{"id":207819,"date":"2022-04-04T05:25:39","date_gmt":"2022-04-04T12:25:39","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=207819"},"modified":"2022-04-04T10:45:59","modified_gmt":"2022-04-04T17:45:59","slug":"light-wonder-tagged-with-junk-rating-in-first-grade-from-fitch","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/light-wonder-tagged-with-junk-rating-in-first-grade-from-fitch\/","title":{"rendered":"Light & Wonder Earns \u2018BB\u2019 Credit Grade in Initial Fitch Rating"},"content":{"rendered":"

Light & Wonder (NASDAQ:SGMS), the company formerly known as Scientific Games, earned a \u201cBB\u201d credit mark in its first grade from Fitch Ratings, putting the slot machine manufacturer in non-investment grade territory.<\/p>\n

\"Light
Scientific Games is now Light & Wonder. The company lands a junk credit grade from Fitch. (Image: Forbes<\/em>)<\/figcaption><\/figure>\n

The company reported a debt of $8.8 billion<\/a> as of September 30, 2021. That\u2019s well in excess of its market capitalization of $5.68 billion as of April 1.<\/p>\n

The company’s ‘BB(EXP)’ rating reflects its improved credit profile pro forma for the planned debt paydown with proceeds from the sale of its lottery and sports betting segments,\u201d says Fitch Ratings. \u201cGross leverage is expected to decline to the low-3x range with FCF margin sustaining in the high-teens percent, both solid for a gaming supplier and mobile developer.\u201d<\/p><\/blockquote>\n

Before rebranding as Light & Wonder, Scientific Games announced multiple transactions to reduce its debt burden.<\/p>\n

The company is generating proceeds of more than $7.2 billion by selling its OpenBet sports betting business and its SG Lottery unit. Endeavor Group Holdings, Inc. (NYSE:EDR), the parent company of the Ultimate Fighting Championship (UFC), said late last September it\u2019s acquiring OpenBet for $1.2 billion in cash and stock. Last October, Brookfield Business Partners LP (NYSE:BBU) announced it\u2019s purchasing SG Lottery<\/a> for up to $6.05 billion.<\/p>\n

Light & Wonder Metamorphosis<\/h2>\n

Disposing of the aforementioned lottery business removes a profitable, cash-generating enterprise from the Light & Wonder equation. But analysts mostly favor the move as will go a long way toward reducing leveraging and firming the company\u2019s balance sheet.<\/p>\n

\n

It\u2019s also part of a broader plan by the Las Vegas-based company to hone its focus on gaming machines and table games in land-based casinos and iGaming, social gaming, and casual mobile gaming. Last July, Scientific Games offered an 11% premium<\/a> to acquire the 19% of SciPlay it doesn\u2019t own to boost its digital exposure. But the suitor dropped that bid last December.<\/p>\n<\/div>\n

\u201cThe company’s digital adjacencies balance the traditional slot industry’s high competitiveness, tepid replacement cycle, and unreliable new casino opening schedule,\u201d adds Fitch. \u201cThe company’s leading slot systems business (~10 percent of pro forma revenues) provides a relatively reliable cash stream and its table game business (~9 percent) is shifting more toward a lease model with operators.\u201d<\/p>\n

The research firm notes Light & Wonder\u2019s social gaming business drove more than $50 million in earnings before interest, taxes, depreciation and amortization (EBITDA) last year, up from just $10 million in 2015.<\/strong><\/p>\n

Cash Flow Potential<\/h2>\n

Fitch highlights Light & Wonder\u2019s potential to generate robust levels of free cash flow (FCF) — an enviable trait when investors prioritize companies with such capabilities.<\/p>\n

Strong FCF Generation: Fitch expects the company’s FCF generation and margin will reach $500 million and 15%, respectively, by 2023 thanks to fully recovered EBITDA, reduced interest expense, and reduced capital intensity following lottery’s divestiture, concludes the research firm. \u201cFCF is strong relative to the broader gaming industry and in line with other ‘BB’ and ‘BBB’ category suppliers.\u201d<\/p><\/blockquote>\n

If Light & Wonder can sustain leverage below 3x, show stability in digital gaming market share, and hold or expand upon current slot share, it could be positioned for a credit upgrade.<\/p>\n","protected":false},"excerpt":{"rendered":"

Light & Wonder (NASDAQ:SGMS), the company formerly known as Scientific Games, earned a \u201cBB\u201d credit mark in its first grade from Fitch Ratings, putting the slot machine manufacturer in non-investment grade territory. The company reported a debt of $8.8 billion as of September 30, 2021. That\u2019s well in excess of its market capitalization of $5.68 […]<\/p>\n","protected":false},"author":46,"featured_media":207820,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,69293],"tags":[],"acf":[],"yoast_head":"\nLight & Wonder Tagged With Junk Rating In First Grade From Fitch<\/title>\n<meta name=\"description\" content=\"Light & Wonder gets junk credit rating from Fitch, but there's strong free cash flow potential.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Light & Wonder Tagged With Junk Rating In First Grade From Fitch\" \/>\n<meta property=\"og:description\" content=\"Light & Wonder gets junk credit rating from Fitch, but there's strong free cash flow potential.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/light-wonder-tagged-with-junk-rating-in-first-grade-from-fitch\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2022-04-04T12:25:39+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-04-04T17:45:59+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/04\/SGMS4.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/light-wonder-tagged-with-junk-rating-in-first-grade-from-fitch\/\",\"url\":\"https:\/\/www.casino.org\/news\/light-wonder-tagged-with-junk-rating-in-first-grade-from-fitch\/\",\"name\":\"Light & Wonder Tagged With Junk Rating In First Grade From Fitch\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/light-wonder-tagged-with-junk-rating-in-first-grade-from-fitch\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/light-wonder-tagged-with-junk-rating-in-first-grade-from-fitch\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/04\/SGMS4.jpg\",\"datePublished\":\"2022-04-04T12:25:39+00:00\",\"dateModified\":\"2022-04-04T17:45:59+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Light & Wonder gets junk credit rating from Fitch, but there's strong free cash flow potential.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/light-wonder-tagged-with-junk-rating-in-first-grade-from-fitch\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/light-wonder-tagged-with-junk-rating-in-first-grade-from-fitch\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/light-wonder-tagged-with-junk-rating-in-first-grade-from-fitch\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/04\/SGMS4.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/04\/SGMS4.jpg\",\"width\":1200,\"height\":800,\"caption\":\"Scientific Games is now Light & Wonder. 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