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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Scientific Games Corporation | NASDAQ:SGMS | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 58.07 | 50.00 | 62.98 | 0 | 01:00:00 |
Nevada | 81-0422894 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
6601 Bermuda Road, Las Vegas, Nevada | 89119 | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, $.001 par value | LNW | The Nasdaq Stock Market | ||||||
Preferred Stock Purchase Rights | The Nasdaq Stock Market |
Large accelerated filer | ☒ | Accelerated filer | ☐ | ||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||||||||
Emerging growth company | ☐ |
Page | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. |
Glossary of Terms | ||||||||
The following terms or acronyms used in this Quarterly Report on Form 10-Q are defined below: | ||||||||
Term or Acronym | Definition | |||||||
2022 10-K | 2022 Annual Report on Form 10-K filed with the SEC on March 1, 2023 | |||||||
2025 Unsecured Notes | 8.625% senior unsecured notes due 2025 issued by LNWI | |||||||
2028 Unsecured Notes | 7.000% senior unsecured notes due 2028 issued by LNWI | |||||||
2029 Unsecured Notes | 7.250% senior unsecured notes due 2029 issued by LNWI | |||||||
AEBITDA | Adjusted EBITDA, our performance measure of profit or loss for our business segments | |||||||
ASC | Accounting Standards Codification | |||||||
ASU | Accounting Standards Update | |||||||
CMS | casino-management system | |||||||
COVID-19 | Coronavirus disease first identified in 2019 (declared a pandemic by the World Health Organization on March 11, 2020), the resulting pandemic and the associated impacts on the macroeconomic environment in general and our business environment specifically | |||||||
D&A | depreciation, amortization and impairments (excluding goodwill) | |||||||
Divested Businesses or Divestitures | The Lottery Business and Sports Betting Business combined or the sales of these, as appropriate within the context | |||||||
Exchange Act | Securities Exchange Act of 1934, as amended | |||||||
FASB | Financial Accounting Standards Board | |||||||
KPIs | Key Performance Indicators | |||||||
L&W | Light & Wonder, Inc. | |||||||
LBO | licensed betting office | |||||||
LNWI | Light and Wonder International, Inc., a wholly-owned subsidiary of L&W and successor to Scientific Games International, Inc. | |||||||
LNWI Credit Agreement | That certain credit agreement, dated as of April 14, 2022, among LNWI, as the borrower, L&W, as a guarantor, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Collateral Agent and Swingline Lender, BofA Securities, Inc., BNP Paribas Securities Corp., Deutsche Bank Securities Inc., Fifth Third Bank, National Association, Barclays Bank PLC, Citizens Bank, N.A., Goldman Sachs Bank USA, Morgan Stanley Senior Funding, Inc., Royal Bank of Canada, Truist Securities, Inc., Credit Suisse Loan Funding LLC and Macquarie Capital (USA) Inc. as Lead Arrangers and Joint Bookrunners, as amended, restated, amended and restated, supplemented or otherwise modified from time to time | |||||||
LNWI Revolver | Revolving credit facility with aggregate commitments of $750 million extended pursuant to the LNWI Credit Agreement | |||||||
LNWI Term Loan B | Term loan facility, issued pursuant to the LNWI Credit Agreement | |||||||
Lottery Business | Our prior operating business segment that provided instant and draw‑based lottery products, lottery systems and lottery content and services to lottery operators wagering solutions to various gaming entities. This business segment was divested during the second quarter of 2022 and is included in discontinued operations in our financial statements | |||||||
Note | a note in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, unless otherwise indicated | |||||||
Participation | refers to gaming machines provided to customers through service or leasing arrangements in which we earn revenues and are paid based on: (1) a percentage of the amount wagered less payouts; (2) fixed daily-fees; (3) a percentage of the amount wagered; or (4) a combination of (2) and (3) | |||||||
R&D | research and development | |||||||
RSU | restricted stock unit | |||||||
SciPlay | SciPlay Corporation | |||||||
SciPlay Revolver | $150 million revolving credit facility agreement entered into by SciPlay Holding Company, LLC, a subsidiary of SciPlay Corporation, that matures in May 2024 | |||||||
SEC | Securities and Exchange Commission | |||||||
Securities Act | Securities Act of 1933, as amended | |||||||
Senior Notes or Unsecured Notes | refers to the 2025 Unsecured Notes, 2028 Unsecured Notes and 2029 Unsecured Notes, collectively |
SG&A | selling, general and administrative | |||||||
Shufflers | various models of automatic card shufflers, deck checkers and roulette chip sorters | |||||||
SOFR | Secured Overnight Financing Rate | |||||||
Sports Betting Business | Our prior line of business that provided sports betting services which enable customers to operate sports books, including betting markets across both fixed-odds and pari-mutual betting styles, a distribution platform, full gaming process support services and brand and player management. This business was divested during the third quarter of 2022 and is included in discontinued operations in our financial statements | |||||||
U.S. GAAP | accounting principles generally accepted in the U.S. | |||||||
U.S. jurisdictions | the 50 states in the U.S. plus the District of Columbia, U.S. Virgin Islands and Puerto Rico | |||||||
VGT | video gaming terminal | |||||||
VLT | video lottery terminal | |||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Revenue: | |||||||||||
Services | $ | 477 | $ | 431 | |||||||
Product sales | 193 | 141 | |||||||||
Total revenue | 670 | 572 | |||||||||
Operating expenses: | |||||||||||
Cost of services(1) | 108 | 90 | |||||||||
Cost of product sales(1) | 94 | 70 | |||||||||
Selling, general and administrative | 192 | 175 | |||||||||
Research and development | 54 | 53 | |||||||||
Depreciation, amortization and impairments | 101 | 108 | |||||||||
Restructuring and other | 19 | 36 | |||||||||
Operating income | 102 | 40 | |||||||||
Other (expense) income: | |||||||||||
Interest expense | (75) | (116) | |||||||||
Gain on remeasurement of debt and other | — | 7 | |||||||||
Other (expense) income, net | (1) | 5 | |||||||||
Total other expense, net | (76) | (104) | |||||||||
Net income (loss) from continuing operations before income taxes | 26 | (64) | |||||||||
Income tax benefit (expense) | 1 | (3) | |||||||||
Net income (loss) from continuing operations | 27 | (67) | |||||||||
Net income from discontinued operations, net of tax | — | 95 | |||||||||
Net income | 27 | 28 | |||||||||
Less: Net income attributable to noncontrolling interest | 5 | 2 | |||||||||
Net income attributable to L&W | $ | 22 | $ | 26 | |||||||
Per Share - Basic: | |||||||||||
Net income (loss) from continuing operations | $ | 0.24 | $ | (0.72) | |||||||
Net income from discontinued operations | — | 0.98 | |||||||||
Net income attributable to L&W | $ | 0.24 | $ | 0.26 | |||||||
Per Share - Diluted: | |||||||||||
Net income (loss) from continuing operations | $ | 0.23 | $ | (0.72) | |||||||
Net income from discontinued operations | — | 0.98 | |||||||||
Net income attributable to L&W | $ | 0.23 | $ | 0.26 | |||||||
Weighted average number of shares used in per share calculations: | |||||||||||
Basic shares | 91 | 97 | |||||||||
Diluted shares | 93 | 97 | |||||||||
(1) Excludes D&A. | |||||||||||
See accompanying notes to condensed consolidated financial statements. |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net income | $ | 27 | $ | 28 | |||||||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation gain (loss), net of tax | 13 | (32) | |||||||||
Derivative financial instruments unrealized (loss) gain, net of tax | (7) | 3 | |||||||||
Other comprehensive income (loss) from continuing operations | 6 | (29) | |||||||||
Other comprehensive loss from discontinued operations | — | (8) | |||||||||
Total comprehensive income (loss) | 33 | (9) | |||||||||
Less: comprehensive income attributable to noncontrolling interest | 5 | 2 | |||||||||
Comprehensive income (loss) attributable to L&W | $ | 28 | $ | (11) | |||||||
See accompanying notes to condensed consolidated financial statements. |
As of | |||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 931 | $ | 914 | |||||||
Restricted cash | 93 | 47 | |||||||||
Receivables, net of allowance for credit losses of $38 | 458 | 455 | |||||||||
Inventories | 172 | 161 | |||||||||
Prepaid expenses, deposits and other current assets | 108 | 117 | |||||||||
Total current assets | 1,762 | 1,694 | |||||||||
Non-current assets: | |||||||||||
Restricted cash | 6 | 6 | |||||||||
Receivables, net of allowance for credit losses of $2 | 14 | 14 | |||||||||
Property and equipment, net | 214 | 204 | |||||||||
Operating lease right-of-use assets | 47 | 49 | |||||||||
Goodwill | 2,922 | 2,919 | |||||||||
Intangible assets, net | 743 | 797 | |||||||||
Software, net | 141 | 145 | |||||||||
Deferred income taxes | 112 | 114 | |||||||||
Other assets | 61 | 67 | |||||||||
Total assets | $ | 6,022 | $ | 6,009 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Current portion of long-term debt | $ | 23 | $ | 24 | |||||||
Accounts payable | 189 | 154 | |||||||||
Accrued liabilities | 362 | 380 | |||||||||
Income taxes payable | 68 | 64 | |||||||||
Total current liabilities | 642 | 622 | |||||||||
Deferred income taxes | 71 | 87 | |||||||||
Operating lease liabilities | 35 | 37 | |||||||||
Other long-term liabilities | 223 | 232 | |||||||||
Long-term debt, excluding current portion | 3,867 | 3,870 | |||||||||
Total liabilities | 4,838 | 4,848 | |||||||||
Commitments and contingencies (Note 16) | |||||||||||
Stockholders’ equity: | |||||||||||
Common stock, par value $0.001 per share, 199 shares authorized; 116 and 115 shares issued, respectively, and 91 shares outstanding | 1 | 1 | |||||||||
Additional paid-in capital | 1,388 | 1,370 | |||||||||
Retained earnings | 539 | 517 | |||||||||
Treasury stock, at cost, 25 and 24 shares, respectively | (608) | (580) | |||||||||
Accumulated other comprehensive loss | (312) | (318) | |||||||||
Total L&W stockholders’ equity | 1,008 | 990 | |||||||||
Noncontrolling interest | 176 | 171 | |||||||||
Total stockholders’ equity | 1,184 | 1,161 | |||||||||
Total liabilities and stockholders’ equity | $ | 6,022 | $ | 6,009 | |||||||
See accompanying notes to condensed consolidated financial statements. |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 27 | $ | 28 | |||||||
Less: Income from discontinued operations, net of tax | — | (95) | |||||||||
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities from continuing operations | 138 | 121 | |||||||||
Changes in working capital accounts, excluding the effects of acquisitions | 32 | (72) | |||||||||
Changes in deferred income taxes and other | (12) | 4 | |||||||||
Net cash provided by (used in) operating activities from continuing operations | 185 | (14) | |||||||||
Net cash provided by operating activities from discontinued operations | — | 108 | |||||||||
Net cash provided by operating activities | 185 | 94 | |||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (53) | (43) | |||||||||
Acquisitions of businesses, net of cash acquired | — | (108) | |||||||||
Other | (1) | — | |||||||||
Net cash used in investing activities from continuing operations | (54) | (151) | |||||||||
Net cash used in investing activities from discontinued operations | (3) | (25) | |||||||||
Net cash used in investing activities | (57) | (176) | |||||||||
Cash flows from financing activities: | |||||||||||
Borrowings under revolving credit facilities | — | 230 | |||||||||
Repayments under revolving credit facilities | — | (70) | |||||||||
Payments on long-term debt | (6) | (10) | |||||||||
Payments of debt issuance and deferred financing costs | — | (1) | |||||||||
Payments on license obligations | (12) | (19) | |||||||||
Purchase of L&W common stock | (28) | (51) | |||||||||
Purchase of SciPlay’s Class A common stock | (8) | — | |||||||||
Net redemptions of common stock under stock-based compensation plans and other | (11) | (25) | |||||||||
Net cash (used in) provided by financing activities from continuing operations | (65) | 54 | |||||||||
Net cash used in financing activities from discontinued operations | — | (2) | |||||||||
Net cash (used in) provided by financing activities | (65) | 52 | |||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | — | (1) | |||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | 63 | (31) | |||||||||
Cash, cash equivalents and restricted cash, beginning of period | 967 | 701 | |||||||||
Cash, cash equivalents and restricted cash, end of period | 1,030 | 670 | |||||||||
Less: Cash, cash equivalents and restricted cash of discontinued operations | — | 117 | |||||||||
Cash, cash equivalents and restricted cash of continuing operations, end of period | $ | 1,030 | $ | 553 | |||||||
Supplemental cash flow information: | |||||||||||
Cash paid for interest | $ | 63 | $ | 117 | |||||||
Income taxes paid | 9 | 9 | |||||||||
Distributed earnings from equity investments | — | 1 | |||||||||
Supplemental non-cash transactions: | |||||||||||
Non-cash interest expense | $ | 3 | $ | 6 | |||||||
See accompanying notes to condensed consolidated financial statements. |
Three Months Ended March 31, 2022 | |||||
Total revenue | $ | 288 | |||
Total cost of revenue | 150 | ||||
Other operating expenses(1) | 41 | ||||
Operating income | 97 | ||||
Total other income, net | 8 | ||||
Net income from discontinued operations before income taxes | 105 | ||||
Income tax expense | (10) | ||||
Net income from discontinued operations, net of tax included in the consolidated statement of operations | $ | 95 | |||
(1) Includes stock-based compensation of $7 million. |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Gaming | |||||||||||
Gaming operations | $ | 160 | $ | 155 | |||||||
Gaming machine sales | 158 | 103 | |||||||||
Gaming systems | 55 | 51 | |||||||||
Table products | 46 | 46 | |||||||||
Total | $ | 419 | $ | 355 | |||||||
SciPlay | |||||||||||
Mobile in-app purchases | $ | 166 | $ | 140 | |||||||
Web in-app purchases and other(1) | 21 | 18 | |||||||||
Total | $ | 186 | $ | 158 | |||||||
iGaming | $ | 65 | $ | 59 | |||||||
(1) Other primarily represents advertising revenue, which was not material in the periods presented. |
Three Months Ended March 31, 2023 | |||||
Contract liability balance, beginning of period(1) | $ | 36 | |||
Liabilities recognized during the period | 8 | ||||
Amounts recognized in revenue from beginning balance | (6) | ||||
Contract liability balance, end of period(1) | $ | 38 | |||
(1) Contract liabilities are included within Accrued liabilities and Other long-term liabilities in our consolidated balance sheets. |
As of | |||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
Current: | |||||||||||
Receivables | $ | 496 | $ | 493 | |||||||
Allowance for credit losses | (38) | (38) | |||||||||
Current receivables, net | 458 | 455 | |||||||||
Long-term: | |||||||||||
Receivables | 16 | 16 | |||||||||
Allowance for credit losses | (2) | (2) | |||||||||
Long-term receivables, net | 14 | 14 | |||||||||
Total receivables, net | $ | 472 | $ | 469 | |||||||
As of | |||||||||||||||||||||||
March 31, 2023 | Balances over 90 days past due | December 31, 2022 | Balances over 90 days past due | ||||||||||||||||||||
Receivables: | |||||||||||||||||||||||
U.S. and Canada | $ | 304 | $ | 4 | $ | 297 | $ | 5 | |||||||||||||||
International | 208 | 28 | 212 | 34 | |||||||||||||||||||
Total receivables | 512 | 32 | 509 | 39 | |||||||||||||||||||
Receivables allowance: | |||||||||||||||||||||||
U.S. and Canada | (19) | (3) | (18) | (5) | |||||||||||||||||||
International | (21) | (15) | (22) | (22) | |||||||||||||||||||
Total receivables allowance | (40) | (18) | (40) | (27) | |||||||||||||||||||
Receivables, net | $ | 472 | $ | 14 | $ | 469 | $ | 12 | |||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Total | U.S. and Canada | International | Total | ||||||||||||||||||||
Beginning allowance for credit losses | $ | (40) | $ | (18) | $ | (22) | $ | (54) | |||||||||||||||
Provision | (1) | (1) | — | (3) | |||||||||||||||||||
Charge-offs and recoveries | 1 | — | 1 | 7 | |||||||||||||||||||
Allowance for credit losses as of March 31 | $ | (40) | $ | (19) | $ | (21) | $ | (50) | |||||||||||||||
As of March 31, 2023 | |||||||||||||||||
Total | Current | Balances over 90 days past due | |||||||||||||||
Receivables | $ | 63 | $ | 36 | $ | 27 | |||||||||||
Allowance for credit losses | (19) | (9) | (10) | ||||||||||||||
Receivables, net | $ | 44 | $ | 27 | $ | 17 |
As of | |||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
Parts and work-in-process | $ | 131 | $ | 124 | |||||||
Finished goods | 41 | 37 | |||||||||
Total inventories | $ | 172 | $ | 161 | |||||||
As of | |||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
Land | $ | 6 | $ | 6 | |||||||
Buildings and leasehold improvements | 56 | 56 | |||||||||
Gaming machinery and equipment | 698 | 685 | |||||||||
Furniture and fixtures | 25 | 25 | |||||||||
Construction in progress | 12 | 9 | |||||||||
Other property and equipment | 96 | 88 | |||||||||
Less: accumulated depreciation | (679) | (665) | |||||||||
Total property and equipment, net | $ | 214 | $ | 204 | |||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Depreciation expense | $ | 28 | $ | 28 | |||||||
As of | |||||||||||||||||||||||||||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||
Gross Carrying Value | Accumulated Amortization | Net Balance | Gross Carrying Value | Accumulated Amortization | Net Balance | ||||||||||||||||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||||||||||||||||||||
Customer relationships | $ | 902 | $ | (519) | $ | 383 | $ | 902 | $ | (503) | $ | 399 | |||||||||||||||||||||||
Intellectual property | 950 | (729) | 221 | 948 | (714) | 234 | |||||||||||||||||||||||||||||
Licenses | 373 | (280) | 93 | 371 | (273) | 98 | |||||||||||||||||||||||||||||
Brand names | 129 | (111) | 18 | 129 | (108) | 21 | |||||||||||||||||||||||||||||
Trade names | 162 | (139) | 23 | 162 | (122) | 40 | |||||||||||||||||||||||||||||
Patents and other | 12 | (7) | 5 | 12 | (7) | 5 | |||||||||||||||||||||||||||||
Total intangible assets | $ | 2,528 | $ | (1,785) | $ | 743 | $ | 2,524 | $ | (1,727) | $ | 797 | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Amortization expense | $ | 58 | $ | 60 |
Gaming(1) | SciPlay | iGaming | Totals | |||||||||||||||||||||||
Balance as of December 31, 2022 | $ | 2,373 | $ | 213 | $ | 333 | $ | 2,919 | ||||||||||||||||||
Foreign currency adjustments | 2 | (2) | 3 | 3 | ||||||||||||||||||||||
Balance as of March 31, 2023 | $ | 2,375 | $ | 211 | $ | 336 | $ | 2,922 | ||||||||||||||||||
(1) Accumulated goodwill impairment charges for the Gaming segment as of March 31, 2023 were $989 million. | ||||||||||||||||||||||||||
As of | |||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
Software | $ | 1,075 | $ | 1,064 | |||||||
Accumulated amortization | (934) | (919) | |||||||||
Software, net | $ | 141 | $ | 145 | |||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Amortization expense | $ | 15 | $ | 20 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(Loss) gain recorded in accumulated other comprehensive loss, net of tax | $ | (7) | $ | 3 | |||||||
Interest income (expense) recorded related to interest rate swap contracts | 3 | (3) | |||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Total interest expense which reflects the effects of cash flow hedges | $ | (75) | $ | (116) | |||||||
Hedged item | (5) | (3) | |||||||||
Derivative designated as hedging instrument | 8 | — |
As of | |||||||||||||||||
Balance Sheet Line Item | March 31, 2023 | December 31, 2022 | |||||||||||||||
Interest rate swaps | Other assets | $ | 21 | $ | 30 | ||||||||||||
Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Noncontrolling Interest | Total | |||||||||||||||||||||||||||||||||||
January 1, 2023 | $ | 1 | $ | 1,370 | $ | 517 | $ | (580) | $ | (318) | $ | 171 | $ | 1,161 | |||||||||||||||||||||||||||
Settlement of liability awards | — | 25 | — | — | — | — | 25 | ||||||||||||||||||||||||||||||||||
Vesting of RSUs, net of tax withholdings and other | — | (14) | — | — | — | — | (14) | ||||||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | (28) | — | — | (28) | ||||||||||||||||||||||||||||||||||
Purchase of SciPlay’s Class A common stock | — | (8) | — | — | — | — | (8) | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | 15 | — | — | — | — | 15 | ||||||||||||||||||||||||||||||||||
Net income | — | — | 22 | — | — | 5 | 27 | ||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||
March 31, 2023 | $ | 1 | $ | 1,388 | $ | 539 | $ | (608) | $ | (312) | $ | 176 | $ | 1,184 | |||||||||||||||||||||||||||
Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid in Capital | Accumulated Loss | Treasury Stock | Accumulated Other Comprehensive Loss | Noncontrolling Interest | Total | |||||||||||||||||||||||||||||||||||
January 1, 2022 | $ | 1 | $ | 1,337 | $ | (3,158) | $ | (175) | $ | (261) | $ | 150 | $ | (2,106) | |||||||||||||||||||||||||||
Settlement of liability awards | — | 43 | — | — | — | — | 43 | ||||||||||||||||||||||||||||||||||
Vesting of RSUs, net of tax withholdings and other | — | (31) | — | — | — | — | (31) | ||||||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | (51) | — | — | (51) | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | 17 | — | — | — | — | 17 | ||||||||||||||||||||||||||||||||||
Net income | — | — | 26 | — | — | 2 | 28 | ||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (37) | — | (37) | ||||||||||||||||||||||||||||||||||
March 31, 2022 | $ | 1 | $ | 1,366 | $ | (3,132) | $ | (226) | $ | (298) | $ | 152 | $ | (2,137) | |||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Related to L&W RSUs | $ | 19 | $ | 12 | |||||||
Related to SciPlay RSUs | 7 | 3 | |||||||||
Total(1) | $ | 26 | $ | 15 | |||||||
(1) Includes $11 million and $4 million of stock-based compensation classified as liability awards as of March 31, 2023 and 2022, respectively. | |||||||||||
Number of Restricted Stock Units | Weighted Average Grant Date Fair Value | ||||||||||
Unvested RSUs as of December 31, 2022 | 1.7 | $ | 46.66 | ||||||||
Granted | 1.0 | $ | 56.93 | ||||||||
Vested | (0.8) | $ | 45.36 | ||||||||
Cancelled | — | $ | 45.60 | ||||||||
Unvested RSUs as of March 31, 2023 | 1.9 | $ | 52.72 |
As of | |||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
Operating lease right-of-use assets | $ | 47 | $ | 49 | |||||||
Accrued liabilities | 18 | 17 | |||||||||
Operating lease liabilities | 35 | 37 | |||||||||
Total operating lease liabilities | $ | 53 | $ | 54 | |||||||
Weighted average remaining lease term, units in years | 4 | 4 | |||||||||
Weighted average discount rate | 5 | % | 5 | % | |||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
Operating cash flows for operating leases | $ | 5 | $ | 6 | |||||||
Right-of-use assets obtained in exchange for new lease liabilities: | |||||||||||
Operating leases | $ | — | $ | 4 |
Remainder of 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | Less Imputed Interest | Total | ||||||||||||||||||||||||||||||||||||||||
Operating leases | $ | 14 | $ | 16 | $ | 13 | $ | 9 | $ | 3 | $ | 4 | $ | (6) | $ | 53 |
Three Months Ended March 31, | Variance | ||||||||||||||||||||||
($ in millions) | 2023 | 2022 | 2023 vs. 2022 | ||||||||||||||||||||
Total revenue | $ | 670 | $ | 572 | $ | 98 | 17 | % | |||||||||||||||
Total operating expenses | 568 | 532 | 36 | 7 | % | ||||||||||||||||||
Operating income | 102 | 40 | 62 | 155 | % | ||||||||||||||||||
Net income (loss) from continuing operations before income taxes | 26 | (64) | 90 | 141 | % | ||||||||||||||||||
Net income (loss) from continuing operations | 27 | (67) | 94 | 140 | % | ||||||||||||||||||
Net income from discontinued operations, net of tax | — | 95 | (95) | nm | |||||||||||||||||||
Net income attributable to L&W | 22 | 26 | (4) | (15) | % | ||||||||||||||||||
nm = not meaningful. | |||||||||||||||||||||||
Consolidated Revenue by Business Segment | ||
(in millions) | ||
Three Months Ended March 31, 2023 and 2022 |
Three Months Ended March 31, | Variance | ||||||||||||||||||||||
($ in millions) | 2023 | 2022 | 2023 vs. 2022 | ||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of services | $ | 108 | $ | 90 | $ | 18 | 20 | % | |||||||||||||||
Cost of product sales | 94 | 70 | 24 | 34 | % | ||||||||||||||||||
Selling, general and administrative | 192 | 175 | 17 | 10 | % | ||||||||||||||||||
Research and development | 54 | 53 | 1 | 2 | % | ||||||||||||||||||
Depreciation, amortization and impairments | 101 | 108 | (7) | (6) | % | ||||||||||||||||||
Restructuring and other | 19 | 36 | (17) | (47) | % | ||||||||||||||||||
Total operating expenses | $ | 568 | $ | 532 | $ | 36 | 7 | % | |||||||||||||||
Three Months Ended March 31, | Factors Affecting Net Income Attributable to L&W | ||||||||||||||||
(in millions) | 2023 | 2022 | 2023 vs. 2022 | ||||||||||||||
Interest expense | $ | (75) | $ | (116) | The decrease in interest expense for the three months ended March 31, 2023 is primarily due to lower outstanding debt resulting from the redemption of select senior notes and refinancing through the LNWI Credit Agreement completed in April 2022. | ||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
($ in millions) | Revenue | % Consolidated Revenue | Revenue | % Consolidated Revenue | |||||||||||||||||||
Foreign Currency: | |||||||||||||||||||||||
British Pound Sterling | $ | 39 | 6 | % | $ | 42 | 7 | % | |||||||||||||||
Euro | 50 | 7 | % | 45 | 8 | % | |||||||||||||||||
Three Months Ended March 31, 2023 and 2022 |
Three Months Ended March 31, | Variance | ||||||||||||||||||||||
($ in millions) | 2023 | 2022 | 2023 vs. 2022 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Gaming operations | $ | 160 | $ | 155 | $ | 5 | 3 | % | |||||||||||||||
Machine sales | 158 | 103 | 55 | 53 | % | ||||||||||||||||||
Systems | 55 | 51 | 4 | 8 | % | ||||||||||||||||||
Table products | 46 | 46 | — | — | % | ||||||||||||||||||
Total revenue | $ | 419 | $ | 355 | $ | 64 | 18 | % | |||||||||||||||
F/X impact on revenue | $ | (5) | $ | (3) | $ | (2) | 67 | % | |||||||||||||||
Gaming KPIs: | |||||||||||||||||||||||
U.S. and Canada units: | |||||||||||||||||||||||
Installed base at period end | 30,675 | 30,359 | 316 | 1 | % | ||||||||||||||||||
Average daily revenue per unit | $ | 45.47 | $ | 43.39 | $ | 2.08 | 5 | % | |||||||||||||||
International units(1): | |||||||||||||||||||||||
Installed base at period end | 26,220 | 29,762 | (3,542) | (12) | % | ||||||||||||||||||
Average daily revenue per unit | $ | 14.19 | $ | 13.72 | $ | 0.47 | 3 | % | |||||||||||||||
Gaming machine unit sales: | |||||||||||||||||||||||
U.S. and Canada new unit shipments | 4,057 | 3,382 | 675 | 20 | % | ||||||||||||||||||
International new unit shipments | 3,621 | 1,914 | 1,707 | 89 | % | ||||||||||||||||||
Total new unit shipments | 7,678 | 5,296 | 2,382 | 45 | % | ||||||||||||||||||
Average sales price per new unit | $ | 18,748 | $ | 17,099 | $ | 1,649 | 10 | % | |||||||||||||||
(1) Excludes the impact of game content licensing revenue. |
Three Months Ended March 31, | Variance | ||||||||||||||||||||||
2023 | 2022 | 2023 vs. 2022 | |||||||||||||||||||||
U.S. and Canada unit shipments: | |||||||||||||||||||||||
Replacement units | 3,760 | 3,152 | 608 | 19 | % | ||||||||||||||||||
Casino opening and expansion units | 297 | 230 | 67 | 29 | % | ||||||||||||||||||
Total unit shipments | 4,057 | 3,382 | 675 | 20 | % | ||||||||||||||||||
International unit shipments: | |||||||||||||||||||||||
Replacement units | 2,210 | 1,914 | 296 | 15 | % | ||||||||||||||||||
Casino opening and expansion units | 1,411 | — | 1,411 | nm | |||||||||||||||||||
Total unit shipments | 3,621 | 1,914 | 1,707 | 89 | % | ||||||||||||||||||
nm = not meaningful. | |||||||||||||||||||||||
Three Months Ended March 31, 2023 and 2022 |
Three Months Ended March 31, | Variance | ||||||||||||||||||||||
(in millions unless otherwise noted) | 2023 | 2022 | 2023 vs. 2022 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Mobile in-app purchases | $ | 166 | $ | 140 | $ | 26 | 19 | % | |||||||||||||||
Web in-app purchases and other(1) | 21 | 18 | 2 | 13 | % | ||||||||||||||||||
Total revenue | $ | 186 | $ | 158 | $ | 28 | 18 | % | |||||||||||||||
SciPlay KPIs: | |||||||||||||||||||||||
In-App Purchases: | |||||||||||||||||||||||
Mobile Penetration(2) | 91 | % | 90 | % | 1 pp | nm | |||||||||||||||||
Average MAU(3) | 6.1 | 6.3 | (0.2) | (3) | % | ||||||||||||||||||
Average DAU(4) | 2.3 | 2.3 | — | — | % | ||||||||||||||||||
ARPDAU(5) | $ | 0.89 | $ | 0.74 | $ | 0.15 | 20 | % | |||||||||||||||
Average MPU(6) (in thousands) | 625 | 560 | 65 | 12 | % | ||||||||||||||||||
AMRPPU(7) | $ | 97.43 | $ | 92.45 | $ | 4.98 | 5 | % | |||||||||||||||
Payer Conversion Rate(8) | 10.3 | % | 8.9 | % | 1.4 pp | nm | |||||||||||||||||
nm = not meaningful. pp = percentage points. (1) Other primarily represents advertising revenue, which was not material in the periods presented. (2) Mobile penetration is defined as the percentage of business to consumer revenue generated from mobile platforms. (3) MAU = Monthly Active Users is a count of visitors to SciPlay sites during a month. An individual who plays multiple games or from multiple devices may, in certain circumstances, be counted more than once. However, SciPlay uses third-party data to limit the occurrence of multiple counting. (4) DAU = Daily Active Users is a count of visitors to SciPlay sites during a day. An individual who plays multiple games or from multiple devices may, in certain circumstances, be counted more than once. However, SciPlay uses third-party data to limit the occurrence of multiple counting. (5) ARPDAU = Average Revenue Per DAU is calculated by dividing revenue for a period by the DAU for the period by the number of days for the period. (6) MPU = Monthly Paying Users is the number of individual users who made an in-game purchase during a particular month. (7) AMRPPU = Average Monthly Revenue Per Paying User is calculated by dividing average monthly revenue by average MPUs for the applicable time period. (8) Payer conversion rate is calculated by dividing average MPU for the period by the average MAU for the same period. |
Three Months Ended March 31, 2023 and 2022 |
(in millions) | Cash and cash equivalents | Revolver capacity | Revolver capacity drawn or committed to letters of credit | Total | ||||||||||||||||||||||
L&W (excluding SciPlay) | $ | 573 | $ | 750 | $ | (12) | $ | 1,311 | ||||||||||||||||||
SciPlay | 358 | 150 | — | 508 | ||||||||||||||||||||||
Total as of March 31, 2023 | $ | 931 | $ | 900 | $ | (12) | $ | 1,819 | ||||||||||||||||||
L&W (excluding SciPlay) | $ | 584 | $ | 750 | $ | (12) | $ | 1,322 | ||||||||||||||||||
SciPlay | 330 | 150 | — | 480 | ||||||||||||||||||||||
Total as of December 31, 2022 | $ | 914 | $ | 900 | $ | (12) | $ | 1,802 |
Three Months Ended March 31, | Variance | ||||||||||||||||
($ in millions) | 2023 | 2022 | 2023 vs. 2022 | ||||||||||||||
Net cash provided by (used in) operating activities from: | |||||||||||||||||
Continuing operations | $ | 185 | $ | (14) | $ | 199 | |||||||||||
Discontinued operations | — | 108 | (108) | ||||||||||||||
Net cash provided by operating activities | 185 | 94 | 91 | ||||||||||||||
Net cash used in investing activities from: | |||||||||||||||||
Continuing operations | (54) | (151) | 97 | ||||||||||||||
Discontinued operations | (3) | (25) | 22 | ||||||||||||||
Net cash used in investing activities | (57) | (176) | 119 | ||||||||||||||
Net cash (used in) provided by financing activities from: | |||||||||||||||||
Continuing operations | (65) | 54 | (119) | ||||||||||||||
Discontinued operations | — | (2) | 2 | ||||||||||||||
Net cash (used in) provided by financing activities | (65) | 52 | (117) | ||||||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | — | (1) | 1 | ||||||||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | $ | 63 | $ | (31) | $ | 94 |
Three Months Ended March 31, | Variance | ||||||||||||||||
($ in millions) | 2023 | 2022 | 2023 vs. 2022 | ||||||||||||||
Net income | $ | 27 | $ | 28 | $ | (1) | |||||||||||
Less: Income from discontinued operations, net of tax | — | (95) | 95 | ||||||||||||||
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities from continuing operations | 138 | 121 | 17 | ||||||||||||||
Changes in working capital accounts, excluding the effects of acquisitions | 32 | (72) | 104 | ||||||||||||||
Changes in deferred income taxes and other | (12) | 4 | (16) | ||||||||||||||
Net cash provided by (used in) operating activities from continuing operations | $ | 185 | $ | (14) | $ | 199 | |||||||||||
Exhibit Number | Description | |||||||
3.1(a) | ||||||||
3.1(b) | ||||||||
3.2 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 | ||||||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Label Linkbase Document | |||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
LIGHT & WONDER, INC. | |||||||||||
(Registrant) | |||||||||||
By: | /s/ Constance P. James | ||||||||||
Name: | Constance P. James | ||||||||||
Title: | Executive Vice President, Chief Financial Officer, Treasurer, Corporate Secretary, and Principal Accounting Officer | ||||||||||
Dated: | May 9, 2023 |
1 Year Scientific Games Chart |
1 Month Scientific Games Chart |
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