Scientific Games Corporation (SGC) has confirmed that it will rebrand its business identity to ‘Light & Wonder’ – to reflect its transformation into a ‘cross-platform’ games supplier for the global gambling sector.
The rebrand was announced as the headline of Scientific Games declaring its full-year 2021 results, in which the Nasdaq gambling technology group achieved a 27% increase in consolidated revenues to $2.1 billion (FY2020:$1.7bn).
2021 developments saw SGC agree to sell its lottery business to Canadian private-equity fund Brookfield Partners for $6 billion.
Updating investors, SGC disclosed that the deal was on track to be finalised by March 2022, completing a transaction that will generate $5 billion in cash proceeds.
The board of SGC continues to prioritise deleveraging the firm’s balance sheets ahead of its business transformation, in which it has set a target net deb of ratio of x 2.5-to-3.5.
The sale of the lottery unit will be closely followed by the agreed divestment of SGC’s OpenBet sportsbook technology platform to US sports entertainment conglomerate Endeavor Group for $1.2 billon cash.
“From the outset we recognized the enormous opportunity to drive increased shareholder value through restructuring the balance sheet, redefining the portfolio and becoming a sustainable growth company,” remarked Executive Chairman Jamie Odel.
“We are already seeing the early stages of the strategy successfully executed and with the announced divestitures, the Company will immediately shift from a debt to an equity story and achieve gearing significantly below the levels we underwrote in our investment thesis. We couldn’t be happier with the way the entire team have executed on the transformation strategy, and our initial expectations are already being exceeded.”
Ahead of its upcoming divestments, SGC reported a net income from continued operations of $24 million, reversing its COVID-impacted FY2020 losses of $800 million.
Of significance, SGC highlighted the full-unit comeback of its Gaming division, that achieved a 175% increase in FY2021 EBITDA to $659 million (FY2020: $240m).
Helping lower its long-term debt, SGC cited that net cash provided by operating activities was $226 million compared to $159 million in the prior year period.
Barry Cottle, President and Chief Executive Officer of Scientific Games, said, “I want to thank our teams for a tremendously successful 2021.
“We expect to dedicate more than 90% of the Lottery proceeds to pay down debt, which combined with the expected Sports Betting proceeds will put us within our target range.”
“Second, the Board has authorised a three-year, $750 million share repurchase program. We see buy-backs at current share price levels as highly accretive to shareholder value. And, third, we will always prefer using our capital for buy-backs, debt reduction and organic investments unless we are convinced that M&A will deliver greater long-term shareholder value than other uses of our capital.”