Light & Wonder CEO, Barry Cottle, notified investors that the firm is in a prime position to take advantage of its transformed balance sheet after it offloaded its lottery business earlier this year.
Hosting its Investor Day in New York City yesterday, L&W provided an in-depth review of its operations to display how it intends to meet its targets of ‘sustainable, double-digit growth’ to drive shareholder value further.
Making up its review, the firm identified four key targets to achieve over the next three years as it eyes up medium-to-long term sustainability and growth.
Firstly, L&W targeted a 2025 Consolidated AEBITDA figure of $1.4bn or a CAGR of 15%. For comparative purposes, Q1 of 2022 delivered $202m in adjusted EBITDA for L&W whilst the full-year of 2021 yielded $659m in AEBITDA.
Additionally, the firm reiterated its previously outlined target of net debt leverage ratio range of 2.5x to 3.5x in an attempt to strengthen its credit profile and balance sheet. It has already been stated that the $5.6bn raised by the sale of the lottery business to Brookfield Business Partners has helped towards this target.
Meanwhile, L&W has targeted a free cash flow conversion rate of 45% by 2025.
Finally, the gaming company wants to have $10bn of available capital to deploy through the Company’s balanced and opportunistic capital allocation priorities.
Cottle commented on L&W’s financial outlook and strategic objectives: “Over the last 18 months, we have transformed our business and paved the way for significant shareholder value creation.
“As we look ahead, there is no better time to be in the industry, which is huge, growing, and converging. We have transformed ourselves to take full advantage of our unmatched market position to capitalize on this opportunity. Our unique asset mix and leading market positions provide unparalleled advantages to deliver games fully cross-platform.
“This results in an enviable and durable financial profile, which includes double-digit growth, a high mix of recurring revenues and robust margins, all translating into robust cash flow generation. With a clear roadmap to take market share and drive long-term shareholder value creation, I’m very confident that Light & Wonder will be the one to lead the future of the game industry.”
Moving towards the operational side of the business, L&W highlighted its ‘sustainable differentiation and a competitive advantage’ in the gaming industry through its staff, whom it labeled as ‘the best talent’.
The firm also boasted its ‘leadership positions’ across land-based, igaming and social along with its intellectual property giving it a competitive edge over other gaming companies.
This, L&W noted, means that it is ‘uniquely positioned’ to take advantage of the ‘estimated $70bn game market TAM opportunity’.
Concluding its update to investors, the gaming firm hinted at further M&A opportunities but asserted that acquisitions will only be considered if they present ‘significant long-term value’.
Last week, it confirmed the acquisition of Playzido as part of a spree of acquisitions.
Chief Financial Officer, Connie James, added: “We are at an inflection point in our journey. We’ve moved rapidly to transform our company and our balance sheet, significantly de-levering and positioning us to win.
“Our new path forward will lead to significant capital creation and with our balanced and opportunistic approach, we will continue to prioritize debt paydown, and return capital to shareholders through share repurchases and disciplined investments in our largest growth opportunities to unlock tremendous shareholder value.”