SGMS - Earnings call transcript Q1 2021

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Operator

Good afternoon. Welcome to Scientific Games 2021 First Quarter Investor Conference Call. All participants will be in listen-only mode. [Operator instructions] There will be an opportunity for questions later. Please note this event is being recorded. the Investor to Relations turn Vice Bombassei, like of President for now conference Jim over Senior I'd Scientific Games. Mr. begin. may you Bombassei,

Jim Bombassei

Thank morning good you, operator everyone. and

first 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 will also 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 meant of a section let this available Investor call review me be These Investors is Barry. the slides A reminder, supplemental scientificgames.com. archived the in reference And your are materials Relations recorded. call and results. Also, our accompanying webcast to slides now are this website will to at conference our facilitate over on replay of of website. being company's the turn

Barry Cottle

everyone, morning you for thank Good and Jim. Thanks joining us.

achieved despite be quarter, solutions, dedication. the our closures, to our we their of the were in and with delivering enabled they've are foundation continued and making we extremely the We financial strong what the America, XXXX. recognition on results quarter, year-over-year businesses, strong great quarter Board. to I momentum share achieve success gaming and building particular also are passion and in results, and execution both, this to you of and are well particularly XX% not I'm continued grow results. our about Europe, strategic enabled us all our the to compelling of review return execution to and by progress proud our in quarterly These content another as excited very we're to very going deliver the top the of growth turn first, businesses, far. In forward. progress able Lottery, year-over-year. with key more SciPlay for talented double-digit enabling made restrictions U.K. to across North us to strength technology want on our on by progress But progress best-in-class We as let with we thus talent building could this, focus on a delivering growth pleased with in I our which strong and and the in as well to of speak And operational continued at Digital portfolio portfolio team bottom-line. pleased demonstrated as AEBITDA, me strong

to an sheet, commitment disciplined $XX million on paydown free us delever. to cash delivering million enhancing We growing be in to flow managing to the ongoing extremely our enabling flow, with cash debt, balance continue and on in quarter our in eye $XXX

restrictions strong we are to seeing sense QX, to progress. in Gaming, U.S. impacted businesses, market. great And particularly a the continued the Now in in of turning internationally business recovery we're while closures, the starting and see

American Fortunes Fortunes against X,XXX is backdrop consecutive we're Willy is at in And roadmap, sequentially. time pools US in and our R&D capture the installed continued of cadence profit gaming top-performing the XX Emperor's Kascada ops the In base, Combo Dreams roadmap, all our both, half our and and example Dreamers growing a first particular, year-over-year markets. Coin is to early Coins its strategy proven our success North third like, global leveraged Kascada, Gaming Wonka the successful our global restrictions for games of cabinet and we North our And across and new like seeing second pace quarter. we times game and It cabinet MONOPOLY expanding the average of to marquee casinos of the Grab, recent success it success under premium the new performing from brands. on a new on share. we for of operations great and JXX. and cabinet franchises of launch the our despite and is house launched and franchises where X.X strategy the many most game premier of see Games talents we great the Scientific the with land-based. success impressively, with with and game bringing is product Money strong this We're in growth of In in focusing in Given major have have closures. also poised in Mural American our games QX, XX quarter the product will our licensed executing markets. in largest achieve history one units, grown

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confident our we And you plans. our hear speak over to to you expect turn year me Mike to now executed financial over will excitement share the call about actions next the these that more results. We let are the as will and be

Mike Eklund

Thanks, call all Barry time you our and of the appreciate good taking morning, everyone. join We today. to

tremendous in that energy the future our to Before of opportunity drive I enthusiasm financials, and customers, was the instrumental significant our and quickly proud and I our and the in first financial and the our shareholders. performance we Games front it in the at want our I'm value Barry's have optimism globe. us the share about for of jump their Frankly, Scientific was quarter. employees excitement all strong around we extremely operational employees into echo to achieving

There four Now the morning. let's I highlight this to to you turn for quarterly are things results. want

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reminder addition permanent track rate $XX savings last achieved quarter. on $XX communicated year. of million for as the are last And run million you additional this we in a to savings the we We to in is

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as as will on restrictions to While Digital business and to impact anticipate in as and the content the tailwinds ease. benefit Betting, Sports be begin offering, closures we well from some broad there our continues iGaming

As our deployment in the sportsbooks of we related to in US. we look expenses also the increase second acceleration to the will the quarter,

our sheet flows. Now balance cash turning the and to debt

forward, going our we have macro of as a flow. delever paid We previously continue the million productivity cash total the ended in and We given which to quarter net maximize $XXX we we $XXX with XXXX. lower improves. our free QX commitment environment Since of approximately our and significant on progress down than execute billion to to as is October revolver expect debt our make $X.X increased million and mentioned, on deleveraging

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any you due debt may until maturities we have recall XXXX. don't As

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enabled We the culture talented winning our strong and by high-performance a are results teams world. around delivering

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leveraging creating engage with, great players our the to platforms our across enhancing are it returns. and We like content many thus

reducing are to leverage. balance our sheet committed meaningfully strengthening and are We

forward take looking the pace I I and are at pleased we very With you we are in We which progress the in ahead. can to excited are our quarter. that we the that line. lies with we moving. your to opportunity review drive Overall, and happy making second value. questions. to will be the Operator about you am the on and open are And I'm updating well high-growth investing look strategic advanced opportunities

Operator

comes The Mr. your Barry question. Jonas open. your first Please ahead. Jonas, go line Securities. Instructions] from question Truist with ahead go with Please [Operator is

Barry Jonas

will start, lot. thanks a I

Digital, compact? new with and also Can you're through I that, So do Thanks. emerging the walk you when in for milestones contracts with the then you And next visible start uplift Florida the see how Digital. given in you we'll market a think us FanDuel to think the for revenues? start positioned to Seminole's wanted

Barry Cottle

Thanks and questions Barry. I'll take those. Great

We're days first about FanDuel. out. of early rolling our very and with excited partnership it we're FanDuel. So, in happy Obviously,

With lined NFL got sports and the FanDuel to four states, up we've start and between we've season. now our some more got the of converted engine now the

months of So participations. with it that as combination fold And revenue, business to there several the starts is progress. our models a and you'll see over next along revenue the

the So continues. to as grow journey we'll continue

On the Seminole, would and exciting say, it's across digital I obviously, frankly digital. time sports

it excited to Florida, to see et cetera. Florida, York, relates of As escalation New momentum in we're Arizona, the

We and live have We're and across Jersey. iGaming Hard specific Jersey Hard with discussions Obviously, Rock. can't sports of Rock but today on and we iCasino. relationship digital New with at we great Seminole content the a retail deals, with continue New Iowa around in and sports comment other opportunities the continuum

now right times exciting sports. in very So,

Barry Jonas

Schneider had just you on an Product from how more before start much could see products Look since. we'll very and Okay. new recently. and guess ask Great. just specifically last if quick Wilson you've do you today? think talent start the new could I with I team guess, some year follow-up. join strong Rich a impact then I several joining? folks And think is Officer, long when Chief you does how your And stamp him maybe Matt

Barry Cottle

Great. Yes.

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honestly, content going a we're on obviously in industry be games. a Rich something that very lean it. Right? example with And is It's a the of so making of working great side function on address talent business. even knows move making map to experienced today he's the say the building how he is because and and to of going some the out great going markets. as leader. that unfortunate and with to suppressed just magic immediate is the best And the key of more that just of that think, continuing enhanced to He the all that started an we coming in is products of the he's -- to a start road to in And an incredible business recover, he existed the on markets is really approach what the July. I'd our doing. what to the the see We coming veteran, He's I COVID and to this, in had team event believe noise because you're have of it's Rich. impact

in to other going excited we've have. talent we're that's And kind the as that's said augment we've obviously, to we're to studio road in excited some and to And that progress basically he's going development result about and really impact going the talent making best the industry board well coming and the on about really best map portfolio of So along, all the continue it. it's announced simply there. we're

Barry Jonas

great. nice a quarter. That's and Thanks congrats on

Barry Cottle

Thank you.

Operator

Please ahead. question next with DeCree Union from The comes John Gaming. go

John DeCree

for taking two. Good morning, my I everyone. questions. Thanks have

talk about if market in content, with. and the land-based The given of share first about land Barry team maybe just And iGaming we're and uptick familiar could Curious, talking lot that one gaming on of all revenues. very content integration a was the your online? for or that to content? iGaming based you nice your content? lot that land-based And get your looking seen do I the the leverage to is, digital some content is customers customers would in-house. you of of guess BXC genesis teams be question opportunity Do a an I your leading have suppliers mean separate there we've the content a

it's So of quality and of evident content [indiscernible] quantity even on very important is ability. your success think your becoming iGaming clear how I maybe and

expertise digital there of side is if curious there. on the land-based So a providing or help your is synergies lot

your thoughts get So just that? on to curious

Barry Cottle

of belief absolutely. this such frankly, upside all TAM of if and alone versus mean tip is Again, market And our potential reinforces for in plus kind No, iCasino. does in moves great just this in billion it the this, Quite to -- you into it. -- reverse building it's moving I start the another And order I'll stages the of just like today, think $XX obviously huge US we're Yes. early of of question. was about is in in the content iceberg. and iGaming It right? announcements a iGaming. people that the in marketplace

space now now. XX that's the There's momentum in you unprecedented players adoption and there also be front opportunity got live such have You space, right? And front, there out for right there's providing to the states market huge so -- legislative on this there's multiple space great but on right? And legislative on with the player content. both coming shortly

position of said, are they the et platform. quite and an gaming OGS I do land-based be XXXX we iGaming described. can in in have we broadest cetera that players best-in-class, and building franchises treasure But play, old and chest with you bringing offering we as things across only Dancing exactly Drums studio confident but with deployed you casinos. XX enviable just love play as games what content Fortunes, not market-leading the like extremely to digital teams for the have today that to in content to mean share are today, frankly relates today We it

the global have GGR bonuses. is its recognize player I that that's to we to SG-owned in States that they digital. think get contents brand, of digital more going they its mentioned comes content, important they $X.X starts people think earlier love United as even and the recognize in become the billion that game across experience And can we that developed our game XX% the progress features, from the in plays, to plays, how play land-based

of nice about And take puts as digital talked in a we going so across -- our that. review, and into content, us to forward land-based building really, those advantage in our position leaning strategic really great deploying and franchises

John DeCree

turned know hopefully, corner seen behavior? color, from we're tight That's we've couple and months less last progressing, gears recovery regional could keeping across If focused non casino your the that I light or team gaming great casinos follow-up a operators specifically change capital more any Curious slots of We the amenities. a for tunnel. hearing their and budgets. the and watch and casinos and seen of their really the those country in wallets the on end But on the if at more has shift particularly on on were of over quick profitable quickly some more it's Barry. less

So started as seeing curious might spoke just couple casino since they've last floor? to we if months when sure behavior if any at you're I'm their the too customers on if of soon, reinvesting a spend it's visibility start better or ago, to look ramping your but capital up getting any not just yet

Mike Eklund

of and the there. things them Mike. CapEx is in in just one was couple overall of a like I'll There's gaming. that. then performance Yes. John sounded take It this

to there we've side, on you think of yet. guidance great would that's We from the going the working CapEx clear as to to budgets the They're react through said, on yet have On it's don't say how still on I that side. you come this little a on operators. their just early through play that's are now see ZIP that like out. the going to right guys the the you seen launching consensus out to but We on CapEx we're in code, right for CapEx, for how waiting kind everybody all have year. us

the right business, market about say add in Barry now. pleased jump we on I'd overall, the for Gaming But guided where thought color we're in and were to well. back land On QX We the in business I'll let as this going as momentum just QX really and said, the and end the as landed as well. with Barry Gaming we we some

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remarks Europe the my international entirety the were in prepared especially effectively heard quarter. and the You closed for UK the markets that of

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and our in anticipating in we're As teamwork the quarter both now. in on business sequentially Gaming and and the all said second now of -- the just all back the on the be right we right to business up year-over-year Gaming expecting have remarks good we going the that's teams

So, side, I'll I it. a lot maybe into of of a fueling that's on that product more Barry jump the let little because bit think

Barry Cottle

market the really lead where mean of really Yes. a territories Mike I we And the outside share I'd just of such the well. terms to have in did we're like UK -- it say alluded Mike to not been great -- turned machines they've impacted the -- trends actually of ops game seeing growing. coin-in premium on we're seeing seeing trends active COVID, not We're we're the we're America North being trends. is by increasing and trends

and our to in regional. remains of customers got you tribal remember So, XX%

business So comes -- and from our XX% of slots.

their So, it's business. super for important

Euro in in marketplace that and we're growth continued with in with we're recent really at combination QX. ourselves call, seeing games recently success products so mentioned the of being on and setting that growth product Kascada -- you as And we're earlier trends with -- we've look those the good if out the the had really just and the brought in regard. And recovery the up the -- I for

John DeCree

color. guys. on the I the Thanks Congratulations appreciate quarter. all

Barry Cottle

Thanks.

Operator

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

Chad Beynon

and on quarterly results. Thanks for Good the morning. taking congrats my question

continued First, like I particularly segment. margins, It the Gaming wanted to OpEx on in looks decline. focus to

that containment to really back not despite to you talked about for of have the were we'd guys you've to just sales see were fully what about the measures where quarter XX% You taken. some that up product it. like similar to in talking Margins segment cost

is of can out So, in margin temper kind where cost couple that this margins of a massive next lot we over And expect I to? business expectations as improvement? the this get months then guess, of could kind come just should to the terms of we question to our Thank look segment in of my back you.

Mike Eklund

short-term of already parity business come first last I you on back I'd results. that into short-term parity is the place loss that I the in obviously the Mike. are I'd year one. we do it's in I'll COVID. measures back reflected of most the thing to try would the guess measures Chad, already. that point out that have call that QX Those put

in what a So, where we of pretty see is QX you good benchmark are.

guiding by at what add indicator of to it's a with I mix forward et thing principle business into variable volatility to needed it expect. think based do with exists a the meet as regionally on we the back that good if going of ensuring quarter-to-quarter number cost pretty would scale ramp that going be which obviously OpEx to But be There's some to a we'll and product, great we'll you As continues demand starts look obviously revenue. always cetera. QX that

Chad Beynon

Great, and Thanks. that have on so a switch kind play to a given bigger casual you other How tangential get thank you you believe, business you you. about Pets, just your this segments balance sheet genre. I And the month segment of to games SciPlay. to launched you that mentioned or side are in will or side? Solitaire the are know then, that I growth into wanted soft I that ago, thinking

Barry Cottle

comes And on attacking the continuing as which has which which they're we -- with market QX, in We've of $X absolutely. process progress the with Yes, just great coming tailwinds it's back space, pleased which portfolio that the casual their casino a from is been the TAM. from the of in -- incredible that quarter social Adventure, you of grew Solitaire Pets to actually they're COVID out to progress as again, on They've Bingo now, SciPlay. plus really been see well, as the strength game games billion $XX-plus continued can is last And well. market see launched the see billion year.

basically by Solitaire for Obviously very We've mid in encouraged is on So, to happened use well it. being applied the we just Bingo but -- it's Pets. Solitaire. or we're late playbook soft April -- launch that still early so methodology is late to

rodeo" that terms of So we've that game it's well. And diverse helping got in "first are efforts not the time like us as launching at other our into this. a get category

think cattle in to enter way. successful -- they where confident ability in a I and again, with space very the very their happy So, it's are

Chad Beynon

Thanks, Mike. Barry. Thanks

Operator

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

Ryan Sigdahl

Thanks morning. for Good taking the questions.

you iGaming On XX% the slide deck, share. say market

a Just to XX% of be data that GGR or provided clear competitors there? of is of this share similar your Games out point. One is market

think was you can of but games number I clarify that that please?

Barry Cottle

we're Yes, GGR. making calculation of that off

Ryan Sigdahl

restrictions potentially the gains or company has? And I And you divestitures? then, can you. shelter any potential on those used will those there on -- be could any Thank the amount or then us NOLs of to those, are assume remind

Barry Cottle

overly we today. is that restrictive see The Yes. I X.X. nothing mean number there's

Ryan Sigdahl

the hop guys. thanks back I’ll in Great, queue.

Operator

next Katz with The ahead. go Please David from Jefferies. comes question

David Katz

views from two morning, my in to Hi. you. the us trade for perspectives. other to around there Thanks valuations about everyone. could wanted a some within talk of if that you Lottery tools within discussion et want et about ourselves? companies the it incremental question. than which debate context completely and -- to your detailed there's give Thank your I evaluation but cetera, I'd And don't focus other amount how your positioning different Number necessarily globally degree it, et cetera. public on of we just And and And have a entities impressions a the globally hear taking a positioning talk trade on to other is make get for do. cetera, fair that around lottery. the to love about Good lotteries about one, in you iLotteries. impressions we And your that just lot are

Barry Cottle

jump Mike then I'll take that Thanks. and This is part the of Barry. in. can first

that $XX now this starts one, expect alone think only early live Let's years. the opportunity early in out start and in where about first of right few TAM over with thing of the we XX the it. iLottery. Number there's Again it I incredible in the U.S. there's there extremely again and it's enormous with an we're billion just stage I we're excited iLottery the states fact innings the few a in states and such next think

we've in you a XX It's just worldwide. We've Pennsylvania. probably we're iLottery one iLottery most these relates the successful globally. got COVID. launched mentioned of it about another -- provide actually of one us off to TAM in successful there's And tremendous momentum a huge opportunities to again heels the We've most So with international the iLottery. date where out We untapped for or product an lotteries coming there enviable launch and position solution. got great and as

and there. on And cusp position. is to top incredible position win. that we're us is And the for every business for an puts global We're market us. opportunity in we it so other in with an iLottery nine us lotteries lottery here great extension the of We continent the a relationships all as key and just a alluded have of great across sitting and scale already just on worldwide and relationship relates XX feel of WLA in to the states you lotteries to a and XX a like our a the top XX, of solution provide we iLottery, so great as advantage we're we've other got already

it. And so excited about we're super

Mike Eklund

David they market-leading a just I'll started industry world there seeing of be of continue some was XX% statement, half it's global mean, could what second far. see on QX that's last the back what to how over It's line be may in accelerated of long secular top been they predict with behavior we with that's Barry a back Clearly that jump hard business We're the to changes and industry what U.S. bottom a see in so and growth. COVID business. this are the and exactly of business tailwinds, tailwinds is I into that in on absolutely that the see a year to happens which that. with very But cylinders about within position out that a global growth line the mean with performance the lot lottery statement, There's, members the hatever great said growth, obviously, statement. opportunities not carry the lasting we is I say would clear exactly we leader again the in see of well. momentum general performing just Lottery all more for XX% a in business is of We're not we the tailwinds going that very, now. those again a business today this existing Mike. what are that Lottery coming business. team and business. on what doing. last I QX, hitting pleased around portfolio

grown it again, On enormous for a the XX lotteries said row. worldwide. U.S. business industry tremendous Barry tailwind that have TAM consecutive in years side, The

into team we U.S. XXX this XX% Games. our said -- We've the betting XX top talked having high side, Betting we've there's the we this Scientific prop, building using great XX a those, And sit years are structures path we an XXX leadership, at CAGR the XX% there's patent think that just and world got over the We've done that five going has You've content, And inventory forward, space. our We've the these growth and as plans, been the global side. of business. chances we've base. proprietary of really the left, about about, least robust on job Barry got XX great the nascent right unrivaled expecting go-to-market top that you XX planning, on management. now right? a And around in a talked game lot industry best-selling understanding and got our and the of extraordinarily the and And TAM customer of existing TAMs of where today. a sports games. you right? got lotteries of we you tailwinds conversation for to the them. international We the customers, price sitting back there with operators got add to betting like big solution lotteries our our years the SGEP value share sitting chance to and opportunities, introduce for as base, probably in are lotteries portion our got in the down If drop the of systems as iLottery real We're to leadership three iLottery citizen Sports large BXC sports on behind leverage turnkey behind or next iLottery waiting to into the then, use experience and out a provider high-quality there's Gain us. customer migrate

and path that bullish now right we're we're pretty lie opportunities the the about And well. And lottery performing so, business is on Lottery business. excited the forward, ahead. all

Barry Jonas

Thank much. you very

Barry Cottle

more Operator, question. we have one time for

Operator

go ahead. Please Stifel. with Stantial Jeff from come will that And you. Thank

Jeff Stantial

morning everyone. squeezing and me Good for Thanks. in Great for Hi. the nice Thanks here quarter. congrats

So pace it ROI the as band half of the this any rollout my future with year progressing first you of should for for think cashless year? well. Tribe. we thoughts short Any the question, would color that I And And back kind been potential time your that how the the with for of helpful how had And these period you to longer technologies? talk here, on believe, a if and Seminole technology them, be of And kind on, field partners like, of Seminoles down have discussions that's might what performing? term? kind could you see expect you've Thanks. and to of for also accelerate partners how into playout the

Barry Cottle

are. XX,XXX look, appreciate in early it's pleased Absolutely. gone about journey. Obviously, And live. we signs question. We've that last actually Since, the Thanks Jeff, we're I the really where we really spoke, connected machines.

additional have the seven in partner next We months XX lined-up. deployments

And great of, systems think, we're this universe. best-in-class the deal with larger has iceberg a as sitting fact those, time, again, really -- to able in with a for patent last XXX,XXX across amount the of comes got a something the off slots, tremendous you're take we our industry. the of and coming you has that down it to can -- is solution. position talked And has IGT. momentum of that the solving deploy it to tip interconnected that remember heels mile marketplace, So the about of one And right? so to with across the addressable I technology last be out business having product we And the of

in the we refining strong where So journey, excited about we're we're and we still happy we're really it it. it's early are And seeing are. but And demand. really Obviously, the out. very rolling product

In and like. a terms specifics et go hardware, very of what it's combination cetera. There's with good that we won't revenue But the pleased of revenue some we software potential, are. it's where we're ROI good -- of recurring looks -- into

Jim Bombassei

remarks. With some for concluding that, over to turn I'll Barry it

Barry Cottle

us Thanks everyone for on call. today's joining

We are operationally. executing both very how and making, progress we're excited and we're about the strategically

wherever play. the content of and results strong to our engaging strength want franchises, players demonstrate Our they

through sharing pillars, plan will platform, the resulting want and to we with review we on for look you, high-growth with thank support. core strategic strategic delevering. And tremendous significantly optimizing I is that, your capitalizing progressed. unlock how Our well our And and to value you forward opportunities

Jim Bombassei

first call. joining Thanks everyone, for our quarter

it over turn back I'll to the operator. Now

Operator

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

You disconnect. may now

Light & Wonder (LNW) 10 May 212021 Q1 Earnings call transcript