• Revenue: $2.5 billion for the full year 2024, consistent with 2023.
• Free Cash Flow: Approximately $660 million, with over 80% from lottery operations.
• EBITDA: $1.2 billion for the lottery business at a 47% margin.
• Net Debt Leverage: 2.4 times, adjusted for $2 billion in gaming and digital sales proceeds.
• Same Store Sales Growth: 4% increase in Q4 for instant ticket and draw games.
• Q4 Revenue: $651 million, compared to $681 million in the prior year.
• Q4 Income from Continuing Operations: $116 million, up from $73 million in the prior year.
• Adjusted EBITDA for Q4: $290 million, compared to $316 million in the prior year.
• Cash from Operations: Over $1 billion for the full year 2024.
• Shareholder Returns: $161 million in cash dividends paid.
• 2025 Revenue Outlook: $2.55 billion to $2.65 billion.
• 2025 Adjusted EBITDA Outlook: $1.1 billion to $1.15 billion.
• 2025 CapEx: Estimated at $400 million to $450 million.

• Warning! GuruFocus has detected 2 Warning Sign with IGT.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• International Game Technology PLC (NYSE:IGT) announced the sale of its gaming and digital business for over $4 billion in cash, allowing the company to focus solely on its leading lottery business.
• The lottery business generated over $1 billion in consolidated cash from operations, with $660 million in free cash flow, highlighting its strong cash flow generation.
• IGT achieved $1.2 billion of EBITDA at a 47% margin in the lottery business, showcasing its attractive profit profile.
• The company has a strong track record of securing long-term contracts, including recent wins and extensions in Colorado, Luxembourg, North Carolina, Mississippi, and Virginia.
• IGT's investment in new technologies, such as its iLottery platform and Infinity Print technology, has driven growth and attracted new players, particularly in Italy.

Negative Points

• Revenue for the fourth quarter was $651 million, down from $681 million in the prior year, due to lower US multi-state jackpot sales.
• The company faces variability in financial performance due to the timing of large US multi-state jackpots, which can impact revenue and LMA incentives.
• IGT anticipates a significant capital expenditure cycle in 2025 and 2026, with annual CapEx expected to be between $400 million and $450 million.
• The company is experiencing temporary costs related to contract extensions, cloud-based solutions, and point of sale network optimization, impacting short-term profitability.
• IGT's guidance for 2025 includes a forecasted negative cash flow from operations of $300 million, primarily due to upfront license fees for the Italy Lotto contract.

Q & A Highlights

Q: Can you expand on the $25 million investment into new contract extensions and growth initiatives? Are these costs mostly one-time, and how do you assess the ROI on these investments? A: (Massimiliano Chiara, CFO) The costs are primarily temporary, related to R&D and project expenses necessary for securing contract bids or extensions. These costs are expected to be incurred mainly in the first part of the year. Additionally, we are investing in cloud-based solutions and point-of-sale network optimization, which will also drive costs this year but are expected to be temporary.

Q: Regarding the pending sale of the gaming and digital business, how do you plan to use the proceeds, particularly for capital returns? A: (Vincent Sadusky, CEO) We have committed to a $2 billion debt paydown, which will help achieve a 2.4 times leverage ratio. The use of proceeds beyond this debt repayment will be discussed around the closing date. We are not prepared to provide specifics at this point.

Q: Can you provide an update on the Lotto rebid process in Italy and potential synergies with digital businesses? A: (Vincent Sadusky, CEO) The tender has been published, and we are working on our bid. We expect to compete effectively, leveraging our market insights and product innovation. Although we are not a significant player in sports betting or i-Casino in Italy, we have increased our iLottery penetration, which presents future opportunities.

Q: How significant are couriers for driving IGT's lottery sales, and are there any risks or opportunities related to lottery legalization? A: (Vincent Sadusky, CEO) The impact of couriers varies by jurisdiction. In states where iLottery is permissible, couriers have minimal impact. In states like Texas, where couriers are banned, the impact on IGT is insignificant due to our small percentage of sales from couriers.

Q: How does the new printing press impact your competitive offering and margins? A: (Vincent Sadusky, CEO) The new press increases our capacity and efficiency, reducing waste and reprints. It allows us to bid more competitively for instant ticket contracts and improves margins by operating closer to capacity. The investment is expected to have a strong ROI, benefiting both cost and efficiency.

Q: What is the impact of the Mega Millions price increase on your guidance and industry growth? A: (Vincent Sadusky, CEO) The price increase is expected to have a positive impact, although it may take time to materialize. Historically, price increases have led to significant revenue growth. We anticipate fewer tickets sold initially but at a higher price point, leading to higher jackpots and increased sales velocity.

Q: Can you elaborate on the guidance for CapEx and its implications for future growth? A: (Massimiliano Chiara, CFO) After 2025 and 2026, we expect CapEx to stabilize at $200 million to $225 million annually, excluding competitive acquisitions. This reflects investments in securing contracts and optimizing infrastructure, which will support long-term growth and efficiency.

Q: What are the expectations for the Powerball pricing structure following the Mega Millions price increase? A: (Vincent Sadusky, CEO) While there is no current indication of a Powerball price increase, it is reasonable to expect that they will monitor the impact of the Mega Millions price change and consider adjustments in the future.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.