International Game Technology (IGT) has reported revenue growth of 25% for Q1 2021, attributed to structural cost savings, continued player demand and the sale of its Italian B2C business to Gamenet Group.
Overall group revenue rose to $1.01bn (2020: $814m). Although the figure still represents a 11.3% decrease from the $1.14 billion in 2019, the group remains hopeful that it will be able to return to this level for key metrics by the end of the year.
The sale of its Italian B2C Lottomatica units to Apollo Global Management’s subsidiary Gamenet for €950 million was a key factor underlying IGT’s first-quarter results.
Of the €950 million sales price for the businesses, €725 million was paid at closing whilst a further €100 million will be payable on 31 December 2021, followed by the remaining €125 million on 30 September 2022. IGT has confirmed that the proceeds will be utilised for debt reduction.
“We delivered some of our strongest profit results ever during the first quarter, fuelled by robust player demand and significant, structural cost savings,” said Marco Sala, CEO of IGT. “Our global lottery segment achieved record same-store sales levels on impressive increases around the world.
“The global gaming segment is demonstrating swift, progressive recovery, including accelerated momentum for digital and betting activities. We expect to return to 2019 levels for key financial metrics this year.”
Driven by an increase in lottery earnings by 133% to $337 million (2020: $144 million), IGT’s overall income for the quarter ending 31 March 2021 was finalised at $260 million – a significant improvement on the loss of $218 million recorded one year earlier trading against COVID-19 circumstances.
Group global lottery revenue stood at $749 million, a 47% YoY increase from $505 million, which was attributed to a 32.4% growth in same store sales. Total lottery net income was up by 84% to $447 million (2020: $243 million).
However, the group’s gaming operations experiencing a widened loss of $19 million (2020: -£6 million), representing a YoY decrease of 14% to $266 million (2020: $310 million) – indicative of trends impacting IGT and its market competitors, notably continued closures of land-based casinos.
Although recovery in the US gaming markets contributed to a 4.3% increase from Q4 2020 to $255 million, gaming finished 39% down in net revenue at $19 million (2020: $31 million).
Moreover, net income totalled $92 million against a net loss of $248 million in 2020, whilst adjusted EBITDA was up 72% at $450 million (2020: $261 million).
“With the recovery in our business in full swing, we are delivering strong operating leverage which, when coupled with invested capital discipline, drove strong cash flows in the quarter,” said Max Chiara, Chief Financial Officer of IGT.
“This enabled us to accelerate our debt retirement strategy and gives us confidence in a return to pre-pandemic leverage levels by the end of the current year.”