Lottery business continued to drive International Game Technology in the fourth quarter. A 7% rise in that segment’s revenue helped the company smash Wall Street’s projections for the period. Adjusted earnings per share rose as well, also topping forecasts.
The company touted the continued lottery growth as it looked ahead to merging its digital-gaming (PlayDigital) and slot-machine (Global Gaming) businesses with Everi Holdings in a $6.2 billion deal announced at the end of February.
In a statement, London-based IGT said its adjusted earnings per share, which exclude one-time costs, were 56 cents, up from 40 cents per share, a year earlier. The latest result topped the consensus 52-cent-per-share forecast of analysts surveyed by Seeking Alpha.
Adjusted earnings before interest, taxes, depreciation, and amortization, a cash-flow measure that also excludes one-time costs, rose 8.3% to $454 million from $419 million. Net income was $27 million, or a loss of 4 cents for share, compared with a net loss of $31 million, or 32 cents per share, a year earlier, reflecting higher operating income and a lower noncash foreign-exchange loss.
Revenue rose 3.7% to $1.13 billion from $1.09 billion and topped the consensus $1.11 billion forecast of Seeking Alpha-polled analysts. Global lottery revenue was $681 million, driven by same-store sales growth in Italy.
To recap the aforementioned merger, IGT will separate its lottery business and merge PlayDigital and Global Gaming with Everi in a separate public company to be called International Game Technology, headquartered in Las Vegas.
When the deal closes later this year or early next, IGT shareholders will own about 54% of the combined company; Everi stockholders will hold the rest. The new company will trade on the New York Stock Exchange with the IGT ticker symbol.
Gaming regulators and both companies’ shareholders must approve the deal.
“We believe the creation of two stronger, more focused companies, each with top-notch teams and simplified business models, better positions each company to service its customers and create significant value for stockholders,” CEO Vince Sadusky, who will also serve as the merged company’s CEO, said in a conference call with analysts and journalists.
“It allows for more focused operating and capital allocation strategies and capital structures that are optimized for different business models and increased flexibility to pursue organic and inorganic growth strategies,” Sadusky added. “It also provides the opportunity for investors to better appreciate the intrinsic value of each stand-alone business.”
Lottery, Sadusky said, is a large, steadily growing, resilient industry with recession-proof characteristics.
“Growth accelerated during the pandemic and our 2023 results confirm that we’re successfully maintaining these higher play levels with significantly improved margins,” he said.
Full-year adjusted earnings per share rose to $2.02 from $1.99. Full-year revenue rose 1.9% to $4.31 billion from $4.23 billion.
Full-year highlights included securing an eight-year internet-lottery contract in Connecticut, deploying its cloud-based internet-lottery system for Totalizator Sportowy in Poland, and extending lottery facilities management contracts in California, Kentucky, South Dakota, and Virginia in the United States and Costa Rica, Sweden, the United Kingdom abroad.
IGT also extended its brand-licensing deal with Sony Pictures Television by 10 years. That secured IGT exclusive rights to the Wheel of Fortune brand for gaming, lottery, internet gaming, and internet lottery.
IGT shares fell $1.57, or 6.24%, Tuesday to close at $23.58 in regular New York Stock Exchange trading. The shares rebounded after hours, gaining 12 cents, or 0.51% to settle at $23.70.
