Generated Double-Digit Consolidated Revenue
Growth of 18% in the Quarter and 17% for the Full Year
Returned $413 Million(1) of Capital to
Shareholders Through Share Repurchases
Light & Wonder, Inc. (NASDAQ: LNW) (“Light & Wonder,”
“L&W” or the “Company”) today reported results for the fourth
quarter and fiscal year ended December 31, 2022.
We completed our strategic transformation, resulting in a
streamlined organization and deleveraged balance sheet, positioning
the Company to strongly execute on its strategic plan and long-term
financial targets.
For the full year, we delivered double-digit topline growth
driven by continued momentum across our businesses and continuing
expansion in high-return markets. Our full year consolidated
revenue grew 17% driven by Gaming recovery approaching pre-pandemic
levels and record revenues for SciPlay and iGaming with strong
momentum in the fourth quarter:
- Gaming revenue increased to $438 million, up 18% compared to
the prior year period, primarily driven by another quarter of
robust Gaming machine sales growth of 41% and continued strong
momentum in Gaming operations, systems and tables.
- SciPlay revenue rose to $182 million, a 18% increase from the
prior year period, and highest quarterly revenue ever.
- iGaming revenue increased 15% and AEBITDA grew 27% from the
prior year period reflecting continued growth momentum in the U.S.
market.
Matt Wilson, President and Chief Executive Officer of Light
& Wonder, said, “2022 was a pivotal year for Light &
Wonder. We delivered on an ambitious and transformative plan while
driving operational success and double-digit growth in our
business.
"We are excited about our future and see strong momentum
continuing in the business in the year to come. Our industry
leading talent, games and technology put us in a strong position to
deliver on our product roadmap, capitalize on the enormous
opportunities ahead and lead in the convergence of gaming.”
Connie James, Chief Financial Officer of Light &
Wonder, added, “We are proud of the tremendous and rapid
progress we have made over the past 18 months. We delivered quality
earnings, setting the foundation for sustainable growth going
forward as we continue to focus on delivering shareholder
value.
"We also returned significant capital to our shareholders,
totaling $413 million(1) since our share repurchase program was
announced a year ago. We now have a strong balance sheet and clear
roadmap to advance with discipline on our balanced and
opportunistic capital allocation strategy and elevate Light &
Wonder’s value proposition.”
(1)
This amount is as of February 24,
2023.
LEVERAGE AND CAPITAL RETURN UPDATE
- Maintained net debt leverage ratio(1) of 3.3x as of December
31, 2022, within our targeted net debt leverage ratio(1) range
of 2.5x to 3.5x.
- Returned $413 million of capital to shareholders through
the repurchase of approximately 7.2 million shares of L&W
common stock since initiating the program on March 3, 2022, and
through February 24, 2023, representing 55% of total program
authorization.
SUMMARY RESULTS
We have reflected our former Lottery business (divested during
the second quarter of 2022) and Sports Betting business (divested
during the third quarter of 2022) (collectively referred to as the
“Divestitures”) as discontinued operations for all periods
presented. Unless otherwise noted, amounts, percentages and
discussion included below reflect the results of operations and
financial condition of the Company’s continuing operations, which
include its Gaming, SciPlay and iGaming businesses.
Three Months Ended December
31,
Year Ended December
31,
($ in millions)
2022
2021
2022
2021
Revenue
$
682
$
580
$
2,512
$
2,153
Net income (loss)
21
62
(176
)
24
Combined net cash (used in) provided by
operating activities
(87
)
226
(381
)
685
Capital expenditures
58
53
216
171
Non-GAAP Financial
Measures
Consolidated AEBITDA(1)
$
265
$
216
$
913
$
793
Combined free cash flow(1)
(148
)
100
(674
)
443
As of December 31,
2022
2021
Balance Sheet
Measures
Cash and cash equivalents
$
914
$
629
Total debt
3,894
8,690
Available liquidity(2)
1,802
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)
Available liquidity is calculated
as cash and cash equivalents (including discontinued operations for
December 31, 2021) plus remaining revolver capacity, including the
SciPlay Revolver.
Fourth Quarter 2022 Financial Highlights:
- Fourth quarter consolidated revenue was $682 million
compared to $580 million, an 18% increase relative to the prior
year period driven by double-digit growth across all lines of
business, with Gaming maintaining strong momentum. Revenue also
benefited from year-over-year growth at SciPlay, which reached
another quarterly record, while iGaming revenue increased 15% or
22% on a constant currency revenue basis(1)(2).
- Net income was $21 million compared to $62 million in
the prior year period, primarily due to an income tax benefit as a
result of a reversal of our valuation allowance on deferred taxes
benefiting the prior year period, which was partially offset by
higher revenue and operating income, as well as lower interest
expense and restructuring and other charges in the current year
period.
- Consolidated AEBITDA, a non-GAAP financial measure
defined below, was $265 million compared to $216 million, a 23%
increase relative to the prior year period, primarily due to growth
in our Gaming business.
- Combined net cash (used in) provided by operating
activities was $(87) million compared to $226 million in the
prior year period, which includes both continuing and discontinued
operations. The current year period cash flows were impacted by
$176 million in cash taxes paid related to the Divestitures coupled
with the timing of payments associated with the strategic review
and related transactions, partially offset by growth in earnings
and lower interest payments.
- Combined free cash flow, a non-GAAP financial measure
defined below, was $(148) million compared to $100 million in the
prior year period. The current year period combined free cash flow
was impacted by $176 million in cash taxes paid related to the
Divestitures coupled with the timing of payments associated with
the strategic review and related transactions, partially offset by
growth in earnings and lower interest payments.
Full Year 2022 Financial Highlights:
- Consolidated revenue was $2,512 million compared to
$2,153 million, a 17% increase relative to the prior year. Growth
was primarily driven by double-digit revenue growth in Gaming,
demonstrating robust recovery and continued momentum approaching
pre-COVID levels. Revenue also benefited from growth at SciPlay
with a strong core business exceeding market growth, while iGaming
demonstrated strong performance enabled by U.S. gross gaming
revenue growth and our original content offerings. Both SciPlay and
iGaming achieved record revenues. Prior year consolidated revenue
benefited from $44 million value-added tax (“VAT”) recovery,
reducing the year-over-year revenue growth comparability by 2
percentage points.
- Net (loss) income was $(176) million compared to $24
million in the prior year due to higher revenue and operating
income, including lower interest expense, which was offset by $147
million in loss on debt financing transactions in the current
period. The prior year benefited from an income tax benefit as a
result of a reversal of our valuation allowance on deferred taxes
and gain on remeasurement of Euro denominated debt, which was
redeemed as part of the April 2022 debt pay down and refinancing
transactions.
- Consolidated AEBITDA, a non-GAAP financial measure
defined below, was $913 million compared to $793 million, a 15%
increase relative to the prior year, primarily due to double-digit
revenue growth. The prior year consolidated AEBITDA benefited from
VAT recovery, reducing the year-over-year consolidated AEBITDA
growth comparability by 7 percentage points.
- Combined net cash (used in) provided by operating
activities was $(381) million compared to $685 million in the
prior year, which includes both continuing and discontinued
operations. The current year cash flows were impacted by $641
million in cash taxes paid related to the Divestitures, timing of
payments associated with the strategic review and related
transactions and unfavorable working capital changes in inventory
and receivables, which were partially offset by lower interest
payments. The prior year included the VAT recovery benefit
described above.
- Combined free cash flow, a non-GAAP financial measure
defined below, was $(674) million compared to $443 million in the
prior year, which includes both continuing and discontinued
operations. The current year combined free cash flow was impacted
by $641 million in cash taxes paid related to the Divestitures
coupled with timing of payments associated with the strategic
review and related transactions, which were partially offset by
lower interest payments. The current year was also impacted by
unfavorable working capital changes in inventory primarily due to
higher inventory purchases in order to limit supply chain impacts
and support future sale levels, while change in receivables was due
to timing of collections and higher billings primarily associated
with strong growth in Gaming business. The prior year included the
VAT recovery benefit.
- Net debt leverage ratio, a non-GAAP financial measure
defined below, declined 47% to 3.3x from 6.2x at the end of 2021,
remaining in our targeted net debt leverage ratio(1) range of 2.5x
to 3.5x. We paid down approximately $4.8 billion of debt during
2022, reducing debt outstanding by 55% to $3.9 billion at the end
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.
(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 fourth quarter of 2022
was $4 million. Management uses or refers to growth rates at
constant currency so that the revenue results can be viewed without
the impact of fluctuations in foreign currency exchange rates,
thereby facilitating period-to-period comparisons given that a
significant proportion of iGaming revenue is denominated in foreign
currencies.
CONTINUING OPERATIONS BUSINESS
SEGMENT HIGHLIGHTS
FOR THE THREE MONTHS ENDED
DECEMBER 31, 2022
($ in millions)
Revenue
AEBITDA
AEBITDA Margin(1)(2)
2022
2021
$
%
2022
2021
$
%
2022
2021
PP Change(3)
Gaming
$
438
$
372
$
66
18
%
$
215
$
186
$
29
16
%
49
%
50
%
(1
)
SciPlay
182
154
28
18
%
59
48
11
24
%
32
%
31
%
1
iGaming
62
54
8
15
%
19
15
4
27
%
31
%
28
%
3
Corporate and other(3)
—
—
—
—
%
(28
)
(33
)
5
15
%
n/a
n/a
n/a
Total
$
682
$
580
$
102
18
%
$
265
$
216
$
49
23
%
39
%
37
%
2
CONTINUING OPERATIONS BUSINESS
SEGMENT HIGHLIGHTS
FOR THE YEAR ENDED DECEMBER
31, 2022
($ in millions)
Revenue
AEBITDA
AEBITDA Margin(1)(2)
2022
2021
$
%
2022
2021
$
%
2022
2021
PP Change(3)
Gaming
$
1,601
$
1,321
$
280
21
%
$
767
$
659
$
108
16
%
48
%
50
%
(2
)
SciPlay
671
606
65
11
%
187
186
1
—
%
28
%
31
%
(3
)
iGaming
240
226
14
6
%
80
75
5
7
%
33
%
33
%
—
Corporate and other(3)
—
—
—
—
%
(121
)
(127
)
6
5
%
n/a
n/a
n/a
Total
$
2,512
$
2,153
$
359
17
%
$
913
$
793
$
120
15
%
36
%
37
%
(1
)
PP - percentage points. n/a - not applicable.
(1)
Segment AEBITDA margin is
calculated as segment AEBITDA as a percentage of segment
revenue.
(2)
As calculations are made using
whole dollar numbers, actual results may vary compared to
calculations presented in this table.
(3)
Includes amounts not allocated to
the business segments (including corporate costs) and other
non-operating expenses (income).
Fourth Quarter 2022 Key Highlights
- Gaming revenue increased to $438 million, up 18%
compared to the prior year period, primarily driven by another
quarter of robust Gaming machine sales growth of 41%. Gaming
operations remained above 2019 levels with continued elevated
average daily revenue per unit, while Gaming systems and Table
products continued strong momentum. Gaming AEBITDA was $215
million, up 16% compared to the prior year period.
- Gaming operations revenue benefited from year-over-year
growth in our North American installed base and elevated average
daily revenue per unit, due to strong content performance and
continued success of our KASCADA® and MURAL® cabinets. Our North
American premium installed base has grown for the 10th consecutive
quarter, representing 45% of our total installed base mix.
Additionally, we continue to see positive momentum with the Kascada
Dual Screen and LANDMARK™ 7000 cabinets, validating our continued
investment in our R&D engine to drive our long-term
growth.
- SciPlay revenue was $182 million, a 18% increase from
the prior year period, breaking another record by achieving the
highest quarterly revenue ever. Growth was primarily driven by the
core social casino business as well as the Alictus acquisition.
SciPlay continued to drive strong engagement and monetization of
players fueled by strategic investments, enabling SciPlay to
deliver record payer metrics, and it once again outpaced the market
and gained share. SciPlay achieved a record number of payers at 0.6
million and the 2nd highest ever AMRPPU, enabling SciPlay to grow
ARPDAU by 18% year-over-year to a record $0.87 and record payer
conversion of 10.4%.
- iGaming revenue increased 15% and AEBITDA grew 27% from
the prior year period with performance primarily reflected by
continued growth momentum in the U.S. market. iGaming revenue
growth was partially offset by $4 million in unfavorable impact of
foreign-currency translation due to strengthening U.S. Dollar,
impacting revenue growth by 7 percentage points. The U.S. market
delivered 41% year-over-year revenue growth, driven in part by the
strong launches of our land-based original content and scaling
third party aggregation on our platform. Wagers processed through
our iGaming platform have increased to $19.1 billion in the fourth
quarter despite the adverse impact of foreign-currency translation.
AEBITDA margin grew 3 percentage points due to the scaling of
original content launches, as well as our acquisitions, which was
partially offset by continued investments supporting ongoing
growth, including our upcoming launch of live casino in the
U.S.
LIQUIDITY
- Combined net cash (used in) provided by operating
activities was $(87) million compared to $226 million in the
prior year period, which includes both continuing and discontinued
operations. The current year period cash flows were impacted by
$176 million in cash taxes paid related to the Divestitures coupled
with the timing of payments associated with the strategic review
and related transactions, partially offset by growth in earnings
and lower interest payments.
- Combined free cash flow, a non-GAAP financial measure
defined below, was $(148) million compared to $100 million in the
prior year period. The current year combined free cash flow was
impacted by $176 million in cash taxes paid related to the
Divestitures coupled with the timing of payments associated with
the strategic review and related transactions, partially offset by
growth in earnings and lower interest payments.
- Net debt leverage ratio, a non-GAAP financial measure
defined below, declined 47% to 3.3x from 6.2x at the end of 2021,
remaining in our targeted net debt leverage ratio(1) range of 2.5x
to 3.5x. We paid down approximately $4.8 billion of debt during
2022, reducing debt outstanding by 55% to $3.9 billion at the end
of 2022.
- Capital expenditures from continuing operations were $58
million in the fourth 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 & Wonder executive leadership
will host a conference call on Wednesday, March 1, 2023 at 4:30
p.m. EST to review the Company’s fourth quarter and full year 2022
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: 245536. 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. ©
2023 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 effects of the COVID-19 pandemic and any resulting
unfavorable social, political, economic and financial
conditions;
- our inability to successfully execute our strategy and
rebranding initiative;
- 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,
including increases in benchmark interest rates and the effects of
inflation;
- public perception of our response to environmental, social and
governance issues;
- changes in, or the elimination of, our share repurchase
program;
- 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, quarterly reports on Form
10-Q and annual reports on Form 10-K, including the forthcoming
report to be filed with the SEC for the year ended December 31,
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
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Revenue:
Services
$
466
$
425
$
1,795
$
1,642
Product sales
216
155
717
511
Total revenue
682
580
2,512
2,153
Operating expenses:
Cost of services(1)
106
92
390
365
Cost of product sales(1)
97
78
348
244
Selling, general and administrative
182
177
717
679
Research and development
55
50
218
190
Depreciation, amortization and
impairments
103
109
420
398
Restructuring and other
40
71
146
167
Total operating expenses
583
577
2,239
2,043
Operating income
99
3
273
110
Other (expense) income:
Interest expense
(73
)
(118
)
(327
)
(478
)
Loss on debt financing transactions
—
—
(147
)
—
Gain on remeasurement of debt and
other
—
11
27
41
Other income, net
—
12
11
33
Total other expense, net
(73
)
(95
)
(436
)
(404
)
Net income (loss) from continuing
operations before income taxes
26
(92
)
(163
)
(294
)
Income tax (expense) benefit
(5
)
154
(13
)
318
Net income (loss) from continuing
operations
21
62
(176
)
24
Net income from discontinued operations,
net of tax(2)
18
37
3,873
366
Net income
39
99
3,697
390
Less: Net income attributable to
noncontrolling interest
9
4
22
19
Net income attributable to L&W
$
30
$
95
$
3,675
$
371
Per Share - Basic:
Net income (loss) from continuing
operations
$
0.12
$
0.60
$
(2.09
)
$
0.06
Net income from discontinued
operations
0.20
0.38
40.87
3.80
Net income attributable to L&W
$
0.32
$
0.98
$
38.78
$
3.86
Per Share - Diluted:
Net income (loss) from continuing
operations
$
0.12
$
0.58
$
(2.09
)
$
0.05
Net income from discontinued
operations
0.20
0.37
40.87
3.72
Net income attributable to L&W
$
0.32
$
0.95
$
38.78
$
3.77
Weighted average number of shares used in
per share calculations:
Basic shares
93
97
95
96
Diluted shares
95
100
95
98
(1)
Excludes depreciation and
amortization.
(2)
The year ended December 31, 2022
includes a total pre-tax gain of $4,927 million on the sales of the
Lottery and Sports Betting businesses.
LIGHT & WONDER, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited, in
millions)
As of December 31,
2022
2021
Assets:
Cash and cash equivalents
$
914
$
585
Restricted cash
47
41
Receivables, net of allowance for credit
losses of $38 and $52, respectively
455
423
Inventories
161
98
Prepaid expenses, deposits and other
current assets
117
88
Assets of businesses held for sale
—
497
Total current assets
1,694
1,732
Restricted cash
6
9
Receivables, net of allowance for credit
losses of $2 and $2, respectively
14
17
Property and equipment, net
204
213
Operating lease right-of-use assets
49
51
Goodwill
2,919
2,892
Intangible assets, net
797
946
Software, net
145
117
Deferred income taxes
114
349
Other assets
67
80
Assets of businesses held for sale
—
1,477
Total assets
$
6,009
$
7,883
Liabilities and Stockholders’
Equity (Deficit):
Current portion of long-term debt
$
24
$
44
Accounts payable
154
204
Accrued liabilities
380
428
Income taxes payable
64
16
Liabilities of businesses held for
sale
—
282
Total current liabilities
622
974
Deferred income taxes
87
35
Operating lease liabilities
37
40
Other long-term liabilities
232
170
Long-term debt, excluding current
portion
3,870
8,646
Liabilities of businesses held for
sale
—
124
Total stockholders’ equity
(deficit)(1)
1,161
(2,106
)
Total liabilities and stockholders’ equity
(deficit)
$
6,009
$
7,883
(1)
Includes $171 million and $150
million in noncontrolling interest as of December 31, 2022 and
2021, respectively.
LIGHT & WONDER, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, in
millions)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Cash flows from operating activities:
Net income
$
39
$
99
$
3,697
$
390
Less: Income from discontinued operations,
net of tax
(18
)
(37
)
(3,873
)
(366
)
Adjustments to reconcile net income (loss)
from continuing operations to net cash (used in) provided by
operating activities from continuing operations
131
121
643
479
Changes in working capital accounts,
excluding the effects of acquisitions(1)
(198
)
92
(863
)
143
Changes in deferred income taxes and
other
(33
)
(170
)
(29
)
(342
)
Net cash (used in) provided by operating
activities from continuing operations
(79
)
105
(425
)
304
Net cash (used in) provided by operating
activities from discontinued operations
(8
)
121
44
381
Net cash (used in) provided by operating
activities
(87
)
226
(381
)
685
Cash flows from investing activities:
Capital expenditures
(58
)
(53
)
(216
)
(171
)
Acquisitions of businesses, net of cash
acquired
(18
)
(146
)
(136
)
(186
)
Proceeds from settlement of cross-currency
interest rate swaps
—
—
50
—
Proceeds from sale of investments and
other, net
48
—
50
10
Net cash used in investing activities from
continuing operations
(28
)
(199
)
(252
)
(347
)
Net cash (used in) provided by investing
activities from discontinued operations(2)
—
(37
)
6,368
(95
)
Net cash (used in) provided by investing
activities
(28
)
(236
)
6,116
(442
)
Cash flows from financing activities:
Payments of long-term debt, net
(6
)
(145
)
(4,893
)
(577
)
Payments of debt issuance and deferred
financing costs
—
—
(37
)
(5
)
Payments on license obligations
(5
)
(21
)
(35
)
(46
)
Purchase of L&W common stock
(202
)
—
(405
)
—
Purchase of SciPlay’s common stock
(19
)
—
(37
)
—
Net redemptions of common stock under
stock-based compensation plans and other
(18
)
(5
)
(53
)
(27
)
Net cash used in financing activities from
continuing operations
(250
)
(171
)
(5,460
)
(655
)
Net cash used in financing activities from
discontinued operations
—
(16
)
(3
)
(24
)
Net cash used in financing activities
(250
)
(187
)
(5,463
)
(679
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
6
(3
)
(6
)
(6
)
Decrease (increase) in cash, cash
equivalents and restricted cash
(359
)
(200
)
266
(442
)
Cash, cash equivalents and restricted
cash, beginning of period
1,326
901
701
1,143
Cash, cash equivalents and restricted
cash, end of period
967
701
967
701
Less: Cash, cash equivalents and
restricted cash of discontinued operations
—
66
—
66
Cash, cash equivalents and restricted cash
of continuing operations, end of period
$
967
$
635
$
967
$
635
Supplemental cash flow information:
Cash paid for interest
$
80
$
104
$
351
$
453
Income taxes paid
195
11
692
38
Distributed earnings from equity
investments
2
—
6
15
Cash paid for contingent consideration
included in operating activities
7
—
7
—
Supplemental non-cash transactions:
Non-cash interest expense
$
2
$
6
$
14
$
24
(1)
Inclusive of income tax
payments.
(2)
The year ended December 31, 2022
includes $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, AEBITDA FROM DISCONTINUED OPERATIONS, COMBINED AEBITDA AND
SUPPLEMENTAL BUSINESS SEGMENT DATA
(Unaudited, in
millions)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Reconciliation of
Net Income Attributable to L&W to Consolidated
AEBITDA
Net income attributable to L&W
$
30
$
95
$
3,675
$
371
Net income attributable to noncontrolling
interest
9
4
22
19
Net income from discontinued operations,
net of tax
(18
)
(37
)
(3,873
)
(366
)
Net income (loss) from continuing
operations
21
62
(176
)
24
Restructuring and other(1)
40
71
146
167
Depreciation, amortization and
impairments
103
109
420
398
Other income, net
—
(11
)
(6
)
(28
)
Interest expense
73
118
327
478
Income tax expense (benefit)
5
(154
)
13
(318
)
Stock-based compensation
23
32
69
113
Loss on debt financing transactions
—
—
147
—
Gain on remeasurement of debt and
other
—
(11
)
(27
)
(41
)
Consolidated AEBITDA
$
265
$
216
$
913
$
793
Reconciliation of
Net Income from Discontinued Operations, Net of Tax to AEBITDA from
Discontinued Operations and Combined AEBITDA
Net income from discontinued operations,
net of tax
$
366
Income tax expense
72
Restructuring and other(1)
10
Depreciation, amortization and
impairments
79
EBITDA from equity investments(2)
80
Earnings from equity investments
(42
)
Stock-based compensation and other,
net
(35
)
AEBITDA from discontinued
operations(3)
$
530
EBITDA from equity investments -
continuing operations(4)
8
Combined AEBITDA(4)
$
1,331
Supplemental
Business Segment Data
Business segments AEBITDA
Gaming
$
215
$
186
$
767
$
659
SciPlay
59
48
187
186
iGaming
19
15
80
75
Total business segments AEBITDA
293
249
1,034
920
Corporate and other(5)
(28
)
(33
)
(121
)
(127
)
Consolidated AEBITDA
$
265
$
216
$
913
$
793
Reconciliation to
Consolidated AEBITDA Margin
Consolidated AEBITDA
$
265
$
216
$
913
$
793
Revenue
682
580
2,512
2,153
Net income (loss) margin from continuing
operations
3
%
11
%
(7
)%
1
%
Consolidated AEBITDA margin (Consolidated
AEBITDA/Revenue)
39
%
37
%
36
%
37
%
(1)
Refer to the Consolidated AEBITDA
and AEBITDA from discontinued operations definitions below for a
description of items included in restructuring and other.
(2)
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.
(3)
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.
(4)
Combined AEBITDA consists of
Consolidated AEBITDA, AEBITDA from discontinued operations and
EBITDA from equity investments included in continuing operations.
Refer to non-GAAP financial measures definitions below for further
details.
(5)
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
December 31,
December 31,
September 30,
2022
2021
2022
Gaming Business
Segment Supplemental Financial Data:
Revenue by line of
business:
Gaming operations
$
157
$
156
$
161
Gaming machine sales
156
111
140
Gaming systems
73
58
70
Table products
52
47
48
Total revenue
$
438
$
372
$
419
Gaming
Operations:
U.S. and Canada:
Installed base at period end
30,630
30,514
30,536
Average daily revenue per unit
$
44.07
$
43.50
$
45.68
International:(1)
Installed base at period end
27,126
29,375
28,100
Average daily revenue per unit
$
13.80
$
13.90
$
12.39
Gaming Machine
Sales:
U.S. and Canada new unit shipments
5,099
3,489
4,400
International new unit shipments
2,661
2,140
2,859
Total new unit shipments
7,760
5,629
7,259
Average sales price per new unit
$
18,047
$
17,392
$
17,359
Gaming Machine Unit
Sales Components:
U.S. and Canada unit shipments:
Replacement units
4,322
3,334
3,688
Casino opening and expansion units
777
155
712
Total unit shipments
5,099
3,489
4,400
International unit shipments:
Replacement units
2,565
1,584
2,725
Casino opening and expansion units
96
556
134
Total unit shipments
2,661
2,140
2,859
SciPlay Business
Segment Supplemental Financial Data:
Revenue by
Platform:
Mobile in-app purchases
$
158
$
137
$
149
Web in-app purchases and other(2)
24
17
22
Total revenue
$
182
$
154
$
171
Mobile penetration(3)
90
%
89
%
90
%
Average MAU(4)
5.7
5.9
5.9
Average DAU(5)
2.2
2.3
2.2
ARPDAU(6)
$
0.87
$
0.74
$
0.80
Average Monthly Paying Users(7)
0.6
0.5
0.6
AMRPPU(8)
$
99.16
$
98.38
$
95.45
Payer Conversion Rate(9)
10.4
%
8.9
%
9.7
%
iGaming Business
Segment Supplemental Data:
Wagers processed through OGS (in
billions)
$
19.1
$
17.2
$
17.5
(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
RECONCILIATION OF PRINCIPAL
FACE VALUE OF DEBT OUTSTANDING TO NET DEBT AND NET DEBT LEVERAGE
RATIO
(Unaudited, in millions,
except for ratio)
As of December 31,
2022
2021
Consolidated AEBITDA/Combined
AEBITDA(1)
$
913
$
1,331
Total debt
$
3,894
$
8,690
Add: Unamortized debt discount/premium and
deferred financing costs, net
47
82
Add: Impact of exchange rate
—
62
Less: Debt not requiring cash repayment
and other
(2
)
(4
)
Principal face value of debt
outstanding
3,939
8,830
Less: Cash and cash equivalents
914
629
Net debt
$
3,025
$
8,201
Net debt leverage ratio
3.3
6.2
(1)
Combined AEBITDA consists of
Consolidated AEBITDA, 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
RECONCILIATION OF NET CASH
(USED IN) PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW -
CONTINUING OPERATIONS AND COMBINED FREE CASH FLOW
(Unaudited, in
millions)
Three Months Ended December
31,
2022
2021
Continuing Operations
Discontinued
Operations(1)
Combined(2)
Continuing Operations
Discontinued
Operations(1)
Combined(2)
Net cash (used in) provided by operating
activities
$
(79
)
$
(8
)
$
(87
)
$
105
$
121
$
226
Less: Capital expenditures
(58
)
—
(58
)
(53
)
(45
)
(98
)
Add: Distributions from equity method
investments, net of additions
—
—
—
—
7
7
Add: Payments on contingent acquisition
considerations
7
—
7
—
—
—
Less: Payments on license obligations
(5
)
—
(5
)
(21
)
(2
)
(23
)
Less: Change in restricted cash impacting
working capital
(5
)
—
(5
)
(2
)
(10
)
(12
)
Free cash flow
$
(140
)
$
(8
)
$
(148
)
$
29
$
71
$
100
Supplemental cash flow information -
Strategic Review and Related Costs Impacting Combined Free Cash
Flows:
Income taxes related to the
Divestitures
$
176
Professional fees and services supporting
strategic review and related activities
25
Year Ended December
31,
2022
2021
Continuing Operations
Discontinued
Operations(1)
Combined(2)
Continuing Operations
Discontinued
Operations(1)
Combined(2)
Net cash (used in) provided by operating
activities
$
(425
)
$
44
$
(381
)
$
304
$
381
$
685
Less: Capital expenditures
(216
)
(37
)
(253
)
(171
)
(94
)
(265
)
Add: Distributions from equity method
investments, net of additions
—
—
—
3
17
20
Add: Payments on contingent acquisition
considerations
7
—
7
—
—
—
Less: Payments on license obligations
(35
)
(2
)
(37
)
(46
)
(7
)
(53
)
(Less) add: Change in restricted cash
impacting working capital
(4
)
(6
)
(10
)
5
51
56
Free cash flow
$
(673
)
$
(1
)
$
(674
)
$
95
$
348
$
443
Supplemental cash flow information -
Strategic Review and Related Costs Impacting Combined Free Cash
Flows:
Income taxes related to the
Divestitures
$
641
Disposition and other closing expenses
80
Payments related to April 2022
refinancing
5
Professional fees and services supporting
strategic review and related activities
97
SciPlay legal settlement payment
25
(1)
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.
(2)
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 measures definitions below for further
details.
LIGHT & WONDER, INC. AND
SUBSIDIARIES
RECONCILIATION OF EARNINGS OF
EQUITY INVESTMENTS TO EBITDA FROM EQUITY INVESTMENTS AND COMBINED
EBITDA FROM EQUITY INVESTMENTS
(Unaudited, in
millions)
Year Ended
December 31, 2021
Continuing Operations
Discontinued
Operations
Earnings of equity investments
$
5
$
42
Add: Income tax expense
—
10
Add: Depreciation, amortization and
impairments
1
31
Add: Interest income, net and other
2
(3
)
EBITDA from equity investments
$
8
$
80
Combined EBITDA from equity
investments(1)
$
88
(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 the 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 as of December 31, 2021 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, Consolidated AEBITDA margin, 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 and
Consolidated AEBITDA margin 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 sold 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 occurred as it provided Management and investors with
information regarding the Company’s combined financial condition
under the structure at the time, including for prior period
comparisons, as the Company transformed 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.
Consolidated AEBITDA Margin
Consolidated AEBITDA margin, as used herein, represents our
Consolidated AEBITDA (as defined above) calculated as a percentage
of consolidated revenue. Consolidated AEBITDA margin is a non-GAAP
financial measure that is presented as a supplemental disclosure
for illustrative purposes only and is reconciled to net income
(loss) from continuing operations, the most directly comparable
GAAP measure, in a schedule above.
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, 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/20230301005266/en/
COMPANY CONTACTS Media
Relations Grace Russell, +1 702-577-7928 Senior
Director, Corporate Communications media@lnw.com Investor Relations Steve Wan, +1 702-532-7643
Director, Investor Relations ir@lnw.com
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