Fitch Ratings Inc has upgraded the long-term issuer default ratings of slot machine maker and online games provider Aristocrat Leisure Ltd to ‘BBB’ from ‘BBB-‘, with a ‘stable’ outlook. The upgrade covers also several of the company’s subsidiaries, including U.S.-based Aristocrat Technologies Inc.
“The upgrade reflects a transition from a secured to an unsecured capital structure after Aristocrat Leisure paid off its term loan, while maintaining its strong business profile as a big-three gaming supplier and solid digital participant in mobile gaming, iLottery and real-money gaming (RMG),” stated the rating agency in a Tuesday report.
Fitch said a “sustained low” in earnings before interest, taxation, depreciation, and amortisation (EBITDA) leverage and “robust” free cash flow generation “also support the rating trajectory”.
The institution said it expects Aristocrat Leisure to “continue to manage its balance sheet conservatively, while investing in its portfolio and prudently pursuing potential acquisitions”.
As per Tuesday’s memo, the ‘stable’ outlook reflects Fitch’s expectation that the gaming supplier “will benefit from its digital segments driving increased market share, while remaining dominant in land-based gaming”.
Aristocrat Leisure’s reporting segments span regulated land-based gaming, via Aristocrat Gaming; social casino, via Product Madness; and regulated online RMG, via Aristocrat Interactive.
According to Fitch, the Aristocrat group has a “top three supplier status” in North America across gaming operations, a position which is “relatively resilient as it is supported by long-term contracts and high margins, as well as outright sales, which can be lumpy”.
Fitch said it expects Aristocrat Leisure to “continue driving market share gains in gaming operations with improved average fee per day from increased Class III premium installations, varied commercial terms with operators and gross gaming revenue momentum”.
The gaming supplier will in likelihood show a “growing scale in ship share” due to factors including “continued capex and design and development spend, while maintaining average selling price of units,” added the rating agency.
Fitch assumes that Aristocrat Leisure’s total revenue in 2026 will “improve marginally,” despite the sale of Plarium and Big Fish studios in calendar year 2025. Such growth, it added, will be “supported by continued growth in gaming and interactive segments”.
Gaming sales are expected to “climb in the mid-single-digit range over the forecast horizon, driven by continued market share gains in operations, the institution added.
Supported by higher sales also in the Product Madness and Interactive segments, Fitch-defined EBITDA margin for Aristocrat Leisure is expected to “steadily advance to around 43 percent”.
Although Fitch does not expect any “material acquisition in the near term,” it said there is “potential for tuck-ins throughout the rating period”.
“Fitch believes the company has ample liquidity, supported by a free cash flow margin in the low teens, to fund bolt-on and material acquisitions while allocating funds toward shareholder returns in the form of dividends and repurchases,” it said.
As of September 30, Aristocrat had AUD1.28 billion (US$851.8 million) in cash and “near-full availability” under a US$500 million revolver, “compared with a modest debt repayment schedule of 5.0 percent per annum for its term loan A, maturing concurrently with the revolving credit facility in May 2027,” noted the institution.
In mid-November, Aristocrat Leisure reported full-year statutory net profit after tax and before amortisation of acquired intangibles (NPATA) of just above AUD1.31 billion, up 6.5 percent year-on-year. That was on revenue of almost AUD6.30 billion, up 11.0 percent from the previous fiscal year.
