Gains across games, geographies, and channels drove same-store lottery sales 35% higher during International Game Technology’s second quarter. IGT reversed a year-earlier loss and its top executive said pre-pandemic performance is in sight.
“We now expect to exceed 2019 levels for key financial metrics this year,” CEO Marco Sala told analysts and journalists Tuesday.
In a statement, London-based IGT said its net income was $365 million, or $1.49 per share for the three months that ended on June 30, reversing a year-earlier loss of $282 million, or $1.37 per share.
The latest result smashed the 11-cents-per-share consensus estimate of analysts surveyed by Seeking Alpha.
Earnings before interest, taxes, depreciation and amortization, a cash flow measure that excludes one-time costs, rose 170% to $442 million from $164 million.
Revenue rose 73.3% to $1.04 million from $600 million and topped the $927 million estimate of Seeking Alpha-polled analysts. Higher recurring service revenue and higher unit shipments stoked the latest revenue result.
IGT shares rose on the news, climbing 9.38% before the close to reach $20.76 before cooling. The shares closed 14 cents, or 0.74%, higher than a day earlier to close at $19.12 in regular trading. IGT added 13 cents, or 0.68%, after hours to settle at $12.25.
IGT’s share price has risen 24% this year.
Second-quarter global lottery revenue rose 58% to $725 million, driven by the aforementioned 35% same-store sales jump. Sala said he expects second-half same-store lottery sales to grow by single-digit percentages compared with 2020 and by low double-digit percentages compared with the second half of 2019.
Sala said the lottery was a reliable entertainment source during the pandemic-forced casino shutdowns, especially in Italy.
“We are experiencing … some stickiness of players toward the higher level of consumption they have experienced during the pandemic,” Sala said.
Second-quarter global gaming revenue rose 126% year-to-year to $316 million.
Sala said IGT expects unit demand gains for video lottery terminals, supported by the PeakSlant 49 cabinet. He added that the Agua Caliente tribe later this year will begin using IGT’s reserve wallet cashless solution at its three California casinos and the Washington State Lottery will deploy IGT’s cashless lottery technology as part of a recent multiyear contract extension.
“There are more deals in the pipeline,” Sala said, without mentioning specifics. He later added, “With tailwinds like attractive long-term lottery-industry trends, the global gaming recovery, and fast-growing digital and betting businesses, we expect … positive trends to continue.”
Wall Street has recently smiled on IGT. This month, Macquarie analyst Chad Beynon raised his price target on the stock to $36 from $34. Truist Securities and Jeffries rate the stock “buy.”
“The strong upside in the quarter is consistent with that of other names in gaming thus far,” Jeffries analyst David Katz wrote in an investor’s note posted on Seeking Alpha. “With the cash generation particularly important for IGT as it progresses to the <4X leverage target, we expect this progress should result in a positive reaction in the shares, particularly given the recent weakness.”
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