IGT backs its trimmed profile as gaming units return to profitability

IGT Plc has maintained confidence in its 2021 commercial strategy, having reported strong gains in Q2 as its gaming division ‘returns to profitability’.

Reporting a yearly increase in revenue of 74% to $1 billion (2020: $600m), the group has also achieved net EBITDA of $442 million (2020: $164m) and operating income of $244 million, a major improvement on the operating losses $72 million in Q2 2020.

IGT’s global gaming division recorded a strong recovery from COVID-19 pandemic headwinds, as the unit returned to profitability, whilst total revenue from Digital & Betting verticals rose by 41% during the quarter.

The technology group identified a number of factors behind its accelerated recovery, including the sale of the Italy B2C Lottomatica units –  which secured $748 million in net cash proceeds used to ‘partially fund full redemption’ of 4.750% Senior Secured Euro notes due in February 2023.

Max Chiara, IGT CFO, commented: “Record free cash flow from continuing operations and proceeds from recent asset sales fueled significant debt reduction in the first half. Our leverage profile improved substantially, reaching pre-pandemic levels well ahead of expectations, and improving our credit profile and overall financial condition.”

Although Gaming and Digital & Betting made substantial advances during Q2 2021, the firm’s lottery success – exemplified by the Maryland Lottery deal – was one of the most significant growth drivers for IGT.

The firm’s Global Lottery division delivered ‘second highest revenues and profit levels in segment history’, with strong player demand given as the primary reason behind this. 

Revenue for this vertical increased 126% to $316 million (Q2 2020: $140m), whilst ‘high profit flow-through’ was also recorded through same-store sales growth.

In addition to the deal clinched with the Maryland Lottery, the firm’s ‘best-in class’ cashless solutions’ have been increasingly adopted, including by Caliente Casinos and the Washington Lottery.

Marco Sala, CEO of IGT, noted: “Impressive second quarter results highlight the vitality of our portfolio. Outstanding Lottery performance, the progressive recovery in land-based Gaming, and strong increase in Digital & Betting activities drove substantial revenue and profit growth, delivering Adjusted EBITDA that is among the highest recorded in a quarterly period. 

“On the strength of the first half performance, we are raising our outlook for the year and now expect to exceed 2019 levels for key financial metrics this year.”

Despite reporting positive inroads for its gaming and betting verticals and substantial revenue generation from its lottery activities, IGT maintains a net loss of £39 million although this represents a decrease on the previous year’s results of $268 million and $ million respectively.

Additionally, the group was able to reduce net debt by $1 billion from the $7.3 billion debt at 31 December 2020, but this figure still stands at $6.3 billion, meaning the group’s debt problems will likely continue despite positive trading trends.

However, lower average debt balances and interest rates did enable IGT to reduce its net interest expense to $91 million (Q2 2020: $96 million), bolstered by ‘disciplined cost management’ as well as the advantages of the OPtiMa structural cost-savings programme.

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