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INTRALOT SA, a leader in international gaming solutions, operations, and technology, has announced its financial results, which were prepared according to IFRS, for the period ending March 31, 2023.
OVERVIEW
- Group Revenue: EUR89.5m. (-8.4% year-on-year).
- EBITDA was EUR33.7m (+29.2% year-on-year) in 1Q23. EBITDA margin increased to 37.7%, up from 26.7%.
- LTM EBITDA at EUR130.5m, up by 6.2% vs. FY22.
- Our US operations have experienced a significant growth (Revenues +13.1% and EBITDA +31.6% year-on-year).
- In 1Q23, EBT was EUR10.9m as compared to EUR-2.3m in 1Q22. EUR-2.3m was the EBT in 1Q22.
- NIATMI, (Net Income after Tax and Minority interest), at EUR3.1m as compared to EUR-5.7m one year ago.
- Operating Cash Flow was EUR37.2m (+115.3% year-on-year) in 1Q23.
- Group Net CAPEX for 1Q23 was EUR7.2m.
- Group Cash ended 1Q23 at EUR109.2m. This is EUR6.8m more than Dec-22.
- Net debt at EUR471.6m by the end of Q23 is EUR18.9m lower than Dec-22, and EUR29.0m lower than 1Q22.
- Net Debt/ LTM EBITDA was 3.6x in the 1Q23 as compared to 4.0x in FY22. In FY22, the ratio was 4.0x.
Group Headline Figures
INTRALOT Chairman & CEO Sokratis P. Kokkalis noted:
In the first quarter, we are proud to report a robust organic Ebitda increase of 29%, a return of Net Earnings and healthy cash flow, as well as a significant reduction in Group Net Leverage ratio down to 3.6x. This has added momentum to INTRALOT’s successful turnaround story, a result our consistent efforts over the last few years. We are excited about the new capabilities and healthy financials offered by next-generation solutions for Lottery Digital Transformation, both in the retail and online realms. This will allow us to address upcoming maturities and improve our capital structure.
OVERVIEW OF RESULTS
REVENUE
The reported consolidated revenue decreased compared to the 1Q22 period, which led to a total of EUR89.5m for the three month period ending March 31st 2023 (-8.4%), without the impact of the discontinuation Malta license. However, the underlying revenue of the continuing operations increased 17.5%.
- Lottery games remain the largest contributor of Group turnover, with a 60.4% share, followed by Sports Betting, with a 17.5% share, VLTs Monitoring, with a 12.5% share, Technology Contracts, with a 9.5% share, and Racing, with a 0.1% share.
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The reported consolidated revenue for three-month period has decreased by EUR8.2m compared to last year. The top-line performance of each Business Activity is primarily driven by:
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EUR-20.4m (-64.5%) of our Licensed Operations activity line (B2C), with the variance being driven by:
- Malta’s revenue will be lower (EUR 21.5m) because of the expiration of the license in early July 2022.
- Revenue growth in Argentina (+10.9% or EUR+1.1m) is attributed to the local market’s growth.
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EUR+6.3m (+11.4%), from our Technology and Support Services activity line (B2B/B2G), with the variance being driven by:
- US operations increased revenue (EUR+4.6m, or +13.1% year-over-year), mainly driven by growth in Numerical games and Instant Games. Further affected by EUR depreciation (4.3% in average terms compared to a year earlier)
- Revenues from the rest of the world (EUR+1.7m, or +8.6%)
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EUR+5.
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The variance is driven by:
- The performance in Euro terms has been partially offset by the headwinds of the Turkish lira (+28.1% Euro appreciation compared to a year ago).
- Increased revenue from US Sports Betting contracts Montana and Washington, D.C.
- Steady performance in Morocco.
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GROSS GAMING REVENUE & Payout
- Gross Gaming Revenue (GGR), which is the total of all gaming revenue, was EUR83.4m for 1Q23. This represents a 4.5% increase (or EUR+3.6m). The increased performance in most key regions was able to offset the lower sales from Malta as well as the higher payout ratios in Argentina (-67.7% year-over-year on wagers placed by licensed operations4).
OPERATING EXPENSES & EBITDA
- The increase in operating expenses was driven by an improved performance in the USA and Turkey.
- The Other Operating Income for the continuing operations reached EUR7.8m, representing a 37.0% increase y-o y (or EUR+2.1m).
- EBITDA in 1Q23 was EUR33.7m, a growth of 29.2% or EUR+7.6m compared to 1Q22.
- The EBITDA margin of sales has risen to 37.7% on a year-over-year basis (+11.0pps) from 26.7% during 1Q22.
- LTM EBITDA is EUR130.5m. This represents a 6.2% increase compared to FY22. FY22.
EBT / NIATMI
- EBT for 1Q23 was EUR10.9m, up from EUR-2.3m during 1Q22. This is largely due to the contribution of EBITDA, improved results from investments and participations, gains in net monetary positions, and the benefit derived from lower D&A.
- NIATMI for 1Q23 was EUR3.1m, compared with EUR-5.7m during 1Q22.
CASH FLOW
- Operating Cash-flow for 1Q23 was EUR37.2m. This is an increase of EUR19.9m compared to the 1Q22. The positive impact of the higher EBITDA recorded y-o y and favorable working capital movements was partly offset by the negative variance for tax payments.
- CAPEX was EUR7.2m in 1Q23, up EUR2.9m from 1Q22. The majority of CAPEX expenditures were accounted for by US projects.
- The net debt as of March 31, 2023 was EUR471.6m. This is a decrease of EUR18.9m from December 31st 2022. Net Debt/EBITDA dropped to 3.6x, down from 4.0x. Gross debt changes that are positive include capital payments made towards the US Term Loan, lower interest rates compared to Dec-22 and a favorable FX effect on our USD denominated loans.
OUTLOOK/RISKS
The Company management sees opportunities in the expansion of regulated ilottery markets as well as the growth of Lottery and Sports Betting markets online, and also the recovery of the effects of the recent pandemic. INTRALOT has developed new technologies for Lottery Digital Transformation. This allows the company to take on more projects and increase its profit margins compared to the previous years.
Interest rates are high and economic growth is relatively slow, but the world economy continues to be awash in macroeconomic uncertainty.
The increased interest rates directly impact the Intralot Group’s financing costs, and the outlook suggests that central banks could start to relax their monetary policies by the end 2023.
The gaming industry is showing above average growth across most regions, and has been more resilient than most other sectors.
Management of Company closely monitors the geopolitical, economic and social developments. is ready to take the necessary steps for the protection of its operations.
