Global supplier of gaming technology and solutions International Game Technology (IGT) released today its third quarter earnings report raising its full-year 2021 forecast.
Revenue, Operating Income and EBITDA
Continuing right where it ended the second quarter, IGT revealed revenue for the three months ended September 30, 2021, was $984 million, an increase of 21% on $816 million generated in Q3 2020.
IGT’s Global Lottery business accounted for $652 million, up 14%, while Global Gaming added another $289 million, an increase of 34% year-over-year. New Digital & Betting division, which reported financial results for the first time, posted $43 million in revenue.
Broad-based momentum across our Lottery, Gaming, and Digital & Betting activities drove significant improvement in key financial and performance metrics in the third quarter.”Marco Sala, CEO, IGT
Operating income across IGT’s divisions was $234 million in Global Lottery, an increase of 19% compared to the third quarter of 2020, and $31 million in Global Gaming to reverse a loss of $56 million in Q3 2020 and drive the total increase of operating income to $144 million.
In the expenses, IGT accounted for $26 million in corporate support expenses, up 54% year-over-year, and $40 million in other expenses, marginally down 5%, which contributed to the huge increase in operating income by 144% year-over-year. Operating margin in the reported quarter doubled to 22%, from 11% in Q3 2020.
We are supporting strong top-line growth with strategic investments in the business while still making good progress on optimizing our cost structure.”Max Chiara, CFO, IGT
Adjusted EBITDA came at $407 million, comprised of $347 million in Global Lottery, $64 million in Global Gaming, $15 million in Digital & Betting and a $19-million loss from corporate support expense. Q3 2021 adjusted EBITDA was up 42% year-over-year, while EBITDA margin was 41%, one of the highest readings in the company’s history.
Cost-Savings and Debt Decrease
Among the main contributors IGT cited was the high profit flow-through of Global Lottery same-store sales growth, high-margin lottery sales in Italy and strong overall operating leverage, as well as disciplined cost management, including benefits from OPtiMa structural cost-savings program.
IGT managed to draw its net debt down to $6.1 billion from $7.3 billion at the end of December 2020, with net debt leverage down from 6.4x to 3.8x driven by strong cash flow generation and proceeds.
The decrease in net debt supported by lower interest rates led to a decrease in net interest expense to $79 million from $101 million in the prior year, while the higher revenue and operating profit, as well as a reduction in foreign exchange losses, resulted in net income of $101 million, compared to a net loss of $129 million for the respective period in 2020.
IGT finished the third quarter with $2.2 billion of total liquidity, of which $435 million in unrestricted cash and $1.8 billion in additional borrowing capacity. The Board of Directors declared a quarterly cash dividend of $0.20 per common share and updated its full-year 2021 forecast.
IGT now expects to finish 2021 with cash from operations between $850 million and $900 million, driven by an increased operating income, with $100 million to $900 million, derived from revenues of around $4.1 billion.