Brightstar Lottery PLC

Good day and thank you for standing by. Welcome to International Game Technology Q221 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, James Hurley, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, and thank you all for joining us on IGT's second quarter 2021 conference call, which is hosted by Marco Sala, our Chief Executive Officer, and Max Chiara, our Chief Financial Officer. We are presenting the results today from multiple locations, so please bear with us if we do encounter any technical difficulties. During today's call, we will be making some forward-looking statements within the meaning of federal securities laws. Forward-looking statements are not guarantees, and our actual results may differ materially from those expressed or implied in the forward-looking statements based on a number of factors and uncertainties, including those related to the effects of the COVID-19 pandemic. The principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our latest earnings release and in our SEC filings. During this call, we may discuss certain non-GAAP financial measures. In our press release, slides accompanying this webcast, and our filings with the SEC, each of which is posted on our Investor Relations website, you'll find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. And now I'll turn the call over to Marco Sala.

Thank you, Jim, and hello to everyone. The impressive second quarter results we are reporting today highlight the vitality of our portfolio. Outstanding lottery performance, the progressive recovery in land-based gaming, and a strong increase in digital and betting activities drove revenues up more than 70%. Profit growth was even stronger. Adjusted EBITDA of $442 million, was over 2.5 times the prior year level and among the highest we have ever recorded in a quarterly period. In addition to the natural operating leverage in lottery, structural cost reductions from our Optima program contributed to improve global gaming performance, which returned to positive operating income in the quarter. In the first six months of the year, we generated 380 million of free cash flow, a record level for a first half period. Our focus on executing with excellence is grounded in good corporate citizenship. We recently published the 14th Annual Sustainability Report, improving the quality of the information we disclose about the sustainable activities and solutions we have in place across the company. Highlighted in the report are our efforts at diversity and inclusion, which have been recognized for their scope and impact. We firmly believe our dedication to well-being and developing of our employees and high standards of corporate citizenship creates value for our stakeholders throughout the world. 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 has had on the global gaming industry. It validates the unique attributes of IGT's portfolio, and the dedication of the IGT team around the world, who I want to thank for their resilience, responsibility, and good corporate citizenship. Our lottery business continues to perform at a very high level. Broad-based player demand across games, geographies, and channels drove same-store sales 35% higher in the second quarter. Lottery's consistent multi-year growth profile is fueled along several dimensions. First, with continuous innovation in game content. Add-ons to popular draw games franchises such as DHL Otto Extra in Italy and Double Play Cash 5 Cash for Life in the U.S. have been especially successful. The recently launched Numerissimistan game in Italy is performing very well out of the gate. Second, through improved retail penetration and sales execution, including the optimization of game portfolios and improved logistics. The distribution of games, especially around convenience options such as self-service, in-lane purchasing, and cashless solutions, have experienced high player acceptance. The Washington State Lottery, a leader in the development of self-service model, will soon deploy our next generation cashless lottery technology as part of a recent multi-year contract extension. And third, by increasing player acceptance in iLottery. I will expand on this a little later. As we look at the second alpha, We expect global same-store sales to be up mid-single digits to last year and up low double digits compared to the second half of 2019. This is at the upper end of historical trends and applied to higher levels of consumption. It is a compelling outlook for a business with an attractive margin structure and a steady growth profile that has proven to be highly resilient to macro dynamics. For the global gaming segment, most markets are open today. Our business is concentrated in the U.S., where slot GGR has largely recovered to 2019 levels in many jurisdictions. Recurring revenue streams have rebounded quickly, more than doubling prior year levels and up double-digit sequentially on higher terminal service revenue and strong digital and betting growth. Sequentially, there are more active install-based units generating stronger yields. Top-performing games include several Wheel of Fortune titles, and new multi-level progressive Dragon Light Jing Kai Shen and Gong Qi Fa Kai. Outright sales more than doubled the prior year and were up over 40% sequentially on strong replacement sales. We expect 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 Peaksland 49 cabinet, which is now offered for sale with proven high-performing games such as Regal Riches and Scarab Link. Adoption of IGT's best-in-class cashless solution is expanding. Later this year, the Agua Caliente tribe will implement our resort wallet cashless solution at all three of its 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 e-wallets. And there are more deals in the pipeline. The industry is also taking notice of our accomplishments. Our ability to consistently bring excitement and innovative products and services to market was recognized at the 2021 Global Gaming Awards London, where IGT won Casino Supplier of the Year. It also supports our expectation of progressive improvement in global casino gaming in the balance of the year. We continue to build on our leadership position in iGaming, iLottery and sports betting. We are investing along many dimensions to bring the most compelling digital games to market. In addition to leveraging our deep and proven land-based portfolio, we are also developing new digitally native games. Cash Eruption is a recent example and has quickly become our top-performing game in Michigan and several European markets. It will launch in New Jersey soon. We are also creating partnerships that provide access to new and innovative game features, as we did with Wheel of Fortune Megaways. These arrangements enable our partners to develop their own new game content using IGT's platform, enhancing the value of IGT's iGaming ecosystem. Distributing third party contents provides another opportunity for incremental market share. We expect to be distributing over a dozen third party titles in the second half of the year. Later this quarter, we will deploy our next-generation iLottery platform beginning in Georgia. We expect this leading-edge solution will greatly enhance our competitiveness. Notably, it is the first cloud-based iLottery solution to go live for WLA customers, enabling faster delivery of game content while reducing costs. We are also expanding the portfolio of games that feature enriched audiovisuals and enhanced bonus play features. VIP Gold Grand and Triple Platinum are recent new e-instance games that are generating all-time high RPUs. Multi-price e-instance games like Invasioni Spaziali have been very successful in Italy. The deployment of our Play Sports platform continues to expand at a fast clip. It is currently powering approximately 50 U.S. sportsbooks for 18 customers across 15 states. One of the more recent additions is Resort World's Las Vegas retail sportsbook, as well as its statewide mobile betting app. This development enhanced our Nevada presence we established with Boyd Gaming earlier this year. We delivered a strong first half thanks to robust player demand and disciplined execution supported by innovative product launches and overall cost and capital control. At the same time, we significantly reduce our debt, improving our financial condition and leverage profile. With tailwinds like attractive long-term lottery industry trends, the global gaming recovery, and fast-growing digital and betting businesses, we expect 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. Now, I'll turn the call over to Max.