Aristocrat Leisure Ltd is swimming in enough cash that the Australia-based slots and entertainment company plans to buy back, at market rates, up to AUD500m (US$353.61m) of its own stock without taking a material hit in the enhancement.
That is possible because the company generated AUD580.1 million (US$403.9 million) in profit (NPATA) during the first half of its fiscal year – up 40.9% from the same year-to-date (previously corresponding period – pcp) last year.
While the company saw good growth in the international segment, those revenues dragged down the astounding growth found in the Americas where Aristocrat posted year-on-year growth of 61.2%.
The reported A$970m in Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) is 30% higher than the PCP.
Operating revenue during the PCP rose about 23% to A$2.75b. The period ended on March 31, 2022. Dividends of A$0.26 per share will be paid out in July.
Continued Investment in Key Assets
The company neither battened down the hatches nor contracted by shedding limbs to weather the uncertainty of the last couple of years but continued to invest heavily in its core assets of people, innovation, and products to achieve growth in market share for both Aristocrat Gaming and its social division Pixel United – creating organic profit in market conditions that could best be described as “mixed”.
Aristocrat Chief Executive Officer and Managing Director, Trevor Croker, said: “Our sustained investment in talent, technology, and product enables us to continue to take share wherever we play and delivered significant top and bottom-line growth”
With net debt for the first half of FY 2021 of A$523.5 million, net cash was positioned at A$1.33 billion.
Croker commented: “We are accelerating the implementation of our ‘build and buy’ strategy to scale in online Real Money Gaming, which provides further channels for us to distribute our world-leading content.”
The firm was stymied in its attempt to buy out some Playtech shareholders earlier this year.
The business is now structured into three distinct units following a framework change announced in February – gaming machines fall under Aristocrat Gaming, and social gaming which was previously under Aristocrat Digital [Big Fish Games, Product Madness (Cashman Casino), and Plarium]
are now under Pixel United. The third division is Online RMG (real money online gambling).
Plans to “Lead” in Online Gambling
According to a press release late last week, Corker said: “Our ambition is to be the leading gaming platform in the global online RMG industry, and we anticipate being live with i-Gaming products in two jurisdictions in the US by the end of calendar year 2022.”
According to notes from analysts at JP Morgan found on GGR Asia, which increases the firm’s profit forecast for Aristocrat based on the new numbers and factors, in addition to the liquidity of A$3.3 billion, free-cash-flow generation is also “extremely strong” and a “solid growth pipeline across multiple avenues,” according to the memo.
When precisely the right opportunity is created or presents itself, Aristocrat could enter the online real money space in a big way thanks to the “big stick” of A$3.3b in liquidity. The analysts stated the firm is, “confident Aristocrat Leisure can strike hard when and where necessary.”
The brokerage said that RMG is a “missing piece for the company, albeit the market will see some semblance of the strategy within a year.”