Light & Wonder(LNW) - 2024 Q4 - Annual Results

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]