IGT enters 2023 ‘from a position of strength’ following robust year

Image: Shutterstock

IGT has reported growth in its global gaming and PlayDigital verticals in its fourth quarter and full year 2022 financial statement, fuelled by strong player demand and operating leverage.

Commenting on the results, CEO Vince Sadusky noted that IGT was able to achieve all its financial objectives last year and that the company enters 2023 ‘from a position of strength’ with momentum across all business segments.

Thanks to a robust year, CFO Max Chiara also confirmed that the company has been able to “reduce debt and leverage to the lowest levels ever”.

IGT Global Gaming strong player demand spurs growth

Publishing its financials, IGT declared a Q4 total revenue of $1.09bn, a four per cent increase year-over-year (Q4 2021: $1.05bn) following growth in its aforementioned reporting segment.

Per vertical, global gaming revenue improved by 21 per cent to $389m (2021: $321m) thanks to strong player demand and operating leverage, while PlayDigital grew by 56 per cent to a record $65m (2021: $42m) due to organic growth, market expansion and the iSoftBet acquisition.

Meanwhile, global lottery revenue during the quarter fell by 7 per cent to $639m (2021: $687m), but IGT noted that the vertical still delivered solid results on strong player demand.

Total operating income rose by 24 per cent YoY to $230m (2021: $186m) following the increase in profitability for both its global gaming ($68m, up 89 per cent) and PlayDigital ($17m, up 239 per cent) verticals and stability for global lottery ($216m).

Adjusted EBITDA also improved by 8 per cent YoY to $419m (2021: $387m), affected by the strong profit growth in global gaming ($101m, up 54 per cent) and PlayDigital ($22m, up 149 per cent) and a significant contribution from global lottery ($318m, down 5 per cent).

IGT’s net debt for Q4 stood at $5.15bn, a 13 per cent decrease YoY (2021: $326m).

“We achieved all our financial goals last year while strengthening product leadership positions across our global lottery, global gaming, and PlayDigital activities,” commented Sadusky.

Full year net debt declines

For the full year, IGT celebrated either meeting or exceeding its financial targets for the year, as total revenue grew by eight per cent YoY to $4.23bn (2021: $4.09bn), reaching its goal of $4.1bn to $4.2bn.

Per vertical, global gaming rose by 28 per cent to $1.42bn (2021: $1.11bn), PlayDigital grew by 27 per cent to $209m (2021: $165m), while global lottery fell by 8 per cent to $2.59bn (2021: $2.81bn).

Following the strong results in global gaming, IGT believes there is a significant revenue opportunity and margin improvement potential for the vertical through 2025.

Operating income for the full year concluded at $922m, a 2 per cent increase YoY (2021: $902m), a new record following significant improvements in global gaming ($242m, up 462 per cent). PlayDigital operating income also grew YoY ($50m, up 51 per cent), while global lottery declined narrowly ($909m, down 16 per cent).

Adjusted EBITDA for 2022 only dropped slightly to $1.66bn (2021: $1.69bn) following strong years for global gaming ($365m, up 111 per cent) and PlayDigital ($68m, up 41 per cent) offsetting declines in global lottery ($1.31bn, down 15 per cent).

IGT’s net debt for the year came in 13 per cent lower than the previous year at $5.15bn (2021: $5.92bn) due to strong cash flow generation, Italian commercial services sale proceeds, the Italian gaming machine, sports betting, and digital gaming businesses final sale instalment, and net debt leverage improving to 3.1x (2021: 3.5x).

“2022 was another year of significant financial accomplishments,” stated CFO Max Chiara. 

“With reduced interest expense and improvements to the effective tax rate, 2022 adjusted EPS highlights IGT’s significantly improved earnings power. We generated strong cash flow while funding increased investments for future growth.

“This, coupled with proceeds from sales of non-core businesses, allowed us to meaningfully reduce debt and leverage to the lowest levels ever. The company’s enhanced credit profile and significant liquidity provide solid support and flexibility as we execute our multi-year plan.”

2023 outlook

Looking ahead, IGT laid out its expectations for Q1 and the full year 2023. For Q1, the company expects revenues close to $1bn with an operating income margin between 22 per cent and 24 per cent.

For FY23, the company has set a goal of revenue between $4.1bn and $4.3bn, an operating income margin between 21 per cent and 23 per cent, cash from operations between $900m and $1bn, and capital expenditures between $400m and $450m.

Per vertical, IGT expects global gaming to continue its momentum while predicting PlayDigital to undergo double-digit revenue growth, and global lottery to show low single-digital same-store sales growth.

Sadusky added: “Important strategic work executed over the last few years has transformed IGT into a company with higher growth prospects, a better profit profile, and a solid path to delivering on our long-term goals. It has also enabled record capital returns to shareholders in 2022.

“We enter 2023 from a position of strength with good momentum across business segments.”