Gaming and lottery provider International Game Technology Plc (IGT) reported on Wednesday revenue of nearly US$981.5 million for the third quarter of 2020, up 54.0 percent from the preceding quarter. The figure was still down 14.9 percent from the prior-year period.
The company said the quarter-on-quarter increase in group-wide revenue was driven by the “strongest lottery same-store sales growth in seven quarters,” and a “sharp improvement” from the second quarter “across all major revenue sources.”
For the three months to September 30, IGT said its global gaming revenue declined by 31.4 percent year-on-year, to US$412.0 million, due to factors including “pandemic-related closures [of gaming venues] and restrictions”. The company said it recorded “positive sequential trends” as casinos reopened and the group’s installed base in those gaming venues is “gradually reactivated.”
IGT posted a net loss attributable to shareholders of just below US$128.0 million, compared to a nearly US$103.6-million profit in the corresponding period a year earlier, according to Wednesday’s press release. The result was an improvement from the US$279.6-million loss reported in the second quarter this year. The company said the net loss for the reporting period included US$149 million in foreign exchange losses, primarily non-cash.
For the three months to September 30 this year, adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) more than doubled from the second quarter, to US$354.1 million; but the figure was down 13.0 percent from a year earlier.
The release quoted IGT’s chief executive, Marco Sala, as saying: “The resilience of our portfolio, particularly in lottery, and benefits from our swift cost reduction initiatives are on full display in our third quarter results.”
He added: “Strong player demand and a host of compelling new games, systems, and digital solutions led to a sharp, sequential improvement in our most important markets.”
The CEO said the company would “continue to monitor the evolution and impact” of the Covid-19 pandemic. “With a simplified organisation firmly in place, we are creating a leaner, stronger IGT,” stated Mr Sala.
IGT said it delivered US$220 million in positive free cash flow in the third quarter, and generated US$610 million in cash from operations and US$384 million in free cash flow year-to-date.
IGT’s chief financial officer Max Chiara said the group’s liquidity and net debt improved on positive cash flow performance during the reporting quarter.
“We are on track to achieve our 2020 temporary cost-reduction targets and have identified a number of initiatives that will enable us to deliver over US$200 million of structural savings over the next two years,” said Mr Chiara. “As a result, the improvement in our profitability should support our continued focus on reducing debt.”
According to Deutsche Bank Securities Inc, “circa 80 percent” of the flagged US$$200-million savings over the next two years will be “coming from global gaming and the remaining circa 20 percent coming from global lottery and corporate support expense.”
“Liquidity wise, IGT has improved their position to about US$2.55 billion as of third-quarter 2020, from about US$2.3 billion at second-quarter 2020,” said the Deutsche Bank team in a Wednesday memo. IGT said in its release that it had US$943 million in unrestricted cash and US$1.61 billion available under revolving credit facilities.
The company’s net debt position stood at US$7.24 billion as at the end of the third quarter, down from US$7.29 billion in the previous quarter, and from US$7.38 billion as of December 31, 2019.
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“As a leaner, stronger company, we expect leverage to return to pre-pandemic levels in the next 12-18 months”
Chief financial officer at gaming product and lottery services provider International Game Technology