International Game Technology PLC (IGT) has reported a lessening of the impact of COVID-19 during Q3 trading its financial results for the quarter ended September 30, 2020. While the firm’s Q3 key metrics reflect the continued global impact of the pandemic, it was at a lower level compared to the second quarter.
Updating investors IGT reported consolidated revenue of $982m, down 15% from the $1,153m earned in 2019, although global lottery revenue stands at $570m, up 3% from the $552m earned last year. This was driven by double-digit growth in North America same-store sales. Net loss of $128m included $149m in foreign exchange losses, primarily non-cash, while adjusted net income was $54m.
During the period, IGT signed a two-year contract extension with New York Lottery, and recently awarded seven-year contracts with Poland and Nebraska Lotteries following competitive bid processes.
CEO Marco Sala stated: “The resilience of our portfolio, particularly in lottery, and benefits from our swift cost reduction initiatives are on full display in our third quarter results. Strong player demand and a host of compelling new games, systems, and digital solutions led to a sharp, sequential improvement in our most important markets.
“We continue to monitor the evolution and impact of the pandemic around the world. With a simplified organization firmly in place, we are creating a leaner, stronger IGT.”
IGT’s operating income came in at $129m, which was down 16% compared to $154m in the prior year. Disciplined cost-saving actions were cited by the firm as a contributory factor.
Player demand managed to drive global lottery same-store sales to the highest growth and adjusted EBITDA in seven quarters. Global lottery operating income came in at $196m, a 22% increase on the $161m from 2019. The same-store sales growth translated into a high-profit flow-through.
Adjusted EBITDA overall came in at $354m, a 13% decrease compared to $407m in the prior-year period. However, the global lottery adjusted EBITDA rose 14% from $270m in 2019, to $309m in 2020.
Net debt stood at $7.24bn compared to $7.38bn at December 31, 2019. Net debt to LTM adjusted EBITDA of 5.72x, up from 4.31x at December 31, 2019, due to the pandemic’s impact on EBITDA in the first nine months of 2020.
IGT delivered $220m in positive free cash flow in the quarter, generating $610m in cash from operations and $384m in free cash flow year-to-date.
CFO Max Chiara added: “Robust cash flow generation during the quarter and year-to-date periods have enabled us to improve our liquidity and reduce net debt. We are on track to achieve our 2020 temporary cost-reduction targets and have identified a number of initiatives that will enable us to deliver over $200m of structural savings over the next two years. As a result, the improvement in our profitability should support our continued focus on reducing debt.”