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Rebounding IGT reports $1B in revenue in 1st quarter

IGT has joined in the gaming industry rebound.

The London-based gaming equipment manufacturer with a massive presence in Nevada reported first-quarter revenue exceeding $1 billion for the first time since 2019’s fourth quarter and a 24.7 percent increase over the first quarter of 2020.

“We delivered some of our strongest profit results ever during the first quarter, fueled by robust player demand and significant, structural cost savings,” IGT CEO Marco Sala said in a release issued prior to Tuesday’s earnings conference call.

“Our global lottery segment achieved record same-store sales levels on impressive increases around the world,” Sala said. “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.”

In an earnings call with investors, Sala attributed the strong results to cost-saving measures and to a lack of entertainment alternatives. Sala also said players are spending more on lottery games than usual. He expects that to move to more normalized levels in the months ahead.

For the quarter that ended March 31, IGT reported net income of $149 million, $1.21 a share, on revenue of $1.015 billion. That compared with a net loss of $234 million, 44 cents a share, on revenue of $814 million for the same quarter a year earlier.

Known in Nevada primarily as a slot machine manufacturer, IGT has a diverse gaming equipment portfolio supplying lottery equipment worldwide. It also has developed a sports wagering system currently being used in 40 sportsbooks in 16 U.S. states.

The company reported adjusted cash flow of $450 million, among the highest levels in company history, driven by revenue momentum and a structured cash-savings plan.

IGT also completed the sale of its Italy B2C gaming businesses, applying the proceeds to debt retirement.

The company also pledged to resume some of its marketing activities with plans to participate in October’s Global Gaming Expo in Las Vegas and to host an investor day on Nov. 9.

In response to an analyst’s question, IGT Chief Financial Officer Max Chiara said the company isn’t quite ready to look at stock repurchases or dividends, instead choosing to focus on retiring debt.

“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,” Chiara said. “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.”

Gaming industry analyst Carlo Santarelli of the New York office of Deutsche Bank, said IGT surprised analysts with its performance.

“We believe IGT remains the most attractive risk-reward in our coverage universe, which should attract value-oriented investors,” Santarelli said in a Tuesday note to investors.

“Further, we believe the recent closing of the Italy deal, the swiftly improving balance sheet, the rapidly growing and inexplicably underappreciated and profitable digital and betting business, the resumption of a dividend, and the fourth-quarter analyst day, should all serve as positive catalysts for shares into year end,” he said.

IGT shares, traded on the New York Stock Exchange, had a big day on Wall Street, closing up 16.7 percent, $2.92, Tuesday on volume about 4½ times the daily average. After hours, it climbed another 52 cents, 2.5 percent, to end at $20.89 a share.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

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