GGRAsia – IGT 1Q revenue up 25pct y-o-y, posts US$92mln profit

IGT 1Q revenue up 25pct y-o-y, posts US$92mln profit

May 12, 2021 Newsdesk Industry Talk, Latest News

Gaming and lottery provider International Game Technology Plc (IGT) reported on Tuesday first-quarter revenue of nearly US$1.02 billion, up 24.7 percent from the prior-year quarter. The figure was up 14.7 percent from the fourth quarter.

IGT stated it had achieved some of its highest revenue and profit levels in its history during the opening quarter of 2021.

The company said the increase in revenue was driven by an “outstanding performance” in the group’s global lottery segment, as well as “continued recovery in global gaming, including acceleration in digital and betting activities” during the reporting period.

For the three months to March 31, IGT outlined that its global gaming revenue declined by 14.2 percent year-on-year, to US$266.0 million. That was still a 4.3-percent increase sequentially, “as U.S. gaming markets continue to recover,” stated the company.

Revenue in the lottery segment was US$749 million, up 48.3 percent year-on-year, driven by 32.4-percent growth in same-store sales, said IGT. The result was an 18.9-percent increase from the fourth quarter of 2020.

IGT posted a net profit of US$92 million, compared to a US$248-million loss in the corresponding period a year earlier, according to Tuesday’s press release. The company had reported a net loss of US$242 million in the final quarter of 2020.

Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) stood at US$450 million, up 72.4 percent from a year earlier, and a 40.2-percent increase sequentially.

The lottery business achieved “among the highest segment-level adjusted EBITDA,” at US$447 million in first-quarter 2021, stated the company. Adjusted EBITDA in the gaming segment was US$19 million, down from US$31 million a year earlier, but an improvement on the negative US$39 million recorded in the preceding quarter.

The company stated it sold 2,896 gaming machine units during the reporting period, up from 2,072 in the prior-year quarter. That included 620 new units, and 2,276 replacements.

‘Full swing’ recovery

The release quoted IGT’s chief executive, Marco Sala, as saying: “We delivered some of our strongest profit results ever during the first quarter, fueled by robust player demand and significant, structural cost savings.”

He added: “Our global lottery segment achieved record same-store sales levels on impressive increases around the world. The global gaming segment is demonstrating swift, progressive recovery, including accelerated momentum for digital and betting activities. We expect to return to 2019 levels for key financial metrics this year.”

Deutsche Bank Securities Inc said it now had “higher” EBITDA estimates for IGT in 2021, “given the upside in the first quarter of 2021.”

“While we anticipate a slowdown in lottery in 2022, and to a lesser extent in the second half of 2021, given the tough comparisons, we expect the gaming segment improvement to more than offset this, as we see IGT as poised to generate mid to high single-digit EBITDA growth in each of 2022 and 2023,” wrote analysts Carlo Santarelli and Steven Pizzella.

They added: “We believe IGT can potentially rival 2019 adjusted EBITDA of US$1.713 billion, which included circa US$260 million of EBITDA from previously sold business lines, in 2023.”

IGT said it delivered US$204 million in positive free cash flow in the first quarter, and generated US$251 million in cash from operations, “driven by strong results and invested capital discipline.”

IGT’s chief financial officer Max Chiara said the group’s business recovery was in “full swing”.

“We are delivering strong operating leverage which, when coupled with invested capital discipline, drove strong cash flows in the quarter,” said Mr Chiara. “This enabled us to accelerate our debt retirement strategy and gives us confidence in a return to pre-pandemic leverage levels by the end of the current year.”

The company’s net debt position stood at just under US$7.07 billion as at the end of the first quarter, down from US$7.17 billion as of March 31, 2020.

In a separate release on Tuesday, IGT said it had completed on Monday the EUR950-million (US$1.15-billion) sale of a consumer-facing Italian gaming business.