Fitch, a renowned capital market analyst, is optimistic about Light & Wonder’s EBITDA leverage targets, believing that the gambling supplier will be able to hit its goals by 2024. While the agency still believes there is some default risk associated with the company, it still gave Light & Wonder a BB rating.
Fitch updated Light & Wonder’s rating on November 21, marking it as a company that still has an increased default risk. However, the rating still designates Light & Wonder as a financially stable business that is able to fulfill its financial commitments.
Fitch is also optimistic that Light & Wonder will be able to reduce its EBITDA leverage to 3.7x by the end of 2023 and to 3.3x in 2024. The agency added that EBITDA leverage is likely to surpass the latter number and decline even further by the end of the next year.
For reference, Light & Wonder targets leverage of between 2.5x and 3.5x.
According to the analyst, this reduction will be underpinned by the company’s robust gaming equipment and systems cash flow.
Light & Wonder’s Business Was Boosted by the SciPlay Acquisition
Fitch commented on the matter, saying that Light & Wonder expects FCF generation and liquidity to remain in line with the BB rating.
In addition, the agency pointed out that the gambling supplier has around $200 million available under its 2022 share repurchase program. While M&A activity is not the company’s priority at the moment, this provides it with the option to quickly return to its targeted net leverage range.
Fitch also underscored Light & Wonder’s expansion in the APAC region, primarily in Australia, which it considers to be a key market. The gambling supplier further doubled down on its operations in the country, securing a secondary listing on the Australian Securities Exchange.
In addition, markets such as Singapore and the Philippines present additional opportunities to the company.
In other news, Light & Wonder just published its financial report for the third quarter of the year, posting outstanding results. The company celebrated revenue growth for the tenth consecutive quarter – a result that was further boosted by the impressive growth of the SciPlay division.
Speaking of which, Light & Wonder finalized its acquisition of SciPlay in October. Back then, the former company’s chief executive, Matt Wilson, said that his team was looking forward to building on SciPlay’s considerable momentum.