IGT enjoys Q1 revenue rise despite 9% decline in global lottery

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IGT has reported financial results for the first quarter ended March 31, 2022, showing overall revenue slightly ahead despite a drop in operating income during the trading period.

According to the headline figures, consolidated revenue came in at $1.1bn, up 4% as reported and 7% at constant currency from $1bn in the prior year.

Global lottery revenue fell 9% to $680m, compared to $749m in the prior-year period. That included $95m in prior-year benefits from Italy gaming hall closures, higher multi-state jackpot activity, and incentive accruals related to LMA agreements. According to IGT, global lottery operating income was down, primarily due to about $80m in prior-year benefits.

During Q1 trading, IGT secured a three-year lottery contract extension with the Missouri Lottery and was awarded a multi-year instant ticket contract with Lotto Baden-Württemberg in Germany. It also recently signed an agreement with Atlantic Lottery Corporation to provide 1,375 CrystalDual 27 video lottery terminals.

Global gaming revenue increased 42% to $325m, driven by significantly higher product sales revenue and higher active installed base units, said the firm.

Elsewhere, digital & betting revenue was ahead by 24% to $47m, as double-digit growth across activities continued. The year-on-year increase, said IGT, was driven by market expansion, organic growth, and timing of jackpots.

Operating income of $252m, compared to $260m in the prior year, was down 3% as reported but up 2% at constant currency.

Adjusted EBITDA came in at $433m, compared to $450m in the prior-year period, matching the prior year’s record level at constant currency. Net income was $117m versus $138m in the prior-year period, driven by a reduction in foreign exchange gains, partially offset by lower income taxes and cost of debt.

Turning to net debt, that fell marginally to $5.8bn compared to $5.9bn at December 31, 2021, with net debt leverage of 3.5x described as stable compared to the prior year period.

CEO Vince Sadusky told investors: “The first quarter results clearly reflect the power of our portfolio. The quarter’s strong margin profile highlights the long-term recovery of the gaming business as well as increased levels of lottery play from pre-COVID periods. The company’s initiatives around a simplified corporate structure have resulted in strong liquidity as we continue to invest in product development and return capital to shareholders.”

CFO Max Chiara commented: “This quarter marks excellent progress on the profitable growth trajectory outlined at our November 2021 Investor Day. The benefits we are realising from continued discipline around cost and cash flow management are evident in profit margins that are among the highest in the last three years and in significantly lower interest expense.

“We are on pace with our leverage target for the year and expect further improvement with the expected proceeds from the announced asset disposition.”

Among the operational highlights during Q1 was the launch of the high-performing IGT PlayCasino games in West Virginia, alongside expansion of the firm’s digital footprint to five US states, and in Ontario, as the market expands to include commercial operators.

IGT also saw extended sports betting momentum through strategic agreements with Meruelo Gaming LLC and Kalispel Casino.

Reaffirming its full-year revenue and profit outlook and introducing the Q2 2022 outlook, the firm predicted full-year revenue of $4.1bn to $4.3bn, cash from operations of $850m to $1bn and capital expenditure of $400m.

Second quarter revenue, meanwhile, is expected to come in at the $1bn to $1.1bn mark with an operating income margin of 20% to 22%. The outlook, said IGT, is based on EUR/USD exchange rate of 1.12; and excludes the impact from the sale of its Italian commercial services business.