Investors discussing potential sale of IGT to Apollo, hinting at upcoming transaction; Mega Millions anticipated to rise
Sell-off Spectacle: Apollo Grabs IGT's Gaming and Digital Biz for $6.3B
mong the buzz surrounding Tuesday's earnings call, the blockbuster sale of International Gaming Technology's (IGT) digital and gaming business to funds managed by Apollo Global Management takes center stage.
Addressing investor inquiries about the utilization of the proceeds from the sale, IGT CEO Vince Sadusky emphasized the $2 billion debt paydown. Despite keeping mum on additional plans, he hinted at potential uses, such as strategic investments or shareholder dividends, to be discussed upon the deal's closure.
For Q4, IGT's revenue stood at $651 million, with an adjusted EBITDA of $290 million, and an EBITDA margin of 44.5%. Yearly figures show revenue of $2.5 billion, primarily driven by US, Canadian, and Italian lottery sales. Adjusted EBITDA was $1.17 billion, with a margin of 46.6%. Cash from operations hit $1.03 billion, and free cash flow reached $659 million.
Sadusky believes the upcoming Mega Millions ticket price hike from $2 to $5 will yield favorable results for IGT. Though past price point adjustments for Mega Millions and Powerball have shown a decrease in ticket sales, he anticipates a more significant jackpot build, driving sales velocity and overall profitability.
As IGT seeks to renew its contract with the Italian lottery in 2025, Sadusky shared the company's internal bid efforts, with a focus on technological innovation and player experience to maintain its dominance in the market.
Despite the pending M&A, IGT's lottery focus positions the company for a leaner, more focused operational structure. This transformation could boost efficiency, improve financial metrics, facilitate growth, and navigate regulatory and market challenges. However, the exact strategic plan for the sale proceeds remains undisclosed.
The sale and restructuring signify a new era for IGT. As it embarks on this journey, investors will closely monitor its progress to gauge the potential impacts on financial performance, growth prospects, and shareholder value.
In relation to the sale, IGT CEO Vince Sadusky may allocate the $2 billion debt paydown proceeds towards strategic investments or shareholder dividends upon the deal's closure, showcasing a potential future shift in the company's sports and gaming focus. As IGT moves towards a leaner, more focused operational structure, the sale and restructuring redefine the company's approach to sports and gaming, leaving room for increased efficiency and growth in these areas.
