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Core Insights - Light & Wonder (LNW) reported strong fourth-quarter 2024 results, with both revenue and net income exceeding expectations, showcasing the company's robust portfolio and business model [1][2][3] Financial Performance - Net income for Q4 2024 was $107 million or $1.2 per share, up from $66 million or 73 cents per share in Q4 2023, driven by revenue growth and asset sales [2] - Total revenues in Q4 2024 reached $797 million, an increase from $770 million in the prior-year quarter, surpassing the consensus estimate of $795 million [3] - For the full year 2024, LNW reported total revenues of $3.2 billion, up from $2.9 billion in 2023 [3] Revenue Breakdown - Services revenues increased to $532 million from $515 million year-over-year, while product sales rose to $265 million from $255 million [4] - Gaming revenues were $515 million, reflecting a 4% year-over-year increase, supported by strong sales of Gaming Machines and operations [4] - SciPlay revenues remained stable at $204 million, with a 6% increase in average revenue per daily active user [5] - iGaming revenues grew to $78 million, an 11% increase from the previous year, driven by momentum in North America and Europe [5] Operational Metrics - Non-GAAP consolidated AEBITDA was $315 million, up from $302 million year-over-year, with an AEBITDA margin remaining flat at 39% [6] - Cash generated from operating activities in 2024 was $632 million, compared to $590 million in 2023, with Q4 generating $202 million [7] Liquidity Position - As of December 31, 2024, LNW had $196 million in cash and cash equivalents, with long-term debt totaling $3.84 billion [7]

Financial Data and Key Metrics Changes - Consolidated revenue for 2024 was $3.2 billion, a 10% increase from the prior year, with fourth quarter revenue at $797 million, up 4% year-over-year [37] - Full year operating income was $668 million, a 29% increase year-over-year, with fourth quarter operating income growing 8% to $168 million [38] - Diluted net income per share more than doubled from $1.75 in 2023 to $3.68 in 2024, with fourth quarter diluted net income per share at $1.20, up from $0.73 [39] - Consolidated AEBITDA for 2024 was $1.24 billion, an 11% increase from 2023, with fourth quarter AEBITDA at $315 million, a 4% increase [40] Business Line Data and Key Metrics Changes - In Gaming, revenue for the quarter was $515 million, a 4% year-over-year increase, with systems growth of 24% [42] - SciPlay's full year revenue grew 6% to $821 million, with fourth quarter revenue at $204 million and AEBITDA increasing 7% year-over-year to a record $74 million [47] - iGaming revenue grew 11% year-over-year to $78 million in the quarter, with full year revenue up 9% to $299 million [52] Market Data and Key Metrics Changes - North America revenue per day grew 2% for the year, with global gaming machine sales at $195 million in the quarter, up 25% year-over-year [44] - The company maintained the number one ship share position in North America for the second, third, and fourth quarters [72] - The iGaming business processed over $24 billion in wagers through the OGS platform, reflecting a 30% year-over-year growth in US GGR [53] Company Strategy and Development Direction - The company plans to focus on top and bottom line growth while continuing investments for future growth, including the acquisition of Grover Gaming's charitable gaming business for $850 million [9][10] - The strategy includes leveraging R&D investments to enhance product offerings and expand into new markets, particularly in charitable gaming and iGaming [29][62] - The decision to divest the live casino business reflects a commitment to allocate resources to higher ROI opportunities [26][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the $1.4 billion AEBITDA target for 2025, supported by strong product lineups and market momentum [68][75] - The company anticipates normalized growth in gaming operations in 2025, driven by a robust roadmap and strong performance from new game releases [15][17] - Management highlighted the importance of maintaining operational excellence and optimizing processes to navigate dynamic market conditions [57][58] Other Important Information - The company reported free cash flow of $74 million in the fourth quarter and $318 million for the year, reflecting strong earnings [61] - The acquisition of Grover is expected to be accretive to adjusted NPATA in the first full calendar year of ownership in 2026 [62] - The company has engaged advisors to evaluate potential strategies for enhancing its ASX listing and capital structure [34] Q&A Session Summary Question: Can you talk through how you see the cadence in getting to $1.4 billion in AEBITDA this year? - Management expressed confidence in achieving the target, citing strong product lineups and momentum leading into 2025 [68][75] Question: How might the installed base change in Q1 in light of new product strength? - Management noted that fee degradation seen in Q4 would reverse in Q1, with a strong lineup of new games expected to drive growth [79][82] Question: Can you discuss the margin growth in Q4 for the gaming segment? - Management indicated that margin growth was driven by mix and controllable factors, with expectations for continued margin expansion in 2025 [86][88] Question: What are the drivers of iGaming growth and outlook? - Management highlighted the successful launch of Huff N' Puff in iGaming and the focus on quality content and cadence of releases across channels [95][98] Question: How do you think about growth in cash flow moving forward? - Management emphasized the importance of free cash flow and the expected contribution from the Grover acquisition to drive incremental cash flow [104]

Core Insights - Light & Wonder (LNW) reported $797 million in revenue for Q4 2024, a year-over-year increase of 3.5% and an EPS of $1.42 compared to $0.73 a year ago, exceeding the Zacks Consensus Estimate of $795.27 million by +0.22% and delivering an EPS surprise of +31.48% [1] Revenue Breakdown - SciPlay revenue was $204 million, below the average estimate of $220.31 million, with no year-over-year change [4] - Gaming revenue reached $515 million, surpassing the average estimate of $503.14 million, reflecting a year-over-year increase of +3.8% [4] - iGaming revenue was reported at $78 million, exceeding the average estimate of $76.07 million, with a year-over-year change of +11.4% [4] AEBITDA Performance - AEBITDA for Gaming was $257 million, slightly above the average estimate of $252.76 million [4] - AEBITDA for Corporate was reported at -$41 million, compared to the average estimate of -$39.59 million [4] - AEBITDA for iGaming was $25 million, slightly above the average estimate of $24.96 million [4] - AEBITDA for SciPlay was $74 million, exceeding the average estimate of $73.17 million [4] Stock Performance - Light & Wonder shares returned +15.3% over the past month, contrasting with the Zacks S&P 500 composite's -1.8% change, and the stock currently holds a Zacks Rank 3 (Hold) [3]

Core Insights - Light & Wonder (LNW) reported quarterly earnings of $1.42 per share, exceeding the Zacks Consensus Estimate of $1.08 per share, and showing a significant increase from $0.73 per share a year ago, resulting in an earnings surprise of 31.48% [1] - The company achieved revenues of $797 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.22% and up from $770 million year-over-year [2] - Light & Wonder's stock has increased approximately 16.5% since the beginning of the year, outperforming the S&P 500's gain of 1.7% [3] Earnings Outlook - The future performance of Light & Wonder's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - Current consensus EPS estimate for the upcoming quarter is $1.26 on revenues of $814.57 million, and for the current fiscal year, it is $5.66 on revenues of $3.45 billion [7] Industry Context - The Gaming industry, to which Light & Wonder belongs, is currently ranked in the top 18% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Business Transformation - Light & Wonder reported a significant transformation in its business after divesting its former Lottery and Sports Betting Businesses in 2022, which improved its balance sheet[29]. - The company operates in three segments: Gaming, SciPlay, and iGaming, focusing on high-quality products and services across these areas[28]. - The company aims to align with 12 of the 17 UN Sustainable Development Goals and became an official signatory of the UN Global Compact in 2024[71]. Gaming Segment Performance - The Gaming segment is expanding in approximately 171 international gaming jurisdictions, driven by new casino openings and existing casino expansions[32]. - The company is authorized to manufacture, sell, lease, or operate gaming products and services in approximately 459 jurisdictions worldwide, including 171 international gaming jurisdictions[82]. - The company’s gaming revenue is largely driven by players' disposable incomes, which may decline due to unfavorable economic conditions, affecting gaming activity levels[127]. SciPlay Developments - SciPlay launched a proprietary direct-to-consumer in-app purchase platform in 2023, aimed at enhancing player experience and reducing costs associated with third-party platforms[40]. - SciPlay's revenue is significantly generated from in-app purchases, with players often receiving free coins, chips, or cards upon game launch[39]. - The company's SciPlay business relies heavily on third-party platform providers, with a significant portion of revenue generated through platforms like Apple, Google, and Facebook[171]. iGaming Operations - The iGaming segment provides a comprehensive suite of digital gaming content, with revenue primarily from casino-style games available through various platforms[43]. - The company has launched its iGaming operations in seven states in the U.S., with ongoing discussions in several other states regarding potential regulations[89]. - The company’s iGaming business is subject to intense competition, particularly from operators with greater financial resources, which may hinder its ability to capture market share[149]. Financial Management - The company emphasizes disciplined capital allocation, focusing on returning capital to shareholders while maintaining financial strength[30]. - As of December 31, 2024, the company had total indebtedness of $3.9 billion and total available liquidity of $936 million, including $740 million of undrawn availability under the LNWI Revolver[180]. - The company has authorized a share repurchase program of up to $1.0 billion, which may not enhance long-term stockholder value and could be suspended or discontinued at any time[179]. Employee Engagement and Diversity - The company achieved a 93% employee participation rate in the annual Global Engagement Survey for both 2024 and 2023, indicating strong engagement[66]. - The company has a Diversity, Equity & Inclusion strategy established in 2020, with a DEI Council that includes representation from the Board of Directors[64]. - The company provides a competitive benefits program, including medical, dental, vision plans, and a 401(k) plan, to inspire innovation and improve performance[69]. Research and Development - Light & Wonder's R&D personnel are strategically located across multiple global sites, including Las Vegas, Chicago, and Bangalore, to enhance product development[46]. - The company is investing significantly in research and development to create new technologies and products, although success is not guaranteed[110]. - The company has invested significantly in R&D, but there is no assurance that these investments will lead to commercially viable products, which could negatively affect margins and financial condition[154]. Regulatory Environment - The company is subject to various gaming regulations across different jurisdictions, which may impact its operations and financial results[93]. - The U.K. Government is reviewing the Gambling Act 2005, with proposed reforms including stake limits for online slots expected to be implemented by Q2 2025[90]. - The company is monitoring international regulatory changes, with increasing scrutiny on responsible gambling and affordability checks in various jurisdictions[91]. Competition and Market Risks - The company competes with major players in the gaming industry, including IGT and Aristocrat, across all its business segments[34][44]. - The company faces significant competition in the gaming industry, competing against both traditional and illegal operators, which may impact its market share and financial performance[139]. - The company faces risks from ownership changes and consolidation in the gaming industry, which could negatively affect customer spending and order volumes[176]. Economic Conditions - The company faces risks related to economic conditions, including inflation and decreased discretionary spending, which could adversely affect its financial performance[106]. - Unfavorable economic conditions, including inflation and rising interest rates, have negatively impacted the company's business, results of operations, cash flows, and financial condition[126]. - The company may incur additional impairment charges and restructuring costs, which are unpredictable and could adversely affect financial performance[120]. Supply Chain and Inventory Management - The company actively manages supply chain risks by specifying alternative components and maintaining safety stock to meet customer demand[58]. - The company monitors potential supply chain disruptions and may need to increase inventory positions to mitigate delays, which could impact operations and gross margin[132]. - The company recorded inventory charges of $14 million, $14 million, and $5 million for the years ended December 31, 2024, 2023, and 2022, respectively, indicating fluctuations in demand and product strategy reassessment[117]. Cybersecurity and Technology Risks - The company’s success depends on the security and integrity of its systems, with potential cybersecurity breaches posing risks to its operations[201][205]. - Cybersecurity threats pose significant risks, with potential costs for remediation and interruptions that could materially affect business operations[220]. - The company anticipates increased use of AI technology, which could impact operations if failures occur within these systems[217]. Acquisitions and Strategic Initiatives - The company has entered into a purchase agreement to acquire Grover Gaming for an upfront consideration of $850 million, with potential additional payments of up to $200 million based on revenue and business expansion metrics[164]. - The proposed Grover Charitable Gaming acquisition presents risks including potential regulatory approval failures and unexpected costs, which could adversely affect the company's financial condition and stock price[165]. - The company’s ability to successfully integrate acquisitions, such as the recent SciPlay merger, is critical for realizing expected cost synergies and benefits[162].

Financial Performance - Record full year consolidated revenue of $3.2 billion, increasing 10% year-over-year, driven by strong performance across all businesses [4] - Fourth quarter consolidated revenue was $797 million, a 4% increase year-over-year, marking the 15th consecutive quarter of growth [17] - Consolidated revenue reached a record $3.2 billion, a 10% increase from $2.9 billion in the prior year, driven by strong performance across all business segments [23] - Total revenue for Q4 2024 reached $797 million, a 3.5% increase from $770 million in Q4 2023 [39] - Total revenue for Q4 2024 reached $515 million, a 3.8% increase from $496 million in Q4 2023 [55] Income and Profitability - Operating income grew by 29%, with consolidated AEBITDA increasing by 11% and adjusted NPATA growing by 24% [4] - Net income for the fourth quarter increased to $107 million from $67 million in the prior year, with net income attributable to L&W per share rising 64% to $1.20 [17] - Net income increased to $336 million, up from $180 million in the prior year, with net income per share rising by 110% to $3.68 [23] - Net income attributable to Light & Wonder, Inc. was $107 million in Q4 2024, compared to $67 million in Q4 2023, representing a 59.7% increase [39] - Operating income for the year ended December 31, 2024, was $668 million, up from $518 million in 2023, reflecting a 28.9% growth [39] Shareholder Returns - Returned $462 million to shareholders through share repurchases in 2024, completing approximately 29% of the new $1 billion share repurchase plan [4] Debt and Leverage - Principal face value of debt outstanding was $3.9 billion, with a net debt leverage ratio of 3.0x, a decrease from 3.1x in the previous year [8] - Long-term debt, excluding current portion, was $3,847 million as of December 31, 2024, slightly down from $3,852 million in 2023 [41] - Net debt as of December 31, 2024, was $3.713 billion, compared to $3.492 billion as of December 31, 2023, reflecting a 6.3% increase [60] - The net debt leverage ratio improved to 3.0 as of December 31, 2024, down from 3.1 a year earlier [60] Revenue Segments - Gaming revenue increased to $2.1 billion, up 12%, with gaming machine sales growing 22% due to market share gains in North America and Australia [4] - SciPlay revenue rose to $821 million, up 6%, expanding the direct-to-consumer high margin revenue channel to approximately 11% of total SciPlay revenue [4] - Gaming revenue increased to $515 million, up 4% year-over-year, driven by global gaming systems growth of 24% and a 9% increase in the North American installed base [26] - iGaming revenue grew by 11% to $78 million, with wagers processed totaling $24.0 billion during the quarter [26] Cash Flow and Capital Expenditures - Free cash flow increased to $318 million from $291 million in the prior year, reflecting strong earnings despite changes in working capital [23] - Capital expenditures were $70 million in the fourth quarter, up from $60 million in the prior year, due to ongoing investments in gaming operations [26] - Cash flows from operating activities for the year ended December 31, 2024, totaled $632 million, compared to $590 million in 2023, indicating a 7.1% increase [43] Strategic Initiatives - Announced strategic acquisition of Grover Gaming's charitable business for $850 million, expected to close in Q2 2025 [8] Non-GAAP Financial Measures - Management utilizes non-GAAP financial measures such as Consolidated AEBITDA, Adjusted NPATA, and Free cash flow to assess the company's performance and financial condition [63][66][68] - Consolidated AEBITDA is a key performance indicator that helps monitor operational performance and is reconciled to net income, providing insights into ongoing underlying performance [71][72] - Adjusted NPATA is widely used for valuation and performance measurement, eliminating effects of amortization, restructuring, and other non-recurring items [66][69][75] - Free cash flow is calculated as net cash from operating activities minus capital expenditures and is crucial for understanding liquidity and debt servicing capabilities [77][70] - The net debt leverage ratio is calculated as net debt divided by Consolidated AEBITDA, providing insights into the company's leverage position [78] - Adjusted NPATA per share (diluted) is presented to give investors a clearer view of performance on a per-share basis, adjusted for various non-recurring items [76] - Consolidated AEBITDA margin is expressed as a percentage of consolidated revenue, offering a perspective on profitability relative to revenue [73] - Management believes these non-GAAP measures provide valuable insights that are integral to financial reporting and strategic planning [68] - The company does not provide forward-looking quantitative reconciliations for targeted non-GAAP measures due to uncertainties and factors beyond its control [72][78]