Light and Wonder cites improved balance sheet from sale of lottery division

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Light & Wonder used the sale of its lottery business division to pay down debt and expand its other operating segments, the company said in an earnings call on Tuesday.

Light & Wonder reported a net loss of $67 million, 72 cents per share, on revenue of $572 million for the quarter ended March 31. During the same quarter in 2021, the company – then known as Scientific Games – posted a net loss of $88 million, 98 cents per share, on $453 million in revenue.

“From a balance sheet perspective, we’ve made tremendous progress since our last earnings call,” chief financial officer Connie James said on the call. “After the lottery sale closed on April 4, we took advantage of a window in capital markets and moved quickly to service our debt and complete a series of debt refinancing transactions delivering on our promise. to transform our balance sheet.”

Officials attributed the narrowing net loss to higher operating profit resulting from revenue growth from its three operating segments: games, SciPlay and iGaming.

Investors on the call asked company officials how inflation and supply chain disruptions were affecting the company. The company said it invested in supply chain talent more than 18 months ago to prepare for any issues that might arise and mainly faced timing issues.

CEO Barry Cottle noted that while the macro environment faces volatile conditions due to inflation, gross gaming revenue was strong through April.

“It really demonstrates, I think, the sustainability and resilience of our business,” he said. “And we do that whether we’re looking at gaming or iGaming or social. We’re actually seeing strong and growing GGR in all three of those markets. And where we’re looking at the high end and the low range of sectors, we are seeing demand on both sides.

Light & Wonder completed the sale of its lottery business to Brookfield Business Partners LP on April 4, raising gross cash proceeds of $5.6 billion. Cottle said the sale provided more financial strength and flexibility to prioritize debt repayment, share buyback and investment in growth.

Funds from the sale of the lottery division were used primarily to pay down debt, officials said. The net debt leverage ratio peaked over a year ago at 10.5 times and has since fallen to the adjusted net debt leverage ratio of 3.7 times after lottery sales and refinancing. The company believes it will achieve its target ratio range of 2.5 to 3.5 times with the sale of its sports betting division. This sale is expected to close in the third quarter and is subject to regulatory approval.

A $750 million share buyback program was authorized in March and the company has purchased about $140 million worth of stock, or about 2.4 million shares, through last Friday.

Light & Wonder’s SciPlay has acquired casual game developer Alictus. Additionally, iGaming acquired Playzido, a content creation platform provider and game provider.

Light & Wonder shares, traded on the NASDAQ, closed Tuesday at $47.66 per share.

This story has been updated to correct Light & Wonder’s previous company name.

McKenna Ross is a corps member of Report for America, a national service program that places reporters in local newsrooms. Contact her at [email protected] To follow @mckenna_ross_ on Twitter.

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