International Game Technology trades down despite strong Q4 performance and stable outlook

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• International Game Technology (NYSE:IGT) reported Q4 revenue growth of 19% to $1B led by 45% growth in Global Gaming revenue, 9% and 27% increase in global lottery revenue and digital & betting revenue respectively.
• Operating income almost doubled to $186M from $96M in year ago quarter; net income stood at $55M compared to a net loss of $220M led by higher profit and lower non-cash foreign exchange losses.
• Adj. EBITDA was higher by 31% to $387M.
• Cash from operations of $396M, up 58% from $251M in the prior-year period; free cash flow of $326M, up from $201M.
• As of Dec.31, 2021, total liquidity stood at $2.3B, unrestricted cash of $591M and $1.7B in additional borrowing capacity.
• Led by a improved leverage of 3.5x a year ahead of schedule through net debt reduction by $1.4B, the company reinstated quarterly cash dividend of $0.20/share during the quarter; reported $40M+ in share repurchases.
• The company reaffirmed its outlook for FY22 wherein the 2021 revenue mix is seen consisting of global lottery (69%), global gaming (27%) and digital and betting (4%).

• Mid-single-digit organic revenue growth, expected to reach $4.6-$5.0B in 2025 while mid-teens operating income CAGR, reaching 26%-29% margin.
• Analysts consensus estimates for Q1 2022 stands at $1.04B (+2.7% Y/Y) and FY22 revenue is seen at $4.21B (+3.5% Y/Y).
• Read more in its Q4 Earnings Presentation.
• Recently, the company divested its proximity payment business, it signed a 20-year contract extension with Rhode Island Lottery and 3-year contract extension with Missouri Lottery.

Comments

[OverTheHorizon]

Stock buyback, dividend and three revenue streams. What’s not to like?

[HardCovenant]

@OverTheHorizon what do you think is really going on? I am not sure. Supply chain mess securing product parts. Retrenching from an international franchise to mostly US, using words like "focused" usually means boost the cash flow short term for a sale. Clearly no international strategy, just maintaining the current contracts. Challenges hiring and retaining execs. The buyback and dividend are check the box token amounts, stock is below the price they bought a few shares. Just look at Draft Kings stock price to know the market has figured out igaming in US is not profitable, tax drain and too competitive and IGT has no international expansion strategy. Billions have to be refinanced next few years and IGT still junk credit (BB+). Solid lottery cash flow but I can't figure out if an accountant is now CEO to find a buyer since Brookfield took their main lottery competitor so maybe the guys in Italy want to sell too. Can't blame the guys in Italy for wanting to sell I just note it is kind of obvious when there is no growth plan or international team beyond some tables in Michigan or podunk. The few sell side analysts like DB that cover IGT are children and don't go back 30 years with IGT and can't ask the questions that matter. No position