IGT surprises analysts with 2Q results, boost in revenue

Capitalizing on a revised debt structure and the global gaming industry recovering faster than expected, IGT on Tuesday reported second-quarter earnings that exceeded analysts’ expectations.

London-based IGT, which has a large presence in Las Vegas and Reno, reported a 73.5 percent increase in revenue to $1.041 billion for the quarter that ended June 30.

The company reported net income of $365 million, $1.49 a share, for the quarter. In the same period a year earlier, in the peak of the coronavirus pandemic, IGT reported a net loss of $282 million, $1.37 a share, on revenue of $600 million.

Results outpaced estimates from financial analysts who forecast revenue of $923.1 million.

“Record free cash flow from continuing operations and proceeds from recent asset sales fueled significant debt reduction in the first half,” Chief Financial Officer Max Chiara said in a release. “Our leverage profile improved substantially, reaching pre-pandemic levels well ahead of expectations, and improving our credit profile and overall financial condition.”

Chiara also said casino revenue is expected to reach pre-pandemic levels by the fourth quarter, but new slot machine sales are not expected to reach 2019 levels until next year.

IGT CEO Marco Sala said the company is monitoring the spread of the COVID-19 delta variant on markets, but he doesn’t anticipate casino closures similar to what occurred in the second quarter of 2020.

Sala noted in remarks in Tuesday’s earnings conference call that IGT’s sports wagering products are flourishing in the United States.

“The deployment of our sports platform continues to expand at a fast clip,” Sala said. “One of the more recent additions was the Resorts World Las Vegas sportsbook as well as its statewide mobile betting app. These developments expand our Nevada presence that we first established with Boyd Gaming earlier this year.”

Sala said the IGT sports wagering system is now deployed at about 50 U.S. sportsbooks for 18 customers across 15 states.

Atlanta-based Truist Securities, which reiterated its “buy” rating on IGT shares, put a $32 price target on the stock and was impressed with the quarterly results.

“We continue to favor IGT’s ‘recovery to growth’ story with no lingering Italy business-to-customer gaming noise,” Truist gaming analyst Barry Jonas said in a Tuesday report to investors.

“While increasing COVID is clearly impacting sentiment, we actually see IGT as a potential beneficiary to increasing restrictions, as seen in Italy this quarter,” he said. “We make modest tweaks to our forward estimates for now. Aside from the Global Gaming Expo (in Las Vegas) in October, we see IGT’s Nov. 9 analyst day as a catalyst with the potential return of the dividend and the issuance of any long-term targets.”

After a strong early rally that faded, IGT shares, traded on the New York Stock Exchange, closed up 14 cents, 0.7 percent, to $19.12 a share in above-average volume.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.