International Game Technology reports 2Q 2024 results

IGT is a global leader in gaming. We deliver entertaining and responsible gaming experiences for players across all channels and regulated segments, from Lotteries and Gaming Machines to Sports Betting and Digital. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, our solutions deliver unrivaled gaming experiences that engage players and drive growth. We have a well-established local presence and relationships with governments and regulators in more than 100 jurisdictions around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has approximately 11,000 employees. 

"IGT delivered strong first half results, including record operating income and Adjusted EBITDA net of Separation and divestiture costs," said Vince Sadusky, CEO of IGT. "Consistent investments in technology, game content, and other innovative solutions provide us a solid foundation to build from as we execute on our growth objectives. The recently announced sale of our Gaming & Digital business for $4.05 billion in cash is an important step in unlocking the intrinsic value of IGT's best-in-class businesses."

"We generated over $460 million in cash from operations in the first half of the year and our balance sheet is as strong as ever," said Max Chiara, CFO of IGT. "Our ample liquidity and manageable near-term debt maturities provide us significant flexibility in light of upcoming investments to extend and secure our long-term lottery contract portfolio for the coming years."

Overview of Consolidated Second Quarter 2024 Results

Key Highlights:

• Recently awarded seven-year facilities management contract with the Colorado Lottery and three-year contract extension with the Mississippi Lottery Corporation
• Signed five-year iLottery content contract with Atlantic Lottery Corporation and launched iLottery in Connecticut
• Continued success in securing instant ticket contract wins and extensions including a five-year agreement with ONCE in Spain and three-year extension in Mississippi
• Launched Tiger and Dragon on the PeakCurve49 cabinet, which ranks as the #1 new premium leased & WAP game in industry performance reports; introduced Whitney Houston on the new SkyRise™ cabinet
• Recently launched award-winning Prosperity Link™ game in digital format in U.S.
• Continued international progress including deployment of Diamond Mania MLP in Spain AWP market, Holland Casino purchase of 500 PeakBar Top™ Video Poker cabinets, and expansion of HHR footprint to Malta
• Recently published 17th annual Sustainability Report, highlighting Environmental, Social, and Governance accomplishments
• Won "Diversity and Inclusion" category at 2024 Women in Gaming Diversity Awards and recognized as "Best Place to Work for Disability Inclusion"

Financial Highlights:
Consolidated revenue of $1.05 billion, in line with the prior-year period, as strength in Gaming & Digital is offset by elevated prior year product sales in Global Lottery

• Global Lottery revenue of $613 million decreased 2% year-over-year, primarily due to a multi-year software license sale in the prior year
• Gaming & Digital revenue of $436 million, up 1% versus the prior year, driven by installed base growth with resilient yields and elevated intellectual property and software license sales, offset by lower terminal unit shipments

Operating income of $230 million, compared to $251 million in the prior-year period; excluding $26 million in Separation and divestiture costs, operating income rose to $256 million

• Global Lottery operating income of $212 million versus $229 million in the prior year, primarily due to a multi-year software license sale and resolution of a customer contract dispute in the prior-year period
• Gaming & Digital operating income of $103 million compared to $89 million in the prior-year period on high-margin intellectual property and software sales and easing of supply chain costs, partially offset by lower terminal sales; operating income margin expands 300 basis points to 23.7%
• Corporate support and other expense of $86 million versus $68 million driven by $26 million in Separation and divestiture costs

Adjusted EBITDA of $420 million compared to $443 million in the prior-year period; excluding Separation and divestiture costs, Adjusted EBITDA was stable at $446 million and Adjusted EBITDA margin expanded 30 basis points

Net interest expense of $73 million compared to $71 million in the prior year

No foreign exchange gain or loss, compared to a $5 million loss in the prior year, primarily due to non-cash impact of fluctuations in the EUR/USD exchange rate on debt and reduced losses related to the devaluation of the Argentine peso

Other non-operating expense, net, of $1 million versus other non-operating income, net, of $2 million in the prior year

Income tax provision of $71 million, compared to $86 million in the prior year, primarily driven by lower valuation allowances on deferred tax assets and lower pre-tax income

Net income of $85 million versus $90 million in the prior-year period

Diluted earnings per share of $0.20 versus $0.23 in the prior year; Adjusted diluted earnings per share of $0.36 compared to $0.45 in the prior year primarily driven by lower net income, coupled with reduced foreign currency and discrete tax items

Net debt of $5.1 billion compared to $5.1 billion at December 31, 2023; Net debt leverage of 2.9x consistent with the December 31, 2023 level

Cash and Liquidity Update
Total liquidity of $1.7 billion as of June 30, 2024; $0.4 billion in unrestricted cash and $1.3 billion in additional borrowing capacity from undrawn credit facilities

Other Developments
The Company's Board of Directors declared a quarterly cash dividend of $0.20 per common share

• Record date of August 13, 2024
• Payment date of August 27, 2024

As announced on July 26, 2024, the Company entered into a definitive agreement to sell its Gaming & Digital business to funds managed by affiliates of Apollo for $4.05 billion in gross cash proceeds. The transaction is expected to be completed by the end of the third quarter of 2025.

Withdrawing Full Year 2024 Outlook
Due to the planned sale of the Gaming & Digital business, the Company expects to classify and report Gaming & Digital results as discontinued operations beginning in the third quarter of 2024. As a result, the Company is withdrawing its previously provided full year financial outlook. The Company expects to provide an outlook for full year 2024 continuing operations once the preparation of the discontinued operations reporting is complete.

For more information, please visit www.igt.com.