Yahoo Finance Light & Wonder Inc (LNW) (Q1 2024) Earnings Call Transcript Highlights: Robust Growth and ...
Consolidated Revenue: Increased 13% year-over-year to $756 million.
Operating Income: $165 million, up 62% over the prior year.
Consolidated EBITDA: Grew 13% to $281 million, with a margin of 37%.
Adjusted NPAT: Rose 22% year-over-year to $105 million.
Gaming Revenue: $476 million, up 14% year-over-year.
Gaming EBITDA: Increased to $232 million, margin at 49%.
Gaming Operations Revenue: Grew 3% in North America.
Global Game Sales: Revenue up 30% year-over-year.
Systems Revenue: Increased 9% year-over-year.
Table Products Revenue: Remained relatively flat compared to prior year.
SitePlay Revenue: $206 million, up 11% year-over-year.
SitePlay EBITDA: $62 million, margin improved by 100 basis points to 30%.
Online Gaming Revenue: $74 million, up 14% year-over-year.
Online Gaming EBITDA: $25 million, margin at 34%.
Consolidated Operating Cash Flow: $171 million.
Free Cash Flow: Increased 26% to $93 million.
Liquidity: Approximately $1.2 billion available, including $450 million cash on hand.
Share Repurchases: $25 million in the quarter, total $600 million repurchased.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Light & Wonder Inc reported its 12th consecutive quarter of year-over-year growth and its sixth consecutive quarter of double-digit revenue growth across all lines of business.
The company achieved a record revenue quarter, up 11% year-over-year, driven by strong performance in its largest games such as Jackpot Party and 88 Fortunes slots.
Light & Wonder Inc's North American premium installed base has grown for 15 consecutive quarters, now representing 49% of the North American installed base.
The company successfully launched new gaming products like the Dragon China franchise in the US and the large screen jumbo cabinet Horizon, which are performing well.
Light & Wonder Inc continues to expand internationally, with significant unit shipment increases in markets like Australia, the Philippines, and South Korea.
Negative Points
Despite strong growth, there are challenges in international markets with some declines due to fleet optimization.
The company faces the need to continuously invest heavily in innovation and technology to maintain its competitive edge and market share.
Operational costs remain a concern as the company scales up, particularly with the expansion of its installed base requiring higher capital expenditures.
There is a reliance on the continued success and revenue generation from newly launched products, which may introduce volatility if these products do not perform as expected.
Light & Wonder Inc must navigate complex regulatory environments across different international markets, which can impact growth and operational strategies.
Q & A Highlights
Q: How are you thinking about the growth trajectory for SciPlay and the direct-to-consumer (DTC) platform, which is currently at 6%? A: Matthew Wilson, EVP and Group Chief Executive, Gaming, highlighted SciPlay's consistent market share gains and the diverse contributions from its major games like Jackpot Party and Goldfish. He sees a long-term goal for DTC revenues to reach 24-25%, similar to industry peers, with expectations of ramping up in the upcoming quarters. Oliver Chow, CFO, added that they plan to continue investing in the SciPlay engine and leverage data analytics to enhance player engagement and monetization.
Q: Can you discuss the opportunities and outlook for unit sales in adjacencies like VLTs and COM? A: Matthew Wilson described 2024 as the "year of adjacencies," noting significant investments in R&D for growth in this area. He mentioned multiple markets coming online and expansions like the Illinois VGT market and Canadian VLTs, which are expected to contribute increasingly through 2024.
Q: Could you unpack the performance and targets for gaming operations, particularly with new installations like Dragon Train? A: Matthew Wilson expressed strong confidence in the gaming operations segment, driven by a robust pipeline and the premiumization of their installed base. He cited specific data points like the anticipation for new games and the performance of existing installations, which support a positive outlook for continued growth in this segment.
Q: What insights can you share about international game sales and which products are resonating in markets like South Korea, Macau, and the Philippines? A: Matthew Wilson pointed out the exceptional growth in international game sales, particularly highlighting the success in the Australian market where they achieved the number one ship share for the first time. He also noted strong expansion in the Philippines and upcoming regulatory changes in Macau, which could further drive growth.
Q: How do you view the M&A landscape across your segments, and how have asking prices trended given higher interest rates? A: Matthew Wilson emphasized a focused and disciplined approach to M&A, aligning with their strategy to be a leading cross-platform global games company. He mentioned that any potential M&A activity would need to closely align with their core business and strategic vision, without rushing into complex acquisitions.
Q: Can you discuss the potential for dividends and the continuation of share buybacks? A: Matthew Wilson affirmed the continuation of share buybacks as being opportunistic, with plans to revisit the market strategy after completing the current $750 million program. Oliver Chow added that while dividends might be considered in the long-term, the current focus remains on strategic investments and share buybacks to enhance shareholder value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
