Delivered Consolidated Revenue Growth of 17%
Year-Over-Year with Strong Cash Flows
Achieved Double-Digit Growth Across all
Three of our Businesses with 18% Gaming Revenue Growth and Record
Revenue in SciPlay and iGaming
Principal Face Value of Debt Outstanding(1)
of $3.9 Billion Translating to Net Debt Leverage Ratio(2) to 3.1x,
Squarely in Targeted Range
Board of Directors Approved Secondary
Listing on the Australian Securities Exchange
Light & Wonder, Inc. (NASDAQ: LNW) (“Light & Wonder,”
“L&W,” or the “Company”) today reported results for the first
quarter ended March 31, 2023.
We entered 2023 with strong momentum and delivered another
quarter of double-digit topline growth with strong cash flows
continuing to execute on our strategic plan and progress toward our
long-term financial targets. Consolidated revenue grew 17%, driven
by growth across all of our businesses, including another quarter
of record revenues for SciPlay and iGaming:
- Gaming revenue increased 18% to $419 million compared to the
prior year period, primarily driven by continued strength in Gaming
machine sales, which increased 53%, and strong performance in
Gaming operations and systems.
- SciPlay achieved record revenue of $186 million, an 18%
increase compared to the prior year period, driven by the core
social casino business, which delivered strong payer metrics and
once again outpaced the market and gained share.
- iGaming revenue reached record quarterly revenue of $65
million, a 10% increase from the prior year period, primarily
driven by continued growth in the U.S. market.
Matt Wilson, President and Chief Executive Officer of Light
& Wonder, said, “We’re off to a strong start in 2023,
delivering on all key metrics and once again driving double-digit
revenue growth across all three of our businesses. Our strategy and
disciplined investments are driving enhanced returns as we continue
to develop and execute on our robust product roadmap, building off
the strong momentum that we saw in 2022. The teams executed several
notable wins and key launches in the quarter, and we have a full
pipeline of games that support progress toward our long-term
targets. With leading talent, technology and products, we continue
to strengthen our position as the leading cross-platform global
games company.”
Connie James, Chief Financial Officer of Light &
Wonder, added, “We continue to capitalize on the strong growth
opportunities that we see in our markets, and drive margin
enhancement across the business as we remain focused on operational
excellence. This quarter demonstrates Light & Wonder’s
favorable financial profile with strong topline growth flowing to
the bottom line, and importantly strong cash conversion, enabling
us to invest in future sustainable growth. We continue to focus on
generating significant cash flow while maintaining our balanced and
opportunistic approach to capital management and a healthy balance
sheet to enhance value for our shareholders.”
(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 March 31, 2023 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.
LEVERAGE, CAPITAL RETURN, AND STRATEGY UPDATE
- Net debt leverage ratio(1) of 3.1x, within our targeted
net debt leverage ratio(1) range of 2.5x to 3.5x, as of March 31,
2023, a decrease of 0.2x from December 31, 2022.
- Returned $437 million of capital to shareholders through
the repurchase of approximately 7.6 million shares of L&W
common stock since the initiation of the program through May 4,
2023, representing 58% of total program authorization.
- Preparing for potential Australian Securities Exchange
(“ASX”) secondary listing — the Company’s Board of Directors
has approved proceeding with a secondary listing on the ASX, in
addition to the Company’s existing primary Nasdaq listing. The
Board believes there are substantial potential benefits for the
Company and its shareholders in pursuing a secondary listing on the
ASX, including enhancing the Company’s profile in Australia, one of
the leading markets for the Company’s Gaming business, and
providing the Company access to new long-term Australian
institutional investors that would complement its strong existing
base of shareholders in the U.S. and Australia.
SUMMARY RESULTS
Unless otherwise noted, amounts, percentages and discussion
included below reflect the results of operations and financial
condition of the Company’s continuing operations, which includes
its Gaming, SciPlay and iGaming businesses. We have reflected our
former Lottery business (disposed during the second quarter of
2022) and Sports Betting business (disposed during the third
quarter of 2022) (collectively referred to as the “Divestitures”)
as discontinued operations.
Three Months Ended March
31,
($ in millions)
2023
2022
Revenue
$
670
$
572
Net income (loss)
27
(67
)
Net cash provided by operating
activities(2)
185
94
Capital expenditures
53
43
Non-GAAP Financial
Measures
Consolidated AEBITDA(1)
$
249
$
202
Free cash flow(1)(2)
74
(11
)
As of
Balance Sheet
Measures
March 31, 2023
December 31, 2022
Cash and cash equivalents
$
931
$
914
Total debt
3,890
3,894
Available liquidity(3)
1,819
1,802
(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) For the three months ended March 31,
2022, these financial measures represent combined results inclusive
of discontinued operations.
(3) Available liquidity is calculated as
cash and cash equivalents plus remaining revolver capacity,
including the SciPlay Revolver.
First Quarter 2023 Financial Highlights:
- First quarter consolidated revenue was $670 million
compared to $572 million, up 17% compared to the prior year period
driven by double-digit growth across all of our businesses. Gaming
revenue increased 18%, driven by another quarter of robust growth
in Gaming machine sales, 53% year-over-year, while both SciPlay and
iGaming reached new quarterly records.
- Net income was $27 million compared to a net loss of $67
million in the prior year period, primarily due to 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 $249 million, an increase of 23% compared to the
prior year period, driven by double-digit growth across all of our
businesses and improved margin.
- Net cash provided by operating activities was $185
million compared to combined net cash provided by operating
activities of $94 million in the prior year period. The current
year period cash flows benefited from lower interest payments
coupled with favorable working capital changes primarily due to the
timing of disbursements as well as receivables and inventory levels
beginning to normalize, while the prior year period reflects cash
flows from the Lottery business (which we divested during the
second quarter of 2022), which were partially offset by higher
payments associated with the strategic transactions.
- Free cash flow, a non-GAAP financial measure defined
below, was $74 million compared to combined free cash flow(1) of
$(11) million in the prior year period. The current year period
free cash flow benefited from lower interest payments and favorable
changes in working capital, as described above. The prior year
period combined free cash flow was negatively affected by
unfavorable changes in working capital accounts, primarily related
to the timing of disbursements, including costs associated with the
strategic transactions and timing of inventory purchases.
- Net debt leverage ratio, a non-GAAP financial measure
defined below, was 3.1x as of March 31, 2023 compared to 3.3x as of
December 31, 2022, remaining in our targeted net debt leverage
ratio(1) range of 2.5x to 3.5x.
BUSINESS SEGMENT
HIGHLIGHTS
FOR THE THREE MONTHS ENDED
MARCH 31, 2023
($ in millions)
Revenue
AEBITDA
AEBITDA Margin(2)(3)
2023
2022
$
%
2023
2022
$
%
2023
2022
PP Change(3)
Gaming
$
419
$
355
$
64
18
%
$
206
$
171
$
35
20
%
49
%
48
%
1
SciPlay
186
158
28
18
%
54
44
10
21
%
29
%
28
%
1
iGaming
65
59
6
10
%
23
21
2
10
%
35
%
36
%
(1
)
Corporate and other(4)
—
—
—
—
%
(34
)
(34
)
—
—
%
n/a
n/a
n/a
Total
$
670
$
572
$
98
17
%
$
249
$
202
$
47
23
%
37
%
35
%
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).
First Quarter 2023 Key Highlights
- Gaming revenue increased 18% to $419 million compared to
the prior year period, driven by continued momentum in Gaming
machine sales, growing 53%. Gaming operations maintained elevated
average daily revenue per unit, while Gaming systems continued
strong momentum, growing 8%. Gaming AEBITDA was $206 million, up
20% compared to the prior year period.
- Gaming operation revenues continue to benefit
from year-over-year growth in our North American installed base and
average daily revenue per unit, as a result of strong content
performance and the continued success of our KASCADA® and MURAL®
cabinets. Our North American premium installed base has grown for
the 11th consecutive quarter, representing 46% of our total
installed base mix, while revenue per day remained at elevated
levels. 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 increased 18% to $186 million compared
to the prior year period, breaking another record by achieving the
highest quarterly revenue ever. Growth was primarily driven by the
core social casino business, which delivered strong payer metrics
and once again outpaced the market and gained share. SciPlay
continued to benefit from key investments that are driving strong
engagement and monetization of our players. Payer conversion rates
continued strong momentum, while ARPDAU(1) grew 20% year-over-year
to a record $0.89, and AMRPPU(2) held at elevated levels.
- iGaming revenue increased 10% to $65 million, and
AEBITDA was $23 million compared to $21 million in the prior year
period. The revenue and AEBITDA increases were primarily driven by
continued growth in the U.S. market. The U.S. market delivered 34%
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. The launch of our live casino in
Michigan is pending final regulatory approval, now expected during
the second half of the year.
- Consolidated capital expenditures were $53 million in
the first quarter of 2023.
(1) Average Revenue Per Daily Active
User.
(2) Average Monthly Revenue Per Paying
User.
Earnings Conference Call
As previously announced, Light and Wonder executive leadership
will host a conference call on Tuesday, May 9, 2023, at 4:30 p.m.
EDT to review the Company’s first 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 (833) 470-1428 for U.S. or +1 (204) 525-0658 for
International and ask to join the Light & Wonder call using
conference ID: 348332. A replay of the webcast will be archived in
the Investors section on www.lnw.com.
About Light & Wonder
Light & Wonder, Inc. (NASDAQ: LNW) 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 Securities Exchange
Commission (“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;
- resulting pricing variations and other impacts if our common
stock is listed to trade on more than one stock exchange;
- 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 its latest Annual Report on Form 10-K filed with the SEC
for the year ended December 31, 2022 on March 1, 2023 (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
March 31,
2023
2022
Revenue:
Services
$
477
$
431
Product sales
193
141
Total revenue
670
572
Operating expenses:
Cost of services(1)
108
90
Cost of product sales(1)
94
70
Selling, general and administrative
192
175
Research and development
54
53
Depreciation, amortization and
impairments
101
108
Restructuring and other
19
36
Total operating expenses
568
532
Operating income
102
40
Other (expense) income:
Interest expense
(75
)
(116
)
Gain on remeasurement of debt and
other
—
7
Other (expense) income, net
(1
)
5
Total other expense, net
(76
)
(104
)
Net income (loss) from continuing
operations before income taxes
26
(64
)
Income tax benefit (expense)
1
(3
)
Net income (loss) from continuing
operations
27
(67
)
Net income from discontinued operations,
net of tax
—
95
Net income
27
28
Less: Net income attributable to
noncontrolling interest
5
2
Net income attributable to L&W
$
22
$
26
Per Share - Basic:
Net income (loss) from continuing
operations
$
0.24
$
(0.72
)
Net income from discontinued
operations
—
0.98
Net income attributable to L&W
$
0.24
$
0.26
Per Share - Diluted:
Net income (loss) from continuing
operations
$
0.23
$
(0.72
)
Net income from discontinued
operations
—
0.98
Net income attributable to L&W
$
0.23
$
0.26
Weighted average number of shares used in
per share calculations:
Basic shares
91
97
Diluted shares
93
97
(1) Excludes depreciation and
amortization.
LIGHT & WONDER, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited, in millions except
for common shares outstanding)
March 31,
December 31,
2023
2022
Assets:
Cash and cash equivalents
$
931
$
914
Restricted cash
93
47
Receivables, net of allowance for credit
losses of $38
458
455
Inventories
172
161
Prepaid expenses, deposits and other
current assets
108
117
Total current assets
1,762
1,694
Restricted cash
6
6
Receivables, net of allowance for credit
losses of $2
14
14
Property and equipment, net
214
204
Operating lease right-of-use assets
47
49
Goodwill
2,922
2,919
Intangible assets, net
743
797
Software, net
141
145
Deferred income taxes
112
114
Other assets
61
67
Total assets
$
6,022
$
6,009
Liabilities and Stockholders’
Equity:
Current portion of long-term debt
$
23
$
24
Accounts payable
189
154
Accrued liabilities
362
380
Income taxes payable
68
64
Total current liabilities
642
622
Deferred income taxes
71
87
Operating lease liabilities
35
37
Other long-term liabilities
223
232
Long-term debt, excluding current
portion
3,867
3,870
Total stockholders’ equity(1)
1,184
1,161
Total liabilities and stockholders’
equity
$
6,022
$
6,009
(1) Includes $176 million and $171 million
in noncontrolling interest as of March 31, 2023 and December 31,
2022, respectively.
LIGHT & WONDER, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, in
millions)
Three Months Ended
March 31,
2023
2022
Cash flows from operating activities:
Net income
$
27
$
28
Less: Income from discontinued operations,
net of tax
—
(95
)
Adjustments to reconcile net income (loss)
from continuing operations to net cash provided by operating
activities from continuing operations
138
121
Changes in working capital accounts,
excluding the effects of acquisitions
32
(72
)
Changes in deferred income taxes and
other
(12
)
4
Net cash provided by (used in) operating
activities from continuing operations
185
(14
)
Net cash provided by operating activities
from discontinued operations
—
108
Net cash provided by operating
activities
185
94
Cash flows from investing activities:
Capital expenditures
(53
)
(43
)
Acquisitions of businesses, net of cash
acquired
—
(108
)
Other
(1
)
—
Net cash used in investing activities from
continuing operations
(54
)
(151
)
Net cash used in investing activities from
discontinued operations
(3
)
(25
)
Net cash used in investing activities
(57
)
(176
)
Cash flows from financing activities:
(Payments of) proceeds from long-term
debt, net
(6
)
150
Payments of debt issuance and deferred
financing costs
—
(1
)
Payments on license obligations
(12
)
(19
)
Purchase of L&W common stock
(28
)
(51
)
Purchase of SciPlay’s common stock
(8
)
—
Net redemptions of common stock under
stock-based compensation plans and other
(11
)
(25
)
Net cash (used in) provided by financing
activities from continuing operations
(65
)
54
Net cash used in financing activities from
discontinued operations
—
(2
)
Net cash (used in) provided by financing
activities
(65
)
52
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
—
(1
)
Increase (decrease) in cash, cash
equivalents and restricted cash
63
(31
)
Cash, cash equivalents and restricted
cash, beginning of period
967
701
Cash, cash equivalents and restricted
cash, end of period
1,030
670
Less: Cash, cash equivalents and
restricted cash of discontinued operations
—
117
Cash, Cash equivalents and restricted cash
of continuing operations, end of period
$
1,030
$
553
Supplemental cash flow information:
Cash paid for interest
$
63
$
117
Income taxes paid
9
9
Distributed earnings from equity
investments
—
1
Supplemental non-cash transactions:
Non-cash interest expense
$
3
$
6
LIGHT & WONDER, INC. AND
SUBSIDIARIES
RECONCILIATION OF CONSOLIDATED
AEBITDA, CONSOLIDATED AEBITDA MARGIN AND SUPPLEMENTAL BUSINESS
SEGMENT DATA
(Unaudited, in
millions)
Three Months Ended
March 31,
2023
2022
Reconciliation of
Net Income Attributable to L&W to Consolidated
AEBITDA
Net income attributable to L&W
$
22
$
26
Net income attributable to noncontrolling
interest
5
2
Net income from discontinued operations,
net of tax
—
(95
)
Net income (loss) from continuing
operations
27
(67
)
Restructuring and other(1)
19
36
Depreciation, amortization and
impairments(2)
101
108
Other expense (income), net
2
(2
)
Interest expense
75
116
Income tax (benefit) expense
(1
)
3
Stock-based compensation
26
15
Gain on remeasurement of debt and
other
—
(7
)
Consolidated AEBITDA
$
249
$
202
Supplemental
Business Segment Data
Business segments AEBITDA
Gaming
$
206
$
171
SciPlay
54
44
iGaming
23
21
Total business segments AEBITDA
283
236
Corporate and other(3)
(34
)
(34
)
Consolidated AEBITDA
$
249
$
202
Reconciliation to
Consolidated AEBITDA Margin
Consolidated AEBITDA
$
249
$
202
Revenue
670
572
Net income (loss) margin from continuing
operations
4
%
(12
)%
Consolidated AEBITDA margin (Consolidated
AEBITDA/Revenue)
37
%
35
%
(1) Refer to the Consolidated AEBITDA
definition below for a description of items included in
restructuring and other.
(2) Includes $50 million and $51 million
in amortization related to acquired intangible assets for the three
months ended March 31, 2023 and 2022, respectively. The
amortization related to acquired intangible assets for the fully
year of 2022 was $204 million.
(3) Includes amounts not allocated to the
business segments (including corporate costs) and other
non-operating expenses (income).
LIGHT & WONDER, INC. AND
SUBSIDIARIES
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
March 31, 2023
March 31, 2022
December 31, 2022
Gaming Business
Segment Supplemental Financial Data:
Revenue by Line of
Business:
Gaming operations
$
160
$
155
$
157
Gaming machine sales
158
103
156
Gaming systems
55
51
73
Table products
46
46
52
Total revenue
$
419
$
355
$
438
Gaming
Operations:
U.S. and Canada:
Installed base at period end
30,675
30,359
30,630
Average daily revenue per unit
$
45.47
$
43.39
$
44.07
International:(1)
Installed base at period end
26,220
29,762
27,126
Average daily revenue per unit
$
14.19
$
13.72
$
13.80
Gaming Machine
Sales:
U.S. and Canada new unit shipments
4,057
3,382
5,099
International new unit shipments
3,621
1,914
2,661
Total new unit shipments
7,678
5,296
7,760
Average sales price per new unit
$
18,748
$
17,099
$
18,047
Gaming Machine Unit
Sales Components:
U.S. and Canada unit shipments:
Replacement units
3,760
3,152
4,322
Casino opening and expansion units
297
230
777
Total unit shipments
4,057
3,382
5,099
International unit shipments:
Replacement units
2,210
1,914
2,565
Casino opening and expansion units
1,411
—
96
Total unit shipments
3,621
1,914
2,661
SciPlay Business
Segment Supplemental Financial Data:
Revenue by
Platform:
Mobile in-app purchases
$
166
$
140
$
158
Web in-app purchases and other(2)
21
18
24
Total revenue
$
186
$
158
$
182
In-App
Purchases:
Mobile penetration(3)
91
%
90
%
90
%
Average MAU(4)
6.1
6.3
5.7
Average DAU(5)
2.3
2.3
2.2
ARPDAU(6)
$
0.89
$
0.74
$
0.87
Average MPU(7) (in thousands)
625
560
591
AMRPPU(8)
$
97.43
$
92.45
$
99.16
Payer Conversion Rate(9)
10.3
%
8.9
%
10.4
%
iGaming Business
Segment Supplemental Data:
Wagers processed through OGS (in
billions)
$
20.3
$
17.5
$
19.1
(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
ATTRIBUTABLE TO L&W TO CONSOLIDATED AEBITDA
Twelve Months Ended
March 31, 2023
December 31, 2022
Net income attributable to L&W
$
3,671
$
3,675
Net income attributable to noncontrolling
interest
25
22
Net income from discontinued operations,
net of tax
(3,778
)
(3,873
)
Net loss from continuing operations
(82
)
(176
)
Restructuring and other
129
146
Depreciation, amortization and
impairments
413
420
Other income, net
(2
)
(6
)
Interest expense
286
327
Income tax expense
9
13
Stock-based compensation
80
69
Loss on debt financing transactions
147
147
Gain on remeasurement of debt and
other
(20
)
(27
)
Consolidated AEBITDA
$
960
$
913
RECONCILIATION OF PRINCIPAL
FACE VALUE OF DEBT OUTSTANDING TO NET DEBT AND NET DEBT LEVERAGE
RATIO
As of
March 31, 2023
December 31, 2022
Consolidated AEBITDA
$
960
$
913
Total debt
$
3,890
$
3,894
Add: Unamortized debt discount/premium and
deferred financing costs, net
45
47
Less: Debt not requiring cash repayment
and other
(1
)
(2
)
Principal face value of debt
outstanding
3,934
3,939
Less: Cash and cash equivalents
931
914
Net debt
$
3,003
$
3,025
Net debt leverage ratio
3.1
3.3
RECONCILIATION OF NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW AND
COMBINED FREE CASH FLOW
Three Months Ended March
31,
2023
2022
Consolidated
Continuing Operations
Discontinued
Operations(1)
Combined(2)
Net cash provided by (used in) operating
activities
$
185
$
(14
)
$
108
$
94
Less: Capital expenditures
(53
)
(43
)
(25
)
(68
)
Less: Payments on license obligations
(12
)
(19
)
(2
)
(21
)
Less: Change in restricted cash impacting
working capital
(46
)
(7
)
(9
)
(16
)
Free cash flow
$
74
$
(83
)
$
72
$
(11
)
(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 measure definitions below for further
details.
Discontinued Operations
We sold our former Lottery business to Brookfield Business
Partners L.P. during the second quarter of 2022. We sold our former
Sports Betting business to Endeavor Operating Company, LLC, a
subsidiary of Endeavor Group Holdings, Inc., in a cash and stock
transaction completed during the third quarter of 2022.
Accordingly, the prior period financial results for these divested
businesses are presented as discontinued operations 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), Consolidated AEBITDA margin, Free cash flow
(representing continuing operations), Free cash flow from
discontinued operations, Combined free cash flow, 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
former Lottery business and Sports Betting business and as such,
historical financial information for these divested 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 Free cash flow from
discontinued operations provides useful information regarding the
Company’s operations as well as the impact of the discontinued
businesses on the overall financial results for the prior periods
presented as they remained under the structure of the Company for
those periods. This non-GAAP measure is derived based on the
historical records and includes only those direct costs that are
allocated to discontinued operations and as such does 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 Attributable to L&W to Consolidated AEBITDA.”
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 (including costs associated with
strategic review, rebranding, divestitures and ongoing separation
activities and related activities); (iv) cost savings initiatives;
(v) major litigation; and (vi) acquisition- and disposition-related
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 (benefit) expense; (9) Stock-based compensation; and
(10) Other expense (income), net, including foreign currency gains
or 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.
Free Cash Flow (representing free cash flow from 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 the schedule above.
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 flow (representing our
continuing operations) and Free cash flow from discontinued
operations and is presented as a supplemental disclosure for
illustrative purposes only.
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 cash
and cash equivalents. Principal face value of debt outstanding
includes the face value of debt issued under Senior Secured Credit
Facilities and Senior Notes, which are described in Note 15 of the
Company's Annual Report on Form 10-K for the year ended December
31, 2022 and in Note 11 of the Company’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2023, but it does not include
other long term obligations of $1 million primarily comprised of
certain revenue transactions presented as debt in accordance with
ASC 470. Net debt leverage ratio, as used herein, represents Net
debt divided by Consolidated AEBITDA. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509005991/en/
COMPANY CONTACTS
Media Relations Andy Fouché +1 206-697-3678 Vice
President, Corporate Communications media@lnw.com
Investor Relations Nick Zangari +1 702-532-7614 Senior
Vice President, Investor Relations ir@lnw.com
Light and Wonder (NASDAQ:LNW)
Historical Stock Chart
From Jun 2024 to Jul 2024
Light and Wonder (NASDAQ:LNW)
Historical Stock Chart
From Jul 2023 to Jul 2024