IGT reports ‘strong finish’ in 2020, sees full recovery in 18 months
Gaming equipment and slot machine manufacturer IGT Plc expects to return to pre-pandemic levels in the near future.
A resilient global lottery market and strong cash generation led to better-than-expected results in the fourth quarter, despite operating restrictions at gaming facilities around the globe. Executives say they the company should return to pre-pandemic levels within the next year to 18 months.
“2020 was a remarkable year in many ways. Like many companies, we were tested,” CEO Marco Sala said during a Tuesday morning call with investors. “Today, we are reporting a strong finish to 2020.”
High cash flow
IGT reported $885 million in revenue in the fourth quarter, down 15 percent compared with revenue from the same period the year prior. Net loss was $220 million for the quarter.
The London-based company generated $866 million in cash from operating activities throughout the year, the highest level in five years. It hit its 2020 goal of $500 million in temporary cost savings and had about $2.7 billion in liquidity as of Dec. 31.
Cash flow is expected to continue growing in 2021.
“We reorganized the company with a focus on core competencies that enabled us to unlock substantial structure cost-savings and yielding the stronger revenue and profit growth outlook,” Sala said.
Recovery efforts
Global lottery sales were stable in 2020, despite several gaming markets closing after the onset of the pandemic. Chief Financial Officer Max Chiara said he expects revenue and profits in the business to continue trending upward, surpassing both 2020 and 2019 levels this year.
The company also expects to grow its iLottery business, with three potential markets set to launch in the U.S. by 2023.
“I think at this point, iLottery has benefited from a lack of other gaming and leisure alternatives,” Sala said. “The player interest has remained robust, even with gaming closed in some jurisdictions. … Players can keep on enjoying our games. This is another reason why we’re doing well in this difficult time.”
The company’s global gaming business — which includes slot terminal sales — isn’t expected to see a full recovery until late 2022 or 2023.
“It’s very much related to the player demand,” Sala said. “We see generally that once the venues are reopening, once the restrictions are removed, the pent-up demand is strong. And so I expect the business to get back.”
As for iGaming, Sala said he is confident that IGT’s gaming content library will continue to support a 20 percent to 30 percent share of the North American iGaming market.
Sala also talked up the recently announced cross-licensing agreement with Scientific Games Corp. to share cashless slot gaming technology patents. The CEO said the partnership should support accelerated industry adoption of cashless gaming.
IGT shares closed down 2 percent Tuesday at $18.37 on the New York Stock Exchange.
Contact Bailey Schulz at bschulz@reviewjournal.com. Follow @bailey_schulz on Twitter.