The sale of its lottery and sports betting businesses and continued debt cutting helped Light & Wonder, the Las Vegas-based developer of cross-platform games and entertainment, boost first-quarter revenue to top Wall Street forecasts.
Earnings per share also rose, reversing a year-earlier loss, to top forecasts.
In an 8-K report filed with the Securities and Exchange Commission, Light & Wonder, formerly known as Scientific Games, said its net income was $26 million, or 26 cents per diluted share, for the three months ended March 31, reversing a net loss of $15 million, or 16 cents per diluted share, a year earlier.
The latest per-share result topped the average 9-cents-per-share loss forecast by analysts surveyed by Seeking Alpha.
Earnings before interest, taxes, depreciation, and amortization, a cash-flow measure that excludes one-time costs, rose 68.3% to $202 million from $120 million.
First-quarter revenue rose 26.3% to $572 million from $453 million and topped Seeking Alpha-polled analysts’ forecast of $563.4 million.
In a statement, Light & Wonder CEO Barry Cottle said his company was delivering content across platforms and expanding in high-growth digital markets to enable a seamless player experience.
“With a reconstituted balance sheet, sustainable double-digit growth, and strong cash generation, we now have the ability to significantly enhance shareholder value through a disciplined approach to capital allocation,” he said.
Light & Wonder Chief Financial Officer Connie James said the company has made a $140 million return on capital by buying back stock just since March.
In October, Scientific Games sold its lottery business to Brookfield Business Partners LP for $6.05 billion – $5.825 billion in cash and an up to $225 million earnout based on the achievement of certain EBITDA targets in 2022 and 2023. The transaction is expected to close in the second quarter.
In September, Light & Wonder sold its OpenBet sports betting business to Beverly Hills, California-based Endeavor Group Holdings for $1.2 billion in cash and stock. The transaction is also expected to close in the second quarter. Endeavor Group owns the Ultimate Fighting Championship.
In its earnings statement, Light & Wonder said it transformed its balance sheet with an April 14 debt paydown that cut the principal face value of debt outstanding from $8.9 billion as of March 31 to an adjusted $4 billion. The adjusted net-debt leverage ratio plunged to 3.7x from 10.5x 15 months ago, the company added.
As it reported earnings, Light & Wonder said it acquired Playzido, a United Kingdom-based open-game development platform and content provider, for an undisclosed price. Light & Wonder said Playzido launched in 2018 and serves content from 12+ gaming studios. Its games include Genie Almighty and American Gods.
Light & Wonder said the deal will boost its custom-content capabilities and expedite the rate at which it can partner with game studios and co-create new and exclusive content.
In April, Light & Wonder extended its contract with interactive entertainment group Entain, a United Kingdom sports betting and gaming group, also for an undisclosed price. Light & Wonder will continue to supply more than 10,000 terminals to Entain’s licensed betting offices through their Coral and Ladbrokes retail shops.
Light & Wonder shares rose 46 cents, or 0.97%, Tuesday to close at $7.66 on the Nasdaq. The shares fell 1 cent, ort 0.02% after hours to settle at $7.66.
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