Scientific Games Provides Business Strategy Update and Reports Fourth Quarter and Full Year 2021 Results

Scientific Games to Be Rebranded “Light & Wonder,” Reflecting Transformation to a Cross-platform Global Game Company

Company Expects to Significantly De-lever, Targeting Net Debt Leverage Ratio(1) Range of 2.5x to 3.5x

Company Provides Capital Allocation Strategy and Authorizes $750 Million Share Repurchase Program

Lottery Divestiture Expected to Close in March(2) Providing Approximately $5 Billion in Net Cash Proceeds, Sports Betting Divestiture on
Track to Close in Q2(2)

Strong Double Digit Growth in Consolidated Revenue From Continuing Operations, Up 21% in 4th Quarter and Up 27% for the Full Year

LAS VEGAS-(BUSINESS WIRE)-Mar. 1, 2022-- Scientific Games Corporation (NASDAQ: SGMS) (“Scientific Games,” “SGC” or the “Company”) today reported results for the fourth quarter and fiscal year ended December 31, 2021.

Jamie Odell, Executive Chair, stated, “from the outset we recognized the enormous opportunity to drive increased shareholder value through re-structuring the balance sheet, redefining the portfolio and becoming a sustainable growth company. We are already seeing the early stages of the strategy successfully executed and with the announced divestitures, the Company will immediately shift from a debt to an equity story and achieve gearing significantly below the levels we underwrote in our investment thesis. We couldn’t be happier with the way the entire team have executed on the transformation strategy, and our initial expectations are already being exceeded.”

Barry Cottle, President and Chief Executive Officer of Scientific Games, said, “I want to thank our teams for a tremendously successful 2021. We would not be where we are today without their hard work and dedication that has enabled our transformative journey. We executed on a number of significant initiatives this past year including the announced sales of our Lottery and Sports Betting businesses, as we delivered on our promises. We want to be really clear on our capital priorities. First, debt reduction to a target net debt leverage ratio range of 2.5x to 3.5x. We expect to dedicate more than 90% of the Lottery proceeds to pay down debt, which combined with the expected Sports Betting proceeds will put us within our target range. Second, the Board has authorized a three-year, $750 million share repurchase program. We see buy-backs at current share price levels as highly accretive to shareholder value. And, third, we will always prefer using our capital for buy-backs, debt reduction and organic investments unless we are convinced that M&A will deliver greater long-term shareholder value than other uses of our capital.”

“Operationally, we are very pleased with the strong performance we achieved in the quarter which capped what was an outstanding year, as we grew double-digits on both top and bottom line and generated substantial cash flow while laying the foundation for future growth. As we begin this new chapter we have chosen a new name, Light & Wonder. A name that evokes the kind of feelings we want to capture in the work we do every day, excitement, inspiration, imagination and maybe even a little bit of magic and certainly a lot of fun. As we embark on this next phase, we’re grateful to be able to focus our energy on creating those experiences for our players.”

1. Non-GAAP financial measure, defined below. Additional information on the non-GAAP financial measure targeted long-term net debt leverage ratio is available below.
2. Subject to applicable regulatory approvals and customary closing conditions.

BUSINESS STRATEGY UPDATE

• Overall the Company, now rebranded as Light & Wonder, is moving rapidly to execute on its vision with a singular focus to be the leading cross-platform global game company, accelerating efforts to de-lever and invest for sustainable growth.
• Progressing on Asset Divestitures, we expect the Lottery transaction to close by the end of March(1) with approximately $5 Billion in net after-tax cash proceeds; the Sports Betting transaction is on track to close in Q2(1).
• De-levering and transforming the balance sheet is a key focus, establishing a long-term net debt leverage ratio target range of 2.5x to 3.5x, rapidly moving from a debt to an equity story. We expect to be squarely in this range by the end of Q2 with the sale of Lottery and Sports Betting businesses.
• Provided Capital Allocation Strategy, taking a balanced and opportunistic approach, significantly de-levering, returning substantial capital to shareholders, while investing in key growth opportunities.
• Authorized a 3-year, $750 million share repurchase program, underscoring a clear commitment and opportunity to return significant capital to shareholders. It reflects our strengthened balance sheet, the recurring nature of our revenue, our strong cash flow generation and the tremendous value we see in our shares. The share repurchase program will be via one or more open market repurchases, privately negotiated transactions, including block trades, accelerated share repurchases, issuer tender offers or other derivative contracts or instruments, “10b5-1” plan, or other financial arrangements or other arrangements.
• Investing in our largest growth opportunities, both organically and inorganically, in content and digital markets to accelerate growth. Organic investments directed at R&D, capex and the launch of our new Las Vegas iGaming studio. Announced SciPlay’s acquisition of proven casual game developer Alictus as we rapidly expand in the casual market. Further bolstering our portfolio and digital mix through acquisitions of Koukoi, Lightning Box Studio, Elk Studio and Authentic Gaming.

KEY ANNOUNCEMENTS

• Rebranding Scientific Games - on March 1, 2022, we announced our intention to rebrand Scientific Games Corporation to Light & Wonder as part of the Lottery sale and to align to our vision of becoming the leading cross-platform global game company. Our legal name “Scientific Games Corporation” is expected to be legally changed to “Light & Wonder, Inc.” during the second quarter of 2022, upon satisfying all applicable legal requirements in the state of Nevada.
• You will be able to access the Investor Relations section of our website at scientificgames.com/investors up to March 3, 2022, at which time the Light & Wonder website officially launches.
• The ticker symbol for the Company’s common stock will be changed from SGMS to LNW at the time of the legal name change. The Company’s common stock will continue to be listed on The NASDAQ Stock Exchange. No action is required by existing stockholders with respect to the planned name and ticker symbol changes.
  Light & Wonder is planning to hold an Investor Day on May 17, 2022, in New York City.

1. Subject to applicable regulatory approvals and customary closing conditions.

SUMMARY RESULTS
We have reflected our Lottery and Sports Betting businesses as discontinued operations, for all periods presented. Unless otherwise noted, amounts, percentages and discussion included below reflect the results of operations and financial condition from the Company’s continuing operations which includes its Gaming, SciPlay and iGaming businesses.