IGT has exceeded the higher levels of its financial outlook in Q4 of 2022 after its global gaming division witnessed astronomical annual profit growth to offset a stagnating lottery unit.
Publishing its Q4 and full-year financial report, IGT reported total fourth quarter revenues of $1.1bn, up 4% year-over-year.
IGT’s Q4 figures
This was broken down by a 7% decline in lottery revenues offset by a 21% growth in the global gaming unit and a 56% increase in the PlayDigital units. IGT placed increased focus on its gaming and digital units in 2022 as it grew its presence in the US and Canadian sports betting and online casino markets.
Lottery revenues totaled $639m in Q4, whilst global gaming reached $389m and PlayDigital achieved $65m in revenues.
IGT recorded adjusted EBITDA of $419m in Q4, up 8% YoY following strong growth in sales from its Global Gaming unit and widening market presence of its digital unit.
The group’s operating profit for the quarter stood at $230m, up 24% YoY after making its operations more efficient.
In 2022, IGT launched its PlayCasino games in West Virginia to take its US online casino portfolio to five states plus Ontario as it takes advantage of legal states.
The digital unit was also enhanced by IGT’s acquisition of iSoftBet, which was completed in a $140m deal. These factors combined to help the division achieve record revenues.
Meanwhile, the global gaming unit witnessed double-digit growth across service and product sale revenue streams in Q4, but it was the full-year operating profit results that caught the eye.
Global Gaming profit growth boosts bottom line
Garnering full-year revenues of $1.4bn, the global gaming division’s operating profit for 2022 increased by over five times (432%) to $242m driven by ‘significant operating leverage’ and reduction in its overall cost base, though it did suffer higher supply chain costs.
This helped IGT’s total 2022 revenues hit $.2bn, up 3% YoY driven by gaming and digital growth, and offset by a declining lottery unit.
Lottery revenue stood at $2.6bn, down 8% YoY despite high US and multi-jurisdictional jackpots. The declines were driven by lower Italy same-store sales and the loss of its Italian commercial services business.
Meanwhile, the gaming business produced strong growth due to ‘significantly higher’ US and Canada replacement machine unit sales and increased installed units.
The PlayDigital unit also achieved record annual revenues of $209m, up 27% YoY driven by organic online casino growth, market expansion and the contribution from the iSoftBet acquisition.
IGT’s annual EBITDA stood at $1.7bn, down 1% YoY due to strong global gaming and PlayDigital profits throughout the year. Meanwhile, the firm’s operating income was up 2% YoY to $922m, despite the lottery unit’s contribution declining by 16% YoY.
Despite significant investment in acquisitions, staff and R&D, the PlayDigital unit also managed to contribute $50m to the bottom line of the business.
These core unit incomes were offset by a $279m expense from corporate support and other expenses driven by higher transaction-related expenses and staffing costs.
“We achieved all our financial goals last year while strengthening product leadership positions across our Global Lottery, Global Gaming, and PlayDigital activities,” said Vince Sadusky, CEO of IGT.
“Important strategic work executed over the last few years has transformed IGT into a company with higher growth prospects, a better profit profile, and a solid path to delivering on our long-term goals. It has also enabled record capital returns to shareholders in 2022. We enter 2023 from a position of strength with good momentum across business segments.”
Net debt down whilst further growth projected
2022 also saw IGT strive to boost its balance sheet which was delivered by the sale of its Italian lottery unit. Whilst this hampered the lottery division’s total growth and slowed down growth that has offset the global gaming unit’s quick growth, it has helped to reduce the company’s debt by 13% to $5.15bn and improved the leverage to 3.1x.
IGT ended the year with total liquidity of $2.4bn, as it had access to $590m in cash and a further $1.8bn in borrowing capacity.
Looking ahead, IGT is anticipating further bottom and topline growth in 2023 as it offered full-year guidance.
Revenue is expected to be in the region of $4.1-$4.3bn with an operating margin of 21-23%.
“2022 was another year of significant financial accomplishments,” said Max Chiara, CFO of IGT. “With reduced interest expense and improvements to the effective tax rate, 2022 adjusted EPS highlights IGT’s significantly improved earnings power. We generated strong cash flow while funding increased investments for future growth.
“This, coupled with proceeds from sales of non-core businesses, allowed us to meaningfully reduce debt and leverage to the lowest levels ever. The Company’s enhanced credit profile and significant liquidity provide solid support and flexibility as we execute our multi-year plan.”
