– 2021 revenue increased 31% to $4.1 billion on double-digit growth across segments; met or exceeded all 2021 financial goals with key financial metrics above 2019 levels
International Game Technology PLC (“IGT”) (NYSE: IGT) today reported financial results for the fourth quarter and full year ended December 31, 2021. Today, at 8:00 a.m. EST, management will host a conference call and webcast to present the results; access details are provided below.
“Our 2021 financial results reflect the best revenue, profit, and cash flow performance in the last four years, meeting or exceeding target levels on strong performance across the portfolio,” said Vince Sadusky, CEO of IGT. “We made important progress on several strategic objectives, and I am excited to be leading IGT in the next chapter of its evolution. We have set aggressive but achievable multi-year goals and we have a focused strategy to maximize value for all stakeholders.”
“Improving leverage to 3.5x a year ahead of schedule enables us to pursue a balanced capital allocation framework that supports investing for growth, continued debt reduction, and the reinstatement of capital returns through quarterly dividends and share repurchases,” said Max Chiara, CFO of IGT. “As we enter 2022, the Company is in a very good place with a solid financial condition and a strong foundation for further growth.”
Overview of Consolidated Fourth Quarter and Full Year 2021 Results
| Quarter Ended | Y/Y Change (%) | Constant Currency Change (%) | Year Ended | Y/Y Change (%) | Constant Currency Change (%) | |||||
| All amounts from continuing operations unless otherwise noted | December 31, | December 31, | ||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||
| (In $ millions, unless otherwise noted) | ||||||||||
| GAAP Financials: | ||||||||||
| Revenue | ||||||||||
| Global Lottery | 687 | 630 | 9% | 12% | 2,812 | 2,164 | 30% | 28% | ||
| Global Gaming | 321 | 222 | 45% | 45% | 1,112 | 837 | 33% | 32% | ||
| Digital & Betting | 42 | 33 | 25% | 24% | 165 | 115 | 44% | 40% | ||
| Total revenue | 1,050 | 885 | 19% | 21% | 4,089 | 3,115 | 31% | 29% | ||
| Operating income/(loss) | ||||||||||
| Global Lottery | 217 | 195 | 11% | 14% | 1,088 | 642 | 69% | 65% | ||
| Global Gaming | 36 | (42) | NA | NA | 43 | (212) | NA | NA | ||
| Digital & Betting | 5 | 3 | 41% | 19% | 33 | 6 | 421% | 383% | ||
| Corporate support expense | (33) | (20) | (66)% | (76)% | (104) | (76) | (37)% | (33)% | ||
| Other(1) | (39) | (40) | 2% | 2% | (158) | (468) | 66% | 66% | ||
| Total operating income/(loss) | 186 | 96 | 93% | 96% | 902 | (107) | NA | NA | ||
| Operating Income margin | 18% | 11% | 22% | (3)% | ||||||
| Net cash provided by operating activities | 396 | 251 | 58% | 1,010 | 595 | 70% | ||||
| Cash and cash equivalents | 591 | 907 | (35)% | 591 | 907 | (35)% | ||||
| Non-GAAP Financial Measures: | ||||||||||
| Adjusted EBITDA | ||||||||||
| Global Lottery | 336 | 313 | 7% | 10% | 1,545 | 1,086 | 42% | 39% | ||
| Global Gaming | 66 | (10) | NA | NA | 173 | (38) | NA | NA | ||
| Digital & Betting | 9 | 8 | 12% | 3% | 48 | 22 | 116% | 105% | ||
| Corporate support expense | (24) | (16) | (49)% | (62)% | (80) | (62) | (29)% | (24)% | ||
| Total Adjusted EBITDA | 387 | 295 | 31% | 33% | 1,686 | 1,008 | 67% | 64% | ||
| Adjusted EBITDA margin | 37% | 33% | 41% | 32% | ||||||
| Free cash flow | 326 | 201 | 62% | 771 | 340 | 127% | ||||
| Net debt(2) | 5,922 | 7,319 | (19)% | |||||||
| (1) Primarily includes purchase price amortization | ||||||||||
| (2) Historical net debt recast to only reflect continuing operations | ||||||||||
| Note: Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release |
Fourth Quarter and Full Year 2021 Key Highlights:
- Hosted Investor Day introducing Grow, Innovate, and Optimize strategic initiatives to deliver compelling 2025 financial targets
- Mid-single digit organic revenue and mid-teens operating income compound annual growth rates from 2021 – 2025
- Cumulative cash from operations of approximately $4.0 billion and free cash flow of about $2.4 billion from 2022 – 2025
- Completed sale of Italy B2C gaming businesses; net proceeds used to reduce debt
- Created stand-alone Digital & Betting segment; strengthened leadership with appointments of Joe Asher and Gil Rotem
- Achieved over $200 million in OPtiMa structural cost savings versus 2019
- Reinstated $0.20 per common share quarterly cash dividend; repurchased 1.5 million shares for $41 million at an average price of $27.22 per share
- Awarded 10-year lottery contract with Connecticut Lottery Corporation, replacing an incumbent following a competitive procurement
- Won “Casino Supplier of the Year” award in 2021 Global Gaming Awards London
- Extended cashless momentum with several deployments and regulatory approval in Nevada
- Company’s lottery operations re-certified by World Lottery Association for Corporate Social Responsibility Standards and Responsible Gaming Framework for Suppliers
Full Year 2021 Financial Highlights:
Revenue of $4.1 billion, up 31% from $3.1 billion in the prior year, driven by impressive growth across segments
- Global Lottery revenue of $2.8 billion, up from $2.2 billion, driven by 20% same-store sales growth and including around $165 million in benefits from certain discrete items in the first half of 2021
- Global Gaming revenue rises 33% to $1.1 billion, as continued recovery drives key performance indicators higher
- Digital & Betting revenue increases to $165 million, up 44%, propelled by new jurisdictions and customers
Operating income of $902 million, versus operating loss of $107 million in the prior-year period
- Driven by double-digit revenue growth
- Strong profit flow-through in Global Lottery segment enhanced by positive mix of high-margin Italy lottery sales; contribution of about $140 million from certain discrete items in the first half of 2021
- Improved operating leverage from revenue growth coupled with benefit of structural cost savings in Global Gaming
- Digital & Betting increases significantly on solid operating leverage
Net interest expense of $341 million, compared to $398 million in the prior year
- Net proceeds from asset sale and free cash flow generation drove lower average debt balances
- Proactive liability management actions lowered the average cost of debt
Provision for income taxes of $274 million versus $28 million in the prior year driven by significant increase in operating profitability and valuation allowances on deferred tax assets
Net income of $670 million compared to net loss of $839 million in the prior-year period
- Significant increase in profit
- Gain on sale of Italy gaming businesses
- Goodwill impairment and non-cash foreign exchange losses in prior year
Adjusted EBITDA totaled nearly $1.7 billion, up 67% compared to the prior year; Adjusted EBITDA margin of 41%, among the highest level in Company history
Cash from operations was $1.0 billion compared to $595 million in the prior-year period
- Strong performance and rigorous management of invested capital
- Record free cash flow of $771 million, up from $340 million
Shareholder returns reinstated with $41 million deployed for $0.20 per share quarterly cash dividend and $41 million for share repurchases
Net debt of $5.9 billion, down $1.4 billion from $7.3 billion at December 31, 2020
- Strong cash flow generation
- Proceeds from sale of Italy B2C gaming businesses
- Net debt leverage of 3.5x, down from 6.4x at December 31, 2020, the lowest level in Company history and achieving the 2022 leverage target a year early
Fourth Quarter 2021 Financial Highlights:
Consolidated revenue of $1.0 billion, up 19% from $885 million in the prior-year period, on double-digit, constant currency growth across segments
- Global Lottery revenue totals $687 million, up from $630 million in the prior year, on 8% same-store sales growth
- Global Gaming revenue of $321 million, up 45% from the prior year, primarily driven by higher replacement unit sales and average selling prices
- Digital & Betting revenue rises to $42 million compared to $33 million in the prior year, propelled by new jurisdictions and customers
Operating income of $186 million, nearly doubling from $96 million in the prior year
- Revenue growth with strong profit flow-through
- Sustained focus on cost discipline/avoidance
Net interest expense of $77 million, down from $101 million in the prior-year
- Lower average debt balances
- Proactive liability management actions lowered the average cost of debt
Provision for income taxes of $56 million, down from $73 million, as prior year impacted by non-deductible foreign exchange losses and valuation allowances on deferred tax assets
Net income was $55 million versus a net loss of $220 million due to increased profit and lower non-cash foreign exchange losses
Adjusted EBITDA of $387 million, up 31% from $295 million in the prior year
Cash from operations of $396 million, up 58% from $251 million in the prior-year period
- Solid financial performance and invested capital management
- Free cash flow of $326 million, up from $201 million
- Record-level quarterly cash flow generation
Cash and Liquidity Update
Total liquidity of $2.3 billion as of December 31, 2021; $591 million in unrestricted cash and $1.7 billion in additional borrowing capacity
Recently received credit rating upgrades with Standard & Poor’s rising to BB+ and Moody’s to Ba2, both with a stable outlook
Other Developments
On January 20, 2022, the Company announced several Executive and Board leadership changes
- Lorenzo Pellicioli to retire as Chairperson of the Board of Directors
- Marco Sala appointed Executive Chair of the Board of Directors
- Vincent Sadusky appointed CEO and Executive Director
- Maria Pinelli appointed to the Board of Directors and Chair of the Audit Committee
- Ashley M. Hunter appointed to the Board of Directors and Nominating and Corporate Governance Committee
Yesterday, the Company announced an agreement to sell its Italian proximity payment business
- â¬700 million purchase price; â¬630M enterprise value
- Net proceeds primarily used to reduce debt
- Transaction expected to close during the third quarter of 2022
The Company’s Board of Directors declared a quarterly cash dividend of $0.20 per common share
- Ex-dividend date of March 14, 2022
- Record date of March 15, 2022
- Payment date of March 29, 2022
Reaffirming Full-year and Introducing First Quarter 2022 Outlook
Full-year
- Revenue of ~$4.1 billion – $4.3 billion
- Operating income margin of 20% – 22%
- Cash from operations of $850 million – $1,000 million
- Capital expenditures of $400 million – $450 million
First quarter
- Revenue of ~$1.0 billion – $1.1 billion
- Operating income margin of 20% – 22%
Outlook not adjusted for announced sale of Italian proximity payment business or any impact from the Russia/Ukraine conflict
Earnings Conference Call and Webcast:
March 1, 2022, at 8:00 a.m. EST
To register to participate in the conference call, or to listen to the live audio webcast, please visit the “Events Calendar” on IGT’s Investor Relations website at www.IGT.com. A replay will be available on the website following the live event.
Note: Certain totals in the tables included in this press release may not add due to rounding
Comparability of Results
All figures presented in this news release are prepared under U.S. GAAP, unless noted otherwise. Adjusted figures exclude the impact of items such as purchase accounting, impairment charges, restructuring expense, foreign exchange, and certain one-time, primarily transaction-related items. Reconciliations to the most directly comparable U.S. GAAP measures are included in the tables in this news release. Constant currency changes for 2021 are calculated using the same foreign exchange rates as the corresponding 2020 period. Management uses non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate the Company’s financial performance. Management believes these non-GAAP financial measures reflect the Company’s ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of business trends. These constant currency changes and non-GAAP financial measures should however be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with U.S. GAAP. Amounts reported in millions are computed based on amounts in thousands. As a result, the sum of the components may not equal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages and earnings per share amounts presented are calculated from the underlying unrounded amounts.
