Catena soars as Better Collective raises war chest

Better Collective cash raise, IGT and Everi combo, Lottomatica M&A prediction +More

Mar 01, 2024

BC raises $158m to fund further M&A – and rival Catena sees the benefit.
In +More: Flutter’s US accounting move, Genting’s New York moves.
IGT and Everi announce iCasino and gaming spin-off, and merger combo.
Lottomatica predicts further Italian consolidation.
BettingJobs’ Jobsboard features head of Asia and head of HR roles.

I see your preparations, invite me first to the feast.

BC raises – Catena soars

Better off: Investors sent Catena Media’s shares soaring over 25% at one point yesterday as they eyed the potential for Better Collective to use its newly-raised cash to buy its ailing rival. Catena’s share price ended the day just shy of 20% while Better Collective was up less than 4%.

Money in my pocket: The share price action came after Better Collective announced on Wednesday AMC it had raised over DK1bn or ~$158m from investors via a sale of new shares representing 10% of the company. The proceeds will go towards funding prospective M&A.

The shares were sold at zero discount to the current share price. The raise was anchored by current shareholder BLS Capital.

Swings, meet roundabouts: Better Collective will have indirectly benefited from its rival’s share price rise as it owns a 9% stake in the business, although that would be negated were it to actually launch a bid.

Investors in Better Collective were skeptical on X about the likelihood of a bid for Catena.

Daly ouster: The Better Collective cash raise came on the heels of news that Catena’s CEO Michael Daly had resigned with immediate effect after a prolonged period of underperformance at the once-leading gaming affiliate provider.

He has been replaced temporarily by Pierre Cadena who joined the company in November as VP for corporate strategy.

Asking price: Catena recently completed a strategic review that led to the disposal of the bulk of its European and global-facing affiliate assets for a total of €76m to concentrate on its North American-facing operations. Assets disposed of include AskGamblers sold to GiG for €45m in Dec22.

However, in its recent Q4 earnings, the company revealed revenues had fallen by 41% YoY to €14.6m while adj. EBITDA had cratered by 88% to €1.5m.
The shares fell 10% on the day and are down nearly 75% in the past 12 months.

Keep the ball rolling: In its Q4 earnings statement, Better Collective noted it had made seven acquisitions in 2023 including its second-ever biggest deal, the €176m laid out for Playmaker.

CEO Jesper Søgaard told analysts on the call it was “no secret” that large parts of the sports media industry were “struggling” at present.
Better Collective sees itself as the “key acquirer and optimizer moving forward.”

👀 Catena receives a booster shot

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+More

Stay awake at the back: Flutter has provided the conversion of its previous financial statements from the IFRS accounting standard to US GAAP standards in preparation for reporting in US dollars when it publishes its annual results on March 26.

Genting: The company’s Resorts World property at Aqueduct racetrack, Queens, is planning for a $5bn expansion should it receive one of the downstate casino licenses in New York.

Fanatics has launched OSB operations in New York, its 15th state.

By the numbers

Nevada: Las Vegas Strip revenue was down 3.8% YoY to $686m, up against a tough comparative in Jan23, but GGR ex-Strip was up 8%, led by a 39% rebound in Reno/Spark and with Downtown up 1% and Locals up 4%.

Macau: MoM GGR rose 4.4% to $2.29bn, a near 80% increase in the prior year, helped by a busy Chinese New Year Golden Week. The enclave saw visitor numbers hit 1.36 million with occupancy over 95%.

What we’re reading

Goodbye to all that: Gaming News Canada publishes its last newsletter, says it will concentrate on podcasts from now on.

Panel focus: Billion-dollar babies and the swing to profitability

What does the swing to profitability and the emergence of the billion-dollar EBITDA behemoths mean for the rest of the US OSB and iCasino sector? As the profits pile up for the sector leaders from 2025 onwards, what does that mean for the rest of the sector? How will this cash be deployed? Does it mean more M&A or will it be handed back to investors?

Joining this panel are Andrew Fabian from Citi, Barry Jonas from Truist, Chad Beynon from Macquarie, Lloyd Danzig from Sharp Alpha and with Cassandra Lee from Bettor Capital moderating.

Subscribers can get a discounted ticket by visiting the E+M Capital Markets Forum page on the SBC North America summit page. Use the code EARNINGS100.

IGT and Everi gaming spin-off combo

Every cloud: One of the unanswered questions hanging over the sector from last year has been resolved after IGT announced it will spin off the gaming and digital elements of its business and merge them immediately with the gaming-to-fintech entity Everi.

The deal values the combined businesses at an enterprise value of $6.2bn with IGT shareholders getting 55% of the new company and Everi being handed 45%.
The new combination will be led by current IGT CEO Vincent Sandusky with Everi’s current executive chairman Michael Rumbolz chairing the new entity, which will retain the IGT name and NYSE ticker while the remaining lottery business will change its name.

A new behemoth: IGT announced its strategic review last summer when it said it was looking at “alternatives” for the business. After closing, IGT shareholders will also retain 100% control of the company’s global lottery business.

Sandusky said the two businesses would be “stronger and more valuable together.”
The new combination is predicted to have pro forma revenues for 2024 of $2.7bn and projected adj. EBITDA of ~$1bn.
The companies said they had identified ~$85m of cost savings and capex efficiencies.

A tale of neglect: Sandusky said the reasoning behind the strategic shift was to address a longstanding and “by any measure” inferior trading multiple. “We really needed to do something strategically,” he told the analysts.

He said the company had been “really methodical.” “We feel like we really left no stone unturned in terms of the conversation we've had with counterparties and thinking about all the various alternatives,” he added.
He said the Everi tie-up was the “best alternative” to an outright sale of the gaming business.

By the numbers: Everi also published its Q4 earnings with revenues down 6.5% to $192m and adj. EBITDA down 12% to $82.2m. Within that, fintech was up 3% to $94.9m but gaming was down reflecting “near-term headwinds” as the company transitioned to new cabinets and the roll-out of new content.

Lottomatica

Pumped up kicks: The leading Italian operator has exceeded all expectations at the time of its IPO, grabbing market share both organically and through M&A, said CEO Guglielmo Angelozzi. The company saw 2023 revenue come in 12% ahead YoY at €1.63bn while adj. EBITDA of €596m was ahead of IPO guidance of between €570m-€590m.

The company said online market share across its existing brands – GoldBet, Lottomatica and BetFlag – hit nearly 22% in Q423.
That represents a ~4% increase YoY and four times faster than the market, according to Angelozzi.

Another planet: The company will soon add SKS/PlanetWin365 to its portfolio following the €639m deal in Nov23. That business claimed 7.3% share of the online market in Q4. The deal is expected to close in H124.

As it stands, without SKS the company is forecasting revenues of €1.8bn-€1.85bn and adj. EBITDA of between €625m-€645m.

This is the way: Further M&A, whether in terms of even more consolidation within the Italian market, or internationally, will have to wait on completion of the SKS deal. But he said any potential deal would be B2C and regulated in Europe. “That's the vision, that's the strategy,” said Angelozzi.

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Light, no shade for LNW

I saw the light: CEO Matthew Wilson proclaimed a “banner year” as the supplier recorded better-than-expected revenues and adj. EBITDA as the company’s transformation strategy appeared to be paying off.

Gaming revenue rose 13% YoY to $496m in Q4 while revenue from the recent SciPlay acquisition was up 12% to $204m and iCasino was up 13% to $70m.
Q4 revenue in total was up 13% to $770m while FY23 revenue was up 16% to $2.9bn.
Q4 adj. EBITDA rose 14% to $303m and FY23 adj. EBITDA was up 22% to $1.1bn.

If music be the food of love: Wilson said SciPlay was now fully integrated and was “executing beyond expectations in a breakout year.” He said the business had once again outpaced the growth in the social gaming sector and had “consistently” gained market share in 2023.

In iCasino, Wilson noted the company had now launched live dealer offerings with Rush Street and DraftKings in Michigan, and said the initial feedback had been positive.
He added the company had just signed up Penn Entertainment in Michigan.
In gaming, CFO Oliver Chow noted sales growth in 2023 in both the US and Australia.

Goddess on a hiway: Wilson reiterated the company’s confidence in hitting its 2025 adj. EBITDA target of $1.4bn as set out in May22. “We have in place the talent, the investments and the product pipeline to continue this pathway to the $1.4bn,” he said.

Earnings in brief

Inspired Entertainment: One-off sales of its gaming cabinets in the UK and a booming interactive segment were the bright spots as Inspired finally delivered its belated and now restated Q3 earnings showing revenues up 31% to $97.5m.

Interactive revenue was up 38% YoY to $7.3m while the cabinet sale brought in $22.7m.
But virtuals were down 14% on a currency-adjusted basis at $13.4m, gaming ex-cabinet sales were also down 14% to $22.4m and leisure revenues were down 3% to $31.7m.
Adj. EBITDA fell 8% on a currency-adjusted basis to $26.7m.

Codere Online: Revenue rose by 33% YoY to €50.1m driven by a 54% leap in the Mexican business, which saw revenues rise to €25.1m. The Spanish business was up 17% to €20.8m. The company now forecasts 2024 FY revenues of between €185m-€200m.

Melco Resorts: The Macau bounceback was in evidence with revenues near enough tripling to $1.09bn while adj. EBITDA rebounded to a positive $303m vs. a negative $6.8m in the same period last year. Lawrence Ho said Macau continued to demonstrate “extraordinary growth potential” despite the uncertainties in China.

Gaming and Leisure Properties: The gaming REIT completed what analysts at CBRE suggested was a “relatively busy” year with $1.1bn of investment activity and the company has already kicked off 2024 with the $175m deal for Tioga Downs. Q4 revenue rose 9.7% YoY to $369m while AFFO grew 7.3% to $257m.

Golden Entertainment: Revenue fell 17.5% to $231m while adj. EBITDA fell over 23% to $48.8m with the YoY comparison affected by the disposals of the Rocky Gap Casino in Maryland and the distributed gaming business in Montana. The business now derives 100% of its revenues from Nevada.

Ainsworth Game Technology: FY23 revenue rose 17% to A$285m but adj. EBITDA was down 31% to A$18.9m. The company’s strategic review, launched in November, is continuing.

Calendar

Mar 5: Full House, AGS
Mar 6: Genius Sports, Super Group, Rush Street
Mar 7: Entain
Mar 12: IGT

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