Q2 2021 International Game Technology PLC Earnings Call
Good day and thank you first funding by welcome to the International game Technology Q3 of 21 earnings call. At this time, all participants are in a listen only mode.
Sorry, the speaker's presentation, there will be a question and answer session.
Oscar for the question during the session you will need for press Star 1 on your telephone if you require any further assistance. Please press star zero.
I would now like to hand, the conference over to your Speaker today, James truly senior Vice President of Investor Relations. Please go ahead Sir.
Yeah.
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 the number of factors and uncertainties, including those related to the effects of the COVID-19 pandemic.
Nick.
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 of second quarter results, we are reporting today highlight of the vitality of our portfolio.
Outstanding Lottery performance of the progressive recovery in land based gaming and the strong increase in digital embedding of Dvds.
All of the revenues up of more than 70 per cent.
Profit growth was even stronger adjusted EBITDA of 442 million was overdue and as the times of the priority of Atlanta, and among the highest that we have ever recorded in the quarterly period of that.
In addition to the natural operating leverage in lottery structural cost reductions from all what I hope the map program contributed to improve the global gaming for 4 months, which returned to positive operating income in the quarter.
In the first the 6 months of the yes, we generated 380 million of free cash flow the record level for the first half of Penny on the.
Our focus on executing with excellence.
Grounded in good corporate citizenship, but.
We recently published the 14th annual sustainability report the improving the quality of the information we disclose about the the sustainable activities in the solution we have in place across the company.
I'm delighted in the report.
The fourth at the diversity and inclusion which have been the recognize that for the band of scope and the impact we.
We firmly believe our dedication to wellbeing and developing the of our employees and high standards of corporate of the Cps and sheep of creates a value for our stakeholders throughout the world.
The veggies tangible in our strong first half results, enabling guys of to raise the expectation for 2021.
At this time, we now expect to exceed the 2019 levels for the key financial metrics for this year.
This is an important achievement considering the fact the of the pandemic on the global gaming industry. It validates the unique attributes of Igt's portfolio and the dedication of the IGT team around the world.
I want to thank for their resilience at this point of stability and good corporate citizenship.
Our lottery business continues to perform at the very island and broaden the base, but all the base of the play of demand across our games of geographies and channel is they're all the same store sales of 35% of Eylea in the second quarter.
Lottery is a consistent multiyear growth profile has fueled our longest say that other dimensions of that.
First of all with continuous innovation in game content head arms of 2 popular draw game franchises, such as the DHA of law to expedite in Italy, and the double play cash 5 of cash for the live in the U S have been his patient and the successful.
The recently launched the novice numerous seem eastern game in Italy is performing very well out of the gate.
Second.
True improve the retail penetration in the sales execution, including the optimization of game for the for years and improve the logistics the distribution of games, especially around convenience options such as of so servicing the lane purchasing and cashless solutions have experienced the I play yet of symptoms.
Uh huh.
The Washington, the state Lottery, a leader in the development of sales service model will soon of deploy our next generation of cash less lottery technology as part of the recent the multiyear contract the station and third by increasing play it safe tons at Kenai lottery.
I will expand on these a little later.
As we look at the second the Alpha.
We expect the 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.
Disease at the up ethane the of historical trends and apply that to higher levels of consumption.
It is the compelling outlook for a business with an attractive margin structure and stayed the growth profile that has proven to be eylea is the yen 2 macro dynamics.
For the global Gaming segment, most markets are open today, our business is concentrated in the U S where there's a lot of the G. Jr. Has allowed the lyrical Virtu 2019 letters in many jurisdictions.
Regarding the revenue streams.
Rebounded quickly more than doubling of prior year levels and up of double digit sequentially on iron therapy service revenue and strong digital index being.
Growth.
Sequentially net out of more active installed base of units of generating stronger yields.
Top performing games, including include several of the wheel of fortune titles, and the new multilevel progressive the Rockland light Jing Thai Shen and Gong of Chief of Cai.
Outright sales of more than double the the prior year and the we're up over 40% of sequentially on strong the replacement seeds.
We expect the sustained improvement of unit demand in the second out of deal book for Casino and the VLT customers as operators are reporting to increase the levels of investment.
Sales will be supported by the peak of land 49 cabinet, which is now often for the sale with proven I performing games, such as legal the cheese and Scott I believe.
Adoption of Igt's of best in class of cashless solution is expanding.
Later this year the Aguascalientes the driver will implement our resort of wallet cashless solution at all 3 of its California Casinos, Inc.
Included in the offering will be the proprietary IGT P. Full service funding solution for the collect cash list wagering via credit and debit cards of bank accounts in the wallets.
And there are more of these in the pipeline.
The industry is also taking notice of our accomplishments of our ability to consistently bring excitement and innovative products and services to market. What's the recognize at the 2021of global Gaming Awards of London, where Igt's <unk> casino supplier of the other.
It also supports our expectation of the progressive improvement in global Casino gaming in the balance of the.
We continue to build on our leadership position in the night gaming lottery and sports betting we are investing along the mainly the maintenance to bring the most compelling digital games to market.
In addition to leveraging our deep and proven the land base portfolio. We are also developing the new digitally native game. So.
Cash adoption is the recent example, and has quickly become our top performing game in Michigan and the same European markets. It will launch in New Jersey soon though.
We are also creating partnerships that provide a success of 2 new and innovative game features as we did with the we look forward to moving Mega ways. These arrangements that enable our partners to develop a day of Rona new game content using igt's platform enhancing the value of IGT.
As I gaming ecosystem.
Distributing third party content provides another opportunity for incremental market share we expect it to be distributing of over a dozen third party titles in the second half of the year.
Later this quarter, we will deploy our next generation lottery platform at the beginning and Georgia, We expect that these leading edge of solution will greatly enhance our competitiveness, notably it is the first cloud the base I lottery solution to go lives for the <unk> customers.
Enabling a faster delivery of game content of while reducing costs.
We are also expanding the portfolio of games that featured in the Leach of audio visuals and announced the bonus play feature.
VIP Golar Grand and the Triple platinum out of the recent new east of the games of the thought of generating all time high.
The use.
Multi price of eastern for games like in value only spud Sally have been very successful in Italy.
The deployment of our play sports platform continued to expand the at a fast clip.
She is currently powering of approximately 50 U S sports books for.
For the 18 customers across 15 states.
1 of the more recent addition is that resource the war of the Las Vegas, the retail sports book as well as its the statewide the mobile banking app.
These are development announced our Nevada President of so we established with the Boyd gaming.
Yeah.
We delivered a strong first of thanks to robust player demand and disciplined execution supported by innovative product launches and the overall cost and capital control.
At the same time, we significantly reduced our debt improving our financial condition and the leverage of profiles.
With the tail winds of 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.
With our growth initiatives remain grounded the in our commitment to sustainability building gone the important progress we have already made now I'll turn the call over to Max.
Thank you Marco and Hello to everyone like last call. It will be primarily speaking to continuing operations in this presentation due to the sale of our Italy B to C gaming business, which closed in May.
Before doing that I want to highlight where we stand in our recovery path of pre pandemic levels Q2 was another outstanding quarter from both an operating and financial perspective, as we see markets across our industries of recovering at a faster pace than originally expected. This combined with our cost savings initiatives being well ahead of plan.
Of the outstanding results, we are reporting today.
And importantly, we have accelerated the pace of our cash generation, allowing us to return to pre pandemic leverage 6 months I had the of our target.
The details of our results continue to showcase the unique strength of the IGT portfolio year to date net income improved by over $1 billion from the priority of period and we generated.
$194 in the earnings per share.
This increase was the result of 3 main drivers sustained improvement in operating profitability. The capital gains recorded on the sale of out of discontinued operations and an impairment charge in the second quarter of last year that was triggered by the beginning of the pandemic downturn.
On the next slide number 11, you can see the the results were impressive across all key financial metrics. During the second quarter IGT generated over 1 billion of revenue 244 million and operating income and 442 million in adjusted EBITDA.
Revenue grew over 70% from the priority other while EBITDA was up 170 per cent.
Last quarter, we can see the impressive operational leverage of our lottery business and the benefits of structural cost savings actions.
We achieved over 2 thirds of our 200 million Optimus savings target versus 2019 by the end of the second quarter, having accomplished over 70% of our product simplification and margin improvement efforts.
The operational excellence piece is driven by the pace of the gaming recovery and we expect to benefit more from the savings in the second half of the year.
Turning to our lottery segment on slide 12 revenue impressively increase of over 50% to $725 million robust same store sales rose, 35% from the priority of and went up 24% from Q2, 2019, which highlights the strong play of demand.
Italy Lottery has had an incredible performance in the quarter with sales more than doubling from the priority of some of this is due to an easy comparison since lottery points of sales were heavily impacted by the pandemic restrictions last year and there was an outsized benefit in the second quarter of this year because gaming halls in Italy were closed until June.
In North America, and the rest of the world of Lottery momentum continuing from Q1 with the same store sales growing 21% in Q2 over the prior year with broad based strength across the game categories and the benefit from high of discretionary income in the U S.
Strong same store same store sales as well as the higher mix of Italy business, which generates more revenue per wager led to margins well above the normal range off.
Operating income more than doubled from the priority of period, 2 of $300 million with adjusted EBITDA growing 87% to $414 million.
Last quarter, we recognized 80 million of revenue from Ellie Mae incentives and outsized jackpot activity.
Net flow through almost entirely to a profit while we did not have those benefits. This quarter. Our strong same store sales growth translated into a net EBITDA incremental margins of over 70%.
Yes.
Turning to our global gaming segment on slide 13.
Revenue of more than doubled from the prior year driven by an improvement in the cutting service revenue and higher the unit shipments, we saw 19% sequential revenue growth versus Q1.
Sequentially. The global installed base was relatively stable with terminal service revenue growing on higher productivity from more active machines.
Currently over 90% of all the U S casino installed base is active and yields continued to be higher than they were pre pandemic given the positive trends in overall gaming service revenue, which includes strong digital embedded growth, we expect to be back to queue for 19 levels by the fourth quarter of this year.
We sold roughly 63 hundreds of units globally in the quarter doubling our priority of shipments and growing 44% sequentially.
Shipments were driven primarily by strong replacement demand from casino and VLT customers. We also saw higher shipments of the order placement units internationally, particularly in Australia and New Zealand.
The gaming business returned to operating profitability in the quarter as top line trends continue to improve and our optima cost savings actions benefited results.
The EBITDA of 49 million is the sequential improvement of trend, we expect to continue for the rest of the year.
On slide 14, you can see that continuous healthy cash conversion and capex discipline drove $176 million in free cash flow.
We've generated 300 and hate to $80 million in free cash flow in the first half of 2020, 1 which is the highest reported the mountain for the first half in company history, along with the roughly 750 million in net proceeds from the sale of of Italy gaming business, we can see the direct impact to net debt level.
Leverage is 4.3 times of 4.3 times is back to pre pandemic levels 6 months ahead of our target.
The next slide shows out of bed maturities, which have improved significantly over the last year. The proceeds from the Italy gaming business where to use towards the full redemption of the for 75% 2023, you were at 850 million bonds, and we recently amended and extended our term loan with our.
Our strong financial position, allowing us additional liquidity and extended the maturity and lowering the interest cost. We now have a weighted average debt maturity of roughly 5 years.
Since the beginning of the of our combined capital markets actions have reduced ongoing interest costs by 65 million compared to 2020 levels of which almost half we started the crewing through the second half of this year and a bit more than half in 2022.
Over 80% of our debt is fixed and the variable piece is pre payable with minimal cost, allowing us to effectively manage our exposure to interest rate volatility.
In summary, we have delivered an impressive financial performance in the second quarter and you have to day periods of strong play of demand in lottery progressive recovery in gaming and our structure our cost savings initiatives have all contributed to the these results we continue to generate robust free cash flow and reduce debt and the balance sheets.
The improved liquidity and a more favorable debt structure.
On slide 17, we have our outlook for the back half of this year. We currently expect revenue of approximately 2 billion and operating income of about 300 million in the second half, which implies strong yeah, it'll body of growth for both metrics.
Global Lottery is expected to return to more normal growth rates applied to higher levels of consumption Q3 to date same store sales are up double digits versus 2019, which is at the high end of the historical trend global gaming should maintain its plan of progressive recovery.
None of them some important differences between the first half and the second half revenue and operating income will be lower versus H, 1 of the normalization of lottery growth trends.
Cash from operations is expected to be lower than H..1 is the elevated lottery revenue quickly converted to cash in the period. In addition, cash tax payments are concentrated in the second half of the year and why working capital was the source of cash during the height of the pandemic. It is now.
The 2 returned to more normal levels.
We estimate capital expenditures will total about 175 million in the second half sequentially, increasing to support growth, but the remaining below 2019 levels for the full year.
Depreciation and amortization should be in line with first half levels.
I should note that this current expectations do not factor in any potential impact for them additional COVID-19 restrictions.
Yeah.
That concludes our prepared remarks, operator can you. Please open the call for questions. Thank you.
Yeah.
Yeah.
Operator, we're ready for the questions.
Folks please bear with US we seem to have lost our operator will be we'll be right back for Q&A.
Excuse me presenters.
Yes.
Alright, I'll be opening up for Q&A at this time itchy.
If you would like to ask the question. Please press star 1 on your telephone keypad again that is star 1 on your telephone keypad.
Well pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Carlo Santarelli of Deutsche Bank.
Your line is open hi, everybody good morning.
If you guys..1 of mine just kind of as you think about the lottery business and the expectation for the back half of the year and obviously the growth rates, which are lower than what you've experienced in the first half.
Provided some color on the <unk>. So my question really is is there anything that you're seeing in the current trend that is materially different than what you've been experiencing here over the last 7 or is it just more of a comp stat issue that kind of has that that growth decelerating from what you experienced in the.
<unk>.
Good morning, Carlo it's Marco.
This is a good question I think of the good and the good news is that the as we said the during our remarks, our expectation is to grow in the stake on the health.
Half of the EBITDA to grow single digit of games.
Last year net by the way was the growing overall in the 8 to 9 per cent of <unk> 19 and to be up low double digits. The comparator to the second half of the 19. So what we are experiencing is of some stickiness of.
Is that of what the higher level of consumption. They have experienced during the pandemic. We haven't seen that these business benefited the problem the lack of Uh huh.
Uh huh.
Entertainment the options in Italy, more specifically benefited from the closure of the the gaming goals and the the sport betting shops, but what we are seeing the data even after the reopening we have a quite a good the performance, especially of a scratch efficacy in Italy.
That is of some out of the of firming of water day consumer researches were telling Gaza that the players overall I appreciate the the very much of the portfolio of lottery games.
They enjoy the ETA and they out of stating that they will have an average consumption I other than the what are the you had the pre pandemic from that of level I guess said that the we will get back going forward to more of the secular trends, but tough for all of them and I yeah the level of.
Patterson of consumption.
Great. That's super helpful. Thank you Marc and then if I could just ask 1 more of ask 1 more.
And as it pertains to your capital return philosophy at this point with the leverage where it kind of <unk>.
What are your latest thought 1 of your range.
I got all of this is mark speaking so as we are approaching the.
Our 4 times a leverage of goalpost.
Obviously, we have.
Accelerated our strategic thinking around the the next phase of our of our.
Culture is the V the capital allocation priorities.
And again.
In front of our Investor day coming up in November I would not preempt our.
Our thinking right now the only thing I want to tell you is that we are right now we're gravitating towards moving to a range.
The range of leverage.
The ratios that we would look into to maintain over the full cycle and as you know for us cycle means.
Yes of of law upfront fees payments versus years of higher upfront payments, which as you know they may be coming to fruition in a couple of years out. So that's where we where we currently sit in terms of our high level thinking and I would defer to the investor day to a more precise answer whereby the gay.
And we're very happy that we were we are able to get closer to that 4 times.
Faster than we originally anticipated.
That's helpful match up the 2 completed the the next year as of we do not have of major upfront fees.
I head of asset so the good news is that we are generating a strong strong cash flow, but the major of the copy of that like why the for the biggest the Congress of all of our portfolio will start of that in 2025.
Great. Thank you Margaret Thanks for the clarity on that I appreciate it.
Yes.
Your next question comes from the line of Chad Beynon Macquarie. Your line is open.
Hi.
Thanks for taking my question and congrats on the results Max you noted that.
You guys plan to be back to gaming levels.
In the fourth quarter of 2021 as you saw in the fourth quarter of 2019 could you just expand a little bit of in terms of if you were thinking revenues or EBITDA and then related to that.
How are you thinking about some of the more cyclical items like product sales and how operators plan to purchase a slot machines, how that's trending thank you.
Yeah. So first of all of the clarification of that comment was made the Ah in regard to the service of recurring revenue business portion of which we expect to continue to improve quarter after quarter and right now we see potentially a Q4 of 'twenty 1.
Seeing a trend in the service part of it by yourself of the business similar to what we were left with at the end of 19 pre pandemic on the product sales side theres going to be more L. A much longer curve to get back to the 19 levels.
We probably will need to see it for a full year of the developments are we have started to see some of the operators.
Willing to come back at the table, but we're still in the very early innings.
For the dynamic to really take hold and allow us to bring back our product sales for the level of 2019, which we don't anticipate.
Until probably late 'twenty 2 early 'twenty 3.
Okay.
The sentiment of Chad if I can elaborate on it at the same demand for of operators of these becoming.
More and more a pause at the helm.
And we will see of progression on the in terms of product sales over the next quarter as the correctly Max said the.
It will take the next day air to recover the pre pandemic level and the thought that if you talk about of the sentiment of the definitely the sentiment has changed the G. G. Other operator of that experiencing out of making them more relaxed the in discussing about the capital expenditure for.
The next months 1 thing is to discuss about it. The 1 thing is to cut deals, but the but the <unk> a.
Very good news and the AMA rather excited about the.
The possible accelerated the velocity in terms of for color.
All of our products again, not the reaching the priority of 11, but if we elaborate on the second quarter. It was the in North America, 11% of below <unk>.
19. So this is a I think angle of the.
A good point.
Perfect. Thanks, Marco and then regarding I Lottery you noted your new cloud based technology that you'll be rolling out in Georgia can you talk about just the overall I lottery education process with state legislators in the U S.
If there are better understanding the the benefits and the technology that comes with US and if you still believe that the market could could double in the near term just any update from a legislative standpoint.
No I think of definitely that of the market cash.
Can grow and can dabble in the foreseeable future of what we see that that I've.
<unk> lesion authorizing a lottery just approve.
Zone, I in Connecticut, and but what I think is that the jurisdictions out there when the day will seeing the importance of a lottery in our in the duty in the other jurisdictions that are already regulated the they will get more of the motivation out of wheat I gave you an.
<unk> full of for example for among of the they do to sneak shows that out of our Lady.
Lottery, we were talking about the importance of a night pay out the ni lottery.
To drive.
On the growth of the business and the for example, our customers in Kentucky, and Georgia now I have decided to increase the payout of the new products because they realize they can go faster I give these.
As an example of the.
The motivation of the jurisdictions the regarding these segments. The by the way is getting the consumer a sanction and though we out of working a lot on our portfolio in order to have the as I said in previous quarters, the investing in talent.
In the technology and content and the next generation I lottery.
Platform you have referenced 2 is a good example, as well as with all the investments that we are doing in the contents in order for.
To strengthen our offering and to be per pad for that when the other jurisdictions will a regulator of the space that in my opinion the committee will happen over the next 2 years.
Thanks, Marco scratching here I appreciate it.
Yeah.
Your next question comes from the line of Barry Jonas of choice of Securities. Your line is open.
Great. Thank you.
Hi, guys.
We're seeing increased Covid cases, and restrictions from the Delta variant aside from the comments you gave around Italy, I'm wondering if you've seen or maybe would you expect any other positive or negative impact to your businesses.
Thank you Barry and good morning regarding the there's the variant. Unfortunately, we are all experiencing an increased number of cases when it comes out to the <unk>.
Consequences to our business so let's focus on gaming because we have seen that the lottery is being that other of our resilient I would say most of the resilient as a matter of fact, we got the traction out of the overall situation of digital benefited out of it.
The gaming Guy regarding gaming, we aspect of that we do not expect that these of giants of the closing majors.
In the in Europe, and the you were referring to Italy, the only debate.
We have yet neither of these regard of being gas.
The fact of showing what we call Green path that is the documented that sales of that you go up the the 2 level of vaccination zone. All other in alternative or you have to demonstrate that the you have been successfully tested the the 48 a year day.
Is the Saudi Yes. These are 40 for the 40.
48 hours before entering.
Gaming going regarding what we see in the United States out of the only measure of that the for the time being.
We are seeing ease in Nevada in the in several of other jurisdictions of the request for players at the way out of the face mask. So all in all I do not see that at this stage.
We should see.
See something truly.
Warning regarding regarding the the gaming business, but we are in the stage, where we have a book to get that look at the the evolution, but I do not see in the government's attitude.
The the approach to get the backend of 2 lockdowns.
Great I appreciate that Marco and just for my follow up question scientific games, just announced they are selling their lottery and sports betting business.
We've got a few questions.
Concerning that as it relates to IGT. So I guess first how meaningful is bundling across your business lines and 2 is selling off any part of the company something you would consider exploring if the price was right.
And this is a very good question I overall I think of we have the consistent portfolio for us to start to read the.
Our businesses.
For Qs on delivering content and solution to the wall of the regulated the.
Gaming market and this is my opinion lots of binds them.
And.
We have folks user of serving governments and the lives of private operators as the b to b provider of it and these are all can expand that to comprise of full outsource.
Lottery operation where appropriate.
This is just to say that we see a consistency of of a lot of our portfolio and the.
And by the way the.
These are each of business in our portfolio is profitable and is a good.
Growth perspective, it will generate a.
Strong cash flow, enabling significant deleverage in the next years.
You said that the.
Our new organizational structure gives us more flexibility to evaluate the value creating portfolio initiatives.
The compelling opportunity materialize and by the way just to give a little bit more flavor or need the talking about the portfolio flexibility.
That as we did that in the previous call that we are considering the possibility of creating a digital the segment going forward. The EBITDA performance will be maintained at this level. So I think I tried to provide you what we feel.
We are the end, but also providing.
Did the sand so our flexibility going forward.
Great. Thank you Marco Thanks, guys.
Okay.
Alright. So next question comes from the line of David Katz of Jefferies. Your line is open.
Good morning, everyone. Thanks for taking my questions.
I wanted to just go back to the discussion about lottery day.
And in lottery sales levels in the back half of the year.
And how much of that is predicated on the.
The reopening of land based halls, and I suppose I'm wondering whether that reopening getting pushed out of.
On a little bit of Covid.
Surgeons would prospectively draw.
Drive upside to what you're guiding today, if that were to occur you know how much of it is land based open or closed drove it.
No.
Talking about our land base of providing these figures of I can tell you that now the situation of the reopening of our main geographies does not is not.
Included in our outlook of because.
We were considering all of the gaming alternatives and the in general.
The statement.
Given the fever options out there.
We're planning so the the performance.
I offered the use for the second half of the year.
<unk> is based on a on the.
All of reopening I do not expect that the the measures I was commenting regarding the resurgence of the delta the variance of coffee the will influence out very much in the lottery at this juncture.
Okay perfect. Thank you and as my follow up with respect.
To the premium or the U S installed base in particular.
You know, we've been sort of looking for that base to be flat and maybe even start to go up.
Over time.
Just how are you thinking about kind of the addition of units there and the yield that they generate and is it reasonable for us to expect at some point that the.
U S installed base would.
Flatten or even the turn up at some point in the near term.
I think first of all of as we were saying in our prepared remarks.
Things are progressing quite positively because now the active units of above 90% in deals of the ease of.
Other truly very very strong in the out of getting stronger notwithstanding the.
The increased number of.
Active units set of guarding the your question of our goal is for sure to stabilize the installed base and the going forward over the next quarters, mainly next year take advantage of from the launch of of especially the Mlps are proud of that so where are we.
We are devoting the most part of our investments I think of the pipeline of products, we have as the assuring.
We see that over the last the.
We got the.
And almost the <unk>.
Stable.
The installed base of.
We think of that are going for the not in the short term unnecessarily, but the our goal is definitely.
To stabilize that increase the installed base and we are investing in the right part of the portfolio of my opinion at what you of that call.
Okay. Thank you very much.
Thank you David.
Your next question comes from Dominik for Gilead of Lucky.
Your line is now open.
Good morning, My question is related to the cost saving initiative.
Got to understand how much of the cash P&L.
Contribution you had in the first semester and my question is related to the fact that basically for the second batch of projecting the very soon that the clients of the too big of its not far away from the first stop but the.
As of at much lower of 200 million go out of our EBITDA or EBITDA, despite the higher contribution from synergies.
And the follow up on this is the if you will see additional opportunities going forward, what sort of for for 2022.
And the last the.
Based on your side or the <unk>.
Jackson of your indication for the second Dod So we should expect all sorts of a tough comparison of the way a sequential the nominal sequential year on year decline in the first semester of 2022.
Hi, The America. This is Max speaking I'll take this 1 so as we have.
Displayed our Optima program in action.
Made up by 3 parts.
So there is a N a.
Out of an improvement action, which relates to our ability to contain cost reorganize back offices.
Look we look at our footprint initiatives and this has been in full swing and motion in the first half and we have been able to kind of achieve almost 70% of those are initiatives and are they are up and running now going forward.
The second portion is the product simplification. So we have looked into the combination of proud of geographies across the board, we have been able to reduce spending Ah Ah in certain of those and the debt initiative is also up and running.
To the tune of 70 per cent of its potential and its kind of meant to stay there.
I'm the last 1 which is running a little bit behind but it's consistent with our initial expectations is the operational excellence because that requires a the volume of new production to come up.
It is moving forward what are slowly moving forward quarter after quarter by the game until we get to full of the full fruition of the gaming the land based gaming demand at which as we said before it's going to come probably towards the end of next year is not going to get to full a full.
Benefits so.
All in all.
We are ahead of our plan in terms of the savings we have been able to count of the hard savings on maintaining strict discipline on cost spending so far are the the more dramatic supply chain a reorganization.
Benefits will come to fruition over the time and so there is a little tail that will come to fruition potentially next year.
In terms of a first half the second half probably in the second half of that would be so.
Some of the supply chain constraints are generating some cost of attrition a not to a significant magnitude. We as we said in the last call we're expecting something around 10, Max 15 million this year.
And we think we have enough power in our optima program to be able to offset those incremental costs.
For the balance of the year.
Does that respond your question.
Yeah, Okay. Thank you.
Again, if you would like to ask a question just press star 1 on your telephone keypad.
We'll take our last question from John Decree of CBRE. Your line is now open.
Hi, everyone. Thank you for taking my questions I think most of them have been answered, but maybe just 1 on the U S sports betting landscape.
And I think you've mentioned in your presentation that you've got about 50 play sports books up and running in a pipeline that might be over 40 potential customers. Mark I was wondering if you could elaborate a little bit on that pipeline and your expectations and maybe high level you know your current thinking and outlook for your <unk>.
In the U S sports betting arena would be helpful.
For sure good morning, but we have a very positive regarding our protiviti non sports betting we see traction on that in terms of the number of the jurisdictions the topic.
We expect that the regulator in the next day, yes. These.
Segment.
The segment and we expect that that weekend and the player in this business as I always say, we ought to be to be provided in this part of the b.
Business, we see an opportunity for it is that mainly as a supply of 2 of them.
The key solutions.
For the local the local operators.
Where we can leverage of our commercial relationship and the our end to end the solution the platform and the risk management service just to give you a little bit of color. These are these end to end solution provides oh burritos downtime of existing sports betting expertise, but.
Wanted to win the day at all of the branded the sports books, the low investment opportunity to build the sports betting business.
And we can enable them.
Doing good and those out of the kind that the kind of cost of them is that of the Zhang our target.
The.
Now in the active out in the house the.
Sports books across the seeks the jurisdiction of Colorado.
The Washington State, Louisiana and the in these are the stake that we own.
For the commercial leads that we are currently exploring and the in Nevada as I said the during my prepared remarks, it has been important for us.
Powering of the recently opened the resorts world of Las Vegas.
Ts.
It is the.
For the fall is follow the that follows the work we've done with Boyd.
During the year. So this is the the way we see this opportunity for us.
I don't know if it is clear out of it.
If you want to ask something else some other vehicle.
Gotcha.
Yeah, that's perfect Marco thanks, Thanks, so much and congratulations on another strong quarter.
Thank you.
There are no free J's question at this time I will now turn the call over to Mr. Michael Sala IGT C L.
Thank you for joining us today, we appreciate your interest in IGT Q2 was another outstanding quarter from both of an operating and financial perspective in the first half of the other we have accelerated the pace of Acacia generation, enabling us to return to pre pandemic leverage of 6.
Months of scale with the tail winds of like attractive long term of lottery industry trends for the global gaming of recovery and fast growing digital embedding businesses. We expect the this positive trend to continue we look forward to seeing you at the broker of competencies of this fall at our inverse.
For the day in November and of Great day.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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Right.
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