Brightstar Lottery PLC

Hello, everyone. Thank you for joining us and welcome to the Bright Star second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Jim Hurley, Senior Vice President of Investor Relations. Jim, please go ahead.

Thank you, and thank you all for joining us on Bright Star Lottery's second quarter 2026 conference call, which is being hosted by Vince Sadusky, our Chief Executive Officer, and Max Chiara, our Chief Financial Officer. After some prepared remarks, Vince and Max will be available for your questions. We are presenting from multiple locations today and would appreciate your patience if we encounter any technical difficulties. 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. Our statements are as of today, August 4th, and we have no obligation to update any forward-looking statements we make. And now I'll turn the call over to Vince.

Thank you all for joining us. Our better than expected Q2 profits were driven by an increase in global same-store sales and strong cost discipline, even as we continue to invest in high-return initiatives. We generated significant cash in the first half of the year, which not only helped to fund the final Italy Lotto license payment in Q2, but also the $140 million of capital returned to shareholders in the year-to-date period, all while continuing to maintain a solid balance sheet. We executed well against our strategic priorities in the first half of the year and expect this good progress to deliver stronger revenue and profit growth in the second half of the year. Global same-store sales increased 1.5% in the second quarter, a slight acceleration from Q1's performance on stronger U.S. sales. The improvement in U.S. sales primarily came from stronger multistate jackpot performance and, to a lesser extent, better instant and draw game sales. Some of the strongest growth in instance and draw games came from New Jersey and Indiana markets, where we have more direct involvement with day-to-day lottery operations. We've expanded retail points of sale and strategically deployed vending machines and digital signage, all proven initiatives that are delivering encouraging results. We intend to scale these initiatives across the broader portfolio over the next several quarters. Italy's same-store sales growth was fueled by instant tickets, including the relaunch of multiplier games, This year has featured Summer Bundle and the continued success of the new 30 Euro game. Recent multi-year extensions with the Oregon and Washington state lotteries have improved the long-term visibility we have for our business. iLottery continues to be an area of substantial growth. Wagers were up 22% in the first half of the year. In Italy, 23% iLottery growth was led by e-instance, especially the 30 Euro and multiplier games. The 29% iLottery growth in the U.S. included strong expansion in Kentucky and Georgia and the excellent performance of our eInstant content in Michigan and Virginia. We've achieved several milestones with our Italy B2C expansion efforts. At the end of April, we launched a significantly enhanced MyLotteries Play app featuring a full range of digital gaming options across eInstant, eDraw, iCasino, and sports betting. It also includes new bonusing and loyalty programs in addition to live chat capabilities. It is a best in class to offer with a compelling user experience. We recently completed the upgrade of retail point of sale terminals at over 33,000 locations throughout Italy. The new terminals had much faster processing capabilities, which should improve sales velocity during peak playtime and support future game innovation initiatives. The retail network is a strategic asset we intend to leverage to drive digital adoption and traffic to the MyLotteries Play app. To date, we've recruited about 23,000 retailers to help drive digital account activation. Their player engagement efforts begin this month and go into September. We've also had important developments in emerging markets. In San Paolo, we are live with digital lottery operations. Our team was able to deploy the network just six months after executing our 15-year concession. The opportunity ahead is substantial. With 46 million residents and approximately one-third of Brazil's gross domestic product, Sao Paulo is the country's largest and most prosperous state. The successful launch of digital operations establishes the foundation for an entirely new lottery operation we are building from the ground up. The launch of retail lottery operations is planned for later this year. We believe San Paolo has the potential to be a significant long term growth opportunity for our business. Instant ticket printing has been another area of focus and investment, including a new press that went live a year ago. The incremental capacity has supported a double digit increase in standard units produced in the first six months of the year, including good growth with customers in Texas, France and Poland. Our innovative gleam and its infinity games are important drivers of this higher production volume. In addition, we secured multi-year FM contract extensions in Mauritius and Slovakia, building on our decades-long relationships with both. The first half of the year was defined by meaningful progress on foundational initiatives. Much of that work has been investment-led and, as expected, has not yet delivered significant revenue or profit contribution. Looking ahead, we expect that equation to shift. Revenue, profit, and cash flow are poised to inflect as these initiatives begin contributing more meaningfully. While some will scale faster than others, each supports the strong annual free cash flow we expect to generate once we move beyond the current peak CapEx cycle. We estimate BrightStar can deliver more than $400 million in annual free cash flow before upfront license payments and after minority distributions. That expected cash generation reinforces our commitment to growing shareholder returns. This cash flow outlook also highlights Brightstar's compelling current valuation, representing about a 20% cash flow yield, while our dividend yield is approximately 9%. Non-cash service revenue amortization impacts adjusted EBITDA, or excuse me, adjusted EPS, by approximately 94 cents this year, which more than covers the current annual dividend. The remaining EPS provides ample capacity to maintain or potentially grow shareholder returns. Adjusted EPS, excluding service revenue amortization, provides another attractive view on valuation. Based on the 2025 actuals, Bright Star is trading at just seven times that metric. Altogether, the Bright Star story is straightforward. The heaviest investment period is largely behind us. Our growth initiatives are in place and beginning to scale. and the market has not fully reflected or priced this inflection point. With that, I'll turn the call over to Max.