Casino equipment and online games provider Scientific Games Corp said on Tuesday its fourth-quarter net income attributable to shareholders was US$95 million, compared to a US$90-million net loss in the prior-year period. The company also announced that it would rebrand itself as Light & Wonder Inc in the second quarter this year, as the “culmination of a year-long strategic process” of restructuring.
The group said it was “moving rapidly to execute on its vision with a singular focus to be the leading cross-platform global game company”.
Scientific Games announced in October the sale of its lottery business to Brookfield Business Partners LP, for a total consideration of US$6.05 billion. In September, the group also divested itself of its sports betting business – including its OpenBet sports betting platform – for US$1 billion in cash, and US$200 million in stock from Endeavor Group Holdings Inc, a sports and entertainment firm.
In a Tuesday press release, Scientific Games said it expected the sale of the lottery business to “close in March,” providing approximately US$5-billion in net cash proceeds. The deal to sell the sports betting business was on track to close in the second quarter of 2022, it added.
The release quoted Jamie Odell, Scientific Games’ executive chair, as saying that the group “recognised the enormous opportunity to drive increased shareholder value through restructuring the balance sheet, redefining the portfolio and becoming a sustainable-growth company.”
He added: “We are already seeing the early stages of the strategy successfully executed and with the announced divestitures, the company will immediately shift from a debt to an equity story and achieve gearing significantly below the levels we underwrote in our investment thesis.”
Scientific Games said it was now targeting a net debt leverage ratio in the range of 2.5 times to 3.5 times. It also authorised a three-year, US$750-million, share repurchase programme.
Barry Cottle, president and chief executive of Scientific Games, said in prepared remarks that the group expected to “dedicate more than 90 percent of the lottery proceeds to pay down debt”.
He added: “Operationally, we are very pleased with the strong performance we achieved in the quarter which capped what was an outstanding year, as we grew double-digits on both top and bottom line, and generated substantial cash flow while laying the foundation for future growth.”
Higher revenues, EBITDA
The firm stated that total revenue for the three months to December 31 was US$580 million, up from US$480 million a year earlier.
The group’s quarterly consolidated adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) were up 67.4 percent year-on-year, at US$216 million.
Revenue in the gaming segment, including casino slot machines, electronic table games and systems, stood at US$372 million in the fourth quarter of 2021, up from US$286 million in the prior-year period. Adjusted EBITDA rose to US$186 million, from US$103 million in the final quarter of 2020.
The company said it sold 5,629 gaming machine units in the three months to December 31, compared to 8,336 a year earlier. Such shipments included 2,140 units sold in the international market, including Asia Pacific, down from 5,784 machines in the prior-year quarter. The average price of aggregate sales in fourth-quarter 2021 was US$17,392, compared to US$10,130 a year ago.
For full-year 2021, Scientific Games reported net income of US$371 million, versus a US$569-million loss in 2020. That was on revenue that rose to US$2.15 billion, from US$1.70 billion in 2020. Adjusted EBITDA for 2021 stood at US$793 million, an increase of 112.0 percent from the previous year.
As of December 31, the firm’s total debt stood at US$8.69 billion. The group noted it had paid down US$577 million in debt during 2021.
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