International Game Technology ((IGT)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for International Game Technology (IGT) presented a mixed sentiment, highlighting both strategic achievements and notable challenges. On the positive side, the company celebrated the sale of its gaming and digital business, robust cash flow, debt reduction, and expansion in the iLottery sector. However, the call also acknowledged challenges such as the impact of lower multi-state jackpot sales, temporary costs, and high upcoming capital expenditures.
Strategic Sale of Gaming and Digital Business
IGT announced a significant strategic move with the sale of its gaming and digital business for over $4 billion in cash. This decision allows the company to sharpen its focus on its leading lottery business, positioning itself for future growth in this core area.
Strong Cash Flow and Debt Reduction
In 2024, IGT generated over $1 billion in consolidated cash from operations and made substantial strides in debt reduction. The company achieved a pro forma net debt leverage of 2.4 times, marking the lowest in its history, reflecting strong financial management.
iLottery Expansion and Growth
The iLottery segment showed impressive growth, with sales rising 28% in Q4 and for the full year. This expansion was seen across the US, Italy, and Europe, with IGT’s platform now operational in 11 jurisdictions, indicating a robust growth trajectory.
Significant Contract Wins and Extensions
IGT secured several long-term contracts, including a notable 10-year FM and iLottery contract with Luxembourg. The company also extended contracts with lotteries in North Carolina, Mississippi, Virginia, and Tennessee, strengthening its market position.
New Printing Press and Increased Production Volume
The company enhanced its production capabilities with a new state-of-the-art printing press, winning several new instant ticket service contracts and increasing production capacity, which is expected to support future growth.
Impact of Lower US Multi-State Jackpot Sales
The earnings call highlighted the negative impact of lower US multi-state jackpot sales in 2024, which offset growth in core lottery products and affected overall revenue performance.
Temporary Investment Costs
IGT incurred $25 million in temporary costs related to new contract extensions, cloud-based solutions, and point-of-sale network optimization, reflecting strategic investments in future capabilities.
Forecasted Decrease in Q1 2025 Revenue
Looking ahead, IGT expects Q1 2025 revenue to decline by low to mid-single-digits due to reduced multi-state jackpot activity and associated LMA incentive revenue.
High CapEx in 2025 and 2026
The company anticipates high capital expenditures of $400 million to $450 million annually in 2025 and 2026, driven by necessary investments to secure important contracts and support long-term growth.
Forward-Looking Guidance
During the earnings call, IGT provided forward-looking guidance with several key metrics. For 2025, the company expects revenue between $2.55 billion and $2.65 billion, with adjusted EBITDA ranging from $1.1 billion to $1.15 billion. Despite a forecasted negative $300 million cash from operations due to upfront costs related to the Italy Lotto contract, IGT plans significant capital investments over the next few years.
In summary, the earnings call for International Game Technology highlighted a balanced sentiment, with strategic achievements in business sales and debt reduction juxtaposed against challenges like lower jackpot sales and high capital expenditures. The company remains focused on its lottery business, with plans for significant investments to drive future growth.