Light & Wonder(US:LNW)2021-03-02 03:08Financial Data and Key Metrics Changes - The company achieved record results in Lottery, SciPlay, and Digital for the full year 2020, with free cash flow conversion of 23%, up nearly 600 basis points year-over-year [12][41][43] - Free cash flow for Q4 was $72 million, a $20 million improvement from the prior year [32][43] - The company ended the year with $8.4 billion in net debt, a $200 million improvement from 2019 [41] Business Line Data and Key Metrics Changes - Gaming revenue improved sequentially by 24% in Q4 compared to Q3, but was down 36% year-over-year [35] - Lottery revenue increased by 10% in Q4, with AEBITDA growing by 7% [37][19] - SciPlay reported a 25% increase in revenue for the full year and a 30% increase in Q4 [21][38] Market Data and Key Metrics Changes - The U.S. Lottery market saw a 70% growth in instant game retail sales for customers using the SGEP, compared to the industry growth of 10% [19] - iLottery in Pennsylvania experienced a 39% year-over-year growth in Q4 wagers, with full-year growth at 57% [20] - The number of game rounds played through the OGS platform increased by 38% over 34 billion in 2020 [23] Company Strategy and Development Direction - The company is conducting a strategic review to optimize its portfolio and capitalize on key growth areas [11] - A focus on building a high-performing culture and investing in R&D to target the largest profit pools is emphasized [10][11] - The company is excited about the cashless gaming market, having entered a cross-licensing agreement with IGT [15][61] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the gaming sector's recovery as vaccinations are distributed and restrictions ease [36] - The company is focused on maintaining strong cash flow and liquidity while managing costs effectively [32][34] - There is confidence in the growth potential of iGaming and iLottery as more states legalize these offerings [70][72] Other Important Information - The company paid down $100 million of debt during the quarter and an additional $100 million in February [12] - The gaming business is seeing early successes with new product launches, including Kascada and Coin Combo [14][51] - The company is targeting an additional $50 million in permanent cost savings for 2021 [34] Q&A Session Summary Question: What is the outlook for the gaming turnaround? - Management noted early signs of progress with new team efforts and product launches, indicating sequential growth in premium game operations [50][51] Question: Can you elaborate on working capital improvements? - The company achieved a $230 million improvement in working capital year-over-year, focusing on cash flow and liquidity [56][57] Question: What is the strategy behind the cashless gaming agreement with IGT? - The cross-licensing agreement allows the company to provide a comprehensive cashless gaming solution, leveraging its extensive patent portfolio [61] Question: How does the company view the iGaming and sports betting markets? - Management is bullish on iGaming, citing strong demand and a leading product offering, while also seeing growth opportunities in sports betting as more states legalize [69][70] Question: What are the plans for reducing leverage? - The company is focused on de-leveraging and maximizing shareholder value through strategic discussions with the board [75] Question: How does the company plan to compete in the casual gaming market? - The company aims to leverage its existing expertise and analytics capabilities to succeed in the casual gaming genre, which has significant growth potential [85]