING
TRANSACTIONS AND THE LOTTERY BUSINESS SALE March 31,
2022 Refinancing Transactions and Lottery Business Sale
Adjustments Adjusted Net Debt Reflecting Refinancing
Transactions and the Lottery Business Sale & Adjusted Net Debt
Leverage Ratio Reflecting Refinancing Transactions and the Lottery
Business Sale Combined AEBITDA(1)
$
1,383
$
(496
)
(2)
$
887
Total debt
$
8,833
$
8,833
Add: Unamortized debt discount/premium and deferred financing
costs, net
77
77
Add: Impact of exchange rate(3)
73
73
Less: Debt not requiring cash repayment and other
(3
)
(3
)
Principal face value of debt outstanding
$
8,980
$
(5,030
)
(4)
$
3,950
Less: Combined Cash and cash equivalents(5)
582
54
(6)
636
Net debt
$
8,398
$
3,314
Net debt leverage ratio
6.1
3.7
(1) Combined AEBITDA consists of Consolidated AEBITDA -
continuing operations, AEBITDA from discontinued operations and
EBITDA from equity investments included in continuing operations.
Refer to “Reconciliation of Net Income Attributable to L&W to
Consolidated AEBITDA - Continuing Operations” above and non-GAAP
financial measure definitions below for further details. (2)
Adjusted for Lottery business discontinued operations and equity
investments included in continuing operations. (3) Impact of
exchange rate is the impact of translating our outstanding 2026
Secured Euro Notes and 2026 Unsecured Euro Notes, translated at
constant foreign exchange rate at issuance of these notes. (4)
Represents a reduction of principal amount of outstanding debt as
of March 31, 2022 for the impact of April 14, 2022 refinancing
transactions including principal reductions related to 2022
payments before the refinancing transactions. Refer to the
Principal Debt Balance Supplemental Information table below. (5) As
of March 31, 2022 includes cash and cash equivalents of both
continuing operations and discontinued operations, as the combined
amount is available for debt payments. (6) Consists of $104 million
in proceeds expected for the sale of the Austria Business, for
which we are awaiting regulatory approval in Austria, which
approval is expected to be received and the transaction to be
completed by the end of the second quarter of 2022, subject to
customary working capital adjustments and is less of $50 million of
cash and cash equivalents of the Lottery Business as of March 31,
2022.
PRINCIPAL DEBT BALANCE SUPPLEMENTAL INFORMATION
Final Maturity Rate(s) Principal Amount of
Outstanding Debt as of March 31, 2022(1) April 14, 2022 Refinancing
Impact(1) Adjusted Outstanding Principal Value(1) Senior Secured
Credit Facilities: SGI Revolver
2024
variable
$
160
$
(160
)
$
-
SGI Term Loan B-5
2024
variable
4,008
(4,008
)
-
New Term Loan
2029
variable
-
2,200
2,200
SGI Senior Notes: 2025 Secured Notes(2)
2025
5.000
%
1,250
(1,250
)
-
2026 Secured Euro Notes
2026
3.375
%
361
(361
)
-
2025 Unsecured Notes
2025
8.625
%
550
-
550
2026 Unsecured Euro Notes
2026
5.500
%
278
(278
)
-
2026 Unsecured Notes
2026
8.250
%
1,100
(1,100
)
-
2028 Unsecured Notes
2028
7.000
%
700
-
700
2029 Unsecured Notes
2029
7.250
%
500
-
500
Other(3)
2023
4.089
%
3
-
3
Total long-term debt outstanding
$
8,910
$
(4,957
)
$
3,953
(1) Principal amount of outstanding debt as of March 31,
2022 represents the outstanding principal value of debt balances
that conform to the presentation found in Note 11 to the
Consolidated Financial Statements in our March 31, 2022 Form 10-Q.
Adjusted outstanding principal value represents the principal
amount of outstanding debt as of March 31, 2022 adjusted for the
impact of the April refinancing transactions, $98 million of SGI
Term Loan B-5 principal reduction and $160 million pay down of the
SGI Revolver related to 2022 payments before the refinancing
transactions. (2) We entered into certain cross-currency interest
rate swap agreements to achieve more attractive interest rates by
effectively converting $460 million of the fixed-rate, U.S.
Dollar-denominated 2025 Secured Notes, including the semi-annual
interest payments through October 2023, to a fixed-rate
Euro-denominated debt, with a fixed annual weighted average
interest rate of approximately 2.946%. (3) Primarily comprised of
certain revenue transactions presented as debt in accordance with
ASC 470.
Combined AEBITDA
Combined AEBITDA, as used herein, is a non-GAAP financial
measure that combines Consolidated AEBITDA (representing our
results of continuing operations), AEBITDA from discontinued
operations, and EBITDA from equity investments included in
continuing operations and is presented as a supplemental disclosure
and more fully described in the Company’s first quarter 2022
earnings release furnished with our Current Report on Form 8-K
dated May 10, 2022.
Consolidated AEBITDA (representing AEBITDA from continuing
operations)
Consolidated AEBITDA, as used herein, is a non-GAAP financial
measure that is presented as a supplemental disclosure of the
Company’s continuing operations and is reconciled to net income
(loss) from continuing operations as the most directly comparable
GAAP measure, as set forth in the schedule above. Consolidated
AEBITDA should not be considered in isolation of, as a substitute
for, or superior to, the consolidated financial information
prepared in accordance with GAAP, and should be read in conjunction
with the Company's financial statements filed with the SEC.
Consolidated AEBITDA may differ from similarly titled measures
presented by other companies. Consolidated AEBITDA includes the
following adjustments: (1) net income attributable to
noncontrolling interest; (2) net income from discontinued
operations, net of tax; (3) restructuring and other, which includes
charges or expenses attributable to: (i) employee severance; (ii)
management restructuring and related costs; (iii) restructuring and
integration; (iv) cost savings initiatives; (v) major litigation;
and (vi) acquisition costs and other unusual items; (4)
depreciation and amortization expense and impairment charges and
goodwill impairments; (5) change in fair value of investments and
gain (loss) on remeasurement of debt; (6) interest expense; (7)
income tax benefit; (8) stock-based compensation; and (9) other
(income) expense, net including foreign currency (gains), and
losses and earnings from equity investments.
The forward-looking non-GAAP financial measure targeted
Consolidated AEBITDA represents a goal for the Company and does not
reflect Company guidance. We are not providing a forward-looking
quantitative reconciliation of targeted Consolidated AEBITDA to the
most directly comparable GAAP measure because we are unable to do
so without unreasonable efforts or to reasonably estimate the
projected outcome of certain significant items. These items are
uncertain, depend on various factors out of our control and could
have a material impact on the corresponding measures calculated in
accordance with GAAP.
AEBITDA from Discontinued Operations
AEBITDA from discontinued operations, as used herein, is a
non-GAAP financial measure that is presented as a supplemental
disclosure for the Company’s discontinued operations and is
reconciled to net income from discontinued operations, net of tax
as the most directly comparable GAAP measure, as set forth in the
schedule above. AEBITDA from discontinued operations should not be
considered in isolation of, as a substitute for, or superior to,
the consolidated financial information prepared in accordance with
GAAP, and should be read in conjunction with the Company's
financial statements filed with the SEC. AEBITDA from discontinued
operations may differ from similarly titled measures presented by
other companies. AEBITDA from discontinued operations includes the
following adjustments: (1) restructuring and other, which includes
charges or expenses attributable to: (i) employee severance; (ii)
management restructuring and related costs; (iii) restructuring and
integration; (iv) cost savings initiatives; (v) major litigation;
and (vi) acquisition costs and other unusual items; (2)
depreciation and amortization expense and impairment charges and
goodwill impairments; (3) income tax benefit; and (4) stock-based
compensation and other, net. In addition to the preceding
adjustments, we exclude (earnings) loss from equity investments and
add (without duplication) discontinued operations pro rata share of
EBITDA from equity investments, which represents their share of
earnings (whether or not distributed) before income tax expense,
depreciation and amortization expense, and interest expense, net of
our joint ventures and minority investees, which is included in our
calculation of AEBITDA from discontinued operations.
EBITDA from Equity Investments
EBITDA from equity investments, as used herein, represents our
share of earnings (loss) (whether or not distributed to us) plus
income tax expense, depreciation and amortization expense
(inclusive of amortization of payments made to customers for LNS),
interest (income) expense, net, and other non-cash and unusual
items from our joint ventures and minority investments. EBITDA from
equity investments is a non-GAAP financial measure that is
presented as supplemental disclosure for illustrative purposes only
and is reconciled to earnings (loss) of equity investments, the
most directly comparable GAAP measure, in a schedule above.
Net Debt and Net Debt Leverage Ratio
Net debt is defined as total principal face value of debt
outstanding, the most directly comparable GAAP measure, less
combined cash and cash equivalents. Principal face value of debt
outstanding includes the face value of debt issued under Senior
Secured Credit Facilities, Senior Notes and Subordinated Notes,
which are all described in Note 15 of the Company's Annual Report
on Form 10-K for the year ended December 31, 2021 and in Note 11 of
the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2022, but it does not include other long term obligations
of $3 million primarily comprised of certain revenue transactions
presented as debt in accordance with ASC 470. In addition,
principal face value of debt outstanding with respect to the 2026
Secured Euro Notes and 2026 Unsecured Euro Notes are translated at
the constant foreign exchange rate at issuance of these notes as
those amounts remain payable at the original issuance amounts in
Euro. Net debt leverage ratio, as used herein, represents Net debt
divided by Combined AEBITDA (as defined above).
The forward-looking non-GAAP financial measure targeted net debt
leverage ratio represents a goal for the Company and does not
reflect Company guidance. We are not providing a forward-looking
quantitative reconciliation of targeted net debt leverage ratio to
the most directly comparable GAAP measure because we are unable to
do so without unreasonable efforts or to reasonably estimate the
projected outcome of certain significant items. These items are
uncertain, depend on various factors out of our control and could
have a material impact on the corresponding measures calculated in
accordance with GAAP.
Adjusted Outstanding Debt, Adjusted Net Debt and Adjusted Net
Debt Leverage Ratio, all Reflecting Refinancing Transactions and
the Lottery Business Sale
Adjusted outstanding debt as used herein, is a non-GAAP
financial measure, that represents the principal amount of
outstanding debt as of March 31, 2022 that conforms to the
presentation found in Note 11 to the Consolidated Financial
Statements in our March 31, 2022 Form 10-Q, adjusted for the impact
of the April 14, 2022 refinancing transactions. Adjusted net debt
reflecting refinancing transactions and the Lottery Business sale,
as used herein, is a non-GAAP financial measure defined as net debt
as of March 31, 2022, plus pending Austria Lottery business
proceeds of approximately $104 million less cash held at Lottery
business. Adjusted net debt leverage ratio reflecting refinancing
transactions and the Lottery Business sale, as used herein, is a
non-GAAP financial measure defined as adjusted net debt reflecting
refinancing transactions and the Lottery Business sale divided by
Combined AEBITDA for the last twelve months, excluding Lottery
Business operations and certain immaterial continuing operations
equity method investments.
Targeted Free Cash Flow Conversion Rate
The forward-looking non-GAAP financial measure targeted free
cash flow conversion rate represents a goal for the Company and
does not reflect Company guidance. We are not providing a
forward-looking quantitative reconciliation of targeted free cash
flow conversion rate to the most directly comparable GAAP measure
because we are unable to do so without unreasonable efforts or to
reasonably estimate the projected outcome of certain significant
items. These items are uncertain, depend on various factors out of
our control and could have a material impact on the corresponding
measures calculated in accordance with GAAP.
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version on businesswire.com: https://www.businesswire.com/news/home/20220516006125/en/
Investor Inquiries Jim Bombassei, Senior Vice President
of Investor Relations jbombassei@lnw.com
Media Inquiries Nick Lamplough / T.J. O'Sullivan / Lucas
Pers, Joele Frank, Wilkinson Brimmer Katcher, +1 212 355 4449
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