{"id":1969,"date":"2021-05-12T09:18:14","date_gmt":"2021-05-12T16:18:14","guid":{"rendered":"https:\/\/wagers.com\/staging\/4285\/?p=1969"},"modified":"2021-11-09T09:22:46","modified_gmt":"2021-11-09T17:22:46","slug":"king-dethroned-igt-says-no-on-digital-ma","status":"publish","type":"post","link":"https:\/\/wagers.com\/staging\/4285\/news\/king-dethroned-igt-says-no-on-digital-ma\/","title":{"rendered":"King dethroned; IGT says no on digital M&A"},"content":{"rendered":"

BREAKING NEWS: King departs from FanDuel, Flutter US listing timeline lengthens<\/h4>\n

Game of thrones:<\/strong> Flutter has announced the surprise departure of FanDuel CEO Matt King who is leaving for unspecified pastures new. The news will impact the hopes for a separate listing for FanDuel – the company said it would \u201caffect the timing\u201d without giving any specifics and said it will \u201ccontinue to keep this option under review.\u201d The departure will disappoint the analysts. \u201cWe viewed the FanDuel listing as a way of narrowing the material valuation gap between Flutter and its US-listed peers,\u201d said Jefferies this morning.<\/p>\n

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IGT<\/h3>\n

The top line<\/h4>\n

Revenues were up 25% to $1bn and ahead of street consensus of $876m. Adjusted EBITDA was up 72% YoY to $450m, well ahead of $309m consensus thanks to the ongoing economic recovery and structural cost savings. YoY growth in iGaming was 85%.<\/p>\n

Lottery was up 48% YoY at $749m in global revenues, adjusted EBITDA rose 133% and to $447m, way above street consensus of $326m. Operating income was $260m, compared to operating loss of $218 million in the prior year period.<\/p>\n

Global same store sales (SSS) grew by a record 32%, in the US and Canada the rise was 28% and 52% in Italy for lottery SSS. IGT\u2019s gaming verticals were down 14% YoY to $266m revenue, but up from $250m sequentially. Adjusted EBITDA was down 30% to $19M.<\/p>\n

The company closed the sale of its Italy B2C business for \u20ac950m and will use $650m of those proceeds towards paying back its \u20ac850M debt. The group said it would save $60m in interest payments. IGT has net debt of $7bn ($7.3bn 2020 YE) and $204m in free cash flow.<\/p>\n

All things must pass: <\/strong>Both CEO Marco Sala and CFO Max Chiara said the cost reductions and banking actions executed in early 2020 were bearing fruit with $200m expected in FY savings. Sala however cautioned against overenthusiastic forecasts: \u201cIt should be acknowledged that some of the growth (in the past 12 months) is due to betting shop closures and a lack of entertainment options.\u201d Still, the analysts were cheered by the recent disposal of the Italian B2C arm. Barry Jonas at Truist said it meant \u201cno Italy gaming tax risks anymore.\u201d<\/p>\n

Potential iGaming split, but no M&A: <\/strong>Carlo Santarelli of Deutsche Bank said IGT\u2019s iGaming division is on a run rate of $230-$250m for the year. Asked if it would consider breaking it out as a separate entity, Sala said if the growth continues \u201cthen of course we will consider breaking it out as a separate segment\u201d. The group has had enhanced visibility in online since reorganising in Q320 and interactive channels are \u201cdriving phenomenal growth: $170m in 2020 and Q1 speaks for itself,\u201d Sala added. Both executives however ruled out the possibility of M&A deals on the digital side of the business. \u201cNot for time being; we have all we need to grow on the digital verticals.\u201d Still, Santerelli said in a note that the online business was \u201cinexplicably underappreciated.\u201d<\/p>\n

Distributed iGaming content: <\/strong>IGT will continue its North American focus on iGaming content as it is \u201cwhat is driving revenues\u201d. It could also collaborate with third-party studios to best optimise its vast games library. \u201cWe enjoyed 80% iGaming revenue growth with 25% market share in the US and 50% in Canada,\u201d Sala said. He also pointed out that it is not as simple as launching them online and expecting returns to come in.<\/p>\n

\u201cYou have to turn them into very good digital games. That can mean changing game mechanics or payouts and we sometimes work with third party studios to achieve this, as we did with Wheel of Fortune\/Megaways in New Jersey and now it\u2019s in Michigan, Canada and Italy.\u201d\u00a0<\/em><\/p><\/blockquote>\n

Driving down debt focus: <\/strong>Chiara said the maturity schedule on the group\u2019s debt was stable saying the company had taken \u201csignificant actions.\u201d Jefferies said that the results from the quarter, along with the delivering demonstrated the company\u2019s business merits, and was supportive of a higher valuation.<\/p>\n

Also highlighted in today’s news on Earnings + more:<\/h3>\n