Delivered Strong Double-Digit Consolidated
Revenue Growth of 20% Year-Over-Year
Completed Final Step to Streamline
Organization with Sale of Sports Betting Business for Approximately
$800 Million in Gross Proceeds
Principal Face Value of Debt Outstanding(1)
of $3.9 Billion Translating to Net Debt Leverage Ratio(2) of 3.1x,
Squarely in Targeted Range
Returned $241 Million(3) of Capital to
Shareholders Through Share Repurchases, Representing 32% of Total
Program Authorization
Light & Wonder, Inc. (NASDAQ: LNW) (“Light & Wonder,”
“L&W,” or the “Company”) today reported results for the third
quarter ended September 30, 2022.
Matt Wilson, President and Chief Executive Officer of Light
& Wonder, said, “With the sale of the Sports Betting
business, we have rapidly delivered on our promise to transform our
business and streamline our organization. We have a unique
collection of assets that are powered by games, technology, and our
amazing teams. Our strengthened balance sheet puts us in a great
position to build on our momentum and capture the incredible
opportunities in front of us. With a sharpened focus and clear
roadmap to win, we are executing on our growth strategy to drive
share gains.
“The results this quarter reflect the tangible progress we are
making strategically, operationally, and financially as we
delivered strong double-digit topline growth and saw clear momentum
across all of our businesses. At the center of our Company are a
robust R&D engine and world-class teams, and I want to
congratulate our teams on their continued energy and focus. With
our strategy in place and with operational momentum building, we
have an unrivaled ability to leverage our leading industry
positions, evergreen franchises, and unmatched platforms to drive
sustainable growth and significant shareholder value.”
Connie James, Chief Financial Officer of Light &
Wonder, added, “What we have achieved over the last 18 months
has been truly transformational as we redefined our portfolio of
businesses and strengthened our balance sheet and credit profile,
all while executing on our strategy to drive sustainable
differentiation and growth. We have made tangible progress each
quarter against our priorities, and this consistent and rapid
execution is becoming a hallmark of our organization.
“With the proceeds from our Lottery and Sports Betting
divestitures, we’ve significantly bolstered our balance sheet,
enabling us to achieve a net debt leverage ratio(2) of 3.1x, now
squarely in our targeted range. With this significant milestone, we
are now advancing our capital allocation priorities of returning
capital to shareholders and investing in growth. As we enter the
next phase of our journey, we will continue to focus on operational
excellence and generating strong cash flows. I have great
confidence in our team as we look to create tremendous value in
this exciting next chapter for Light & Wonder and work towards
driving sustainable growth and competitive differentiation.”
(1) Principal face value of debt
outstanding represents outstanding principal value of debt balances
that conforms to the presentation found in Note 11 to the Condensed
Consolidated Financial Statements in our September 30, 2022 Form
10-Q.
(2) Represents a non-GAAP financial
measure. Additional information on non-GAAP financial measures
presented herein is available at the end of this release.
(3) This amount is as of November 4,
2022.
BUSINESS AND STRATEGY UPDATE
- Overall, the Company delivered on its strategic
initiatives and balance sheet transformation with the completed
sale of the Sports Betting business, which generated approximately
$800 million in gross proceeds.
- Delivered double-digit topline growth, driven by
continued strong momentum across Gaming and iGaming and record
revenue at SciPlay.
- Continued expansion in high-growth digital markets, with
record revenue at SciPlay, and iGaming growing 19% on a constant
currency revenue(1)(2) basis year-over-year.
- Achieved net debt leverage ratio(1) of 3.1x, squarely
within our targeted net debt leverage ratio(1) range of 2.5x to
3.5x, at September 30, 2022.
- Returned $241 million of capital to shareholders through
the repurchase of approximately 4.4 million shares of common stock
since initiation of the program on March 3, 2022, and through
November 4, 2022, representing 32% of total program
authorization.
- Completed leadership transition, with Matt Wilson
appointed as President and Chief Executive Officer of Light &
Wonder, continuing to execute on the Company’s strategic plan and
financial targets provided at 2022 Investor Day.
SUMMARY RESULTS
We have reflected our former Lottery business (disposed during
the second quarter of 2022) and Sports Betting business (disposed
during the third quarter of 2022) as discontinued operations for
all periods presented. Unless otherwise noted, amounts,
percentages, and discussion included below reflect the results of
operations and financial condition of the Company’s continuing
operations, which includes its Gaming, SciPlay, and iGaming
businesses.
Three Months Ended September
30,
($ in millions)
2022
2021
Revenue
$
648
$
539
Net income
20
100
Combined net cash (used in) provided by
operating activities
(351
)
187
Capital expenditures
58
43
Non-GAAP Financial
Measures
Consolidated AEBITDA(1)
$
235
$
203
Combined free cash flow(1)
(420
)
130
As of
Balance Sheet
Measures
September 30, 2022
December 31, 2021
Cash and cash equivalents
$
1,277
$
629
Total debt
3,898
8,690
Available liquidity(3)
2,165
1,417
(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) Constant currency revenue is
calculated by translating current period non-U.S. denominated
revenue using the prior year’s currency conversion rate. Foreign
currency impact on iGaming revenue for the third quarter of 2022
was $5 million. Management uses or refers to growth rates at
constant currency so that the revenue results can be viewed without
the impact of fluctuations in foreign currency exchange rates,
thereby facilitating period-to-period comparisons given that a
significant proportion of iGaming revenue is denominated in foreign
currencies.
(3) Available liquidity is calculated as
cash and cash equivalents (including discontinued operations for
December 31, 2021) plus remaining revolver capacity, including the
SciPlay Revolver.
Third Quarter 2022 Financial Highlights:
- Third quarter consolidated revenue was $648 million
compared to $539 million, up 20% compared to the prior year period.
Growth was driven by all lines of business, with double-digit
revenue growth in Gaming demonstrating continued strong momentum.
Revenue also benefited from year-over-year growth at SciPlay, which
reached a quarterly record, while iGaming’s underlying businesses
momentum continued despite 9% unfavorable impact of foreign
currency translation.
- Net income from continuing operations was $20 million
compared to $100 million in the prior year period. Net income
decreased as prior year net income benefited from a $181 million
income tax benefit as a result of the partial reversal of our
valuation allowance on deferred taxes, which was partially offset
by higher revenue and operating income as well as lower interest
expense in the current period.
- Consolidated AEBITDA, a non-GAAP financial measure
defined below, was $235 million, an increase of 16% compared to the
prior year period, primarily driven by growth in our Gaming
business.
- Combined net cash (used in) provided by operating
activities was $(351) million compared to $187 million in the
prior year period, which includes both continuing and discontinued
operations. The current year cash flows were primarily impacted by
$465 million in cash taxes paid related to divestiture of Lottery
business, coupled with a $25 million SciPlay legal settlement
payment during the quarter.
- Combined free cash flow, a non-GAAP financial measure
defined below, was $(420) million, which includes both continuing
and discontinued operations. The current year combined free cash
flow was primarily impacted by $465 million in cash taxes paid
related to divestiture of Lottery business, coupled with a $25
million SciPlay legal settlement payment during the quarter.
- Net debt leverage ratio, a non-GAAP financial measure
defined below, declined 70% to 3.1x from the peak of 10.5x at
December 31, 2020, squarely in our targeted net debt leverage
ratio(1) range of 2.5x to 3.5x.
CONTINUING OPERATIONS BUSINESS
SEGMENT HIGHLIGHTS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 2022
($ in millions)
Revenue
AEBITDA
AEBITDA Margin(2)(3)
2022
2021
$
%
2022
2021
$
%
2022
2021
PP Change(3)
Gaming
$
419
$
339
$
80
24
%
$
202
$
172
$
30
17
%
48
%
51
%
(3
)
SciPlay
171
147
24
17
%
43
45
(2
)
(4
)%
25
%
31
%
(5
)
iGaming
58
53
5
9
%
20
18
2
11
%
34
%
34
%
—
Corporate and other(4)
—
—
—
—
%
(30
)
(32
)
2
6
%
n/a
n/a
n/a
Total
$
648
$
539
$
109
20
%
$
235
$
203
$
32
16
%
36
%
38
%
(2
)
PP - percentage points.
n/a - not applicable.
(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) Segment AEBITDA Margin is calculated
as segment AEBITDA as a percentage of segment revenue.
(3) As calculations are made using whole
dollar numbers, actual results may vary compared to calculations
presented in this table.
(4) Includes amounts not allocated to the
business segments (including corporate costs) and other
non-operating expenses (income).
Third Quarter 2022 Key Highlights
- Gaming revenue increased 24% to $419 million compared to
the prior year period, driven by robust 47% growth in Gaming
machine sales coupled with continued growth momentum in Gaming
operations. Gaming operations remained above 2019 levels with
record North America premium installed base units and continued
elevated average daily revenue per unit. Gaming AEBITDA was $202
million, up 17% compared to the prior year period.
- Gaming Operations revenue benefited from
year-over-year growth in our North American installed base and
average daily revenue per unit, driven by strong content
performance and continued success of our Kascada and Mural
cabinets. Our North American premium installed base has grown for
the 9th consecutive quarter, achieving a record 45% of our total
installed base mix, while revenue per day remained at elevated
levels. Additionally, we continue to see positive momentum with the
launch of the Kascada Dual Screen and Landmark 7000, validating our
continued investment in our R&D engine to drive our long-term
growth.
- SciPlay revenue increased 17% to $171 million compared
to the prior year period, achieving a quarterly revenue record.
Growth was primarily driven by the core social casino business,
which delivered strong payer metrics and once again outpaced the
market and gained share, coupled with benefit from the Alictus
acquisition. Payer conversion rates continue to be at an all-time
high growing sequentially to a record 9.7%, while ARPDAU grew 16%
year-over-year to a record $0.80 and AMRPPU continued at elevated
levels. We continued to benefit from key investments that are
driving strong engagement and monetization of our players.
- iGaming revenue increased 9% to $58 million compared to
the prior year period, primarily driven by continued growth in the
U.S. market, partially offset by approximately $5 million in
unfavorable impact of foreign-currency translation due to
strengthening U.S. Dollar, impacting revenue growth by 10
percentage points. The U.S market delivered 39% year-over-year
revenue growth, driven in part by the strong launches of our
land-based original content and growth in gross gaming revenue on
our platform as we gained share. AEBITDA of $20 million was up 11%
compared to the prior year period. AEBITDA margin remained flat due
to the scaling of original content launches, as well as our
acquisitions, offset by higher costs associated with continued
investments supporting ongoing growth, including our upcoming
launch of live casino in the U.S.
- House Advantage was acquired in October 2022, a leading
loyalty and marketing software and technology provider, which will
advance our Gaming systems offering with enhanced loyalty
capabilities.
LIQUIDITY
- Combined net cash (used in) provided by operating
activities was $(351) million compared to $187 million in the
prior year period, which includes both continuing and discontinued
operations. The current year cash flows were primarily impacted by
$465 million in cash taxes paid related to divestiture of Lottery
business, coupled with a $25 million SciPlay legal settlement
payment during the quarter.
- Combined free cash flow, a non-GAAP financial measure
defined below, was $(420) million, which includes both continuing
and discontinued operations. The current year combined free cash
flow was primarily impacted by $465 million in cash taxes paid
related to divestiture of Lottery business, coupled with a $25
million SciPlay legal settlement payment during the quarter.
- Net debt leverage ratio, a non-GAAP financial measure
defined below, declined 70% to 3.1x from the peak of 10.5x at
December 31, 2020, squarely in our targeted net debt leverage
ratio(1) range of 2.5x to 3.5x.
- Capital expenditures from continuing operations were $58
million in the third quarter of 2022.
(1) Represents a non-GAAP financial
measure. Additional information on non-GAAP financial measures
presented herein is available at the end of this release.
Earnings Conference Call
As previously announced, Light and Wonder executive leadership
will host a conference call on Wednesday, November 9, 2022, at 4:30
p.m. EDT to review the Company’s third quarter results. To access
the call live via a listen-only webcast and presentation, please
visit explore.lnw.com/investors/ and
click on the webcast link under the Events and Presentations
section. To access the call by telephone, please dial: +1 (844)
200-6205 for U.S. or +1 (929) 526-1599 for International and ask to
join the Light & Wonder call using conference ID: 015548. A
replay of the webcast will be archived in the Investors section on
www.lnw.com.
About Light & Wonder
Light & Wonder, Inc. (NASDAQ: LNW) (formerly known as
Scientific Games Corporation) is a global leader in cross-platform
games and entertainment. The Company brings together approximately
6,000 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 www.lnw.com.
You can access our filings with the SEC through the SEC website
at www.sec.gov or through our website,
and we strongly encourage you to do so. We routinely post
information that may be important to investors on our website at
explore.lnw.com/investors/, and we use
our website as a means of disclosing material information to the
public in a broad, non-exclusionary manner for purposes of the
SEC’s Regulation Fair Disclosure (Reg FD).
The information contained on, or that may be accessed through,
our website is not incorporated by reference into, and is not a
part of, this document, and shall not be deemed “filed” under the
Securities Exchange Act of 1934, as amended.
All ® notices signify marks registered in the United States. ©
2022 Light & Wonder, Inc. All Rights Reserved.
Forward-Looking Statements
In this press release, Light & Wonder makes “forward-looking
statements” within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements describe
future expectations, plans, results or strategies and can often be
identified by the use of terminology such as “may,” “will,”
“estimate,” “intend,” “plan,” “continue,” “believe,” “expect,”
“anticipate,” “target,” “should,” “could,” “potential,”
“opportunity,” “goal,” 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 and uncertainties and other
factors, including, among other things:
- the impact of the COVID-19 pandemic and any resulting
unfavorable social, political, economic and financial conditions,
including the temporary and potentially recurring closure of
casinos and lottery operations on a jurisdiction-by-jurisdiction
basis;
- risks relating to the sales of our Lottery business and Sports
Betting business (“Divestitures”), including that the transactions
will yield additional value or will not adversely impact our
business, financial results, results of operations, cash flows or
stock price;
- our inability to successfully execute our new strategy and
rebranding initiative;
- our inability to further de-lever and position the Company for
enhanced growth with net proceeds from the Divestitures;
- slow growth of new gaming jurisdictions, slow addition of
casinos in existing jurisdictions and declines in the replacement
cycle of gaming machines;
- risks relating to foreign operations, including anti-corruption
laws, fluctuations in currency rates, restrictions on the payment
of dividends from earnings, restrictions on the import of products
and financial instability;
- difficulty predicting what impact, if any, new tariffs imposed
by and other trade actions taken by the U.S. and foreign
jurisdictions could have on our business;
- U.S. and international economic and industry conditions;
- level of our indebtedness, higher interest rates, availability
or adequacy of cash flows and liquidity to satisfy indebtedness,
other obligations or future cash needs;
- inability to further reduce or refinance our indebtedness;
- restrictions and covenants in debt agreements, including those
that could result in acceleration of the maturity of our
indebtedness;
- competition;
- inability to win, retain or renew, or unfavorable revisions of,
existing contracts, and the inability to enter into new
contracts;
- the impact of U.K. legislation approving the reduction of
fixed-odds betting terminals maximum stakes limit on LBO operators,
including the related closure of certain LBO shops;
- inability to adapt to, and offer products that keep pace with,
evolving technology, including any failure of our investment of
significant resources in our R&D efforts;
- changes in demand for our products and services;
- inability to achieve some or all of the anticipated benefits of
SciPlay being a standalone public company;
- dependence on suppliers and manufacturers;
- SciPlay’s dependence on certain key providers;
- ownership changes and consolidation in the gaming
industry;
- fluctuations in our results due to seasonality and other
factors;
- security and integrity of our products and systems, including
the impact of any security breaches or cyber-attacks;
- protection of our intellectual property, inability to license
third-party intellectual property and the intellectual property
rights of others;
- reliance on or failures in information technology and other
systems;
- litigation and other liabilities relating to our business,
including litigation and liabilities relating to our contracts and
licenses, our products and systems, our employees (including labor
disputes), intellectual property, environmental laws and our
strategic relationships;
- reliance on technological blocking systems;
- challenges or disruptions relating to the completion of the
domestic migration to our enterprise resource planning system;
- laws and government regulations, both foreign and domestic,
including those relating to gaming, data privacy and security,
including with respect to the collection, storage, use,
transmission and protection of personal information and other
consumer data, and environmental laws, and those laws and
regulations that affect companies conducting business on the
internet, including online gambling;
- legislative interpretation and enforcement, regulatory
perception and regulatory risks with respect to gaming, especially
internet wagering, social gaming and sports wagering;
- changes in tax laws or tax rulings, or the examination of our
tax positions;
- opposition to legalized gaming or the expansion thereof and
potential restrictions on internet wagering;
- significant opposition in some jurisdictions to interactive
social gaming, including social casino gaming and how such
opposition could lead these jurisdictions to adopt legislation or
impose a regulatory framework to govern interactive social gaming
or social casino gaming specifically, and how this could result in
a prohibition on interactive social gaming or social casino gaming
altogether, restrict our ability to advertise our games, or
substantially increase our costs to comply with these
regulations;
- expectations of shift to regulated digital gaming or sports
wagering;
- inability to develop successful products and services and
capitalize on trends and changes in our industries, including the
expansion of internet and other forms of digital gaming;
- the continuing evolution of the scope of data privacy and
security regulations, and our belief that the adoption of
increasingly restrictive regulations in this area is likely within
the U.S. and other jurisdictions;
- incurrence of restructuring costs;
- goodwill impairment charges including changes in estimates or
judgments related to our impairment analysis of goodwill or other
intangible assets;
- stock price volatility;
- failure to maintain adequate internal control over financial
reporting;
- dependence on key executives;
- natural events that disrupt our operations, or those of our
customers, suppliers or regulators; and
- expectations of growth in total consumer spending on social
casino gaming.
Additional information regarding risks and uncertainties and
other factors that could cause actual results to differ materially
from those contemplated in forward-looking statements is included
from time to time in our filings with the SEC, including the
Company’s current reports on Form 8-K and quarterly reports on Form
10-Q and its latest Annual Report on Form 10-K filed with the SEC
for the year ended December 31, 2021 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 our ongoing obligations under the
U.S. federal securities laws, we undertake no and expressly
disclaim any obligation to publicly update any forward-looking
statements whether as a result of new information, future events or
otherwise.
You should also note that this press release may contain
references to industry market data and certain industry forecasts.
Industry market data and industry forecasts are obtained from
publicly available information and industry publications. Industry
publications generally state that the information contained therein
has been obtained from sources believed to be reliable, but that
the accuracy and completeness of that information is not
guaranteed. Although we believe industry information to be
accurate, it is not independently verified by us and we do not make
any representation as to the accuracy of that information. In
general, we believe there is less publicly available information
concerning the international gaming, social and digital gaming
industries than the same industries in the U.S.
Due to rounding, certain numbers presented herein may not
precisely recalculate.
LIGHT & WONDER, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited, in millions,
except per share amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Revenue:
Services
$
453
$
408
$
1,329
$
1,216
Product sales
195
131
501
356
Total revenue
648
539
1,830
1,572
Operating expenses:
Cost of services(1)
101
90
283
273
Cost of product sales(1)
92
63
251
166
Selling, general and administrative
181
164
535
502
Research and development
56
47
163
140
Depreciation, amortization and
impairments
102
96
317
289
Restructuring and other
27
45
106
96
Total operating expenses
559
505
1,655
1,466
Operating income
89
34
175
106
Other (expense) income:
Interest expense
(68
)
(120
)
(254
)
(360
)
Loss on debt financing transactions
—
—
(147
)
—
Gain on remeasurement of debt and
other
—
12
27
30
Other income, net
3
2
10
22
Total other expense, net
(65
)
(106
)
(364
)
(308
)
Net income (loss) from continuing
operations before income taxes
24
(72
)
(189
)
(202
)
Income tax (expense) benefit
(4
)
172
(8
)
164
Net income (loss) from continuing
operations
20
100
(197
)
(38
)
Net income from discontinued operations,
net of tax(2)
315
87
3,855
329
Net income
335
187
3,658
291
Less: Net income attributable to
noncontrolling interest
7
5
13
15
Net income attributable to L&W
$
328
$
182
$
3,645
$
276
Per Share - Basic:
Net income (loss) from continuing
operations
$
0.14
$
0.99
$
(2.20
)
$
(0.55
)
Net income from discontinued
operations
3.33
0.90
40.43
3.43
Net income attributable to L&W
$
3.47
$
1.89
$
38.23
$
2.88
Per Share - Diluted:
Net income (loss) from continuing
operations
$
0.14
$
0.96
$
(2.20
)
$
(0.55
)
Net income from discontinued
operations
3.28
0.88
40.43
3.43
Net income attributable to L&W
$
3.42
$
1.84
$
38.23
$
2.88
Weighted average number of shares used in
per share calculations:
Basic shares
94
96
95
96
Diluted shares
96
99
95
96
(1) Excludes depreciation and
amortization.
(2) The three months ended September 30,
2022 include a pre-tax gain of $362 million on the sale of the
Sports Betting business, and the nine months ended September 30,
2022 include a total pre-tax gain of $4,930 million on the sales of
the Lottery and Sports Betting businesses.
LIGHT & WONDER, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited, in millions except
for common shares outstanding)
September 30,
December 31,
2022
2021
Assets:
Cash and cash equivalents
$
1,277
$
585
Restricted cash
42
41
Receivables, net of allowance for credit
losses $41 and $52, respectively
426
423
Inventories
137
98
Prepaid expenses, deposits and other
current assets
166
88
Assets of businesses held for sale
—
497
Total current assets
2,048
1,732
Restricted cash
7
9
Receivables, net of allowance for credit
losses $2 and $2, respectively
16
17
Property and equipment, net
202
213
Operating lease right-of-use assets
51
51
Goodwill
2,865
2,892
Intangible assets, net
767
946
Software, net
130
117
Deferred income taxes
92
349
Other assets
68
80
Assets of businesses held for sale
—
1,477
Total assets
$
6,246
$
7,883
Liabilities and Stockholders’
Equity (Deficit):
Current portion of long-term debt
$
24
$
44
Accounts payable
176
204
Accrued liabilities
352
428
Income taxes payable
250
16
Liabilities of businesses held for
sale
—
282
Total current liabilities
802
974
Deferred income taxes
143
35
Operating lease liabilities
39
40
Other long-term liabilities
156
170
Long-term debt, excluding current
portion
3,874
8,646
Liabilities of businesses held for
sale
—
124
Total stockholders’ equity
(deficit)(1)
1,232
(2,106
)
Total liabilities and stockholders’ equity
(deficit)
$
6,246
$
7,883
(1) Includes $161 million and $150 million
in noncontrolling interest as of September 30, 2022 and December
31, 2021, respectively.
LIGHT & WONDER, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, in
millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Cash flows from operating activities:
Net income
$
335
$
187
$
3,658
$
291
Less: Income from discontinued operations,
net of tax
(315
)
(87
)
(3,855
)
(329
)
Adjustments to reconcile net income (loss)
from continuing operations to net cash (used in) provided by
operating activities from continuing operations
119
114
488
358
Changes in working capital accounts,
excluding the effects of acquisitions
(496
)
51
(641
)
51
Changes in deferred income taxes and
other
(2
)
(176
)
4
(172
)
Net cash (used in) provided by operating
activities from continuing operations
(359
)
89
(346
)
199
Net cash provided by operating activities
from discontinued operations
8
98
52
260
Net cash (used in) provided by operating
activities
(351
)
187
(294
)
459
Cash flows from investing activities:
Capital expenditures
(58
)
(43
)
(158
)
(118
)
Acquisitions of businesses, net of cash
acquired
(2
)
(40
)
(118
)
(40
)
Proceeds from settlement of cross-currency
interest rate swaps
—
—
50
—
Other, net
6
1
2
10
Net cash used in investing activities from
continuing operations
(54
)
(82
)
(224
)
(148
)
Net cash provided by (used in) investing
activities from discontinued operations(1)
739
(26
)
6,368
(58
)
Net cash provided by (used in) investing
activities
685
(108
)
6,144
(206
)
Cash flows from financing activities:
Payments of long-term debt, net
(5
)
(161
)
(4,887
)
(432
)
Payments of debt issuance and deferred
financing costs
—
(5
)
(37
)
(5
)
Payments on license obligations
(6
)
(1
)
(30
)
(25
)
Purchase of treasury stock
—
—
(203
)
—
Purchase of SciPlay’s common stock
(11
)
—
(18
)
—
Net redemptions of common stock under
stock-based compensation plans and other
(2
)
(1
)
(35
)
(22
)
Net cash used in financing activities from
continuing operations
(24
)
(168
)
(5,210
)
(484
)
Net cash used in financing activities from
discontinued operations
—
—
(3
)
(8
)
Net cash used in financing activities
(24
)
(168
)
(5,213
)
(492
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(6
)
(3
)
(12
)
(3
)
Increase (decrease) in cash, cash
equivalents and restricted cash
304
(92
)
625
(242
)
Cash, cash equivalents and restricted
cash, beginning of period
1,022
993
701
1,143
Cash, cash equivalents and restricted
cash, end of period
1,326
901
1,326
901
Less: Cash, cash equivalents and
restricted cash of discontinued operations
—
71
—
71
Cash, Cash equivalents and restricted cash
of continuing operations, end of period
$
1,326
$
830
$
1,326
$
830
Supplemental cash flow information:
Cash paid for interest
$
52
$
120
$
271
$
349
Income taxes paid
474
14
497
27
Distributed earnings from equity
investments
—
—
4
15
Supplemental non-cash transactions:
Non-cash interest expense
$
3
$
6
$
12
$
18
Fair value of securities received in sale
of discontinued operations
46
—
46
—
(1) The three months ended September 30,
2022 include $750 million in gross cash proceeds from the sale of
the Sports Betting business, and the nine months ended September
30, 2022 include $6,409 million in gross proceeds from the sales of
the Lottery and Sports Betting businesses, both net of cash, cash
equivalents and restricted cash transferred.
LIGHT & WONDER, INC. AND
SUBSIDIARIES
RECONCILIATION OF CONSOLIDATED
AEBITDA - CONTINUING OPERATIONS AND
SUPPLEMENTAL BUSINESS SEGMENT
DATA
(Unaudited, in
millions)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Reconciliation of
Net Income Attributable to L&W to Consolidated AEBITDA -
Continuing Operations
Net income attributable to L&W
$
328
$
182
$
3,645
$
276
Net income attributable to noncontrolling
interest
7
5
13
15
Net income from discontinued operations,
net of tax
(315
)
(87
)
(3,855
)
(329
)
Net income (loss) from continuing
operations
20
100
(197
)
(38
)
Restructuring and other(1)
27
45
106
96
Depreciation, amortization and
impairments
102
96
317
289
Other income, net
(1
)
—
(7
)
(19
)
Interest expense
68
120
254
360
Income tax expense (benefit)
4
(172
)
8
(164
)
Stock-based compensation
15
26
47
81
Loss on debt financing transactions
—
—
147
—
Gain on remeasurement of debt and
other
—
(12
)
(27
)
(30
)
Consolidated AEBITDA - continuing
operations
$
235
$
203
$
648
$
575
Supplemental
Business Segment Data
Business segments AEBITDA - continuing
operations
Gaming
$
202
$
172
$
552
$
472
SciPlay
43
45
128
138
iGaming
20
18
61
60
Total business segments AEBITDA -
continuing operations
265
235
741
670
Corporate and other(2)
(30
)
(32
)
(93
)
(95
)
Consolidated AEBITDA - continuing
operations
$
235
$
203
$
648
$
575
(1) Refer to the Consolidated AEBITDA -
continuing operations definition below for a description of items
included in restructuring and other.
(2) Includes amounts not allocated to the
business segments (including corporate costs) and other
non-operating expenses (income).
LIGHT & WONDER, INC. AND
SUBSIDIARIES
CONTINUING OPERATIONS
SUPPLEMENTAL INFORMATION - SEGMENT KEY PERFORMANCE INDICATORS AND
SUPPLEMENTAL FINANCIAL DATA
(Unaudited, in millions,
except unit and per unit data or as otherwise noted)
Three Months Ended
September 30, 2022
September 30, 2021
June 30, 2022
Gaming Business
Segment Supplemental Financial Data:
Revenue by line of
business:
Gaming operations
$
161
$
151
$
163
Gaming machine sales
140
95
123
Gaming systems
70
52
60
Table products
48
41
44
Total revenue
$
419
$
339
$
390
Gaming
Operations:
U.S. and Canada:
Installed base at period end
30,536
30,396
30,836
Average daily revenue per unit
$
45.68
$
42.66
$
45.86
International:(1)
Installed base at period end
28,100
30,644
28,966
Average daily revenue per unit
$
12.39
$
11.78
$
13.63
Gaming Machine
Sales:
U.S. and Canada new unit shipments
4,400
3,223
4,009
International new unit shipments
2,859
1,780
2,479
Total new unit shipments
7,259
5,003
6,488
Average sales price per new unit
$
17,359
$
16,099
$
17,176
Gaming Machine Unit
Sales Components:
U.S. and Canada unit shipments:
Replacement units
3,688
2,887
3,369
Casino opening and expansion units
712
336
640
Total unit shipments
4,400
3,223
4,009
International unit shipments:
Replacement units
2,725
1,690
2,443
Casino opening and expansion units
134
90
36
Total unit shipments
2,859
1,780
2,479
SciPlay Business
Segment Supplemental Financial Data:
Revenue:
Mobile in-app purchases
$
149
$
131
$
138
Web in-app purchases and other(2)
22
16
22
Total revenue
$
171
$
147
$
160
In-App
Purchases:
Mobile penetration(3)
90
%
89
%
90
%
Average MAU(4)
5.9
6.1
5.9
Average DAU(5)
2.2
2.3
2.3
ARPDAU(6)
$
0.80
$
0.69
$
0.74
Average MPU(7)
0.6
0.5
0.6
AMRPPU(8)
$
95.45
$
93.67
$
90.99
Payer Conversion Rate(9)
9.7
%
8.5
%
9.4
%
iGaming Business
Segment Supplemental Data:
Wagers processed through Open Gaming
System (in billions)
$
17.5
$
16.9
$
17.8
(1) Excludes the impact of game content
licensing revenue.
(2) Other primarily consists of
advertising revenue which was not material for the periods
presented.
(3) Mobile penetration is defined as the
percentage of SciPlay revenue generated from mobile platforms.
(4) MAU = Monthly Active Users is a count
of visitors to our sites during a month. An individual who plays
multiple games or from multiple devices may, in certain
circumstances, be counted more than once. However, we use
third-party data to limit the occurrence of multiple counting.
(5) DAU = Daily Active Users is a count of
visitors to our sites during a day. An individual who plays
multiple games or from multiple devices may, in certain
circumstances, be counted more than once. However, we use
third-party data to limit the occurrence of multiple counting.
(6) ARPDAU = Average revenue per DAU is
calculated by dividing revenue for a period by the DAU for the
period by the number of days for the period.
(7) MPU = Monthly Paying Users is the
number of individual users who made an in-game purchase during a
particular month.
(8) AMRPPU = Average Monthly Revenue Per
Paying User is calculated by dividing average monthly revenue by
average MPUs for the applicable time period.
(9) Payer conversion rate is calculated by
dividing average MPU for the period by the average MAU for the same
period.
LIGHT & WONDER, INC. AND
SUBSIDIARIES
(Unaudited, in millions,
except for ratios)
RECONCILIATION OF NET INCOME
(LOSS) ATTRIBUTABLE TO L&W TO CONSOLIDATED AEBITDA - CONTINUING
OPERATIONS
Twelve Months Ended
September 30, 2022
December 31, 2020
Net income (loss) attributable to
L&W
$
3,739
$
(569
)
Net income attributable to noncontrolling
interest
16
21
Net income from discontinued operations,
net of tax
(3,890
)
(253
)
Net loss from continuing operations
(135
)
(801
)
Restructuring and other
176
56
Depreciation, amortization and
impairments
426
449
Goodwill impairment
—
54
Other (income) expense, net
(16
)
9
Interest expense
372
503
Income tax benefit
(146
)
(3
)
Stock-based compensation
79
56
Loss on debt financing transactions
147
—
(Gain) loss on remeasurement of debt and
other
(38
)
51
Consolidated AEBITDA - continuing
operations
$
865
$
374
RECONCILIATION OF NET INCOME
FROM DISCONTINUED OPERATIONS, NET OF TAX TO AEBITDA FROM
DISCONTINUED OPERATIONS AND COMBINED AEBITDA
Twelve Months Ended
December 31, 2020
Net income from discontinued operations,
net of tax
$
253
Income tax expense
7
Restructuring and other
11
Depreciation, amortization and
impairments
105
EBITDA from equity investments(1)
30
Loss from equity investments
9
Stock-based compensation and other,
net
4
AEBITDA from discontinued
operations(2)
$
419
EBITDA from equity investments -
continuing operations(3)
7
Combined AEBITDA(3)
$
800
RECONCILIATION OF PRINCIPAL
FACE VALUE OF DEBT OUTSTANDING TO NET DEBT AND NET DEBT LEVERAGE
RATIO
As of
September 30, 2022
December 31, 2020
Consolidated AEBITDA/Combined
AEBITDA(3)
$
865
$
800
Total debt
$
3,898
$
9,303
Add: Unamortized debt discount/premium and
deferred financing costs, net
49
104
Add: Impact of exchange rate
—
7
Less: Debt not requiring cash repayment
and other
(2
)
(7
)
Principal face value of debt
outstanding
3,945
9,407
Less: Combined cash and cash
equivalents
1,277
1,016
Net debt
$
2,668
$
8,391
Net debt leverage ratio
3.1
10.5
(1) EBITDA from equity investments is a
non-GAAP financial measure reconciled to the most directly
comparable GAAP measure in the accompanying supplemental tables at
the end of this release.
(2) 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.
(3) 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.
LIGHT & WONDER, INC. AND
SUBSIDIARIES
(Unaudited, in
millions)
RECONCILIATION OF NET CASH
(USED IN) PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW -
CONTINUING OPERATIONS AND COMBINED FREE CASH FLOW
Three Months Ended September
30,
2022
2021
Continuing Operations
Discontinued
Operations(2)
Combined(3)
Continuing Operations
Discontinued
Operations(2)
Combined(3)
Operations
(exc.
interest and
taxes)
Cash
interest
and taxes(1)
Total
Operations
(exc.
interest and
taxes)
Cash
interest
and taxes(1)
Total
Net cash (used in) provided by operating
activities
$
167
$
(526
)
$
(359
)
$
8
$
(351
)
$
221
$
(132
)
$
89
$
98
$
187
Less: Capital expenditures
(58
)
—
(58
)
(7
)
(65
)
(43
)
—
(43
)
(21
)
(64
)
Less: Distributions from equity method
investments, net of additions
—
—
—
—
—
1
—
1
4
5
Less: Payments on license obligations
(6
)
—
(6
)
—
(6
)
(1
)
—
(1
)
—
(1
)
Add (less): Change in restricted cash
impacting working capital
2
—
2
—
2
(1
)
—
(1
)
4
3
Free cash flow
$
105
$
(526
)
$
(421
)
$
1
$
(420
)
$
177
$
(132
)
$
45
$
85
$
130
Supplemental cash flow information -
Strategic Review and Related Costs Impacting Combined Free Cash
Flows:
Professional fees and services supporting
Strategic review and related activities
$
8
Income taxes related to dispositions
465
SciPlay legal settlement payment
25
(1) Represents cash taxes and cash
interest paid on our existing debt, which has not historically been
allocated to our business segments. We present this column to
provide the impact of our debt structure for periods presented on
our operating cash flows from continuing operations to provide
greater comparability to cash flows generated by our continuing and
discontinued operations.
(2) Free cash flow from discontinued
operations, a non-GAAP measure, is derived based on the historical
records and includes only those direct cash flows that are
allocated to discontinued operations. See below for further
description and disclaimers associated with this non-GAAP
measure.
(3) Combined free cash flow consists of
Free cash flow (representing Free cash flow from continuing
operations) and Free cash flow from discontinued operations. Refer
to non-GAAP financial measure definitions below for further
details.
Nine Months Ended September
30,
2022
2021
Continuing Operations
Discontinued
Operations(2)
Combined(3)
Continuing Operations
Discontinued
Operations(2)
Combined(3)
Operations
(exc.
interest and
taxes)
Cash
interest
and taxes(1)
Total
Operations
(exc.
interest and
taxes)
Cash
interest
and taxes(1)
Total
Net cash (used in) provided by operating
activities
$
420
$
(766
)
$
(346
)
$
52
$
(294
)
$
570
$
(371
)
$
199
$
260
$
459
Less: Capital expenditures
(158
)
—
(158
)
(37
)
(195
)
(118
)
—
(118
)
(49
)
(167
)
Less: Distributions from equity method
investments, net of additions
—
—
—
—
—
3
—
3
9
12
Less: Payments on license obligations
(30
)
—
(30
)
(2
)
(32
)
(25
)
—
(25
)
(5
)
(30
)
Add (less): Change in restricted cash
impacting working capital
1
—
1
(6
)
(5
)
7
—
7
62
69
Free cash flow
$
233
$
(766
)
$
(533
)
$
7
$
(526
)
$
437
$
(371
)
$
66
$
277
$
343
Supplemental cash flow information -
Strategic Review and Related Costs Impacting Combined Free Cash
Flows:
Disposition and other closing expenses
$
80
Payments related to April 2022
refinancing(4)
5
Professional fees and services supporting
Strategic review and related activities
72
Income taxes related to dispositions
465
SciPlay legal settlement payment
25
(1) Represents cash taxes and cash
interest paid on our existing debt, which has not historically been
allocated to our business segments. We present this column to
provide the impact of our debt structure for periods presented on
our operating cash flows from continuing operations to provide
greater comparability to cash flows generated by our continuing and
discontinued operations.
(2) Free cash flow from discontinued
operations, a non-GAAP measure, is derived based on the historical
records and includes only those direct cash flows that are
allocated to discontinued operations. See below for further
description and disclaimers associated with this non-GAAP
measure.
(3) Combined free cash flow consists of
Free cash flow (representing Free cash flow from continuing
operations) and Free cash flow from discontinued operations. Refer
to non-GAAP financial measure definitions below for further
details.
(4) Excludes impact of interest savings
anticipated as a result of April 2022 refinancing transactions of
approximately $92 million.
LIGHT & WONDER, INC. AND
SUBSIDIARIES
(Unaudited, in
millions)
RECONCILIATION OF EARNINGS
FROM EQUITY INVESTMENTS TO EBITDA FROM EQUITY INVESTMENTS AND
COMBINED EBITDA FROM EQUITY INVESTMENTS
Twelve Months Ended
December 31, 2020
Continuing Operations
Discontinued
Operations
Earnings (loss) from equity
investments
$
3
$
(9
)
Add: Income tax expense
—
3
Add: Depreciation, amortization and
impairments
1
31
Add: Interest expense, net and other
3
5
EBITDA from equity investments
$
7
$
30
Combined EBITDA from equity
investments(1)
$
37
(1) Combined EBITDA from equity
investments consists of EBITDA from both discontinued and
continuing operations equity investments.
Discontinued Operations
On September 27, 2021, and amended on June 30, 2022 and August
2, 2022, we entered into a definitive agreement to sell our Sports
Betting business to Endeavor Operating Company, LLC, a subsidiary
of Endeavor Group Holdings, Inc., in a cash and stock transaction,
which was completed during the third quarter of 2022. On October
27, 2021, we entered into a definitive agreement to sell our
Lottery business to Brookfield Business Partners L.P., which was
completed during the second quarter of 2022.
Accordingly, the financial results for our Lottery business and
the Sports Betting business presented in the Consolidated
Statements of Operations presented herein have been reclassified to
discontinued operations and prior period Lottery and Sports Betting
businesses balance sheet balances have been reclassified to the
Asset and Liabilities held for sale lines on the Condensed
Consolidated Balance Sheet presented herein in accordance with
Accounting Standard Codification 205-20, Presentation of Financial
Statements - Discontinued Operations.
We report our continuing operations in three business
segments—Gaming, SciPlay and iGaming—representing our different
products and services.
Non-GAAP Financial Measures
The Company’s management (“Management”) uses the following
non-GAAP financial measures in conjunction with GAAP financial
measures: Consolidated AEBITDA (representing continuing
operations), AEBITDA from discontinued operations, Combined
AEBITDA, Free cash flow (representing continuing operations), Free
cash flow from discontinued operations, Combined free cash flow,
EBITDA from equity investments included in discontinued operations,
Net debt and Net debt leverage ratio (each, as described more fully
below). These non-GAAP financial measures are presented as
supplemental disclosures. They should not be considered in
isolation of, as a substitute for, or superior to, the financial
information prepared in accordance with GAAP, and should be read in
conjunction with the Company’s financial statements filed with the
SEC. The non-GAAP financial measures used by the Company may differ
from similarly titled measures presented by other companies.
Specifically, Management uses Consolidated AEBITDA to, among
other things: (i) monitor and evaluate the performance of the
Company’s continuing operations; (ii) facilitate Management’s
internal and external comparisons of the Company’s consolidated
historical operating performance; and (iii) analyze and evaluate
financial and strategic planning decisions regarding future
operating investments and operating budgets.
In addition, Management uses Consolidated AEBITDA to facilitate
its external comparisons of the Company’s consolidated results from
continuing operations to the historical operating performance of
other companies that may have different capital structures and debt
levels.
Management uses Net debt and Net debt leverage ratio in
monitoring and evaluating the Company’s overall liquidity,
financial flexibility and leverage.
As described in this earning release, the Company divested its
Lottery business and Sports Betting business and as such,
historical financial information for these businesses is classified
as discontinued operations, as described above. Management believes
that Combined free cash flow is useful during the period until the
disposition occurs as it provides Management and investors with
information regarding the Company’s combined financial condition
under the structure as of September 30, 2022, including for prior
period comparisons, as the Company is transforming its strategy
subsequent to the divestitures.
Additionally, Combined free cash flow provides greater
visibility into cash available for the continuing operations to use
in investing and financing decisions as this cash flow remains
available for such decisions.
Management believes that these non-GAAP financial measures are
useful as they provide Management and investors with information
regarding the Company’s financial condition and operating
performance that is an integral part of Management’s reporting and
planning processes. In particular, Management believes that
Consolidated AEBITDA is helpful because this non-GAAP financial
measure eliminates the effects of restructuring, transaction,
integration or other items that Management believes are less
indicative of the ongoing underlying performance of continuing
operations (as more fully described below) and are better evaluated
separately. Management believes that Free cash flow and Combined
free cash flow provide useful information regarding the Company’s
liquidity and its ability to service debt and fund investments.
Management also believes that Free cash flow and Combined free
cash flow are useful for investors because they provide investors
with important perspectives on the cash available for debt
repayment and other strategic measures, after making necessary
capital investments in property and equipment, necessary license
payments to support the ongoing business operations, adjustments
for changes in restricted cash impacting working capital and taking
into account cash flows relating to the Company’s equity
investments.
Additionally, Management believes that AEBITDA from discontinued
operations and Free cash flow from discontinued operations provide
useful information regarding the Company’s operations and provide
the impact of the discontinued businesses on the overall financial
results for the periods presented as they remained under the
structure of the Company for the periods presented. These non-GAAP
measures are derived based on the historical records and include
only those direct costs that are allocated to discontinued
operations and as such do not include all of the expenses that
would have been incurred by these businesses as a standalone
company or other Corporate and shared allocations and such
differences might be material.
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 titled “Reconciliation
of Net Income (Loss) Attributable to L&W to Consolidated
AEBITDA - Continuing Operations.” 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 is reconciled to Net income attributable to
L&W and 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, amortization and impairment charges and
Goodwill impairments; (5) Loss on debt financing transactions; (6)
Change in fair value of investments and Gain on remeasurement of
debt and other; (7) Interest expense; (8) Income tax expense
(benefit); (9) Stock-based compensation; and (10) Other income,
net, including foreign currency (gains) and losses, and earnings
from equity investments. AEBITDA is presented exclusively as our
segment measure of profit or loss.
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 titled “Reconciliation of Net Income from Discontinued
Operations, Net of Tax to AEBITDA from Discontinued Operations.”
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 and is
presented only for purposes of calculating and reconciling Net debt
leverage ratio.
AEBITDA from discontinued operations is reconciled to Net income
from discontinued operations, net of tax and 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, amortization and impairment charges and Goodwill
impairments; (3) Income tax expense; and (4) Stock-based
compensation and other, net. In addition to the preceding
adjustments, we exclude Earnings 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.
Combined AEBITDA
Combined AEBITDA, as used herein, is a non-GAAP financial
measure that combines Consolidated AEBITDA (representing our
continuing operations), AEBITDA from discontinued operations and
EBITDA from equity investments included in continuing operations
and is presented as a supplemental disclosure. Combined 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. Combined AEBITDA
may differ from similarly titled measures presented by other
companies and is presented only for purposes of calculating and
reconciling Net debt leverage ratio.
Free Cash Flow - Continuing Operations
Free cash flow, as used herein, represents net cash provided by
operating activities from continuing operations less total capital
expenditures, less payments on license obligations, less
contributions to equity method investments plus distributions of
capital from equity investments, and adjusted for changes in
restricted cash impacting working capital. Free cash flow is a
non-GAAP financial measure that is presented as a supplemental
disclosure for illustrative purposes only and is reconciled to net
cash provided by operating activities, the most directly comparable
GAAP measure, in a schedule above and representing Free cash flows
of our continuing operations.
Free Cash Flow from Discontinued Operations
Free cash flow from discontinued operations, as used herein,
represents net cash provided by operating activities from
discontinued operations less total capital expenditures, less
payments on license obligations, less contributions to equity
method investments plus distributions of capital from equity
investments, and adjusted for changes in restricted cash impacting
working capital. Free cash flow from discontinued operations is a
non-GAAP financial measure that is presented as a supplemental
disclosure for illustrative purposes only and is reconciled to net
cash provided by operating activities from discontinued operations,
the most directly comparable GAAP measure, in a schedule above.
Combined Free Cash Flow
Combined free cash flow, as used herein, represents a non-GAAP
financial measure that combines Free cash flows from continuing
operations and Free cash flows from discontinued operations and is
presented as a supplemental disclosure for illustrative purposes
only.
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 expense, net, and other non-cash and unusual items from
our joint ventures and minority investees. 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 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
September 30, 2022, but it does not include other long term
obligations of $2 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 (paid off
as of June 30, 2022) were translated at the constant foreign
exchange rate at issuance of these notes as those amounts were
payable at the original issuance amounts in Euro. Net debt leverage
ratio, as used herein, represents Net debt divided by Consolidated
AEBITDA for current period and Combined AEBITDA for prior period
(as defined above). The forward-looking non-GAAP financial measure
targeted net debt leverage ratio is presented on a supplemental
basis 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 predict with reasonable certainty the ultimate
outcome of certain significant items without unreasonable effort.
These items are uncertain, depend on various factors, and could
have a material impact on GAAP reported results for the relevant
period.
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version on businesswire.com: https://www.businesswire.com/news/home/20221109005373/en/
Media Relations Grace Russell, +1 702-577-7928 Senior
Director, Corporate Communications media@lnw.com
Investor Relations Jim Bombassei, +1 702-532-7643 Senior
Vice President, Investor Relations jbombassei@lnw.com
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