International Game Technology (IGT) cited the ‘intense effect’ of casino and gaming hall closures on its business, as the gambling technology company listed in New York reported operating losses of $291 million from H1 2020.
Absorbing double-digit declines in Q2 across its main lottery divisions, Global, North America, and Italy, IGT posted a 48-percent decrease in sales from $1.23 billion in Q2 2019 to $637 million in Q2 2020.
Compounded impacts on sales saw the company’s adjusted EBITDA taking on a 63 percent hit, falling to $168 million compared to $454 million in the prior year.
IGT announced a 72 percent fall in global gaming revenue, led by the closing of casinos and gaming halls, fewer unit shipments and lower systems and software sales compared to the previous year.
Marco SalaIGT’s CEO explained:“Our second quarter results reflect the intense impact of global lockdowns caused by the pandemic.
“That said, thanks to strong North America Lottery performance and our swift adoption of cost-saving and avoidance measures, we delivered better cash flow than we expected back in May.
“Our resilience is a direct consequence of the diversity of our global portfolio of products and solutions. The improving trends we are currently seeing are encouraging, but we remain prudent with our planning. Our new organisational structure enhances our readiness to adapt to changes in market conditions.”
The overall decline was compounded by an operating loss of $94 million, down from the previous year ‘s revenue of $224 million posted by IGT due to lower income contribution from reduced sales volumes, a $43 million restructuring expense and increasing gains from cost reduction measures.
Despite the grim outlook, IGT announced an improvement in its digital business, with the segment seeing a 35 per cent rise in revenue. The ‘progressive easing of restrictions during the quarter and cost-saving initiatives helped mitigate impact’. according to the report.
Since then, IGT has shifted its attention to cash generation and liquidity to ensure it has the capital required to handle COVID-19 ‘s effect.
As of 30 June 2020, IGT reported that liquidity amounted to $2.3 billion, comprising $1.3 billion in unrestricted cash and $1.0 billion under revolving credit facilities available.
In an attempt to speed up the company’s response to market conditions, IGT also reported that ‘over $200 million has been identified in structural cost savings compared to pre-pandemic levels’.
IGT governance, underscored as a key corporate 2020 target, confirms that it intends to achieve $500 m in group savings achieved by operational and discretionary cost cuts by year-end trading.
The savings, which are ‘mostly anticipated in 2021, will include the ‘issuance of $750 million 5.25% notes due 2029, as previously announced, $500 million of net proceeds used to fund a partial tender of 6.25% notes due 2022, optimising the supply chain for maximum cost efficiency and eliminating duplicative functions’.
Max Chiara, CFO of IGT added: “Cash generation and liquidity remain our top financial priority. The proactive efficiency initiatives and focused capital markets activity we executed in the quarter have us tracking ahead of plan on all key measures and we expect to deliver positive free cash flow this fiscal year.
“We have the resources we need to navigate the impact COVID-19 is having on our business and we are making important, strategic decisions to enhance our operational flexibility. This includes over $200 million in structural and discretionary cost savings compared to pre-pandemic levels.”