GGRAsia – L&W posts 2Q loss on continued ops, revenue up 5pct

L&W posts 2Q loss on continued ops, revenue up 5pct

Aug 10, 2022 Newsdesk Industry Talk, Latest News

Casino equipment and online games provider Light & Wonder Inc (L&W) – previously known as Scientific Games Corp – saw its group-wide revenue rise 5.0 percent year-on-year in the second quarter, to US$610 million. Such growth was supported by an increase in revenue in the group’s gaming segment and digital business SciPlay.

“Our gaming business demonstrated continued strong momentum including growth in all lines of business year-over-year … and robust sequential growth in gaming operations and game sales,” said Light & Wonder in a Tuesday press release. “Revenue also benefited from year-over-year growth at SciPlay, while iGaming businesses momentum continued despite 7 percent unfavourable impact of foreign currency,” it added.

Accounting only for the group’s continued operations, Light & Wonder reported a net loss of US$150 million in the three months to June 30, compared to a loss of US$51 million a year earlier.

“Net loss increased primarily as a result of US$147 million in loss on financing transactions associated with the April 2022 debt pay down and refinancing transactions,” stated the group.

Nonetheless, Light & Wonder posted a second-quarter net profit attributable to its shareholders of US$3.29 billion from discontinued operations. The period ended June 30 included pre-tax gain of nearly US$4.57 billion on the sale of the group’s lottery business, completed in April.

The company’s quarterly consolidated adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) from continuing operations were down 8.6 percent year-on-year, at US$212 million. The company said the prior-year adjusted EBITDA result “benefited from value-added tax recovery, reducing the year-over-year comparability by approximately 18 percentage points.”

Light & Wonder said it had “significantly de-levered and transformed” its balance sheet, as a result of a debt pay down and refinancing transactions, that reduced the principal face value of debt outstanding to US$3.90 billion.

The company is also selling its sports betting business: the deal is due to be closed by the end of the third quarter this year. The firm is to get US$750 million in cash and US$50 million in stock from the acquiring business, United States-listed Endeavor Group Holdings Inc, a sports and entertainment firm, under an amended agreement announced earlier this year.

Higher gaming sales

Tuesday’s release quoted Barry Cottle, Light & Wonder’s president and chief executive, as saying: “We made great strides in the second quarter as we continued to execute on our vision and the transformation of our company. With the lottery business sale and anticipated closing on the sale of our sports betting business by the end of the third quarter, we have achieved a significant milestone in the transformation of our organisation.”

In May, the group said at its 2022 Investor Day it was aiming by 2025 to achieve annual consolidated adjusted EBITDA of US$1.4 billion. The firm also aimed at “total capital creation of US$10 billion from 2022 to 2025”.

Second-quarter gaming revenue increased by 6.3 percent year-on-year, to US$390 million. Light & Wonder said such growth was “primarily driven by strong growth in gaming operations, which once again exceeded 2019 levels driven by record North America premium installed base units, and continued elevated average daily revenue per unit, coupled with robust growth in game sales, systems and table games businesses.”

Revenue from gaming operations fell by 9.9 percent year-on-year, to US$163 million. Sales of gaming machines reached US$123 million in the second quarter of 2022, up 23.0 percent from a year ago.

The company said it sold 6,488 gaming machine units in the three months to June 30, compared to 4,972 a year earlier. Such shipments included 2,479 units sold in the international market, including Asia Pacific, up from 1,751 machines in the prior-year quarter.