Brightstar Lottery (BRSL) Q2 2024 earnings summary

Executive summary

• Achieved over $2.1 billion in revenue and a 23% operating margin for H1'24, with record operating income and Adjusted EBITDA, net of separation and divestiture costs.

• Announced sale of Gaming & Digital business to Apollo for $4.05 billion in cash, superseding prior plans and enabling quicker value realization.

• Company to become a pure-play lottery business with a diversified contract mix and strong global presence.

• Published 17th annual Sustainability Report and continued progress on strategic and financial goals.

• Generated over $460 million in cash from operations and $260 million in free cash flow in H1'24.

Financial highlights

• Q2'24 revenue was $1.05 billion, down 1% year-over-year; operating income was $230 million, including $26 million in separation/divestiture costs.

• Adjusted EBITDA for Q2'24 was $420 million, down 5% year-over-year; margin was 40%. Excluding separation costs, Adjusted EBITDA was $446 million, margin 42.5%.

• Diluted EPS for Q2'24 was $0.20; Adjusted EPS $0.36; six-month adjusted EPS (ex-separation costs) reached $1, a company record.

• Free cash flow for H1'24 was $264 million; net debt leverage at 2.9x, lowest in company history.

• Total liquidity of $1.7 billion as of June 30, 2024, including $438 million in cash and $1.3 billion undrawn credit.

Outlook and guidance

• With the Gaming & Digital sale, full-year 2024 outlook is withdrawn due to accounting changes; new outlook to be provided for continuing operations after reclassification.

• Lottery segment expected to grow low single digits ex-jackpot for the remainder of 2024, with upside from potential jackpots.

• Underlying business conditions for lottery expected to improve in the second half, aided by higher price point launches and new game campaigns.

• Long-term lottery growth profile expected to be low- to mid-single digits, driven by innovation and iLottery expansion.