Light & Wonder (LNW) Q4 2012 earnings summary

Executive summary

• FY12 revenue rose 7% YoY; Attributable EBITDA increased 5%, wholly owned EBITDA 9%, and ROIC reached 18.6%, up 270 bps since 2010.

• GAAP operating income fell to $38.2M from $83.8M, while net loss widened to $62.6M from $12.6M, driven largely by higher depreciation and amortization and restructuring charges.

Financial highlights

• Revenue was $940.6M, up from $878.7M; service revenue increased $20.6M and sales revenue increased $40.9M.

• Operating income was $38.2M, down 54% YoY; net loss was $62.6M and basic/diluted loss per share was $0.70.

• Operating cash flow was $156.8M versus $171.1M; cash and cash equivalents ended the year at $109.0M.

• Adjusted for Racing Business comparability, revenue growth reflected core segment gains; Barcrest added $26.9M to consolidated revenue.

Outlook and guidance

• U.S. instant-ticket and draw-game retail sales appeared soft in Q1 2013 versus strong prior-year comparisons; instant tickets had grown over 12% and draw games nearly 16% in Q1 2012.

• WMS acquisition was expected to close by year-end 2013, subject to stockholder and regulatory approvals; integration, financing and anticipated synergies remained uncertain.

• Existing cash, operating cash flow and revolver availability were expected to cover needs for the foreseeable future, excluding the WMS transaction financing.