GGRAsia – L&W well positioned to achieve 2025 EBITDA target: CEO

L&W well positioned to achieve 2025 EBITDA target: CEO

Jun 07, 2023 Newsdesk Latest News, Top of the deck, World

Matt Wilson (pictured in a file photo), global chief executive at casino equipment and game technology provider Light & Wonder Inc (L&W), says the firm’s management is “really committed” to meeting its long-term targets as part of the company’s growth strategy.

The gaming supplier has announced the goal of US$1.4-billion in adjusted earnings before interest, taxation, depreciation, and amortisation (AEBITDA) for 2025.

“We’ve said we want to grow EBITDA from US$913 million in 2020, to US$1.4 billion in 2025. And we have a really high level of conviction about getting there,” stated Mr Wilson in an interview with Australia-based CommSecTV.

L&W – previously branded as Scientific Games – had a “huge amount of debt” in the middle of the Covid-19 pandemic, noted the CEO.

“We kind of reset our strategy, we refactored the management team. And importantly, we wanted to rapidly get out from under that leverage,” he said.

The legacy Scientific Games entity “was really a Frankenstein of gaming assets, everything from a lottery business, to a sports platform business, to a content business,” he added.

“We decided to sell a few pieces of the portfolio … and got about US$6 billion in net cash proceeds … we took that cash and repaired the balance sheet,” said the executive.

In the third quarter of last year, Light & Wonder completed the sale of the group’s sports betting business, OpenBet, to Endeavor Group Holdings Inc, involving total gross proceeds of approximately US$800 million. In April 2023, the group finalised the sale of its lottery business, generating approximately US$5.0 billion of net after-tax cash proceeds.

“We took all the complexity out of it [business], and really focused on a clear vision about being the leading cross platform, global games company,” said Mr Wilson.

“We also refocused the business around three distinct but complementary businesses about [gaming] content and technology,” he added. “We had a great first quarter, and you’ve got cash flow growing faster than the bottom line.”

The company is focusing on “three distinct market leading but very complementary businesses,” said the CEO. Those are: the land-based casino business; the social casino business, via digital gaming company SciPlay Corp; and the iGaming segment.

In recent years, “every dollar of free cash flow went to servicing our debt, and then we were underinvesting in research and development, in capex, in user acquisition costs, and in our social casino business,” stated Mr Wilson.

“Now we’re out from underneath that debt burden and we’re able to invest behind our ambitions. We expanded our research and development as a percentage of revenue, we were in the 7-percent range, we’ve taken that to 10 percent, while protecting healthy margin,” he noted.

He added: “In the first quarter, every one of our businesses grew double digits. So, they’re all positioned nicely for growth over the coming years.”

Light & Wonder reported revenue of US$670 million for the first quarter of 2023, up 17.1 percent from a year ago. Such increase was “driven by growth across all of our businesses, including another quarter of record revenues for SciPlay and iGaming,” stated the company in a release in early May.

The company reported a net profit of US$27 million in the three months to March 31, compared to a US$67-million loss in the prior-year period.

The CEO also said that a secondary listing in Australia “felt like the next obvious milestone” in the firm’s strategic transformation. In May, Light & Wonder said it received conditional approval from the Australian Securities Exchange (ASX) for the company’s secondary listing on that bourse.