{"id":300427,"date":"2023-11-24T12:17:56","date_gmt":"2023-11-24T18:17:56","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=300427"},"modified":"2023-11-24T12:17:56","modified_gmt":"2023-11-24T18:17:56","slug":"light-wonder-leverage-continues-declining","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/light-wonder-leverage-continues-declining\/","title":{"rendered":"Light & Wonder Leverage Declining, Credit Outlook Stable"},"content":{"rendered":"

Light &Wonder\u2019s (NYSE: LNW) efforts to reduce leverage are paying dividends with Fitch Ratings recently affirming the gaming device manufacturer\u2019s credit grade of \u201cBB\u201d with a \u201cstable\u201d outlook.<\/p>\n

\"Light
Light & Wonder signage at a roulette table. The company’s leverage is declining and its credit profile is improving. (Image: X)<\/figcaption><\/figure>\n

Helped by the recent reunification<\/a> with social casino developer SciPlay, Light & Wonder\u2019s free cash flow (FCF) margins are outpacing those of comparable firms and the company\u2019s leverage profile is increasingly conservative — a positive at a time when interest rates are high.<\/p>\n

SciPlay’s recent acquisition in October, when LNW bought the remaining 17% equity interest, added a half turn to the leverage,\u201d noted the research firm. \u201cDespite this, Fitch believes LNW’s credit profile remains consistent with ‘BB’, due to robust FCF generation, strong liquidity and still conservative leverage. The rating is offset by the company’s high exposure to the Gaming segment, which tends to drive earnings volatility.\u201d<\/p><\/blockquote>\n

Light & Wonder\u2019s earnings before interest, taxes, depreciation, and amortization (EBITDA) dropped to 4.3x at the end of last year and is expected to further decline to 3.7x by the end of 2023, confirming debt-reduction plans are paying off.<\/strong><\/p>\n

Light & Wonder Rapidly Reduced Debt<\/h2>\n

In 2021, the company formerly known as Scientific Games sold its lottery<\/a> and sports betting units in transactions that raised about $7 billion in cash.<\/p>\n

\n

Those transactions dramatically reduced debt, eliciting praise from Wall Street, and also simplified the Light & Wonder investment thesis. It did so while allowing the firm to direct some proceeds to faster-growing segments<\/a>, including iGaming. While the company\u2019s credit rating is a junk grade, the slot machine maker\u2019s debt metrics are, at the very least, in-line with that rating.<\/p>\n<\/div>\n

\u201cThe continued momentum of LNW’s gaming equipment and systems cash flows in 2024, coupled with stable digital cash flows, will allow LNW to keep its EBITDA leverage metrics in 2023 and 2024 consistent with ‘BB,\u2019\u201d added Fitch. \u201cNotably, LNW’s strong expected FCF generation and strong liquidity remain consistent with the rating.\u201d<\/p>\n

Light & Wonder has the capacity to repurchase at least another $200 million worth of its own shares and with large acquisitions unlikely over the near-term, the company could make progress in terms of getting leverage down to its desired range of 2.5x to 3.5x.<\/p>\n

Digital Could Boost Light & Wonder Growth<\/h2>\n

The aforementioned SciPlay transaction was aimed at boosting the acquirer\u2019s footprint in a higher growth industry. Data indicate it was a shrewd move on Light & Wonder\u2019s part.<\/p>\n

\u201cMonthly payer users have increased to 602,000 as of Sept. 30, 2023 from 577,000 as of Sept. 30, 2022, despite monthly active users decreasing by about 200,000 to 5.7 million over the same period due to turnover,\u201d concluded Fitch. \u201cThis improvement, arising from SciPlay’s focus on introducing new content, features and live events in its games, has resulted in a higher payer conversion rate by 0.9% to 10.6%.\u201d<\/strong><\/p>\n

Digital gaming is a space fraught with competition and earnings volatility, but Light & Wonder\u2019s strong FCF generation can mitigate some of those risks.<\/p>\n","protected":false},"excerpt":{"rendered":"

Light &Wonder\u2019s (NYSE: LNW) efforts to reduce leverage are paying dividends with Fitch Ratings recently affirming the gaming device manufacturer\u2019s credit grade of \u201cBB\u201d with a \u201cstable\u201d outlook. Helped by the recent reunification with social casino developer SciPlay, Light & Wonder\u2019s free cash flow (FCF) margins are outpacing those of comparable firms and the company\u2019s […]<\/p>\n","protected":false},"author":46,"featured_media":246760,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,19,69293],"tags":[81903,81871,81890],"acf":[],"yoast_head":"\nLight & Wonder Leverage Continues Declining<\/title>\n<meta name=\"description\" content=\"Light & Wonder free cash flow increasing while leverage declines.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/light-wonder-leverage-continues-declining\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Light & Wonder Leverage Continues Declining\" \/>\n<meta property=\"og:description\" content=\"Light & Wonder free cash flow increasing while leverage declines.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/light-wonder-leverage-continues-declining\/\" \/>\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=\"2023-11-24T18:17:56+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/12\/lnw.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1080\" \/>\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-leverage-continues-declining\/\",\"url\":\"https:\/\/www.casino.org\/news\/light-wonder-leverage-continues-declining\/\",\"name\":\"Light & Wonder Leverage Continues Declining\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/light-wonder-leverage-continues-declining\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/light-wonder-leverage-continues-declining\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/12\/lnw.jpg\",\"datePublished\":\"2023-11-24T18:17:56+00:00\",\"dateModified\":\"2023-11-24T18:17:56+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Light & Wonder free cash flow increasing while leverage declines.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/light-wonder-leverage-continues-declining\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/light-wonder-leverage-continues-declining\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/light-wonder-leverage-continues-declining\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/12\/lnw.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/12\/lnw.jpg\",\"width\":1920,\"height\":1080,\"caption\":\"Light & Wonder signage at a roulette table. 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