Scientific Games Corporation (SG) has rebranded itself to Light & Wonder Inc as part of its Lottery sale and to align itself with its vision of ‘becoming the leading cross-platform global game company’.
The rebrand comes simultaneously with the publication of the firm’s Q4 and full year 2021 financial results, in which it saw year-over-year consolidated revenue growth in both measuring periods.
Following the planned divestitures of its Lottery and Sports Betting businesses, SG’s rebrand to Light & Wonder focuses on creating igaming and land-casino games.
Commenting on the new identity, CEO Barry Cottle said: “We are thrilled to introduce the world to Light & Wonder, a company that will build great games and franchises that offer players a seamless experience across platforms.
“Our powerful new strategy required a powerful new identity to distinguish us and our unique offerings and capabilities. Our new name and identity are born from our winning strategy to be the leading cross-platform game company and will inspire our people to make great products for our players.”
Turning to the firm’s trading metrics, consolidated revenue in Q4 was $580m, up 21% YoY compared to $480m in Q4 2020, while its FY2021 consolidated revenue stood at $2.15bn, a 27% improvement YoY compared to $1.70bn in 2020.
In Q4, SG noted that its revenue benefitted from its Gaming business demonstrating ‘continued momentum’ revenue growth standing at $372m, up 30% YoY (Q4 2020: $286m). The group also saw strong gains in Igaming, recording $54m in the quarter (Q4 2020: $47m) with US revenues up 112% YoY. SciPlay delivered its second-highest revenue quarter ever at $154m (Q4 2020: $147m) with growth in key payer metrics.
In reference to its FY2021 consolidated revenue of $2.15bn, SG stated it benefited from strong growth across all businesses.
Gaming performance (FY2021: $1.32bn, FY2020: $926m) was helped by North American premium gaming operations and the market recovery, SciPlay recorded record revenue (FY2021: $606m, FY2020: $582m), as did Igaming (FY2021: $226m, FY2020: $191m) with strong US market performance enabled by original content offerings.
Back in October last year, the firm agreed to sell its lottery business to Canadian private-equity fund Brookfield Partners for just over $6bn. Updating its investors, it noted that the deal should be finalized by March 2022, generating $5bn in cash proceeds.
The board also continues to prioritize deleveraging the firm’s balance sheets ahead of its business transformation, in which it has set a target net debt of ratio of x 2.5-to-3.5.
The agreed divestment of SG’s OpenBet sportsbook technology platform to US sports entertainment conglomerate Endeavor Group for $1.2bn cash is expected to follow.
“From the outset, we recognized the enormous opportunity to drive increased shareholder value through restructuring the balance sheet, redefining the portfolio, and becoming a sustainable growth company,” stated Executive Chairman Jamie Odell.
“We are already seeing the early stages of the strategy successfully executed and with the announced divestitures, the company will immediately shift from a debt to an equity story and achieve gearing significantly below the levels we underwrote in our investment thesis. We couldn’t be happier with the way the entire team have executed on the transformation strategy, and our initial expectations are already being exceeded.”
SG reported a net income from continued operations of $24m, reversing losses in 2020 of $800m. It highlighted the full-unit comeback of its Gaming division, which achieved a 175% increase in FY2021 EBITDA to $659m (FY2020: $240m).
The firm noted that net cash provided by operating activities was $226m (FY2020: $159m), lowering its long-term debt.
Cottle added: “I want to thank our teams for a tremendously successful 2021. We expect to dedicate more than 90% of the Lottery proceeds to pay down debt, which combined with the expected Sports Betting proceeds will put us within our target range.
“Second, the Board has authorized a three-year, $750m share repurchase program. We see buy-backs at current share price levels as highly accretive to shareholder value.
“And, third, we will always prefer using our capital for buy-backs, debt reduction, and organic investments unless we are convinced that M&A will deliver greater long-term shareholder value than other uses of our capital.”
