Light & Wonder Reports $82 Million Profit in Q2 2024 with 12% Revenue Growth. Great Progress in North America has Been Recorded!

Light & Wonder (LNW) achieved a significant financial turnaround in the second quarter of 2024, reporting an $82 million profit, a marked improvement from the $1 million loss recorded during the same period in the previous year. The company’s revenue also saw an impressive growth of 12%, reaching $818 million, driven by robust performance across its diverse business segments.

Strong Performance Across Business Segments

The gaming division was a key contributor to this success, with revenue increasing by 14% to $539 million. This growth was largely fueled by a 32% surge in global gaming machine sales and an expansion of gaming operations in North America. These gains were further ed by a notable increase in the installed base, leading to growth in Adjusted EBITDA (AEBITDA) and a 100 basis point improvement in margin expansion.

The social casino segment, represented by SciPlay, also showed solid performance, with an 8% revenue increase to $205 million. This was largely due to strong payer metrics and the continued growth of its direct-to-consumer platform. This segment’s success was underscored by a 300-basis-point expansion in AEBITDA margin, reflecting its ability to outpace the market.

Meanwhile, the iGaming segment reported a 6% rise in revenue to $74 million. This increase was primarily driven by ongoing momentum in the North American market. Although the prior year’s performance included $2 million in license termination fees, the current year’s figures still demonstrated healthy growth.

In addition to its operational successes, LNW also completed its initial $750 million share repurchase program during the quarter. The company repurchased approximately 11.2 million shares, representing 11.6% of its outstanding shares at the program’s inception in March 2022. The average purchase price was $66.72 per share, a 34% discount compared to the closing price of $100.71 on the day before the announcement.

Building on this momentum, the company’s board approved a new three-year share repurchase program with a maximum allocation of $1 billion. This new initiative is set to extend through June 2027, reflecting the company’s confidence in its long-term growth prospects and commitment to delivering value to its shareholders.

Debt Management and Cash Flow

Light & Wonder also made significant strides in managing its debt and improving cash flow. The company reported $3.9 billion in total debt as of June 30, 2024, with $321 million in cash on hand and additional liquidity of approximately $700 million. The company’s net debt leverage ratio decreased slightly to 3.0x from 3.1x at the end of 2023, remaining within its target range of 2.5x to 3.5x.

Cash flow for the quarter rose to $330 million, up from $281 million in the same quarter of the previous year. Additionally, LNW repriced its Term B loan in July 2024, resulting in a 50 basis point reduction in its interest rate, which is expected to save the company an additional $11 million annually. This move is part of a broader strategy to reduce annualized interest costs, which has already led to a $19 million reduction in 2024.

CEO Matt Wilson expressed confidence in the company’s ability to capitalize on its diversified product offerings, particularly in the gaming sector. He said: ”“Light & Wonder continues to capitalize on opportunities underpinned by our scale and diversified product offerings as demonstrated through the growth momentum across the business. We saw strong progress in the Gaming business as the expansion of units in the North American installed base reached an inflection point. Our global presence enables further product refinement and market penetration with our suite of games and casino solutions. We continue to develop our catalog of proven, evergreen franchises to bring the most engaging experiences to our players, leveraging the power of our portfolio across land-based, social and iGaming platforms. The uplift that we have continued to see across the business is a testament to the quality of the talent and culture in our organization. I am pleased with the continued momentum that we are seeing and know that the best is yet to come.”

CFO Oliver Chow echoed this optimism, noting that the company’s consistent revenue growth and healthy margins are indicative of its strong financial profile. He also pointed to the new share repurchase program as a testament to LNW’s confidence in its long-term strategy and its ability to create value for shareholders through enhanced cash flow generation.

Source:

”Light & Wonder, Inc. Reports Second Quarter 2024 Results”, explore.lnw.com, August 07, 2024.