{"id":307444,"date":"2024-01-22T05:17:53","date_gmt":"2024-01-22T11:17:53","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=307444"},"modified":"2024-01-22T16:24:11","modified_gmt":"2024-01-22T22:24:11","slug":"igt-cutting-leverage-in-a-big-way","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/igt-cutting-leverage-in-a-big-way\/","title":{"rendered":"International Game Technology Cutting Debt in Impressive Fashion"},"content":{"rendered":"

International Game Technology (NYSE: IGT) has notably reduced its debt, potentially positioning itself to meet management leverage targets over the next several years.<\/p>\n

\"Wheel
IGT’s famous Wheel of Fortune slot machines. The company’s leverage is declining materially. (Image: Las Vegas Weekly<\/em>)<\/figcaption><\/figure>\n

Supported by strong third-quarter earnings growth, the gaming device manufacturer is expected to have driven earnings before interest, taxes, depreciation, and amortization leverage to 3.6x last year, according to Fitch Ratings. That puts IGT on pace to pare leverage to 3x by 2026.<\/p>\n

Management has a 2025 2.5x-3.5x net leverage target, and was at the midpoint of the band at Sept. 30, 2023. Fitch focuses on gross metrics and subtracts minority distributions from adjusted EBITDA (approximately 0.5x difference in leverage due to the latter),\u201d noted the ratings agency.<\/p><\/blockquote>\n

Fitch affirmed IGT\u2019s corporate credit rating at \u201cBB+\u201d — a junk grade. The outlook on that rating is \u201cstable.\u201d<\/p>\n

IGT Asset Sales Helped<\/h2>\n

Prior asset sales helped IGT generate cash used to lower liabilities, and it\u2019s possible that the theme could be repeated in 2024. Last June, the company announced it was considering strategic alternatives<\/a> for its global gaming and PlayDigital units.<\/p>\n

\n

It\u2019s possible that IGT could merge, sell, or spin-off<\/a> those businesses. Alone, the sale of the global gaming unit could command a price tag of $4 billion to $5 billion, which could go a long way toward funding IGT\u2019s debt-cutting plans and its shareholder rewards programs.<\/p>\n<\/div>\n

\u201cFrom 2021-2022, IGT sold its Italian B2C gaming business and Italian payments business, with proceeds primarily used to pay down debt,\u201d added Fitch. \u201cAs of 2Q23, IGT is in the midst of a review to explore strategic alternatives for its gaming and digital segments, considering the company’s EV\/EBITDA multiple continues to lag its peers. Barring a status quo, Fitch believes a part of the proceeds could potentially be used to further de-lever, while also bolstering IGT’s liquidity for the upcoming lottery rebid cycle.\u201d<\/p>\n

As beneficial as asset divestments might be for IGT, the company has recently been chided<\/a> for dragging its feet on such transactions.<\/p>\n

Advantages for IGT in Selling Slot Unit<\/h2>\n

There are potential perks for IGT in selling its global gaming segment. Not only is there rumored strong<\/a> interest in the business, but it has recurring capital needs that weigh on the company\u2019s ability to generate free cash flow.<\/p>\n

Additionally, by shedding some more capital-intensive businesses, IGT could better focus on its highly profitable lottery arm, which accounts for about 70% of EBITDA.<\/strong><\/p>\n

\u201cIGT generates about 70% of its EBITDA from lotteries, which is resilient and less prone to economic shocks and other threats seen elsewhere in the gaming industry,\u201d concluded Fitch. \u201cIt also exhibits favorable characteristics relative to other forms of gaming, such as less cash flow volatility, stable low-to-mid single-digit growth rates even during periods of dislocation, and higher profit margins, while benefiting from significant barriers to entry due to high regulatory oversight and capital intensity.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

International Game Technology (NYSE: IGT) has notably reduced its debt, potentially positioning itself to meet management leverage targets over the next several years. Supported by strong third-quarter earnings growth, the gaming device manufacturer is expected to have driven earnings before interest, taxes, depreciation, and amortization leverage to 3.6x last year, according to Fitch Ratings. That […]<\/p>\n","protected":false},"author":46,"featured_media":229150,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,13699,69293],"tags":[81903,13701,81890],"acf":[],"yoast_head":"\nIGT Cutting Leverage In A Big Way<\/title>\n<meta name=\"description\" content=\"International Game Technology Cutting Debt in Impressive Fashion.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/igt-cutting-leverage-in-a-big-way\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"IGT Cutting Leverage In A Big Way\" \/>\n<meta property=\"og:description\" content=\"International Game Technology Cutting Debt in Impressive Fashion.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/igt-cutting-leverage-in-a-big-way\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2024-01-22T11:17:53+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-01-22T22:24:11+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/08\/wof.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1000\" \/>\n\t<meta property=\"og:image:height\" content=\"666\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/igt-cutting-leverage-in-a-big-way\/\",\"url\":\"https:\/\/www.casino.org\/news\/igt-cutting-leverage-in-a-big-way\/\",\"name\":\"IGT Cutting Leverage In A Big Way\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/igt-cutting-leverage-in-a-big-way\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/igt-cutting-leverage-in-a-big-way\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/08\/wof.jpg\",\"datePublished\":\"2024-01-22T11:17:53+00:00\",\"dateModified\":\"2024-01-22T22:24:11+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"International Game Technology Cutting Debt in Impressive Fashion.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/igt-cutting-leverage-in-a-big-way\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/igt-cutting-leverage-in-a-big-way\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/igt-cutting-leverage-in-a-big-way\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/08\/wof.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/08\/wof.jpg\",\"width\":1000,\"height\":666,\"caption\":\"IGT's famous Wheel of Fortune slot machines. The company's leverage is declining in material fashion. 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