Sale of lottery business helps Light & Wonder reduce debt in second quarter
Light & Wonder (L&W), the company formerly known as Scientific Games, reduced its net debt by $4.9 billion in the second quarter of its fiscal 2022 following the sale of its lottery division.
Light & Wonder sold its lottery business to private equity firm Brookfield Business Partners in April for $5.8bn (£4.8bn/€5.7bn) in gross cash proceeds and approximately $5.0 billion in net after-tax proceeds.
The sale is part of a wider strategy at Light & Wonder, in which the group is streamlining its operations to focus on games. As part of the plan, L&W has also agreed to sell its OpenBet sports betting business to Endeavour, owner of IMG Arena. This was originally supposed to end during the second quarter, but is now expected to end before the end of the third quarter.
L&W President and CEO Barry Cottle said on an investor call that fiscal 2022 is a “pivotal year” for the company as it focuses on games, adding that it will create greater value for shareholders.
“We made significant progress in transforming our business and are successfully executing our roadmap, delivering strong operational performance this quarter,” Cottle said. “With the sale of the lottery business and the expected completion of the sale of our sports betting business by the end of the third quarter, we have taken an important step in the transformation of our organization.
“We completed the sale of our lottery business for gross cash proceeds of $5.7 billion, which we have used to significantly reduce our balance sheet as we continue to deliver on our promises.
“We now have all the pieces in place and are particularly focused on making great games that are fully cross-platform.”
Looking to the vendor’s second quarter performance, revenue grew 5.0% year-over-year to $610 million, with growth in two of its three business segments .
Gaming revenue increased 6.3% to $390 million, driven by growth in gaming operations and helped by the $38 million UK VAT recapture, while SciPlay’s social gaming arm also grew 3.9% to $160 million following the acquisition of Alictus.
Revenue for the igaming arm was flat at $60 million in the second quarter, although the company saw significant growth in the United States, with revenue in the country up 47% year-on-year. ‘other. Light & Wonder also completed the acquisition of igaming content provider Playzido during the quarter, with the aim of expanding its original igaming content offering.
On the cost side, total operating expenses were $564 million, up 9.9%, whereas after also including $195 million in financing costs, that left a pre-tax loss of $149 million, compared to a loss of $45 million recorded at the same time. Last year.
L&W only paid $1 million in taxes, resulting in a net loss of $150 million, up from $51 million in the second quarter of 2021. However, the sale of the lottery business has generated an additional net profit of $3.4 billion, meaning overall net profit for the quarter was $3.3 billion, compared to $109 million the previous year.
The group also noted that adjusted earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter were down 8.6% to $212 million, although the lottery sale meant that its total debt was reduced from $8.7 billion to $3.9 billion.
In the first half, revenue for the six months to June 30 rose 14.4% to $1.2 billion, with revenue from services and product sales both increasing year-over-year.
Operating expenses increased 14.0% to $1.1 billion and, also including $299 million of other costs, pre-tax loss was $213 million, up from $130 million last year. L&W paid $4 million in taxes, leaving an initial net loss of $217 million for half.
However, after taking into account the revenue from the sale of the lottery business, net profit for the six-month period reached $3.3 billion, well above the $94 million recorded the previous year. Additionally, adjusted EBITDA increased by 10.7% to $414 million.
“We made great progress in the second quarter as we continued to execute on our vision and the transformation of our business,” Cottle said. “This quarter, we made tangible progress against our strategies as we delivered strong operational momentum and revenue growth in the quarter.
“The success we’re seeing this quarter is the result of the fundamental changes we’ve made across the business. Adding it all up, we couldn’t be more excited about the progress we’re making and our path forward as the world’s leading cross-platform games company.