Gaming technology services and products maker International Gaming Technology (NYSE: IGT)
stock is still performing well with 25.32% year-to-date (YTD) performance thanks to gain in the global lottery segment. The maker of slot machines and iGaming products still collects the majority of its revenues from Las Vegas
, but profits really shined in its global lottery segment. While iGaming is gaining steam with sports betting being legal in 32 states, the lottery is a behemoth that continues to expand worldwide. The lottery is recession-proof and gained during the pandemic
as IGT has 37 of the 46 U.S. lotteries as clients. The reopening
is helping to expand lottery sales globally and iGaming is the cherry on top. Its sports betting market share was north of 25% in 2019 and digital gaming products are gaining traction. Prudent investors seeking exposure in the global lottery, sports betting, and iGaming segments in a one-stop-shop approach can watch for IGT for opportunistic pullbacks.
Q2 FY 2021 Earnings Release
On Aug. 3, 2021, IGT reported its Q2 2021 earnings for the quarter that ended in June 2021. The Company reported an earnings-per-share profit of $1.49 beating consensus analysts estimates for a profit of $0.23, a $1.26 beat. Net income was $365 million mostly from income from discontinued operations and sale of assets of $404 million. Adjusted EBITDA rose 170% to 442 million. The Company generated $500 million in cash and a record-level $380 million of free cash flow during first half of the year. The Company reduced debt by $1 billion improving net Revenues rose 73% year-over-year (YoY) to $1.04 billion beating consensus analyst expectations for $926.69 million. The Company raised outlook to exceed 2019 financial metrics. IGT CEO Marco Sala commented, "Outstanding Lottery performance, the progressive recovery in land-based Gaming, and strong increase in Digital & Betting activities drove substantial revenue and profit growth, delivering Adjusted EBITDA that is among the highest recorded in a quarterly period. On the strength of the first half performance, we are raising our outlook for the year and now expect to exceed 2019 levels for key financial metrics this year."
Conference Call Takeaways
CEO Sala set the tone, “The value is tangible in our strong first-half results, enabling us to raise expectations for 2021. At this time, we now expect to exceed 2019 levels for key financial metrics this year. This is an important achievement considering the impact of the pandemic as I said on the global gaming industry, it validates the unique attributes of IGT portfolio and the dedication of the IGT team around the world while I want to thank for their resilience, responsibility, and good corporate citizenship. Our lottery business continues to perform at a very high level. Broad base player demand across games, geographies. and channels drove the same store sales at 35% or higher in the second quarter. Lotteries consistent a multi-year growth profile is fueled along several dimensions. First, with continuous innovation in game content, add on to popular draw games, franchises Such as HL Lotto, Italy and Double Play Cash 5, Cash for Live in the U.S. have been especially successful. The recently launched Numerisimi game in Italy is performing very well out of the gate.”
CEO Sala addressed international markets, “For the global gaming segment, most markets are open today. Our business is concentrated in the US whereas lot GGR has largely recovered to 2019 levels in many jurisdictions. Regarding revenue streams ever rebounded quickly more than doubling a priori of levels and up double-digit sequentially on iron terminal service revenue and stronger digital impacting growth. Sequentially, there are more active installed base units generating stronger yields. Top-performing games include several Wheel of Fortune titles, and a new multi-level progressive Dragon light Jing Chi Shen and Gong Xi Fa Cai. Outright sales more than double than the prior year and were up over 40% sequentially on strong replacement sales. We expect a sustained improvement in unit demand in the second half of the year, both for casino and VLT customers as operators return to increase the levels of investment. Sales will be supported by the PeakSlant49 Cabinet, which is now offered for sale with proven high-performing games. Adoption of IGT's best-in-class cashless solution is expanding. Later this year will implement our resort wallet cashless solution at all three of his California casinos. Included in the offering will be the proprietary IGT pay full service funding solution for cashless wagering via credit and debit cards, bank accounts and the wallets. And there are more deals in the pipeline.”
CEO Sala concluded, “We delivered a strong first half. Thanks to robust player demand and disciplined execution supported by innovative product launches and the overall cost in capital control. At the same time, we significantly reduce our debt, improving our financial condition and the leverage profile. With tailwinds like attractive long-term lottery industry trends, the global gaming recovery and fast growing digital and betting businesses, we expect that these positive trends to continue. As always, our growth initiatives remain grounded in our commitment to sustainability, building on the important progress we have already made.”
IGT Price Trajectories
Using the rifle charts on the weekly and daily times frames enable a precision view on the price action for IGT stock. The weekly rifle chart peaked on the $26.41 Fibonacci (fib) level and proceeded to trigger a weekly market structure high (MSH) on the breakdown under $22.85. The weekly downtrend stalled on the recent spike through the flat 5 period moving average (MA) at $19.33 as shares attempt a channel tightening to the 15-period MA at $21.96. The weekly upper Bollinger Bands (BBs) are at $28.54. The weekly stochastic has stalled on its move down as it contemplates a cross back up or mini inverse pup back towards the 20-band. The daily rifle chart triggered a market structure low (MSL) buy signal on the breakout above $18.65. The daily uptrend has a rising 5-period MA at $20.06 and 15-period rising at $19.43. The daily stochastic has risen to the 80-band as the upper BBs sit at $21.74.
Prudent investors should avoid chasing and wait for opportunistic pullback levels at the $20.30 fib, $19.48 fib, $18.76 fib, $17.56 fib, $16.71 fib, $15.86 fib, and the $14.68 fib. Upside trajectories range from the $24.74 fib to the $37.63 fib level.
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