Fitch Ratings Inc projects casino and gaming supplier firm International Game Technology Plc (IGT) to have seen its 2023 leverage relative to earnings before interest, taxation, depreciation, and amortisation (EBITDA) decline to 3.6x, “largely due to the year-to-date third-quarter double-digit growth in its gaming segment”.
The ratings house said in a Friday update it expects the gaming supplier’s EBITDA leverage to decline further to “low 3.0x by 2026”.
Fitch added that IGT had “about 48 percent remaining” under its existing US$300-million share repurchase programme expiring in November 2025,” and Fitch also assumed “a relatively favourable dividend policy” from the company.
“There is also a possibility of tuck-in M&A [merger and acquisition], considering its [IGT’s] 2022 acquisition of iSoftBet has started delivering healthy contributions,” it added. The latter was a reference to an online and mobile casino games supplier, and third-party game aggregator, acquired by IGT in July 2022.
IGT announced its third-quarter results on October 31, including a quarterly cash dividend of US$0.20 per common share, payable on December 13. The firm is expected to report its fourth-quarter and full-year 2023 numbers within the calendar first quarter this year.
As of September 30, IGT had net debt of US$5.25 billion compared to US$5.15 billion at December 31, 2022.
Fitch’s update on IGT said the institution had affirmed IGTs long-term issuer default rating at ‘BB+’, and its senior secured debt at ‘BBB-‘/’RR2’.
“The rating reflects IGT’s conservative leverage profile, robust profitability, and solid liquidity,” said the ratings agency in a Friday update.
IGT’s lottery unit, IGT Lottery Holdings BV, also saw its long-term issuer default rating affirmed at ‘BB+’.
“The strong credit profile positions IGT favourably to continue funding slot machine development, shareholder returns, and absorb potential future cash demands related to lottery concessions,” stated Fitch.
The institution said there had been a “stabilising” of trends in IGT’s slot business. “IGT saw its ship share and installed base erode over the last decade as newer competitors invested heavily in the U.S. and increased scale.”
Nonetheless, IGT’s current installed slot base had “benefitted from healthy international growth and a stabilisation in North America”.
Fitch added: “The average daily yields on IGT’s installed slots remain over the pre-pandemic level of US$40 in North America, while its international yield has now caught up with that threshold. Average sales price[s] across all jurisdictions have also risen as suppliers are sharing rising input costs with operators.”
In June, IGT said it was mulling sale, or spin-off, for its gaming and digital units.
Fitch said in its Friday update: “Barring a status quo, Fitch believes a part of the proceeds could potentially be used to further de-lever, while also bolstering IGT’s liquidity for the upcoming lottery rebid cycle.”
