Brightstar Lottery PLC

Thank you for standing by and welcome to the International Game Technology second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press the star one. Thank you. I'd now like to turn the call over to James Hurley, Senior Vice President, Investor Relations. You may begin. James Hurley, Senior Vice President, Investor Relations. You may begin.

James Hurley, Senior Vice President, Investor Relations. You may begin. James Hurley, Senior Vice President, Investor Relations. You may begin. James Hurley, Senior Vice President, Investor Relations. You may begin. James Hurley, Senior Vice President, Investor Relations. You may begin. James Hurley, Senior Vice President, Investor Relations. You may begin. James Hurley, Senior Vice President, Investor Relations. You may begin. James Hurley, Senior Vice President, Investor Relations. You may begin. James Hurley, Senior Vice President, Investor Relations. You may begin. James Hurley, Senior Vice President, Investor Relations. You may begin. James Hurley, Senior Vice President, Investor Relations. You may begin. James Hurley, Senior Vice President, Investor Relations. You may begin. James Hurley During today's call, we will be making some forward-looking statements within the meaning of the 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. 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 will discuss certain non-GAAP financial measures. You'll find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP 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. And now I'll turn the call over to Vince.

Thank you, Jim, and welcome everyone on the call. We are reporting strong first half results today with over $2 billion of revenue and an operating margin of 23%, in line with the upgraded outlook provided in May. Net of separation to best your costs, we achieved a record operating income and adjusted EBITDA, reflecting strong performance from both the global lottery and gaming and digital segments. We are delivering these results while maintaining a solid commitment to good corporate citizenship, including the publication of our 17th Annual Sustainability Report. IGT has firmly established itself as a leader in global sustainability through environmental, social, and governance initiatives. We look forward to continuing to build on our achievements. As many of you know, last week we announced the sale of our gaming and digital business to Apollo in a transaction that supersedes the spin and merger transaction originally contemplated with Every Holdings. Apollo's $4.05 billion cash offer is a positive evolution of our previously announced every transaction in many ways. This simple, straightforward transaction provides a clear-cut separation of global lottery from gaming and digital for IGT shareholders. There is a substantial increase in cash, nearly $1.5 billion, which provides a quicker realization of value upon closing, thereby eliminating IGT shareholder exposure to execution risk, regarding integration efforts and synergies. The all-cash structure also eliminates the tax timing impact to IGT shareholders from the previously contemplated equity distribution. We intend to allocate the cash proceeds in a balanced manner with significant portions being used to repay debt and for returning capital to shareholders. Upon the successful completion of the transaction, IGT's remaining operations will be comprised of its current global lottery business and corporate support functions. This establishes the company as the premier pure-play lottery business with a diversified contract mix, broad global reach, and strong positions in important markets. IGT's lottery industry leadership is supported by unmatched capabilities, a high-performing suite of products and value-added solutions, and a proven ability to maximize proceeds for lottery customers. The global lottery segment has a compelling business model with infrastructure-like characteristics, including recurring revenue streams backed by long-term contracts and long-standing customer relationships. It's relatively unique to find a business that offers such good visibility into the future. That visibility is bolstered by attractive fundamentals. Lottery is a large, consistently growing, and resilient industry with recession-proof characteristics. It also has significant tailwinds from potential lottery adoption especially in the US. This ultimately establishes a financial profile characterized by strong profit margins, significant free cash flow generation, a solid balance sheet with substantial liquidity, and focused capital allocation. This puts us in a good position to extend and secure our contract portfolio over the coming years. Moving on to the results we are reporting today, we continue to see high levels of lottery play around the world. The 2% increase in revenue for the first six months comes on top of a 5% increase in the prior year. Global same-store sales were up modestly, consolidating significant growth in the underlying sales base experienced in the last four years. 3.5% growth in Italy's same-store sales has been well-balanced between instant and draw games, thanks to a steady stream of innovative games. In Q2, the fourth lotto draw introduced last summer, and 10 Elana special draws introduced last fall were important drivers of increased retail and digital sales. For Italy, instance, the new 25 euro super gold infant ticket game and the launch of several tickets at different price points under proven franchises fueled growth. Same store sales outside of Italy were slightly below prior year as 7.5% growth in multi-jurisdiction jackpot games mostly offset lower instant ticket sales. We did see sequential improvement in trends in the second quarter, again fueled by strong Powerball and EuroMillion jackpots in the period. There are a dozen or so more higher-priced games that will launch over the next several months compared to last year. That should support better instant ticket sales trends in the second half of 2024. Global high lottery sales are maintaining excellent momentum, rising 27% in the first half, with strong growth across regions, especially in the US and Italy. Over the last few months, we've bolstered our global lottery portfolio and advanced some key strategic initiatives with important multi-year contract wins and extensions. We secured a new seven-year contract with the Colorado Lottery to install a full suite of our newest products and solutions that will offer players enhanced retail and mobile experiences. We also executed a three-year extension with the Mississippi Lottery Corporation, where we will continue to provide online gaming systems and instant ticket services, in addition to deploying a mobile convenience app and expanding the network of self-service vending machines. We signed a five-year contract to launch cloud-based iLottery solutions, including our RGS platform, in a vast array of e-Instant games for Canada's Atlantic Lottery, which is the nation's largest digital instant market. We also recently went live with our OnLottery platform in Connecticut, enabling digital draw-based gameplay there. On the printing front, we entered a five-year contract with ONCE, the operator of Spain's lottery, building on our 20-year history with ONCE as the provider of its lottery central system and software maintenance services. A robust pipeline of new games is driving gaming and digital performance. The global installed base continues to expand with Q2 marking the eighth consecutive quarter of sequential growth led by premium games. In fact, IGT has nine of the top 25 new premium games based on the latest ILR survey data. Among them is Tiger and Dragon, which secured its third month as the number one new premium leased in WAP game. Generating productivity of about three times zone average, Tiger and Dragon has already established itself as one of the best game families in the market. Mystery of the Lamp is another, and demand remains high. In June, we launched Whitney Houston Web Game on our new Skyrise cabinet. Initial performance is excellent, and we are planning a broader rollout over the next several months. We sold over 14,000 gaming machines in the first half of the year, thanks to the top-ranking MLPs such as Rising Rockets, Magic Treasures, and Golden Link. The progress we are making in core video is evident, with seven spots in the top 25 new core game rankings. With approximately 80% of gaming and digital revenue coming from the US and Canada, there is considerable opportunity for IGT to grow in the EMEA, Asia Pacific, and Latin American regions. We have targeted initiatives in each and have made some good progress recently, such as expanding into the Spanish AWP market, launching HHR games outside of the US for the first time ever, and rolling out the largest peak bar top video poker installation in Europe. On the digital front, our cash eruption and blackjack games continue to maintain their spots as the number one slot in table games in the U.S., supporting 20% growth in U.S. iGaming GGR in the first half of the year. Earlier this month, we launched our highly successful land-based Prosperity Link into five U.S. iGaming markets. Providing customers and players with multi-channel game content is a cornerstone of our global content strategy. The record first half operating income and adjusted EBITDA we achieved before the separation to vestiture costs confirms we are very much on track with our core operational and strategic objectives. At the same time, we are working through separation activities for digital and gaming to support our goal of unlocking the intrinsic value of IGT's best-in-class business. Now I'll turn the call over to Max.