GGRAsia – L&W 2Q revenue up 12pct y-o-y but gaming biz costs jump

L&W 2Q revenue up 12pct y-o-y but gaming biz costs jump

Aug 08, 2024 Newsdesk Latest News, Top of the deck, World

Casino equipment and online games provider Light & Wonder Inc (L&W) reported second-quarter revenue of US$818 million, up 8.2 percent on the first quarter’s US$756 million, and up 11.9 percent on a year earlier, according to a Wednesday announcement.

“Our 13th consecutive quarter of consolidated revenue growth once again reflects the strength of our combined business and solid financial profile,” stated chief financial officer Oliver Chow, in prepared remarks.

The firm saw its second-quarter net income attributable to shareholders flat sequentially, at US$82 million. Judged year-on-year, the second quarter this time was a major gain from the US$1-million loss reported in second-quarter 2023.

The group’s consolidated adjusted earnings before interest, taxation, depreciation, and amortisation (EBITDA) were up 17.4 percent quarter-on-quarter, at US$330 million, and up by the same percentage measured year-on-year.

The group has three main segments: land-based gaming; the digital games unit SciPlay; and iGaming.

Matt Wilson, president and chief executive of Light & Wonder was cited as saying of the second-quarter performance: “Light & Wonder continues to capitalise on opportunities underpinned by our scale and diversified product offerings as demonstrated through the growth momentum across the business.”

He added: “Our global presence enables further product refinement and market penetration with our suite of games and casino solutions.”

JP Morgan wrote in a Thursday memo: “The second-quarter result was another beat [for] sales (+2 percent/+3 percent versus JP Morgan/consensus) and EBITDA (+3 percent/+7 percent versus JP Morgan/consensus).”

Though analysts Don Carducci and Michael James also noted: “Capital expenditure and cash were a drag, in addition to below the line costs – elevated restructuring costs and a US$32 million charge relating to ‘certain legal matters’.”

They added: “The strong North American installed base net unit growth is the highlight, while a number of items – capital expenditure, corporate costs and second-half margins – need to be considered.”

Free cash flow for the gaming technology group was US$70 million compared to US$24 million in the prior-year period. “The current year period is reflective of strong earnings, which were partially offset by higher capital expenditures,” noted the firm.

Capital expenditure rose 45.8 percent year-on-year in the second quarter, to US$86 million, “primarily due to investments made to support our gaming operations growth,” said the group.

Light & Wonder shipped 11,310 new gaming machine units in the three months to June 30, up 23.6 percent from a year earlier. Second-quarter 2024 shipments included 5,501 units sold in the international market, including Asia Pacific, up 33.2 percent from the prior-year second quarter.

The value of gaming machine sales globally was up 31.8 percent from the prior-year period, at US$228 million in the three months to June 30.

Aggregate revenue in the gaming segment – including gaming operations – stood at US$539 million, up 14.4 percent year-on-year.

Gaming segment adjusted EBITDA were up 16.7 percent year-on-year, to US$272 million.

SciPlay generated US$205 million in second-quarter revenue, up 7.9 percent year-on-year, but down marginally on the first quarter. Light & Wonder’s iGaming segment generated revenue of US$74 million, which was flat sequentially, but up 5.7 percent year-on-year.

Light & wonder stated its net debt leverage ratio as of June 30 was 3.0 times, the same as it was on March 31, though an improvement on the prior-year period’s 3.1 times. The group had net debt of just over US$3.59 billion as of June 30, which was up 3.6 percent year-on-year.