SGMS - Earnings call transcript Q2 2020

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Operator

Good afternoon, ladies and gentlemen. And welcome to the Scientific Games 2020 Second Quarter Investor Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this event is being recorded.

the Investor to Relations turn Vice Kruse, me of President for let call Trent over Senior Now, Scientific Games. Mr. begin. may you Kruse,

Trent Kruse

Thank afternoon, good you, operator, everyone. and

second operating During XXXX this afternoon and question-and-answer discuss we Cottle today’s me our Barry Eklund. call, period. With results followed performance, Mike and are by a will quarter

could to Our call Securities that certain Reform materially of Act statements and Litigation call. discussed statements risks statements during involve results forward-looking today include will cause uncertainties those from that XXXX. differ contain Private under actual These the the

regarding For our call and to afternoon, posted issued risks the information earnings this website our filings these refer with and uncertainties, earlier this on our the please materials SEC. to relating release

each measure a of well Investors be release, We our also will as the discuss to found certain press the non-GAAP GAAP measure of in each reconciliation non-GAAP measure non-GAAP financial as in directly description website. most comparable measures. earnings can on our and section A

As of a section this available Investor be Investors is the slides A reminder, supplemental scientificgames.com. archived in reference materials Relations recorded. call and Also, our accompanying webcast are this website will at conference our on replay of website. being

the will to These not management company’s document the call. directly be reference following to be your used speaking are to While meant review and slides slides. facilitate results the of as a

call the to Barry? Barry. turn me over let Now,

Barry Cottle

company. to start to the partners my Thanks, Trent. our recognizing way want up has Good afternoon, for by team other, help stepped I everyone, and I our us. proud our am thanks and colleagues. each so of joining

ability reopen. which begins cash us containment effectively short-term, as for setting manage business economy performance the while evidenced quarter. flow and the This a also our to incredibly significantly our navigating are cash success our by well as to team’s our to We strong testament current up expectations is better-than-expected to ourselves the in outperform for environment cost allowed management, the

that about are cautious in we the XXXX the aware think months, will our there very and cost our optimistic are still business. for though, unknowns outlook bringing to coming We beyond. are and we be rest of therefore, back how in many in Ultimately,

nimble positioned financial and our structured have solid that billion results as following Today, have any more operating ready our will win. $X.X offering. liquidity our over through ourselves position, business, ability we we emerge to by to share, are demonstrated effectively to operate stronger, continue environment to through in in a including we to the also across But have situation. this We business first, debt recent drive very while we unprecedented

Second, assets the actions for advantage as had portfolio us our positioned effectively demonstrate results to the of the that And look and our us has ahead. business throughout that drive crisis deliver to best diverse to we true allowed continue are manage results meaningful future. of finally, to take strength strong and position ourselves the competitive we and

across crisis team are pursue all an in front of enhanced to with improved opportunities line, numerous us we and segments. this liquidity exiting and incredible of product We our growth have ready

Now before wanted minute Mike over him the to welcome to I a our I to call team. to Eklund, turn take

deliver operations with has the operational model. on He its just to aligning brings in leadership wealth very enhance and experience Mike Mike right Board. to financial finance in a opportunities jumped cash several us company’s We and of aspects continue a fortunate our and profitability. all business identified of are have core and improved for flow to and for passion and operations

our drive Mike? Following Mike’s business. strong results will are comments, we looking how to I discuss to come across back ahead

Mike Eklund

was the join to enhance afternoon, opportunity some It’s from real those back should interesting certainly team, least my we create potential, things today. made and ultimately, you than you we as value the business. company I decision clear right, excited I have good Barry, drive and everyone. to I not I am and I at see higher if Thanks, about convinced about margins great it role, in the It’s cash I on across the on multiple operational should excited to things that happy drivers and outside that reflect growth the Scientific call can the do and tell to could am all more and be I to for those great into here. What excited Hey. that the them decision the could and looking our units time I Games business do be and also the was in. here. many the some I see effectiveness flow, XX able a if well, ever I you do we be days as And many and to more be report the to things you shareholders do join unlock at that

of on to headlines the in financial and across three, the for results. firm achieving some balanced that, four may let’s now to kind secret the two what as update full I this probably things. delivering QX will de-levering. of of operational liquidity that, With course, the I predictable we a and brief that doing. exactly quarter, on everything excellence I is And do and jump then, across I you what on and with of right know For me that fun priorities Number filling will structure do. and set focus life, after away, be thesis imagine Number cost key the to would might that a on for investment and from the a couple Number with of right unit results of it’s headlines no I like prior my business give reflected With saw I growth that start as QX. key you profitability. exactly have like a phone is turn one,

strong million all as have liquidity, $X.X with liquidity of a up which you in we liquidity know. our so position following refinancing, available July or billion by with we topped First $XXX

also exceeded for in outflow to guidance provided We net of range delivering versus $XX QX, May $XX minus guidance million. cash of a million we a $XX negative have million the

there. an performance really When was and said positive the by nice free environment. operating team extremely $X So of team all million in challenging plus done, generated cash our flow has otherwise

appreciative job team of by we it’s So the a work they could the have be that not great more done. and

second the completed our notes highlight, refinancing of we XXXX Now well. the as in

have until due no maturities a we As XXXX. significant result,

many that the phone on pleased your that think refinancing, our done. We are in support of timing with you market. are the getting it for in On I

In I both saw fact, you for Scientific want to great the and for again, widespread Games you was thank that. support tell to see, just and that I encouraging

Third for highlight results is the breadth balance the our portfolio of the really helped quarter. which us

tough impacted to effect upside. our all the was business the our by closures Digital iGaming materially to Great upside QX, within market. the this particular generating in balance see know again material casino side While Gaming during SciPlay the advantage business orders in business of we working and material the for the stay-at-home the portfolio by the widespread have opposite actually on

Our the Lottery its own business quarter. and for also proved resiliency held its

QX a business year. off our over quarter. into final and and see reduced we second got March where that The of million is headline going with we headline, the cash Lottery teams fourth half expenses comfortable the the of our the $XXX QX, and in into and but to April, course, June, nicely really momentum recovered we and in carrying and are slow Of May

of we the As business very our worked able through all business. were a teams reexamine difficult aspects environment, to

we the business a Importantly, meaningful long-term. and way portion as we do set now beyond now in in to and in the rethink of these result savings cost XXXX has to permanent teams the expect measures

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controls revenue on continue reductions will layer costs expense those our back back ramping into and see focus will and we We only business as up. the

$X.XX Our net million prior quarter the $XX share share $X.XX $XXX or per million the in period per for loss year. versus or was

$XX to $X cash and million and earlier, flow. our flows, million I in cash free in flow balance Turning we generated mentioned operations, sheet from as delivered cash

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this compared million last year. Our to million, $XX was CapEx spend $XX quarter

below million talked expenditures range planning offering. guidance original have our over to $XXX for our million With of XXXX, the recent following billion million capital For is we our to all are for these about now we $XX as $XXX liquidity, be actions, $X.X or notes in XXXX. of

and XXXX. leverage reminder, relief we net quarter with first QX X.X, our the ended covenant and we through ratio to the net Finally, a agreement debt ratio lien previously as including on leverage of amended a obtain credit

significantly ratio, growth generating reducing are debt ahead, flow. strong sustainable leverage Looking profitable cash and to we committed our delivering

turn million. Now XX% unit SciPlay business up I to was starting SciPlay. $XXX quickly to revenue will with performance, our

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$XX bottomline. revenue through Again, nice productivity Digital X% really the dropping to AEBITDA million, while increased XX%. Our increased to

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can we customers results drive well, out opportunities, continuing future. systems business we profit given cost where Finally, solutions significantly stay Ticket connected team Brazil over debt focused meaningful it in impacted XXX,XXX cashless revenue over positioned leverage our slots Instant of has our our are in refinancing. and and we innovate this the later still to billion by said but launch In Gaming as clearly before, wrap industry closures, were all largest business contactless global our up, through expect our casino and recent for maturity $X.X plenty streamline to in year. leading liquidity the on our Lottery structure in to the have our we runway To in

handle emerge the current for with the efficient sure ourselves and the have potential we talented to increased navigating and teams appropriately Barry? of We today. to at cost Again, I couldn’t to we to the in a see results that that position true lessons potential put Barry cash all together. Scientific allow that, Scientific maintaining continuing achieve great this and actions let the flow as environment, feel With Games the more be the you Barry. add warrant. of unprecedented -- we will to leaders while enable to for any more as we unlock right-sized speak the will excited me that while space. expenses turn to Games. only it that of optimistic with team working as I focus environment delivering he’s it’s the over Together, and implemented are us future. learned back on us business all we business will controlling have the the I a will be The have business critical to successfully

Barry Cottle

Thanks, Mike.

but would As heard, crisis, we on this focus have will you continue success current and effectively long-term and to our also business. across manage through

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our of We while titles build number options are competence portfolio titles forward bringing content number a providing our of around flexible classic pricing customer for also to classic a customers.

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our Games results As SGEP Building States to business of are program. supplier in growth Games outpaced performing is Connecticut, world. is a Instant in seen on we XX program our by SGEP seeing our to XX%. in now reminder, lotteries the momentum the sales have we across the Game all the over supplier Scientific following industry outstanding the on Instant the the elevation primary top primary

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Lottery, to within digital solution deliver results Speaking the Pennsylvania is of Lottery. with our outstanding continuing iLottery

$X and under launch in sales in know, billion most the billion America iLottery on delivering commercially $X to is years As you deliver annually. two in sales launch in track total successful of our over to-date, now Pennsylvania it’s North iLottery

I type partnership and have continue future. increased the adoption in We from velocity partners win tried in is to incredibly as for We a market launched to four-week process from segment, Michigan, we lottery, momentum NLO, launches the the these states and Sports capabilities. accelerates another to in June, Lottery re-launched on This takeaway we SG as Drums Betfred which across two levels. with Dancing We the the of period operators. FireKeepers improved very near Digital Dancing our delivered an in the partnerships launch. key in the operations well-positioned improved expect World iLottery and significantly Drums adoption additional and our in we the leading win significant launch four power market begins demonstrates over state, would Association one competitor. a of state with our [ph] the platform. of position benefit the to speed tech Dutch announce longstanding In the our Colorado, see rapidly to that to NLO demonstrating demonstrates are first we expect note big

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of the results and and Jersey, advantage Looking revenue these in at such our America is our XX% was iGaming, North state expanding in unmatched to preeminent set versus platform the as share With racing. player market Sports, XXXX our leagues OGS no we have expansion. soccer for positioned within New returned iGaming opportunities significant in can take across recovery and position events leverage are held where a market second half leading position we seeing demand up to And iGaming better last and recent are European in we year. one be future market

fact, saw in one. XX% bets In day a we increase Ascot Royal placed year-over-year on

pioneer betting XX with helped for robustness. it reliability and scalability, ago technology Sports Our years carries a reputation platinum nearly level and

and enhancements seen second surge we to to quarter. the bets SciPlay, We in number portfolio to the in economies, capitalize produced player leader with We U.S. allowed and Sports that we truly finally, the on have in ops us positioned And systems the drive the other many our in regulated and market. across be over technology results the to leaders the XX% live compelling markets. one markets of delivered in supplier and are worldwide are regulated in game quality demand. delivering We U.K., record are significant

AEBITDA $X.XX, record. result, payer conversion XX% a and increased increased points increased up payer a monthly to million, XX also million, revenues basis quarterly per X.X%. $XXX to to generated and revenue grew XX% average nearly last XX% $XXX.XX $XX year XX% record to our ARPDAU to As of we quarterly

All incredible in. represent are record levels of of and these position the demonstrate all KPIs games our

and beyond and the and team addition leverage our great results, market enables acquired casual an genre us grow unique to revenue. a also technology developer, talented portfolio we player engagement In of social to strategies to our these adding drive games incredibly ComeXPlay and during quarter, casual expands casino game new evergreen immediately our apps second to

financial record our of In crisis in continuing the are our of we future. have given results about this in opportunities a position We are quarter for we breaking through ourselves and excited ahead growth very the untapped our and the are us. strength position and the solid future games best second for to we effectively and closing, manage

numerous of liquidity are front and have ready We product team across growth we we improved that with all moving pipeline incredible and enhanced forward of are and to divisions. our us opportunities pursue in

recent turn from & Now Forbes. to our shareholders quickly Q&A, want before address to I filing of the MacAndrews we

therefore and expect sale early be this sale no have to work have We the Forbes at we of The as commenting and consider a always MacAndrews to SG shares. cooperatively we will they is time & further provide very with at it additional stage details we today. not consideration and

appropriate as ensure to day-to-day nor Board. are line whatsoever. updates to the management provide that, and that will continue you for Operator, questions. affect company we open your in our want run will leadership to take to report We this the could making decision not please team planning, and The questions. the happy business will any With process way

Operator

ahead. Gaming. [Operator DeCree Union question from Instructions] The John is Please first with go

John DeCree

too results AEBITDA I welcome seems to think and Mike. we you time congratulations don’t has the see guys like quarter. that cash Barry. flow, free you Games many so so it positive team. Congratulations Mike, from Sci that. to a the start, And we will Hi, -- good on on Hi, EBITDA sector our picked

Mike Eklund

John. Thanks,

Barry Cottle

Thanks, John.

John DeCree

on your good in A will lot talk get kind maybe level I strategy of kind us on world long-term to start and as just of so high time. of is changing the Barry, kind thoughts real stuff just of about,

of number your business are shining really segments a here. So

the sustainable get the highlighted obviously them, get lot demand thoughts demand of growth on I Lottery for like, of prepared might the around in your what that whatever pandemic, a are kind it’s to this some we pandemic? your growth to I on view of results, this the are hopefully and demand or think, most look SciPlay tables, course, right of is electronic of business have whenever other wanted of whether of kind But how You normal and remarks, on now. level least side side we iCasino. other of this at your new experiencing views sticking of on

Barry Cottle

I be And then long-term two this there John. on there, think first may the let -- of Thanks, questions so kind and long-term piece a strategy. the about talk comment tackle Absolutely. again little and SciPlay on me of note Digital bit

So, first of all, as you noted, we certainly dynamic. saw stay-at-home benefits in SciPlay and Digital from the

note the as it’s also surge forefront incredible recent important on with in significantly the market grown I’d player However, our allowed iGaming, look baseline has on created that, that environment think games that to if demand at based and Digital to the In shape that a these SciPlay into think we businesses take capitalize we going clear of of forward, at also rapid along I player it’s you has truly that higher that given us Jersey also a I in the for Gaming years. in current adoption well. going land being had have And Digital seen. obviously New note market.

does tandem. So of growth strong in based land to ahead we has lot a can they and Digital gaming have continued think grow as

Jersey, seen this in with have We iLottery. Pennsylvania and in New obviously,

continue to both these drive expect we businesses meaningful growth. of So to

which as of And features about have we our have in it’s a and are growth long-term ever strategy, product, business market, think terms to So in I position healthy in go-forward a then that I you very the see strategy. and in our addressable we I have adoption, games, going in. today growth consumer growth in as the created, positioning we would confident strong really feel say,

really future. strength the reaffirmed and of the advantage effectively competitive a both In have. to fact, and leadership business the position operate profitable and our growth happened of and me structured for the our today portfolio created environment opportunities diverse we to deliver the quite lot nicely team of us through frankly, up sets is what’s to businesses We

launch in we momentum Digital lead delivered our mean, So the as anyone the if take as the have leadership today, or front think I that on Sports you the we see well-positioned in we this the And as the are markets. as are business in advantage iGaming to on and revenue position this going alone. rapid market past today is of I mentioned, at deal those just well. I don’t in XXX% future look think then, growth reinforces there quarter we U.S. and you iGaming our growth quarter that to

On the the where the is we to, manage adoption of or and winning Lottery in only QX ticket unprecedented Mike take now, are and the then significantly. that we advantage SGEP positioned also -- of bid ahead, Lottery Brazil broader as as the now sales seeing as not are full the solution. if new to the look we are we streak territory such alluded saw and we Instant resilient program front, well-positioned, in so that we have launch business Lottery the but acceleration adoption increase And you via

shows on in add with on top we game greater leverage our into scale quarter that the Gaming, which of just SciPlay enables it’s focus more market business. road on efficient through is compelled customer of have in commercial the the and share growth So at acquisition approach post-COVID, compelling business the there business that record to XX%, to play going XX%, Xx the and an accelerate -- that AEBITDA us amazing as On and wallet team casino laser becoming are continue driving forward. really at of the In map we then market, we kind the mentioned have casual strong which of beyond it leaner product which help the and now a and really grow that both while pre again social of and ComeXPlay Lottery rate expanding side. recent we

we we predict know, impact can’t you our can COVID As control we can our but impact share structure. market or cost

team’s we and all share so of growth look ability And reducing ahead. us and cost enhance strong in deliver create potential and in business are business be extremely this When flow position and for in enables quarters believe achieve more profitable the team’s competitively cash results shareholders. all just Matt on deleverage that that the you the at nimble Board, across really to and generate confident We a market even overall. our full nice efficient to of our and top

John DeCree

helpful. That’s

sneak multiple about. in I talk in. But think given could follow answered there’s questions short if to up there, much so you I one

realized big bit you? those of a on partnership of or partnership the flung the you been does additional a how have big kind little But might kind about front. horizon in across, could could certainly of you can’t who are. qualify? would where you along be on qualify Is a a might You the talking some it or Digital it a and eyes it lens partnerships your it if It what see be kind probably partner go can I multi-jurisdiction be for specify

Barry Cottle

Yeah.

I That’s fine. think, no.

think, are you as and and deals, launches. booked we having also the I well that right alluded as as momentum you appreciate the highlighting the I now we

had as to they switching then made we proven, over in the worked or original out by replicate us as We scalable we for four -- to that U.K. and scale to and weeks the everybody was choices in our reliable, Sports I success now side that’s else the bet -- had another have seeing do we best, everybody are our are on playbook happen the toward of we want open imminent. business, somebody nicely. that time, had most we the is in that think really four customizable and going launched the and four I gravitate have last -- side launches told who think people delivering product. And over up, and two U.S., the to

think as for you all the of the the platform pipeline say, and today, very On iGaming front, so it people, but above, market the I and that to do offer that to imminent where kind are would et rich deals have becomes we which that are yes, attracts our of a as to in studios announcing the we not operators kind our have of kind Netflix, cetera. IP. multi-jurisdictional, alluded OGS I bring in well of, content We can entering -- kind of and have we that space, own must-have We that space. feature-rich top that a to addition we of the platform

side, So, we had the said, as out. that we place and be playing seeing happy are in that seems I with fortunate to we are momentum in the playbook that

John DeCree

Thanks, Barry. I my Thanks queue. for the questions. taking hop all back will into

Operator

Jonas The with Please go SunTrust. Barry next is question from ahead.

Barry Jonas

Barry. guys. segment. wanted wanted with a start Hey, Mike. I to had Hey, I the few questions, Welcome to -- I Gaming

first back you do When really Just budgets as curious purchasing you with to pandemic first customers are you now pre-COVID hearing and hit. could the when levels go customer speak think what levels?

Barry Cottle

would we a the at Yeah. That’s I be way guess, uncertainty, to question a great there’s has terms great in of the I of Obviously, challenging a where obviously just high caveated. of are answer degree is, and state this so given question. COVID alike. everything a

year level and spend of on based the business see in do XXXX. more believe in next Gaming having, the normalized grow However, conversations will do meaningfully we are expect to we we

If when turned basis have at And market, and results been seeing that up the you look kind units casinos the say, actually on. of encouraging actually coin-in see roughly recovery in have we got very we of today the per view back are day are open. early a on XX%, significantly the impact the for you let’s that

seems consumer So be seems and demand forward. that there to be moving the to initial

we think in -- tribal of we I are of the that’s the I’d And exposure XX%. market in very travel and on much se, particular, local tourism, very terms a don’t be faster contingency space that that in will us that’s the have is that describe per kind actually In driven so you fortunate market. terms and believe it’s our largely that because how of the sense recovery in regional,

And are cautious we say. so we are encouraged, always would I but

and as services up before, or can we COVID, it do lined And up is what sure make can’t control products of our and is does. can when ready make take have we to that greater so, we sure but wallet structure predict I the the mentioned we share set cost appropriately

Barry Jonas

helpful. more. that point little drive to But really just maybe that’s Well, home a bit

Lottery second your some data wondering of participation actually. look are side seeing holding I are businesses of the regional or waves? you despite of Are waves second just those as seeing We markets in you the or any off at on real-time there am instances tail even maybe cases. of certainly some a

Barry Cottle

Yeah.

a when the So have is, seen we the actually up that’s of about there talk close you things country. of What couple course the remember opening casinos first so wave. second been -- have a to over thousand

temporarily, continuing. two for Arizona, we are obviously but people two, and and day three that few, them But that still Oklahoma, closed basically have only the momentum reopened. cautiously they the or a a in reopened have closed We of seeing casino sanitized to seen

set operators services enable order in created type the will we things. available. some our socially that those market keep taking them turn social I products and have and think and measures right them -- we we is, on ensuring have discussions in are at least sanitation and and seeing that what now of off do cargos open in stay system people testing distanced that some But people the help are will distancing to coming what was we the out to are it to of that we surface to our sanitation a and ready machines, keep to have, we up which position that cash continue topical been products grow. have And people leadership and have obviously, in systems upon can I people with with in try -- the by we and different ourselves also really enable actually -- taken set they that come obviously

is tools the leverage our COVID want our on and that are to players the right? our impact we very structure well. always keep during this and list can goal safely, position is, give that people besides we And systems high so and momentum order cost try that order is employees, in we to do because as going And to -- to we safe, the thing wallet obviously other time our ensure the the here in sure keep to goal customers make

Trent Kruse

Trent. And consistent. for Lottery. four out been longer transpiring an point Barry, to the weeks I But four those ticket surge your instant We add than just last here is very been that’s called weeks. has this growth over on would and the

seeing our in for are time trend, encouraging as and to innovating those point are Barry’s we well. we this So customers point, at

Barry Jonas

as That’s hear great to well.

level for levers curious a one sort to it’s But me, of maybe there? to to I into of equity the issuance, last fray. spinouts asset the whether get appreciate just the any any leverage would division, Mike from you get just So sales, remarks accelerate here. thoughts high about the consider

Mike Eklund

control with really need can products, control for been prepare capital. keeping innovation, attention Yeah. what QX, in what and the worst the satisfied little My our posture. clearly, customers that really the it’s look on reaction We too safety market, well-being team is need it. control kind to QX has they members. We they of cost has the and initial all let’s this and all of the control our control approach early Frankly, hope best control working we a In environment. tell. when been we QX with environment, we for in But, of was our uncertainty health, this really our

Digital, nice, kind the trends with back We about Trent of that now, the QX, we go pretty May for kind to the it’s kind we encouraging June SciPlay doing over March of and and recovering all and are Barry which reasons our business the optimistic is of Lottery, where momentum there. said. really cut is As regional bouncing really see well, cautiously as around but said, focus tough tribal great feel into casinos April,

And and they ready are tighten are and If so postured we to up up, we already and will we going back of to open way got in controls things lead to back are stabilize, those them start in place. cost tighten up, have the either as need go. If with we things we to we kind fast heavy go.

have got liquidity in the We place.

We got flow from the have place. in cash headroom a

to lot on all Little on work out opportunities the tell the I exactly, cash new, flow going work inventories, with there. outside really we see. feel been will So we do do synergies, my with really some brands a time, far I from in. tell of the the given really and at Coming came have et focus externally, payables, point in to cetera. you Again, reality It’s environment has environment the of set and capital be a has things terms things place feel focused the in things get over tough at When you feel there good can leadership right it. the all out left of the have really positive, in in outside about next early effectiveness, behind are impressive the company When cycle just I automation, a that hypothesis leaning up a really you topics. everything we done. hardworking, them eyes too and acquisitions the of just really looking with been team lot we the that let’s are. the to this new we XX the where that see of at look the lot in house of great extraordinarily team in way to that best from of Clearly, stuff like days. stabilized digitization together like lot get put business I of put we good working just I the interactions are receivables, the we Barry of see I about of look you frankly this of that focus lot you sure about of get and so of dedicated look internally that a when liquidity, has just the through making opportunities together. leading integration, been over

in the at But delevering getting the that getting time, in to lot leadership a of and I where and after three to same The really out does around had a are rush then look So the the we and advantage conversations five as we like self-funding to after look environment XXXX years sure the costs, of and of that way. we of ready making XXXX, in are we does years what of working invest growth the meaningful team Taking really marketplace getting are also like. what of continue need kind after now. get next really we lot get capital, have for liquidity a invest.

so, And opportunities yes, I see there.

XXX see days got next the encouraged XX think that whole lot have the by of of going have new I about I days. out to out am have We those opportunities to a over into will say the But bets there what we I to But I seen some far. year. more so

Barry Cottle

Yeah. is Barry. This

I what they manage set Just ourselves operate just to this, up to generate that to and quick said, Mike this add said on is through in can business way the a real we Mike -- cash as think, to add environment.

the to need don’t we do So sales. asset

We have SciPlay. obviously strategic got an asset in valuable amazing

that shareholders, distribution strategic strategic valuable in great and channels asset within amazingly Scientific our along think that they value have that in We our the business with we these synergy where player of the Games at have more strong an as and growth looking an brands, there’s convergence send Digital businesses and with makes we it futures and in and in come it actually opportunity to uniquely is of that look ways opposed all -- value always mean. competitive but staying enhance opposed out it a it of explore and our as as at to interests said, advantage. All a

Barry Jonas

you Thank guys. much, helpful. so Really

Barry Cottle

Thanks, Barry.

Operator

Please The Brad go ahead. Stifel. is with Boyer from next question

Brad Boyer

questions Thanks quarter. Hey. a on and for congrats solid the guys taking

the I color, was still it provide little there, I segment? non-Gaming momentum First all at you a is question of me, but your the additional appreciate around Gaming still we say seeing segments the color kind for and all And look and could Barry. hoping largest are

touched color position helpful? around additional little bit these are your to a around, could that provide and maintain color you just the Gaming a little be today other ensure what market in you but you in the segment You doing unusual some times. Gaming would additional Any answers, that in on

Barry Cottle

Yeah. I mean, absolutely.

an the his not starts two organization I to we walked efficiency invest when happened is services that that it’s in Matt possible thought, plans actually in they COVID the the division can structure have but as frankly to the wanted for out in market mapped that. I and the of things just One and make right in we so team think will put when that this that invest they COVID first, in right, us cost to in things. believe done do to the as we opportunity had and again and quite door, out think as products have could compete had would it we come COVID it, right we and so buckets. they and And that efficient we and in ensuring accelerated win I recover,

And of so the second wallet. share piece is obviously the winning the greater

have things Reel and that lined versions titles, the really so going space new them marketplace sales in products, with with after strong done Mechanical. Matrix they the classic of the in up So, And right? are the We we recently two titles. great cabinets classic X unit just launched value-engineered that

commercial We take flexible operators to their also can partner be as that to in incentives come way to share we and commercial our with CapEx developed potentially fruition. and around strategy them a a the starts

attack most and commercial performance. the spaces, and the strong and it have to demand higher are And product side, the market. coming game cabinets to we ever that and getting a -- with strong roadmap is COVID, believe brought to We really And we at we okay, things in market share said, a a so that strategic And space Drums, with that in seeing like more execution operational I cashless, we pricing have does before we the look the COVID after that will to we after. have terms On product go ops what We of launched really with the Again new already efficiency. market, significant emphasis and in which some seen. with during product mentioned as the performing accommodating mentioned present new electronic launching then streamlined game table well then quality we systems certain segment a games products very we we have the but in things market put us than franchises COVID improve took before, our -- top of occur which are another set line with Dancing platform-agnostic in like market. of et cetera, similarly, them card-less. them a lot

we the just now come done creating products products up of in going job that market and in we with sets a to and and are organization. into growth profitable has market so I team And challenging going operational that efficiency in needs and Matt share. that stellar us going our streamlining and his and where games future time after the driving take then think believe quality a higher for the

Brad Boyer

bidding light world Okay. That’s question technology And in from is some of my of activity a combination perspective. recent then helpful. in second the Sports the

conversations helpful? I from perspective provide forum can narrative that you just your think to on you BXC marketplace perspective Is any the operators have with out want been this outright. thought that you this what more to any own going misguided, are are your in just that ultimately be would perspective and you? their there’s color platforms provide just Could that having of train from in clients, any on public

Barry Cottle

time will ways, the point would their and have that technologies it and a happened, I you if that and you in to that scalable would is that’s would of a what some consumer I in kind capabilities. at and to captures look then the going on, customizable platform think in close attempts -- exactly historically on is market, shouldn’t in realized more right? in So, customizable word today. what competitive opposite of a what robust but Look, marketplace advantage as at players misguided, type I market of they both the don’t run rather use and find platform consumer I made own the U.K. see the and the focus call, fact, say, U.K. majority say We

are did opened and right? we that itself, market are do think of that from the path, so, and the to approach. counter the mix space think, and the I growth very very iGaming so, away similar platform, top a And just what market on in in And the OGS of would the is thing services integrating ours that platform are owned. the folks the the be in doing value-added is way providing seeing people driven a are best-in-class have everything of say, I of some we our Sports the plugs with we basically that best we The third-party we betting I balanced we other which similar also of in BXC United their so, to others value are platform. unique we provide. Best supplier the chain we and we and as products that or provide to that were of States will down seeing that value-added opposed you much platforms to walking integration, platform a services seeing up tools one to going are ultimately as trying go that Don into got continuing we to And

way. don’t, a I it’s longer of use and and other out broader with than actually wouldn’t So so actually the seen again, it, -- there, but it’s we have clear more trend, it’s it trend balance the not misguide go term a

Brad Boyer

Perfect. Appreciate the thorough Thanks guys. for it. very answers,

Barry Cottle

Thanks, Brad.

Operator

with Please is question ahead. Macquarie. next from Beynon The Chad go

Chad Beynon

share think It than before Hi. medium-term kind running greater most Do this, since are through might and or be? my leverage could something have you of Good you goals, that willing have strides certainly was any afternoon. given XXXX that in goal Thanks for too I budgets, I you focused us taking early know were you the maybe on leverage of what are question. be really thought. quarter but to ask you made to XXXX

Mike Eklund

I in will Trent this Yeah. and here Chad, Mike is too. let up

say. marketplace the has too to happens I hit whatever it is to Let’s around get maturities of a the It’s deal think early reality around QX The positioned we moved right? QX, kind are there. been out. us, little you sure in making with

Let’s get up. liquidity topped

after get cost. Let’s

Let’s get after cash.

and are Let’s in right health feel We that. well-being have financial we we the about got we good place -- and of the make now. that do firmly firm sure

kind going that continue are where got as like we to rest the market to of Is were questions off to retrench of just in a wait-and-see As and is to are encouraging prepare in Is kind long-term the good said, we to going little in until to of things move We go. it line it going this some have the thing asked? on we now happen we QX. of of any goals going pretty forward to sight going signs we for that, the are have to inching that have but what’s now a held marketplace right better forward?

So up and XXXX better we as and go. a into get planning got for our where that things we idea firms have of

bit We to we declarative a that front. growing. obviously, will more little get on got point, But, Barry’s Digital

got improving. have cash We flow

We have got costs down. coming

We on. have got it’s holding, Lottery

have We a of got good lot momentum.

are us that those generate equation they As cash, referring with happen to. of they you things all help that

going be now. of early clearly say a right sight. it’s our it’s it’s not but to firm my It’s little to in So where in priority. too no There’s a top top the line scenario priority

Chad Beynon

casino? the pool think will It’s kind your guys are teams very learned into in of acquisition and than you SciPlay, casual current is have sure Do doing monetization opportunity you was and that given the doesn’t given better for well. games a in guys terms is into It acquisition, space you your but casual games gets of particularly and which it strong larger this and doing sense. on then acquired makes And interesting Okay. Thanks. casual that everything customers I ComeXPlay, game the that I game think ARPU regarding that casual certainly for am monetization. the successes given SciPlay metrics, you have you strong significantly confirms monetizing so the of bigger that pool -- an get could call. for and Small you as games are you become

Barry Cottle

Yeah. Absolutely.

improve it game here with top. is to and meta card, our exact create We to which people similar in use is and mechanic companies bingo These very gameplay, that same playbook and on the board, the plug puzzle, believe We and goal for monetization very business a think the games loops. understand game for create tripled look We I casual core on knowledge themes. -- to the simple game to monetization. go these expertise with right, expertise figuring -- that come we the our well. but mechanic the find really like-skilled is we we loop get we layer slot. -- the machine. and playbook We into do tends and and them a their know where we to really and really It are UA. in casual our that loops. really create space It’s game, simple in it We bigger. who social monetization this In the then be build like category. around is exactly is, case, are taking that’s And monetized and solitaire game to to order meta building that which less them games you

got we have right that it exactly you and so are team there. excited the are And we and very about

Trent Kruse

do going point would space simply avenue and as on in this for add and us to this well down a which Chad, chance could I road. monetization. run give growth for just so They ad-based is create business to that that And learn Trent. look is to at us another the some

Chad Beynon

Thanks. Nice Appreciate it. results, guys.

Barry Cottle

Thank you.

Mike Eklund

you. Thank

Operator

The with from Sigdahl ahead. go Craig-Hallum Group. is next question Ryan Capital Please

Ryan Sigdahl

Good congrats on results the here. environment in afternoon and guys. Thanks, challenging good the

Barry Cottle

you, Thank Ryan.

Mike Eklund

Thank you.

Ryan Sigdahl

customer or participant or is new say in Digital expansion bit then is someone operator else new a you that that’s with to an expire? an little to coming. and on more dig want that online that the existing Is new that displacing Just a are a customer

Barry Cottle

adopt say, both, we right? and to had I were we what -- are love, learn gameplay forced things home, new the think work people to new getting space do that they when is seeing Yeah. players we seeing so Basically the And just it’s from comfortable that are to mobile seeing expands they market. are the coming and to a and I with addressable and would digital way

friction seeing that land whereas and a drive well to because XXxX, barrier phone a frequency base there’s if that, play are on entity also you to It up bet there. you at or have -- we y to you of get addition In to make a your as play. happened to or is game,

both. So we are seeing

frequency that market. are seeing new the play, frequency we are people of We of enter in and spend spend and come seeing then

Trent Kruse

our to iGaming new just multi-jurisdictional, so the is in as things and point horizon. on the future, to Ryan, your And some on it Barry deals alluded exciting the both, on it’s and earlier, side, certainly Sports

Barry Cottle

Yeah.

Ryan Sigdahl

a to brand new operator new coming existing with, or you just adding? be more talked your for that expanding the Maybe that clear, you that an prepared that Digital about in remarks, you is Digital that’s are that customer Yeah. customer is are

Trent Kruse

announcement It’s can’t today, an Ryan. but is addition, beyond Trent have we really an anything but it more again. that say -- I we soon. will

Ryan Sigdahl

Got it.

so it premium me, reopened, your how competitors? machines partial then machines your machines, customers the it for more ones are then capacity. so you machines from And have casino is have one are on, leased? how versus comparing or are which their What that and they the own seen their on Is Moving turning on?

Barry Cottle

terms our big what the lot didn’t when well-known. space, world, quite are got would like are So familiar I that off seeing which obviously kind think it’s on. of lot you It’s the frankly. into right, brand of getting that say, came will It’s seeing all balancing balanced a turned franchises -- in of are of with a we I are them gravitation we say, turned and toward restaurants new well I go machines everybody shutdown so, plays restaurants are restaurant. franchises, what of up and have really and -- or most the back ultimately, your to a

we above there is such the would And are we so, the as -- the are the and same can’t that results machine that ways will franchises coin-in mentioned that There’s one active of there lot here have credibility yet. thing you and would of a me on the to on, earlier to competitively reports restaurant and But great an on went putting by seeing give the tells what any happens we well. the -- significant in most, that out are out and And of we that You I that the point doing no us of see are right? really loved missed news plethora that balance in so great got beyond we that. We traditional normally marketplace. encouraged

Ryan Sigdahl

Good luck. guys. Thanks,

Barry Cottle

Thank you.

Operator

question-and-answer to like Cottle any conference concludes would remarks. This the closing our to I back session. Barry over for turn

Barry Cottle

measures, the Hi, businesses in support for and on pleased your really implementing with being of am to was of the with to successfully continuing successful our forefront quarter being today. taken for worst have actions and Digital all. Thanks joining note The saving this cost appreciate offering allow we customers. while the very Gaming the We diversity and us effectively I to forefront operate the and environment. on of us navigate the critical second our

Thank future very right team the coupled have across We both the the to you profitable with best us products mobile much. and gaming growth. based position land for

Operator

today’s now The conference presentation. attending has you concluded. for Thank

You may now disconnect.

Light & Wonder (LNW) 23 Jul 202020 Q2 Earnings call transcript