International Game Technology PLC (“IGT”) (NYSE:IGT) yesterday reported financial results for the fourth quarter and full year ended December 31, 2023.
Fourth quarter 2023 financial results reach forecast:
- Revenues of $1,1 billion, driven by 7% growth in global lotteries
- Operating profit increased 11% to $256 million, driven by strength from Global Lottery, Global Gaming and PlayDigital; operating profit margin increased 160 basis points to 22,7%
Full-year 2023 financial results record record profit thanks to continued segment momentum:
- Revenues of $4,3 billion, up 2% compared to the previous year and 7% net of the sale of commercial services in Italy, thanks to the growth of Global Lottery's single point of sale sales and the 9% increase in Global Gaming and PlayDigital
- Operating income increased 9% to a record $1,0 billion, with growth across all segments; operating income margin improved by 140 basis points to 23,2%
- Record Adjusted EBITDA of $1,8 Billion and Adjusted EBITDA Margin of 41,3%
- Net debt leverage improved to 2,9x, the lowest in the Company's history
- Expected full-year 2024 revenue of $4,3 – $4,4 billion with an operating margin of 20% – 21%, including the 300 basis point negative impact of separation and divestment costs
“In the fourth quarter we ended the year on a high note, bringing full-year 2023 earnings to record levels,” he said. Sadusky wins (in the photo), CEO of IGT -. An attractive range of products and solutions has fueled broad momentum in key performance indicators, driving margin improvement in our Global Lottery, Global Gaming and PlayDigital segments. We believe the recent decision to split the business and create separate lottery and gaming companies, each with experienced management teams and streamlined business models, better positions each company to serve customers and create significant value for stakeholders.”
“We have achieved all our financial objectives in 2023 – he declared Max Chiara, CFO of IGT -. Robust cash generation has funded incremental investments in the business and shareholder returns, while driving leverage to historically low levels, placing IGT in a strong financial position entering 2024. This gives us confidence to expand further our investments in the company to fund future growth.”
Fourth quarter and full year 2023, the highlights:
- Live with a new facilities management contract in Connecticut and instant and passive lottery games in Minas Gerais, Brazil
- Awarded 8-year contract for iLottery in Connecticut and implemented cloud-based iLottery system for Totalizator Sportowy in Poland
- Lottery facility management contract expansion into multiple jurisdictions, including California, Costa Rica, Kentucky, South Dakota, Sweden, United Kingdom, and most recently Virginia
- Secured 10-year brand license extension with Sony Pictures Television, granting IGT exclusive rights to the legendary Wheel of Fortune® brand across all gaming, lottery, iGaming and iLottery industries
- Awarded four EKG Slots Awards, including “Most Improved Provider – Premium” and “Best Performance New Mechanical Reel Cabinet”
- Launched the first omnichannel Wheel of Fortune® jackpot game in the US and tailored games for key customers such as CAESARS CLEOPATRA® for Caesars Palace Online Casino and Blackjack Surrender for FanDuel Casino
- Debut of the award-winning PeakBarTop™ sports betting cabinet, offering players the most advanced interface in the land-based casino sports betting market
- Rerated to Ba1 from Ba2 by Moody's Investors Service with stable outlook; has received a BB+ long-term issuer rating from Fitch with a stable outlook and an investment grade senior secured debt rating of BBB-
- Continued progress on ESG initiatives, including improved FTSE Russell and S&P Global Corporate Sustainability Assessment scores; recognition of excellence in diversity, equality and inclusion in the All-In Diversity Project 2023 All-Index report; highest score in the Human Rights Campaign Foundation's 2023-2024 Corporate Equality Index
Fourth Quarter 2023 Financial Highlights:
Consolidated revenue of $1,1 billion increased 3% from $1,1 billion in the prior period.
- Global lottery revenue of $681 million, up 7% from $639 million a year earlier, driven by strong product sales and same-store sales growth in Italy
- Global gaming revenue of $390 million, consistent with the prior year, as increased terminal product sales and increased intellectual property revenue were offset by decreased system sales
- PlayDigital revenue of $59 million compared to $65 million in the prior year, due to a one-time benefit related to jackpot spending in the prior year and lower sports betting volumes and participation rates in Rhode Island in the current year
Operating income of $256 million, up 11% from $230 million a year earlier; operating income margin increased 160 basis points to 22,7%, with growth across all business segments.
- Global lottery operating income of $238 million increased 10% from $216 million in the prior period; operating income margin increased 110 basis points to 35,0%, driven by strong same-store sales in Italy, increased sales of high-margin products and despite lower jackpot benefits
- Global Gaming operating profit of $80 million, up 17% from $68 million a year earlier; Operating profit margin increased 290 basis points to 20,5%, driven by easing supply chain costs and R&D process improvements, partially offset by higher jackpot spending
- PlayDigital operating profit of $17 million, in line with the previous year; Operating profit margin increased 360 basis points to 29,1%, driven primarily by cost discipline and reduced variable compensation costs due to lower-than-expected revenue
- Corporate support and other expenses of $79 million compared to $71 million in the prior year, primarily due to higher separation and divestiture costs related to the exploration of strategic alternatives for the Global Gaming and PlayDigital segments, as well as higher renovation costs
Adjusted EBITDA of $454 million, up 9% from $419 million in the prior year, driven primarily by increased operating income and depreciation and amortization, partially offset by separation and disposal costs; adjusted EBITDA margin increased 190 basis points to 40,2%.
Net interest expense of $71 million compared to $66 million in the prior year, due to higher interest rates on floating rate debt and the retirement of lower coupon senior bonds.
Foreign exchange loss of $66 million compared to $95 million a year earlier, primarily reflecting the impact of EUR/USD exchange rate fluctuations on debt
Other non-operating expenses of $8 million compared to other non-operating income of $1 million in the prior year, primarily related to the purchase and sale of a blue-chip swap used to transfer funds out of Argentina in the prior year course
Provision for income taxes of $83 million, compared to $101 million in the prior year, driven primarily by lower non-deductible foreign exchange losses.
Net profit of $27 million compared to net loss of $31 million in the prior period
Diluted loss per share of $0,04, compared to $0,32 in the prior year, primarily due to increases in operating income and reductions in non-deductible foreign exchange losses; Adjusted earnings per share increased 40% to $0,56 from $0,40 a year earlier, driven primarily by higher operating income.
Full-year 2023 financial highlights:
Consolidated revenue of $4,3 billion increased 2%, or 7% net of sales of commercial services in Italy, compared to $4,2 billion in the prior period.
- Global lottery revenue of $2,5 billion, down 2% from $2,6 billion; net of sales of commercial services in Italy, revenues increased 6%, with global sales 2,3%, thanks to strong performance in Italy and higher product sales
- Global gaming revenue increased 9% to $1,6 billion, driven by strong key performance indicators
- PlayDigital revenues reached a record $228 million, up 9% from $209 million in the prior period, driven by iGaming growth across all geographies
Record operating income of $1,0 billion, up 9% from $922 million in the prior period, with increases across all business segments; operating income margin increased 140 basis points to 23,2% with improvements across all segments.
- Global lottery operating income of $913 million, in line with the previous year, despite the sale of the commercial services business in Italy (commercial services in Italy contributed $34 million in the previous year); operating income margin increased 100 basis points to 36,1%
- Global Gaming's operating income increased 29% to $313 million; operating income margin improved 320 basis points to 20,2%, driven by easing supply chain costs and R&D process improvements
- Record PlayDigital operating profit of $65 million, up 32% from $50 million the previous year, thanks to strong operating leverage; operating profit margin increased 490 basis points to 28,6%
- Support and other corporate expenses of $290 million, up from $279 million in the prior year, primarily due to separation and divestiture costs, partially offset by lower transaction costs due to acquisition activity and disposal in the previous year
Record adjusted EBITDA of $1,8 billion, up 7% from $1,7 billion in the prior period, driven primarily by increased operating income and depreciation and amortization, partially offset by higher separation and divestment costs ; adjusted EBITDA margin increased 190 basis points to 41,3%.
Net interest expense of $285 million compared to $289 million in the prior period.
Foreign exchange loss of $75 million, compared to $36 million in the prior period, primarily reflecting the impact of EUR/USD exchange rate fluctuations on debt.
Other non-operating expenses of 12 million dollars compared to 7 million dollars in the previous period.
- $5 million loss on debt settlement and $5 million loss on the purchase and sale of a blue-chip swap used to move funds out of Argentina in the current year
- $278 million gain on sale of Italian commercial services business, offset by $270 million provision associated with DDI/Benson issue and $13 million loss on debt extinguishment in prior year
Provision for income taxes of $322 million compared to $175 million in the prior year, primarily due to higher incremental write-downs on deferred tax assets and the negative impact from the resolution of a tax audit in Italy in the current year course, partially offset by the benefit from the DDI/Benson issue in the previous year.
Net profit of $307 million compared to $414 million in the prior period.
Diluted earnings per share of $0,77, compared to $1,35 in the prior year, primarily reflected increased operating profit, partially offset by increased non-cash foreign exchange losses and the accrual for income taxes; Adjusted earnings per share of $2,02 versus $1,99 primarily reflected the increase in operating income.
Record operating liquidity of $1,0 billion, compared to $899 million in the prior period, despite the payment of $220 million, $184 million after taxes, in the final resolution of the DDI/Benson matter.
Net debt of $5,1 billion, down $0,1 billion from $5,2 billion as of December 31, 2022; net debt leverage improved to 2,9x, the lowest level in the Company's history, compared to 3,1x as of December 31, 2022.
Liquidity update
Total liquidity of $1,8 billion as of December 31, 2023; $572 million in unrestricted liquidity and $1,2 billion in additional lending capacity.
Other developments
Conclusion of the strategic review communicated on 29/2/24; the Global Gaming and PlayDigital businesses will be spun off and combined with Everi Holdings, Inc. creating a global gaming and fintech enterprise; at closing, IGT shareholders are expected to own approximately 54% of the combined company.
S&P Global Ratings recently placed IGT on Positive CreditWatch and Fitch Ratings recently moved IGT to Positive Rating Watch.
The Company's Board of Directors declared a quarterly cash dividend of $0,20 per common share.
- Ex-dividend date 25 March 2024
- Registration date March 26, 2024
- Payment date April 9, 2024
Presentation of expectations for the first quarter and full year 2024 (1)
First quarter
- Revenue of approximately $1,0 billion
- Operating income margin of ~20%; includes a negative impact of ~300 basis points due to separation and divestment costs prior to closing
Full year
- Revenues of $4,3 billion – $4,4 billion
- Operating margin of 20% – 21%; includes a negative impact of approximately 300 basis points due to separation and disposal costs prior to the end of the year
- Cash from operations of ≥$1,0 billion
- Capital expenditures of approximately $500 million
(1) The spin-off and merger transaction is assumed to close in early 2025.
