IGT gaming segment opportunities in Asia Pacific: CEO

Jul 31, 2024 Newsdesk Latest News, Top of the deck, World  

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Vince Sadusky, chief executive of gaming equipment maker and content provider International Game Technology Plc (IGT), says the group’s gaming and digital segment has “considerable opportunity” for growth in a number of markets, including in Asia Pacific.

“With approximately 80 percent of gaming and digital revenue coming from the U.S. and Canada, there is considerable opportunity for IGT to grow in the EMEA [Europe, Middle East, and Africa], Asia Pacific and Latin American regions,” stated Mr Sadusky (pictured).

He added: “We have targeted initiatives in each and have made some good progress recently.”

The CEO was speaking on a conference call on Tuesday following the release of IGT’s second-quarter earnings results.

IGT reported second-quarter net income attributable to shareholders of US$42 million, on group-wide revenue of US$1.05 billion.

Revenue from the global gaming and digital segment was US$436 million in the three months to June 30, compared with US$432 million a year earlier.

Operating income for gaming and digital was up 15.7 percent year-on-year, to US$103 million, and adjusted segmental earnings before interest, taxation, depreciation and amortisation (EBITDA) stood at US$151 million, 13.5-percent higher than a year ago.

Mr Sadusky said on the call that a “robust pipeline of new games” was “driving gaming and digital performance”.

“The global installed base continues to expand with the second quarter marking the eighth consecutive quarter of sequential growth, led by premium games,” he added.

The executive said IGT “sold over 14,000 gaming machines in the first half” of 2024.

“The record first-half [group-wide] operating income and adjusted EBITDA we achieved before the separation and divestiture costs confirms we are very much on track with our core operational and strategic objectives,” noted Mr Sadusky.

IGT is to sell its gaming and digital business to funds managed by affiliates of private equity firm Apollo Global Management Inc, for US$4.05 billion, according to a Friday announcement.

Upon completion of the sale of IGT gaming and digital businesses, the current IGT will be a “pure-play lottery company” under a new name and ticker symbol.

The funds linked to Apollo will simultaneously acquire gaming technology supplier Everi Holdings Inc, paying US$14.25 per share in cash. The transactions are expected to be completed by the end of the third quarter of 2025.

‘Clear-cut separation’

The sale of IGT’s gaming and digital business to Apollo “supersedes the spin and merger transaction originally contemplated with Everi Holdings,” observed Mr Sadusky.

“This simple straightforward transaction [with Apollo] provides a clear-cut separation of global lottery from gaming and digital for IGT shareholders,” said the IGT boss. “There is a substantial increase in cash, nearly US$1.5 billion, which provides a quicker realisation of value upon closing, thereby eliminating IGT shareholder exposure to execution risk regarding integration efforts and synergies.”

Max Chiara, IGT’s chief financial officer, said on the call that the “tax leakage from the sale [of the gaming and digital business] is expected to be modest, up to US$100 million or less than US$0.50 per IGT share”.

“Total transaction-related cash outflows continues to be estimated at approximately US$400 million, including the tax leakage,” he added.

IGT said “significant portions” of the cash proceeds are expected to be used “to repay debt and to be returned to shareholders”.

Mr Chiara said on Tuesday that IGT has “some requirements to repay a portion of the bank debt on the term loan only”.

“So, the revolver is not going to be touched. It’s just a voluntary decision if we want to apply some of that money to reducing the revolver instead of paying down bond, which is part of our flexibility,” explained the CFO.

Mr Chiara said the firm expects “to pay down half of the term loan remaining at the time of closing”.

“The balance will be used for capital returns to shareholders plus some amount will remain for corporate general purposes,” he added.

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