Overview of Financial Performance
International Game Technology (IGT) has reported a slight 1% decline in its group-wide revenues for the second quarter of 2024, totaling US$1.05 billion. This reduction in revenue was largely influenced by a downturn in the company’s core lottery business. However, the company experienced significant growth in its Gaming & Digital segment, which saw a 16% increase in revenues, reaching US$436 million. This growth reflects a larger installed base, resilient yields, and increased sales in intellectual property and software licenses.
Decline in Adjusted EBITDA
The overall financial performance was marked by a 5% drop in Adjusted EBITDA, which amounted to US$420 million. This decrease was primarily driven by a 6% decline in Adjusted EBITDA within the Global Lottery segment, which generated US$311 million. Additionally, the company faced higher corporate expenses. In contrast, the Gaming & Digital segment reported a 13% increase in Adjusted EBITDA, reaching US$151 million, attributed to improved margins.
Strategic Divestiture and Financial Impact
IGT has announced a significant strategic move involving the divestment of its Gaming & Digital segment. This segment will be merged with Everi Holdings Inc. as part of a major transaction valued at US$6.3 billion. Apollo Global Management will acquire the merged entity, and IGT will receive US$4.05 billion in gross proceeds from the deal. This substantial cash influx is expected to unlock the intrinsic value of IGT’s core businesses and provide considerable financial flexibility.
Record Performance in the First Half of 2024
Despite the slight decline in Q2 revenues, IGT reported record-breaking performance for the first half of 2024. The company generated over US$460 million in cash from operations and achieved more than US$260 million in free cash flow. The Adjusted EBITDA for the first six months of the year reached an all-time high, reflecting the company’s robust operational performance and financial health.
Executive Commentary
Vince Sadusky, CEO of IGT, commented on the company’s performance, highlighting the strong results for the first half of the year, including record operating income and Adjusted EBITDA, despite the costs associated with the separation and divestiture. He emphasized that ongoing investments in technology and innovative solutions have established a solid foundation for future growth. The sale of the Gaming & Digital business for US$4.05 billion is a critical step in realizing the intrinsic value of IGT’s leading businesses.
Max Chiara, CFO of IGT, also noted the company’s robust financial position. He pointed out the substantial cash generation and strong balance sheet, highlighting the ample liquidity and manageable near-term debt maturities. These factors provide IGT with significant flexibility to pursue upcoming investments and secure long-term lottery contracts.
Future Outlook and Strategic Focus
Looking ahead, IGT’s strategy will focus on leveraging the proceeds from the Gaming & Digital divestiture to enhance its core lottery operations and explore new growth opportunities. The company’s strong cash flow and financial stability position it well for future strategic investments and sustained growth.
While IGT experienced a slight revenue decline in the second quarter of 2024, the growth in the Gaming & Digital segment and the strategic divestiture mark significant milestones for the company. With a solid financial foundation and a clear path forward, IGT is well-positioned to continue its trajectory of innovation and expansion.