Fitch highlights Light & Wonder’s leverage improvement, revises rating outlook to ‘positive’

Fitch Ratings has praised gaming equipment supplier Light & Wonder Inc for “strengthening” its earnings before interest, taxation, depreciation and amortisation (EBITDA) leverage profile, with leverage “expected to decline to approximately 2.9 times by the end of 2027”. The institution said in a note on Monday that the improvement was “driven by voluntary debt repayment and EBITDA growth across all business segments.” “This trajectory advances Light & Wonder’s goal of maintaining a lower leverage profile,” Fitch said. The agency stated that the leverage improvement was one of the factors leading it to revise its rating outlook for Light & Wonder to ‘positive’ from ‘stable’. In its Monday memo, Fitch affirmed its long-term Issuer Default Rating (IDR) for Light & Wonder and Light & Wonder International Inc at ‘BB’, i.e. below investment grade. The rating affirmation, Fitch noted, reflected Light & Wonder’s “moderately diversified product mix, solid free-cash-flow margins, and disciplined capital allocation strategy.” Fitch noted that the firm has operations spanning traditional gaming, iGaming, and social casino gaming, with traditional gaming representing about 65 percent of revenue based on the latest available data. The institution said it expected Light & Wonder’s installed base to continue growing as the firm “expands its premium-game portfolio, broadens its presence across gaming adjacencies, and enters additional product markets.” According to Fitch’s calculations, the gaming supplier’s EBITDA leverage “improved modestly” to 3.5 times as at June 30 this year, from 3.6 times at the end of 2025. The institution said near-term deleveraging “will likely be driven by voluntary repayments” on Light & Wonder’s 2030 senior secured revolver facility and existing term loans. “Share repurchases, which were significant in 2025 given Light & Wonder’s Nasdaq delisting and transition [in November that year] to a sole primary listing on the Australian Securities Exchange, could moderate as strong cash flow is increasingly directed toward debt reduction,” the rating agency added. Fitch said that, over the longer term, Light & Wonder’s leverage could decline to about 2.5 times as the firm advances towards its 2028 adjusted EBITDA target of US$2 billion. The institution forecast that Light & Wonder’s total revenue will grow at a “mid-single-digit” compound annual growth rate “over the medium to long term,” supported by enhancements across all its business segments. In August, Light & Wonder reported a 2.4 percent year-on-year increase in second-quarter revenue, while net income rose 26.3 percent. The firm said at the time it expected full-year 2026 consolidated adjusted EBITDA growth “to be in the mid- to high-single-digit” percentage range, as the group continued to execute its long-term strategy. In early August, Light & Wonder named one of its serving executives, Mike Smith, as managing director for Asia, with the appointment taking effect this month (October).