IGT Sees 2022 Revenue Up to $4.3B, Reveals Buyback Plan, iGaming Spin-Off Possible

Posted on: November 16, 2021, 09:50h. 

Last updated on: November 16, 2021, 12:14h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

International Game Technology (NYSE:IGT) said it expects 2022 revenue of $4.1 billion to $4.3 billion — a forecast that is on the high side tops Wall Street’s outlook of $4.2 billion.

IGT outlook
A man and woman play the Wheel of Fortune slot machine. IGT, the maker of the Wheel of Fortune slot machine, offers up an encouraging revenue outlook. It could spin-off its iGaming unit, too. (Image: Las Vegas Review-Journal)

The gaming device manufacturer delivered that top-line guidance at its virtual investor day today. It also revealed plans for a $300 million, multi-year share repurchase program. That’s the first buyback plan in the company’s history, and arrives a week after the maker of the popular Wheel of Fortune slot machines said it’s reinstating its quarterly dividend of 20 cents a share.

The UK-based gaming technology company, which also provides back-end services and solutions for lotteries and sportsbooks around the world, adds that it expects 2025 sales of $4.6 billion to $5 billion, implying a mid-single-digit compound annual growth rate (CAGR).

Over the next four years, we are confident we can deliver accelerating organic growth, significant margin expansion, and robust free cash flow to drive stakeholder value and increased shareholder returns,” said CEO Marco Sala in a statement.

In the US, IGT has partnerships in more than half the states where sports wagering is currently live and legal. Its lottery unit is also delivering strong performances.

IGT Buoyant Outlook Rooted in Cash Capabilities

Over the course of 2021, IGT has been making a series of moves aimed at reducing leverage, while enhancing its cash position and margins. It appears those actions are paying dividends.

The company is forecasting 2022 cash from operations of $850 million to $1 billion on operating margins of 20 percent to 22 percent. Capital expenditures are slated to be $400 million to $450 million, while net leverage is projected to decline to 3.5x to 4x.

IGT is deploying its OPtiMa 2.0 cost-reduction program, which is “expected to deliver more than $150 million in incremental savings, compared to pre-pandemic levels, by the end of 2023,” according to the company.

For 2025, IGT is projecting cumulative cash from operations of approximately $4 billion, and free cash flow of $2.5 billion, with operating margins expected to surge to 26 percent to 29 percent.

IGT Spending Plans

In addition to the aforementioned buyback plan and reinstated dividend — the latter of which is a rarity in the gaming industry in 2021 — IGT is planning capital expenditures for its newly formed dedicated digital and betting unit. The company announced the creation of that entity in September.

IGT is planning “a comprehensive capital investment plan of approximately $2.8 billion in aggregate capital expenditures and research and development from 2022-2025, supporting the existing portfolio with a focus on fast-growing iLottery and Digital & Betting activities,” it said in the statement.

The digital gaming and sports wagering arm will be structured as a new entity — a transaction that should be completed over the next year – and that could eventually lead to the business being spun off from the parent company.