Brightstar Lottery (BRSL) Q2 2024 earnings summary

Executive summary

• Achieved over $2.1 billion in H1'24 revenue and a 23% operating margin, with record operating income and Adjusted EBITDA, net of separation and divestiture costs.

• Announced sale of Gaming & Digital business to Apollo for $4.05 billion in cash, superseding prior spin/merger plans and enabling quicker value realization.

• Published 17th annual Sustainability Report and continued progress on strategic and financial goals.

• Generated over $460 million in cash from operations and $260 million in free cash flow in H1'24.

• Post-transaction, focus will shift to Global Lottery, positioning as a premier pure-play lottery operator with global reach.

Financial highlights

• Q2'24 revenue was $1.05 billion, down 1% year-over-year; Gaming & Digital up 1%, Global Lottery down 2%.

• Operating income was $230 million (including $26 million in separation/divestiture costs), down 8% year-over-year; excluding these costs, margin improved to 24.4%.

• Adjusted EBITDA was $420 million for Q2'24, down 5% year-over-year; excluding separation costs, Adjusted EBITDA was $446 million, flat year-over-year.

• Diluted EPS was $0.20; Adjusted EPS was $0.36 for Q2 and $1.00 for the first half, a company record.

• Free cash flow for the first half was $264 million, with $463 million generated from operations.

Outlook and guidance

• With the planned sale of Gaming & Digital, full-year financial outlook is withdrawn; future results for this segment will be reported as discontinued operations from Q3.

• Proceeds from the sale will be used to repay $2 billion in debt, return significant capital to shareholders, and fund transaction-related expenses.

• Underlying lottery business outlook remains unchanged: low single-digit growth ex-jackpot fluctuations expected for the remainder of the year.

• Anticipates slightly better business conditions in the second half, aided by higher price point launches and continued new game campaigns.

• Long-term lottery growth profile expected to be low- to mid-single digits, supported by innovation and iLottery expansion.