Q4 2021 Scientific Games Corp Earnings Call
To differ materially from those discussed during the call.
For information regarding these risks and uncertainties. Please refer to our earnings release issued earlier this afternoon.
The materials relating to this call posted on our website and our filings with the SEC.
We will also discuss certain non-GAAP financial measures.
A description of each non-GAAP measure and a reconciliation of each non-GAAP measure.
The most directly comparable GAAP measure can be found in our earnings release as well as in the investors section on our website.
On September 27, 2021, we announced that we had entered into a definitive agreement to sell our sports betting business to endeavor in October 27th we announced that we'd entered into a definitive agreements to our lottery business to Brookfield business partners.
Beginning in the third quarter of 2021, we have reflected these businesses as discontinued operations in our consolidated statement of operations and reflected the assets and liabilities of these businesses as held for sale in our consolidated balance sheets for all periods presented.
We are reporting our results of continuing operations and three business segments gaming side play and I gave you.
Gaming is a former digital business segment, excluding sports betting.
Our mountain disclosures, referring to combine include both our continuing and discontinued operations.
As a reminder, this conference call is being recorded.
Play of this webcast and accompanying materials will be archived in the investors section of our website at scientific games Dot com.
Supplemental reference sites are available on our Investor Relations website to help facilitate your review of the company's results, including an earnings presentation and historical recast business segment information.
Now, let me turn the call over to Jamie Thank.
Thank you for joining the call today before we get to today's update and the earnings presentation, Tony and I wanted to share our perspective on this company's journey over the last year and a half.
The insights, which drove our investment thesis.
Changes in financial outcomes, which will result.
From the outset, we recognize the enormous opportunity.
Drive increased shareholder value.
The restructuring of the balance sheet, redefining the portfolio and becoming a sustainable growth company.
Very encouragingly, we've already seen the early stages of this strategy successfully executed.
Shifting to deliver improved metrics.
Associated with the increased body, we target for our investors our customers and our employees.
We originally joined the team as consultants to the gaming business partnering with Barry and his senior leadership team.
We quickly developed a highly effective relationship with Barrick.
The complementary nature of combining all land based experiences with his exceptional mobile gaming experience.
Immediately powerful.
As we developed our collective thinking we became fully aligned the company was ready for and capable of transformative change beginning with optimizing the portfolio.
Scientific games was essentially functioning as a holding company.
Diverse set of assets.
While many of these assets were incredibly valuable they were poorly integrated.
There was no core vision of how they fit together or how that could complement each other and thereby deliver incremental value.
It was not clear and coherent arguments for investors.
And importantly, the company with hamstrung by high levels of debt and plagued by the current leadership changes.
The debt burden resolved gearing levels around 10 times EBITDA.
Limiting the ability to invest in growth and distracting management from focusing on some core fundamentals.
A company like strategic vision and direction due to the complexity of our portfolio and the debt burden carried.
Despite these limitations we were convinced that the company has the potential for enormous growth and most importantly, we have the right team.
Energized and ready to drive positive change program at all levels.
Bill Wheeler immediately impressed by the potential of key leaders and creative talent already in the business. The company has also added significant new talent. During the last 18 months, we've been attracted by the excitement of this transformational change.
Within that mix of assets, we saw well established leading positions in the land based game.
As well as leading positions in a number of other key strategic areas like mobile guidance and I game, which provided a strong platform for transformation and a clear path for success.
Now I will turn it over to Tony.
The asset is Jamie outlined with cleanly tied together by content. The company's greatest strength was it underlying IP and we saw a game changing opportunity to unlock value by using that content as a foundation and building out strategy from there across land based gaming mobile games and I gave you the company already had established traditions in.
<unk> segment.
So that's how we thought we would need to dramatically simplify the company's operation it would need to liberate it from its fasting desk to us cash is king and it was clear that divesting of noncore assets would immediately delever the business to allow it to drive high returns to shareholders as well as create space for the pursuit of strategic growth investments by organic.
And he and organic.
The opportunity to do that came in the Kansas and folks decided to divest our interest in the company and we seized the opportunity.
We introduced new long term oriented investors to purchase a shape and.
And me joining your board with a majority of independent directors with a wide range of experience.
Could help to guide and drive transformational change under Barry's leadership. This was also reflected in the appreciation of the share price at the time that these change.
And here our plan was to accelerate and progressed the transformation.
The reason, we had such strong conviction about potential transformation of the business.
We had done something similar before.
During our time at aristocrat, we executed a successful turnaround and that created enormous shareholder value. During a combined thing is by following a similar playbook.
We created a high performance culture, we redoubled our commitment to attracting talent.
We expanded into new distribution channels accelerating our digital capabilities, we drive operational excellence and we developed a disciplined M&A strategy that drive highly accretive return.
But at the heart of it all without humans to a clean simple idea of who the company was and watched the company beat we built great game industry, leading content.
Everything grew from that foundation.
In executing this strategy, we consistently applied strong discipline focus on optimizing returns and managing debt throughout this journey.
The result of the transformation but for themselves.
Holder return of nearly 700%.
An eight fold increase in market cap either too.
200% growth in revenue.
They are growing by over four times to top $1 billion.
We believe that similar success story with possible scientific games and in fact, the starting point was actually stronger.
The portfolio was robust, but Mr lives, realizing the value of the lotteries and sports businesses enabled us to pursue the broader content opportunity.
What's more we believe scientific games is balanced leadership composed of new and existing talent was capable of offering such a story.
<unk> experience in building digital businesses from past executive roles at companies like Zynga and electronic App and his record of leading ESG digital's growth made him the ideal leader for the stronger executive talent company and on the board and the perfect partner for these tenants.
Your turn.
With our previous experience firmly in mind.
And closely with Barry and the leadership team, we embarked on a comprehensive head to toe strategic review.
Just the changing control, we've seen our market capitalization increased threefold.
Investors begin to recognize the potential for ongoing share price growth.
We're still at the beginning of this journey.
The strategic review led us to announce a game plan for the company's transformation one that relies on three key strategic pillars.
First we will optimize our portfolio by divesting the luxuries sports betting business units.
Then with the proceeds from these transactions, we would significantly delever shifting from a debt to an equity story.
Long is to position the company for superior returns driving sustainable growth and strong cash generation.
All of this results in a better aligned portfolio, which would also provide the opportunity to invest in growth opportunities that fit with our new kidney revision for the company.
Engine, which can drive sustainable growth and cash generation.
These actions will resolve some gearing levels immediately reduce our net leverage significantly below the levels, we underwrote our investment thesis.
And with double digit revenue and EBITDA growth higher mix of digital revenue within our portfolio targeting 50%.
Higher sustainable cash flow generation going forward.
Just with the Optionality to drive long term shareholder value in multiple ways.
Our clear goal is for the companies to come out on the other side a more focused company with a strong balance sheet a concrete idea of its corporate identity.
Our focus on creating the world's greatest content and attracting and retaining the best talent.
In summary, a clear pathway for growth.
12 months later, we couldnt be happier with the way the team has executed on our transformation strategy and our initial expectations are already being exceeded.
The divestment of luxuries in sports betting are poised to significantly resolved the complexity within our portfolio.
And up more than $70 billion of combined gross proceeds they will deliver cash proceeds well beyond our expectations.
We want to be very clear on our capital priorities following the luxury sale.
One immediate debt reduction for a net debt leverage ratio below four times.
Two share buybacks to return capital to shareholders now and in the future.
Our current share price levels buybacks will be highly accretive to shareholder value.
Three.
That being M&A.
We will always prefer using your capital for buybacks debt reduction and organic investments unless we convinced to M&A. It looks a little greater long term shareholder value than the other uses of our capital.
That debt reduction means we can write a new chapter in this company's history, one defined not by that by all work to sustain our double digit growth profile, achieving a 50% digital mix drive sustainable earnings and cash generation, while maintaining lower gearing levels and establishing ourselves as the employer of.
Choice in the games industry.
This pivot is a hugely exciting moment for us and we are marketing with a W or an exciting new brand.
But none of this would've been possible without the tremendous hard work of our teams around the world.
Turning to this we knew it would be a monumental efforts, but we have confidence in the brilliance creativity and determination of our people.
And that confidence has only grown stronger as we've watched them execute this transformation.
I'd like to offer not just my deepest gratitude, but also my congratulations to every member of our team.
And now to provide an update on how we operationalize it in our strategy and progress to date I'd like to turn things over to Barry.
Thank you, Jamie and Tony for your leadership and your partnership.
Let me start with the news.
We embarked on a path to rebrand the business following the decision to transform the portfolio.
After extensive consultation with key stakeholders, we've chosen a new brand that reflects our focus on creating break game franchises and technologies that support cross platform game play.
I'm really excited to announce that our new name is light and wonder.
This name evokes the feelings we want to capture and the work we do every day.
<unk> inspiration imagination surprises, maybe even a little bit of magic and certainly a lot of fun.
We are fortunate to make games for a living.
Our new name is a constant reminder, that our future will be defined by the fun, we're able to build into those gains and the experiences we're able to create for our players.
As we begin this new phase of our transformative journey with <unk>.
<unk> to be able to focus our energy on creating those experiences.
Turning to an update on our progress today.
We are very pleased with the strong performance, we achieved in the quarter, which capped what was an outstanding year.
As we reflect on what a difference the past year has made for our organization. We sit here today with an enviable position.
Incredibly strong financials and with a rapidly transformed balance sheet.
We navigated exceptionally well in a dynamic environment and delivered on our key promises.
Our results. This past year are evidence of our momentum and our ability to drive sustainable long term growth and profitability.
In fact, we're already delivering the double digit growth and robust cash generation that Jamie laid out.
In 2021 year over year, our revenue grew 27%.
Our EBITDA grew 112% over last year, and we generated $443 million in free cash flow.
Seven months into our transformation, we are tracking well ahead of our original expectations.
We're on the cusp of closing the sale of our lottery business.
And I think today that we anticipate that it will close this month pending final regulatory approvals.
We continue to be on track to close our sports betting sale by the end of the second quarter.
As Jamie said, the lottery and sports betting transactions had the effect of resolving the complexity within our portfolio.
And they are bringing and substantially more than we expected.
Over 7 billion combined.
With the 5 billion of net after tax cash proceeds from the sale of lottery coming this month, we want to be really clear on our capital priorities.
Debt reduction to a target net debt leverage range of two and a half times to three and a half times.
We will dedicate 90 plus percent of the lottery proceeds to pay down debt and by the end of Q2 with our sale of sports we will be squarely in our target range.
Share buybacks. The board has authorized a three year 750 million share repurchase program.
We see buybacks at the current share price levels as highly accretive to shareholder value.
Disciplined M&A that deliver superior financial value to shareholders as Jamie said, we will always prefer using our capital for buybacks debt reduction and organic investments unless we're convinced that M&A will deliver greater long term shareholder value than other uses of capital.
Taking a look at our new organization, we offer investors, a clear coherent and compelling investment thesis.
We're committed to driving sustainable double digit growth with a focus on cash generation and using that cash to drive shareholder value.
Gross cash and shareholder value are touchdowns, we will make that happen by building on our Companys core strength.
We're the world's leading game content and platform provider position.
Positioned in markets with a collective tam of over $60 billion.
We're a streamlined organization singularly focused on developing cross platform games and franchises.
We're uniquely positioned to take advantage of the convergence between land based and digital gaming.
Because our IP and because of our best in class systems business.
All of this with a healthy balance sheet and disciplined approach to managing operations and capital.
And best of all we can finally organized all of our efforts around a clear and compelling strategic goal of becoming the leading cross platform Global game company.
And the Great news is that we have all of the major pieces in place today.
We are the leading end to end gaming solutions provider with leadership positions in gaming ops in game sales.
As we look forward to the land based gaming industry bouncing back this year and next we will benefit as the number one provider for casino systems table games and table utilities.
With a robust product roadmap and recent hardware and game releases, we're already achieving share gains.
We also have the leading position in digital gaming.
With the world's largest collection of I gaming content, the number one gaming aggregation platform and the leading pan.
Enjoying strong tailwind as U S. I gaming proliferate and we're writing those tail wins by expanding on our original content offerings, bringing our great land based games to digital and also creating digital native content.
In addition to first party content, we're leveraging our best in class aggregation platform to identify and target key third Party studios.
As we've successfully done with lightning box and Elk.
These acquisitions are already exceeding our investment thesis.
Both have achieved record G G R since acquisition.
Expanding our content capabilities and delivering long term shareholder benefits.
And in late 2021, we acquired authentic gaming entering the fast growing live casino space.
Meanwhile, Si play is positioned as one of the top ranked social casino players globally with sticky player cohorts driven by our expertise in player engagement and monetization.
Providing a strong foundation as we look to diversify in this casual gaming.
So I play has a strong core social casino business and we're going to build on that success by leveraging our expertise in data analytics user acquisition and live services to keep growing.
With our growth and I gave you an Si play, we're making great progress towards increasing the digital share of our revenues to 50% with investments in our existing game studios and targeted M&A focused on content.
We also have an exciting new side play acquisition to tell you about elective this acquisition substantially expand site police presence in the casual markets and supports further growth. Thanks to Lick this talented group of developers.
<unk> pipeline of hyper casual games and entry into the fast growing mobile ad market.
Let this represents just the kind of M&A that we believe best deliver superior value for shareholders.
Disciplined strategic and value accretive acquisitions that complement our skills and accelerate our strategy.
Together, our gaming I gaming and <unk> businesses are even stronger as we leverage our games fully cross platform for a seamless player experience as digital convergence with land based.
And we have a great team in place who are executing on our vision with speed and urgency as demonstrated by our progress to date.
Over the past three years, we've made more than 25 executive and senior management hires across game design and development technology finance sales and marketing and data and analytics to augment the team that was in place.
And just since September 2020, we've added the company's Chief Financial Officer, Chief Strategy Officer, Chief product Officer, and Chief Technology Officer.
Yeah.
We have been seizing on the opportunity to invest in our people and culture that is the foundation of our success and attract great talent by becoming the employer of choice.
We will also continue to invest in our own technology and capabilities to create innovative solutions that drive value for our customers and players as the industry converges.
With that let me turn things over to Connie.
Thanks, Barry I want to take a moment to talk about our improving financial flexibility, our capital allocation framework and our commitment to driving shareholder value.
Our approach to capital allocation will be balanced and opportunistic a significantly strengthened financial position, we will gain with the proceeds from the divestment.
With our strong cash flow will allow us to materially Delever return substantial capital to shareholders, while continuing our disciplined approach to investment all aligned to our commitment to create a sustainable and profitable growth company.
As Barry mentioned by the end of the second quarter with the sale of lottery and sports.
Be squarely in our target net leverage range of two and a half times to three and a half time.
This will significantly strengthen our credit profile and enhanced our financial flexibility and access to capital markets.
We will have the opportunity to very quickly culture, and high coupon bonds and pay down and refinance our credit agreement.
As we Delever, we will see dramatically lower interest expense driving significant cash flow per share and ultimately value for our shareholders.
The authorization of a three year $750 million share repurchase program underscores a clear commitment to return capital to shareholders.
Reflects our strengthened balance sheet and recurring nature of our revenues are strong cash flow generation and the tremendous value we see in our shares.
Of course, another significant part of the value, we generate from our strong and durable growth profile.
Approximately 75% of our revenues are recurring in nature. Additionally, our focus on increasing our digital mix through organic investment and disciplined M&A will accelerate the digital component of our growth strategy further enhancing our recurring revenue mix.
The combination of our debt pay down share buyback program and value accretive investments. Okay is another testament to executing the strategy we outlined.
With a strategic and disciplined approach to capital allocation, we will regularly review and assess the most productive way to deploy our capital to create significant value for our shareholders.
We will do this with a commitment to retaining a strong balance sheet and liquidity position.
This is an exciting time for us as we make these transformational changes to our balance sheet and capital structure.
Now I will turn it back to Barry for the fourth quarter and full year highlights.
Thanks, Connie 2021 was a tremendously successful year, we benefited from the key strategic initiatives, we have set in motion and the continued recovery in the gaming market as we strengthened our leading positions and laid the foundation for sustainable growth.
Let's get into the breakdown by business first gaming, let me share some headlines North America game ops revenue exceeded 2019 levels, both for the quarter and for the full year.
Our North American premium ops installed base grew for the sixth consecutive quarter and again exceeded 2019 levels.
And it stands at a record 42% of our total North American install base.
That's a high margin recurring revenue stream.
In addition, north American game sales continued to accelerate with nearly 3500 units sold this quarter and replacement units approaching 2019 level.
We spent the last two years working relentlessly to build the best games and cabinets and so when the market began to recover we were in a position to drive share gains.
A great example of this is cause SCADA and its very first year cause Scott. It is north American casino floor footprint already exceeds 8000 units.
And it's our first cabinet to scale internationally.
Strong proof point for our strategy of driving operational efficiency by transitioning to a global product roadmap.
We talked earlier about how excited we are to focus our energy on making great games.
While the performance of games like dancing drums explosion <unk>.
<unk> combo monopoly lunar new year, Willy Wonka Dreamer of dreams, and ultimate fire link along with upcoming titles like Golden Fire Link Ultimate fire link explosion and door food or Kai. It's why we're so excited.
Looking ahead, we entered 2022 with a fully refreshed portfolio of cabinets showcasing our evergreen franchises and as operator Capex continues to grow so will we.
Here are some upcoming highlights.
Just got a dual screen is expected to launch in Q2 across our gaming ops and global outright sales portfolios with a robust portfolio of games, including double money link.
Fortunately money coins lockett linked breeches and goldfish feeding time in fact gold fish feeding time is expected to launch fully cross platform in Q3, this year, giving players the ability to play in land based social and digital channels.
The landmark 7000 stepper is scheduled to launch in early Q3 with beta testing underway and will feature our hit evergreen blazing Seven's franchise.
I'd also like to mention Australia, another key market for US we made great progress there with our ship share nearly doubling to 14% in 2021.
Moving over to systems, we continue to maintain strong momentum as the market leader.
This past quarter, we had particularly strong sales of our state of the yard I view four player interface, which enables operators with cashless capabilities and whose success enabled us to drive sequential growth in Q4.
Cashless is increasingly becoming a focus for us that's why we're expanding our offering with Adam the number one cashless solution in table games, which enables players to use their debit cards to buy chips right at the table.
Our tables business also a market leader continued to strengthen against the backdrop of a recovery in domestic live table games.
Tables business is also on its way to becoming a recurring revenue stream.
Thanks to growth in our vault subscription based bundled service.
Looking ahead, we anticipate continued strong performance from our new games and cabinets and we're continuing to invest in growth with a strong pipeline of product launches planned for 2022 and 2023.
Let's move on to I gaming I talked earlier about the convergence in the gaming industry as players increasingly look to play their favorite land based games online.
In that context, our I gaming business isn't just the market leader there truly differentiate it.
We have the leading aggregation platform integrated with major operators.
The leading pan we can offer more than 3500 games and they're not just any games in Q4. It was our own original content accounting for an average of 16 of the top 20 performing games on our I gaming platform in the U S.
So the trend towards convergence.
Content is the engine.
It's just more wind in our sales and we're building off a strong Q4.
Wish we more than doubled U S revenue.
Overall, it's up 112% over last year and 6% sequentially.
We continue to lead in market share in the states, where we operate and in Q4, we added another to the list with Connecticut launching in gaming we are now live in six states.
Looking internationally Q4 growth was impacted by the easing of Lockdowns and restrictions as well as regulatory changes in certain countries.
Still we had continued momentum in Canada, and we launched with N L O in the Netherlands for both our I gaming platform and apps.
I mentioned that the core of our I gaming successes the games themselves.
And this ties in with our inorganic investments and growth strategy.
Looking at our acquisitions Lightning box are number one digital native studio on O jet is performing strongly with five consecutive months of G. G are growth.
And there's more opportunity ahead as we launch a new game every month in the U S and as we launch in Ontario.
Meanwhile, in our first month without the studios they posted record G. G R.
And we're targeting a U S and Canada launch of <unk> content in the second half of 2022.
Between the ramp up in production at Lightning box in Elk, and a number of land based games launching from our new Las Vegas studio.
This coming year, we will see a significant increase in the number of original game launches.
Additionally, with the acquisition of authentic gaming, we believe we have a unique opportunity in live dealer, combining our well known proprietary land base table brands and content with authentic capability and technology to create a truly differentiated offering.
Stay tuned it's coming later this year.
Bottom line with I gaming G. G are achieving a new U S record in December .
Ontario scheduled to launch a gaming next month and a robust content roadmap for 2022 and beyond we feel great about the path forward and are poised to strengthen our leadership position in the market.
Finally, Si play, which is quickly evolving to become a diversified global game developer.
The core business continues to perform exceptionally well with our industry, leading engine life services capabilities as well as player focus continue to drive improved engagement and monetization.
Si play capped the year with strong performance posting the second highest ever quarterly revenue and record revenue for the full year.
Meanwhile, payer conversion achieved record levels for the year.
Important highlights in the quarter and for the year Jack.
Jackpot Party rebounded strongly in Q4 and achieved record revenue for the full year.
And this is a game that's been around for 12 years.
The new version of quick hit drove 14% sequential revenue growth and this was also a record revenue year for the game.
Goldfish marked its fifth consecutive quarter of record revenue and posted a record year.
Solitaire Purser adventure launched worldwide in Q4 and is off to a good start with strong user engagement.
And Si play is investing in its capabilities, we're making both organic and inorganic investments inside play because we see it as core to our cross platform vision with a real change to significantly grow and scale the business driving value for shareholders with.
With Si play this acquisition of Electus. This strengthens our foothold in the casual market, providing a deep pipeline of games and entry into the mobile advertising market.
So lots of exciting results and momentum here, but let me now turn it over to Connie to discuss some financial highlights.
Thanks, Barry before I speak about the overall financial performance I want to remind you that with the pending sale of our lottery and sports betting businesses. They have classified those discontinued operations.
Let me begin with the key financial highlights fourth quarter consolidated revenue increased 21% and consolidated EBITDA grew 67% with the continued momentum in our gaming business as well as the strong growth at I gaming and at Safeway.
For the full year consolidated company revenue was up 27% and EBITDA was up 112% more than doubling.
Full year consolidated revenue and EBITDA benefited from the $44 million VA T recovery in gaming, while the prior year consolidated EBITDA includes inventory and credit loss charges of $102 million.
We generated $685 million in combined net cash flow from operations in 2021, and 443 million of free cash flow on a combined basis more than double the cash we generated last year translating to a free cash flow conversion rate of 33%.
We continue to make great progress deleveraging organically, reducing leverage by four three turns or over 40% to six two times down from 10 five times at the end of 'twenty 'twenty.
Turning to the business unit results.
In gaming, we continue to come at the turnaround in the business and the foundation for long term growth and share gains as we achieved sequential growth across key metrics.
Revenue in the quarter grew 30% year over year, and 10% sequentially, while EBITDA increased 81% year over year and 8% sequentially.
On a full year basis gaming grew revenue by 43% and EBITDA by 175%.
Growth was positively impacted by the $44 million VA T recovery benefit this year and the prior year was impacted by inventory and credit loss charges of $102 million.
In terms of driving efficiency the business deliver a 50% EBITDA margin both in the quarter and for the year.
The V a P benefit and package full year margins by 2%.
We saw continued momentum in North America gaming operation with North American premium installed base growth of 14% in the quarter exceeding 2019 level for the quarter and for the full year as our premium installed base hit an all time high of 42% of our mix.
Growth was driven by performance of a great game and we have a robust pipeline of game launches in the coming quarters.
North American Gainesville continued to see strong demand with the successful launch of our kids got a cabin in driving year over year and sequential growth.
Our North American replacement unit sales approached 2019 levels in the fourth quarter further solidifying our successful turnaround progress.
Once again content is at the center, killing the success of our cabinet performance.
Looking at systems and table, we thought 12% sequential rise in systems revenue driven by strong IV hardware sales and increased connected Aegean and a 15% sequential rise in tables Robin now benefiting from our market leading position and the continued recovery.
Well, we are seeing strong demand for our products to continue to navigate the supply chain environment, which remains dynamic, noting that the impact is principally been limited to the timing of deliveries.
Looking ahead, we feel great about our gaming business and how it is set up for long term success.
Turning to I gaming performance.
The fourth quarter was the seventh consecutive quarter, we more than doubled argue if I gaming revenue growing 112% from last year and 6% sequentially.
Overall, the business grew year over year revenue, 15% and EBITDA at 25% for the full year revenue was up 18% and EBITDA was up 29%.
Hi, Jim and continues to expand its content offering growing the number of land based and digital native new game launches. This year and is expected to launch live dealer in Q4.
With our I gaming platform and leading Pam argument participate in multiple parts of the value chain and is set up for outsized success as the marketplace continues to expand.
Now turning to slide five performance.
The business delivered strong year over year and sequential growth.
The top and bottom line in the fourth quarter.
For the year, we delivered record revenue of $696 million up 4% year over year.
<unk> core business has real momentum with improved key metrics, including payer conversion hitting an all time high of eight 9% and strong average monthly revenue per paying user.
EBITDA was 186 million for the year, it's likely continues to invest in talent and capabilities to evolve into a diversified game developer.
This business is highly cash generative with operating cash flow of $38 million in the fourth quarter and $164 million for the full year.
Building on Barry's comments on the elective announcement the acquisition checked all the boxes strategically and financially for us. It is a capital efficient transaction that furthers, our casual strategy diversifies, our revenue, while minimizing breath with the earn out structure.
Finally, I'm excited to speak to you about our balance sheet and cash flow, we made significant progress deleveraging organically ending the year with a total debt of $8 7 billion net debt of $8 2 billion and net leverage at six two times.
40% reduction from net leverage of 10 have time at the beginning of the year.
And we ended the quarter with $1 4 billion of available liquidity.
In the fourth quarter, we paid down $145 million of debt, which brings total 2021 debt repayment to $577 million.
Now moving to our strong cash flow and our focus on driving value for our shareholders.
We generated $226 million of combined operating cash flow in the quarter and 685 million for the year driving a $100 million of combined free cash flow in Q4 and $443 million for the year.
This translates to a full year free cash flow conversion rate of 33% as we continue to focus on driving productivity to the bottom line.
Cash flow was bolstered by the great strides, we've made improving DSO, particularly at gaming as well as the catchment collections from Covid related accounts receivable.
As we look ahead, we see a number of positive trends in the business. This year with a healthy balance sheet and our near future. We will scale our investment in line with increasing customer demand and built additional flexibility into our global supply chain.
With the switch progress they are making on closing the divestitures in the near term, we won't incur one off transaction costs that will temper, our first half cash flow.
We substantially reduced our debt, we will materially lower our interest expense, providing significant benefit to cash flow in the back half of the year.
Before we take your questions. Let me say that I'm really proud of all that we've accomplished it is a testament to the caliber of the team and the speed at which they execute as well as our focus on operational excellence and our commitment to driving shareholder value.
Thank you operator, we are ready to take your questions.
Yeah.
Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad now when preparing to ask your question. Please ensure you are on mute locally.
Change your mind, Please press star followed by team.
Our first question is from Barry Jonas Altria Securities. Your line is now open. Please go ahead.
Great. Thank you.
I may I'd like to ask my first question to Jamie and Tony.
You and the team have orchestrated significant change since you joined scientific games management changes all of lottery and sports betting and now rebranding I guess the question is is everything in place strategically at this point and is it more a matter of execution here.
Yeah, Hi, Barry its Jeremy Thanks for your question.
Yes, I think largely the strategy is now in place in those key actions to rebalance the.
To get strength to go forward are in place, we put strong disciplines in place about Wisconsin yogurt smoothie screen considering the presentation. So those disciplines are now fully understood by management is strong guidelines and it means that we've now got a strong platform for growth and that growth.
Cash generation, what we're particularly pleased of.
In the last 12 months, we are already seeing early signs of great execution from this team we've seen that focus we have to become share I think because we have to get better product through.
Through our people and those results as Barry and Gordon just talked about where they would prefer to find and we've already started that journey, but we now need to accelerate that as we need to settle and technology comes in and we can self go further but I think we're at a very strong position to go forward from here.
Mentioned during the commentary we've vastly exceeded our expectations in terms of our ability to get cost for those great assets. So thats actually accelerating that because there's some even further than we thought originally.
Great. Thank you for that Jamie and a follow up maybe for Barry or Connie I guess, but you know look it's very helpful to see the new net leverage target I guess can you give any color on how you landed on two and a half to three and a half times.
Sure Hey, Barry Thanks for your question.
First of all how great is it that we can actually have this conversation compared to where we were a year ago.
Just amazing transformation in.
Really excited to be able to make the announcements that we did today.
Look with the cash coming in with the divestitures operating cash that we generated.
Actually develop a framework on capital management witness really simply this this ranking order number one.
Pay down debt to create a healthy balance sheet with a long term range of two and a half to three and a half times number two beyond that.
The way, we think about it we always think about deploying our cash for the highest shareholder return on a per share basis.
Obviously, given the upside that we see in our stock.
We're delivering significant returns to shareholders with our announced $750 million buyback that we announced today.
Laugh if we go forward, we're going to make this.
Support investments, both organically and inorganically to ensure that we can be sustainable and profitable over the long term.
To be clear what that means is any M&A, we pursue market outperformed the hurdle of what that return would be to shareholders on a per share basis.
Connie would you like that.
Sure. Thanks, Marian very great to be with you today that'd be really thought about the actual range. There are a couple elements that came into play. The first was we clearly wanted to shift very quickly for my debt to an equity story and that range really ticks the box for US there. It's important also for us to have the finance.
So flexibility to return capital to shareholders as Barry just mentioned and also to have the ability to invest for growth.
Financial Wherewithal I think is incredibly important as well is we just know that there was volatility within markets that we want to have a profile that allows us to see us through the good times and the challenging times we.
Took some time to also as you think about benchmarking our peers that both the land base side of the competitive space as well as our digital peers.
And the Great News is I think that we're aligned with industry standards and.
And importantly, what's really exciting for US is here very quickly with the proceeds coming in from lottery and sports we're gonna be squarely within that range. So we're really thrilled with being able to provide you with more guidance on how we think about our net leverage range and as Barry mentioned, you're pretty amazing to think about very quickly where we're going to be just have.
The balance sheet that will truly act as an asset.
Thank you I'll, just add as well great. Thank you so much.
So I don't think it was also particularly thrilled about the timing of.
The lotteries are closer as we expect to as Brian said that we expect that to close this month subject to regulatory approvals.
I guess, it's decelerating from where everybody tool.
Okay perfect. Thank you so much.
Our next question is from Ryan too dull of Craig Hallum Capital. Your line is now open. Please go ahead.
Good afternoon, everyone. Congrats on all the positive change.
Okay. Thanks, Ron I'm curious the first question.
For me for Jamie and Tony to start I mean on gaming ops a lot of good things happening appreciate your remarks on this call as well, but what are you. Most excited about in the next say 12 months in the next three to five years do you think is most underappreciated by the market.
Thanks, Brian .
Ryan It is very much about building lot and wonder it's delivering to our plan.
We have I think we have a very clear strategy for growth and driving superior returns and I think we're very well positioned on our journey today. It was still on a journey and we're still at the front end of transforming this company, but I think we've got the right disciplines in place.
I don't think we've demonstrated both today, we are well positioned in the collective market worth more.
More than $60 billion, we've got great IP and a streamlined organization and that is very exciting. The fact that we are a much cleaner and more focused organization with a repaid balance sheet shortly.
And the right disciplines in place on how we invest I'm I'm excited about building a culture and I'm very excited about the talent that exists in this business, what we had and what was built over the last 18 months I think the collective team is very strong and our focus on developing and delivering great games across our distribution channels.
So it's definitely a front end of the journey, but as as the team have reference there are already great proof points and an alpha because if it is likely we will.
Licensed light laser focus I should say on delivering as planned.
Great then maybe one for you Connie, but great to see the buyback authorization and be in a position for the embassy at authorized are you able to buy back shares prior to the lottery <unk> sports pack divestitures or do you have to wait for those to close.
Yeah sure. Thanks, Ryan great to be with you today first I'd say that we're really excited to announce the.
Share buyback program, we see tremendous value in terms of outside of where we are today and the organic growth profile. We know we have very here in the near future.
And in terms of timing to your question, we've actually been very proactive in looking at how we could manage some of our credit agreement. So we will now have the flexibility very quickly to go out into the market and be opportunistic about purchasing those shares. So we're really thrilled to have the opportunity to deliver.
Our shareholder return.
Importantly, we'll always do that in the context of having a healthy balance sheet.
Yeah.
Well done and good luck guys.
Right right.
Our next question is from David Katz of Jefferies. Your line is now open. Please go ahead.
Thanks, and good afternoon, everyone.
First for Jamie and Tony.
This may seem unusual, but I first heard about youre getting involved with sorry games very early in the process and I'm wondering how this came together what compelled you to get involved here because at that point in time there were still.
What seemed like a mountain of work to do.
Yeah, Hi, David.
I guess I've been out.
Scott.
For years, and barring Armageddon scenario, Jonathan a little bit through various interactions and I got to really understand it very wanted to take this business forward.
Direction. So that was the first thing I'm joined us as a consultant with Tony.
We held that first part of the journey working on strategy.
Adult partner February then when the opportunity came from a kind of us foods as Kevin says, we just seize that opportunity because we could see that this business was worth so much more than the sum of the parts.
And frankly, we were just ready for another adventure and this is this is just a huge adventure is a great opportunity and it was a wonderful assets and I'd say lookers and schools are great assets to just couldnt have that debt burden sorry for us.
Swift to seize that opportunity that could be created for shareholders and we are encouraged that the virus sort of exactly the same vision.
Hey, Presto before they really are kind of.
Got to the point, where we're able to.
Strong into the business as chair and Vice Chair and Singapore really feeling the start we've had has been accelerated from our original views and there's a long way to go to turning your reflections on that.
Our perspective is supposed to be.
The assets, we have the <unk> team with the talent because he left the business couldn't invest.
And as we referenced in all you know I'm.
Previous comments, there had been a lot of leadership changed and so high leverage leadership changes not a clear strategy.
Yeah, great assets underlying the business.
Oh, sorry.
It definitely the changes required he.
Really drew on our broad skill set with deep learning in gaming, but also from other industry prices to gaming. So we have had transformation experience with a multi national corporations and built high performance cultures.
We've expanded into new business segments, and driving operating efficiencies in our past experiences we can see what to bring that talent team that.
That skill set here as well so it was we could see the gyms, we could see that could be realigned.
Jamie says I think the combined business today is worth more than the sum of the parts because of the ability to leverage content across those distribution channels. We gave every dollar we invest in one go at the cost to each of the other channels.
And again, great positions in our gaming dining and social yeah that is what this relationship we develop a very there's a lot of fun. We are in the guidance business. There's a lot of energy. There's a lot of firm that we are fully aligned.
On the journey and frankly during a pretty startling couple of news for everybody to have.
The opportunity to do something very material with some really great people.
Quite extraordinary so that was a compelling piece of the argument as well.
I appreciate that Barry if I can just follow up at all I guess I'll only speak for myself I understand what it takes to be successful I believe in the gaming machine business.
And I gaming as well, but if you could talk about the social piece of it and how you see the critical success factors there for us to achieve division that you've laid out.
Absolutely David.
So first of all it's actually fairly consistent honestly building great games that attract players engage them.
At the heart of really quite frankly anything business, whether it's land based gaming, whether it's gaming whether it's social.
The slight difference in the social businesses, they're live operating systems and so you're engaged in with a core loop and then you build a metagame around them, but it's still appeal to the player motivations, which is again very consistent to how we develop and design and think about things in the AR and the gaming and gaming.
Space as well I think that.
I play is quite frankly, an important part of our strategy and.
And we partner with them great. They are at the heart of what we want to be which is a gaming company they add to our digital mix and ultimately.
We want to build one of the leading cross platform Global gaming company and they want to build games that can be taken completely cross platform as well.
We learn and we test together, we build in a fair IP, we coordinate launches.
To help maximize then and their entry into casuals, and it's going to do nothing but help us that's going to help us.
The $20 billion plus casual space is going to broaden the audience that we can expose to our IP and we're also very consistent in how we think about capital management as well.
We think about we lean in and look at organic and inorganic growth.
You know we have the same views that we have to.
Invest in things that you now.
Have the hurdle of.
Comparing it versus returning capital to shareholders. So.
It's a different venue in the sense that it's free to play but.
At the heart of it people love to play games and <unk>.
So it's very similar to what we do holistically.
So I guess.
Understood and congrats al.
Thanks, Thank you.
Thanks, David.
Our next question is from Chad Beynon of Macquarie. Your line is now open. Please go ahead.
Hi, good afternoon, Thanks for taking my question.
First just wanted to start with I guess, it's a capital allocation question for everybody.
With the share repurchase plan and I guess the reduction of some sales multiples in the digital in the social space.
<unk> dynamic can you be and how are you thinking about the best use of of cash flow when you know post.
The lottery transaction, you'll have a pretty chunky free cash flow yield, but then certainly if the multiples of some of these higher growth hyper growth.
Our content businesses come down maybe its a good time to kind of act on that and hit your goal of 50% digital just kind of a broad one there. Thanks.
Perfect I'm happy to take that one and thank you you know how do we think about capital allocation I think we're in a very privileged position in fact to the point that we're gonna have a significant amount of proceeds coming in which is going to allow us to very quickly.
The latter are you know.
At the heart of what we're trying to achieve it's your point is to take a balanced and opportunistic approach with the proceeds against being able to quickly Delever. We also know that we're going to have a business, which will yield strong cash flows which will allow us to also think about our share repurchase program.
And especially in that space and then also importantly.
Hey grow organically I think when we think about investment we're going to continue to scan the marketplace and see what might make sense, when but as Barry outlined before we're going to have a very disciplined approach to how we think about deploying every dollar of capital, but again the great News is we're just going to have so much flexibility.
Not only from the proceeds coming in but also with the organic cash flow that we're going to generate.
Yeah, I'd like to add in as well on the 50%.
I'd like to add in on the 50% digital.
So the great news is we're in a great place now where 40% today.
Yeah in terms of our digital mix.
Very confident that we can achieve our target we have we have all the major pieces in place today, and our I gaming and <unk> businesses are very well positioned and pointed out the $50 billion digital Tam.
And each of them have great momentum in the space today, you've got a gaming with 112% year over year growth in the United States, yet side play outperforming the market in social casino.
And now with some really strong shots on goal on casual we've made some very strategic organic.
Investments in content as well as our Las Vegas digital studio and we've made some really smart targeted investments on the inorganic side with lightning box.
Moving up into the large dealer space as.
As well as the recently announced elected.
Could it be later all of that in and then you think about our cross platform approach will really help accelerate that.
We're in a really good position, we feel very confident about our ability to achieve that goal.
Thank you I appreciate it and then on the I gaming business understanding that a lot of it is going to be based on.
Legislative approval, particularly in the United States and in North America. How are you thinking about what a long term goal could be for free.
<unk> for your content, given how well your games are performing particularly on your platforms and then also as we think about you know a very unique platform that you have the Pam.
Are there still lots of opportunities for that piece of the business to expand.
Yes, great question.
So yes first of all we are obviously very excited about.
Our position now as we sit in the gaming space.
Got through mentioning we're basically a few states into it at this point, but.
With the current pace of regulation, we had 112% year over year growth.
We believe that the obviously, it's kind of the pace of that legislation is going to vary state by state.
Ultimately, it's inevitable that gaming is going to be illegal everywhere that that gaming is two major reasons number one is that.
What players want that players want to play they want to listen to their music they wanted that.
They want to do that.
In mobile and second.
Sure.
Gaming and sports are legal in the state.
Gave me now actually outperformed sports betting by two to three times, which means two to three times.
Tax that's available for the state government. So we believe that those states are.
Incentive they want they want that as well, obviously, you've got Ontario launching next week, we've just recently heard the New York.
A gaming Bill that has been sent to the legislature and we believe there is five to 10 states.
Possibly legalizing over the next few years, so our focus is really.
Building, great content that is going to continue.
To continue to be the market leader every everywhere. Our state goes live and then as you say continue to build our product portfolio by being the largest aggregator in this space, which we've done with <unk> and so.
The great thing is we participate in every part of the value chain today in gaming, we have first party content, where you have the distribution platform and then we have our Pam as well and that gives us great insight into the into the small studios that are moving up and down the charts.
We recently as you just noted we acquired lightning box and Elk, London Ladenburg.
Latin box has been onboard for five or six months now they've had record <unk> every single month that had been a part of our our platform and.
And <unk> been onboard.
A month now achieved a record GTR as well and we're going to be bringing them to the United States in the second half of this year. So.
Our playbook and we're going to continue.
Lean into our playbook and we believe because we have that great view votes, yes, we're going to continue to see great teams and break gains and leverage them again, where it makes sense on a disciplined and rigorous.
But actually rigorous basis to see if it makes sense to complement our portfolio.
But yes.
Namely well positioned and.
And looking forward to leading the argument space as it continues to go forward.
If I can to clear your mind expert in there and.
Just I think it's also worthy of noting that we're in a really privileged position with our number one.
CMS and also with the number one P M in digital and I think we have a really unique opportunity that as the businesses start to converge to create that 360 view of the players that weren't really also excited to lead in this space have also the platform segment as like gaming.
Fine.
Thank you.
Thank you very much and looking forward to the Investor day in May.
Great. Thank you operator.
Operator, we'll take our next question.
Our next question is from Zach Silverberg of Bernbach. Your line is now open. Please go ahead.
Hi, Thanks for taking my question, maybe one for Jamie Tony.
A follow up on Chad's question.
You guys, David a few times in the prepared remarks about the convergence of games is the future of gaming as a whole can you sort of just walk us through what that means strategically for light and wonder how the convergence will help the firm achieve recurring revenues and a growing digital mix.
Yeah, Hi, thanks.
It's the way that players play these days as customers who've alliances.
Frank on the prior to them to play from screens and.
The pads and then.
Propagating machines. So that's what I want to plan on what we're gonna do to facilitate that firstly building the circus, leading position across social gaming and land based well, which is still unique at this point.
And then it's to get the technology and the studios working together, so you need the technology the processes and the platforms to allow virtually instant realizations on guidance on these different platforms like our new CTO joined US in September I'm, sorry in July I believe it was really talented in that respect and then Rick Snyder to cover our product is overseas.
And we're working more closely with the other divisions.
As ever happened in the past to really coordinate the roadmap. So we now look at our product roadmap.
And rich and his team there are four primary product, which will work across all platforms.
What are you seeing increasing examples of where games are being launched.
At the same time across platforms, along all of that extra dollar that's come through and to get extra assortment of planning the same guidance.
Different compounds, and giving clients and customers optionality, so sorry for us it's inevitable that that's the way that play is going to go out and look at a facilitator.
IP with great processes, great technology, and content, which we deliberately developed to make sure to work easily across various platforms and just accelerates our ability to be on their screens, a one time very very powerful.
That's exactly right. The only thing I would add is first of all that we.
Look forward to.
Sharing more about this at the Investor day, when we're going to invite out all of our business unit heads and rich and the like to really dive dive into this in detail. So super excited about sharing more but.
And he said I think this is what makes us truly unique being the leading cross platform Global game company, where the only competitor to the day that is a leader across gaming gaming and social and so from a gaming perspective being able to launch a coordinated launched across all three leveraging the audiences and the power to <unk>.
Maximize that franchise to be able to optimize our R&D. So that we're putting all the wood behind.
The same franchises.
And.
Being able to.
Provide more of it to do testing and learning in the life.
Across all of these so that we can again optimize markets over our message all of this.
Process now.
Done.
We've now tested with a couple of operators, which will share some results in our investor, but we're seeing above market returns on this approach and then on the.
The systems platform side as Jayme highlighted we're the number one system provider.
Market share, we're the number one digital Pam so single authentication.
Recognizing the player wherever they are carrying the unified wallet with them their loyalty points.
And able to provide a seamless experience that's what people expect that you know when you when you're listening with Spotify, we expect them to know what your platelets are on your phone and on your laptop anywhere you go that is what people expect when they are doing zoom conveying the day and we uniquely can provide that and we're super excited about doing so.
Since the player engagement all of that increases the relationship with the planet has.
It increases the number of hit guidance and I think we're still gonna have 19 studios across.
<unk>.
Platforms, but wanted to see instantly.
Adding platform for new data comes out and it's a winner in that sales aren't thinking Hey, Chris proceed as soon as we possibly can to get it into other platforms.
Got you I appreciate the comprehensive answer maybe just a quick a lumpy Barry can you just maybe give a high level overview on what the labor market looks like and what it would take to sort of acquire high level talent and retain that talent and labor appears.
Constrained.
Absolutely I think.
The number one thing that.
We are focused on.
Having a high performance culture that attracts the best talent in the space, we're very blessed to have some really great people here.
And and we've been able to with.
Yes.
Damian and Tony and the folks that we brought on continuing to attract a level of talent across the board in pretty much every discipline from our game designers too.
Marketing product management, you name it and.
And the thing about when you build the right culture.
People want to they want they want to work there and that is by far and away. The best thing you can do is we focus on people and we focus on products.
That's the core of it and.
So.
We is there a number one priority in agriculture and building a great culture and that's why we're so excited about.
Our new brand name have lightened wonder is having a name that is consistent with the atmosphere and environment that we want to create here.
Most of our M&A and.
As we I think you mentioned inorganic inorganic has been to date targeted filling out the product.
But we ensure that the people in those organizations mapped to our culture and we believe in this Alan that is there but the.
Core I think of winning in this space and the challenges that Covid has presented to all of us.
Is really the remaining people focus and culture focused.
Okay.
Operator, OK thanks for the color everyone.
Our next question is from Jeff statue of Stifel. Your line is now open. Please go ahead.
Hey afternoon, everyone. It's great to hear from you all and congrats again on all the success in transforming the business and driving value. These past couple of years.
My first question here is probably best suited for Jamie or for Tony look clearly Australia is a key strategic focus for the slot business in a market where this team brings tremendous experience I was just you know in that light I was hoping you could talk a bit on what you see as the key drivers of success down there and some of the changes that you've helped oversee in order to begin taking <unk>.
<unk> share of market Thats really still dominated by your all the mater.
Thank you, yes, I think well say, it's a great market, it's a great gaming market and as the team reported we've seen a good improvement in <unk> from 8% to 14%.
And it really is coming through I mean, redirected and reorganized Tom guidance right now.
The talent that we've expanded down your investment that's coming into games and were starting to say that come through so it is very much doing what we're saying we want to do across that portfolio, but with a focus on Australia.
We had we had our guidance down in Sydney and a couple of weeks ago.
And I can remember a few weeks and we were able to work already with the <unk> to get on the road map and we're just very excited the way that you are now thinking about how they can get serious with gains effectively we have underperformed in that market for a number of years and it was kind of a step up of rebuilding restructured correctly. We've got the right people in the right roadmap and Montgomery from that.
With great confidence about our ability to continue to grow in the next few years.
Perfect Thats very encouraging and then for my follow up Barry I was hoping you could talk to the ongoing supply chain framework and if you could work in do you see any implications here.
From everything that's going on over in Russia, and Ukraine, that'd be helpful as well thanks.
Sure I might jump in and take that one if that's okay.
And thanks for the question similar to other industries that we have felt some impact regarding surprising however, they've really been small in nature. We're really fortunate that a couple of years ago. We spent time really building a global supply chain that wasn't something that had really existing scientific games.
Lee and bolster the talent that we've been able to adapt and respond very quickly I think that changed.
The Great News is I think we're seeing strong demand for our products and so the challenges that we might face are more timing than anything else I think it's probably also just worthy of highlighting that.
As we think about our portfolio now being 40% with a digital make that isn't impacted by supply chain that just helped create overall durability for our financial profile. So all in all I think we're in good shape. There and then just regarding the Ukraine you first of all I would say that our hearts go out to everybody.
There.
A tragic situation is unfolding and we've got a handful of contractors and from a financial perspective, it doesn't have any material impact, but most importantly for us. It's just making sure that those that we partner closely with our faith and we will continue to make sure. We can do all we can to put them in there.
The best scenario possible.
Okay perfect. That's very helpful. Thank you Connie yes, thank you all and congrats again.
Thank you thanks, Jeff operator.
Operator, we have time for one more question.
Our final question today is from John decree of CB <unk> Securities. Your line is now open. Please go ahead.
Hi, everyone. Thanks for sneaking in one last question.
A lot of ground on AWN I gaming, so far and I imagine more at the analyst day, So maybe an easy one on slots and we're paying attention to public casino operators look to have elevated capital investment budgets. This year and it looked like there was a nice recovery in replacement demand in for Q Barry maybe.
If you have any thoughts on how confident you are will kind of migrate back to 2019 replacement levels and if there's maybe some potential for catch up spend from your kind of public casino.
Casino partners given they.
They've taken a little break during the particularly the early quarters of the pandemic.
Hey, John gets me with you and I'll take that question.
Firstly, we're really excited because this is the moment, we've been waiting for a with catheter with operators to open up their capital budgets, we've been spending the last two years really getting prepared to.
See this uplift and we've now got products in all critical segment. The last two being the dual screen coskata as well as our separate product the landmark that Barry spoke to in the prepared remark now essentially we will have a again a great cabinet with great content and so we're really off.
Domestic I think as we think about it we do expect to see kind of gaming capital cycles, returning to more normalized levels here towards the back into this year and then obviously a full recovery in 'twenty three and so again, it's great to hear that.
I think that the business is kind of open for.
Opening back up and we're very well positioned.
To take advantage of that.
Yes.
Good.
Okay.
Part of it obviously is as you described as kind of a trend that we're seeing on the operator side, but also have to tell you I think our products are just really hitting.
Hitting the market with tremendous success with Scott, obviously that that you've seen with over 8000 on the Florida Neuro also with.
You know really strong momentum and his comment that we now have four new major cabinets at the profit the big verticals and service categories, we want to be and it's got a dual screen looks amazing landmark 7000 looks amazing.
Just great games that back out.
Backup.
Each of these with from dancing drums Ultimate fire length.
Wizard of Oz goldfish blazing sevens some of our best franchises all lined up against these products. So.
Got it.
It's just it's really Greg so.
The combination of products in the market recovery.
It's creating a lot of momentum.
Thanks, John .
Let me turn it over to Barry for some final comments.
Great.
Thanks, so much.
Again, I just I wanted to just highlight.
One thing.
Before we.
We closed up which is again the.
We had come off a really transformative year over the last 12 months.
And we.
We continue to as we generate cash from these divestitures and through our operating.
We're really focused on disciplined capital management, which is again.
Number one priority to pay down our debt number to deploying our cash for the highest shareholder return on a per share basis with share buyback and then ultimately.
<unk>.
Executing well with organic and inorganic investment only where.
Our returns are greater than the capital management opportunities that exist. So again. Thank you all for your time and support you can probably tell that we're super excited about our journey that we've been over the last 12 months and the position has put us and achieved the excellent results going forward really appreciate you taking the time to hear about it and witness RFP.
<unk> I do want to just close by telling you that behind all these exciting numbers. In this presentation is a group of people who have never been more dedicated to achieving great things. Our teams around the world are energized enthusiastic about our strong performance and aligned around the new vision that we've outlined today, we have a core business that continues to.
Generate momentum capital allocation priority is geared towards building, an even more successful future fresh roadmap for delivering shareholder value going forward revitalized passion for making great games and a new name to cap. It all off so look we hope to see many of you at our upcoming Investor Day on May 17th in New York City.
We're going to have a lot more on this exciting new chapter in our story until then on behalf of everyone at light and Wonder. Thank you for your time and have a great rest of your day. Thanks, everyone for joining our call I also want to thank Tony for coming over who is joining us for this and I'll turn it back to the operator.
Yeah.
This concludes today's call. Thank you for joining you may now disconnect.
Yeah.
Okay.
Okay.