Q2 2024 International Game Technology PLC Earnings Call

July 30, 2024

Thank you for standing by and welcome to the International Game Technology second quarter 2020 forearnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: The second quarter, 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: Thank you. I'd now like to turn the call over to James Hurley, Senior Vice President of Investor Relations. You may begin.

Operator: After the speakers or marks, 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 number one. Thank you.

Speaker Change: 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 1 on your telephone keypad. If you would like to withdraw your question, again press the star 1.

James Hurley: I now like to turn the call over to James Hurley, Senior Vice President, Professor Relations. You may begin.

James Hurley: Thank you. I'd now like to turn the call over to James Hurley, Senior Vice President, Investor Relations. You may begin.

James Hurley: Thank you, Rob, and thank you all for joining us on IGT's second quarter 2024 conference call, which was 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. 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.

James Hurley: Thank you, Rob, and thank you all for joining us on IGT's second quarter 2024 conference call, which is 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.

Operator: Please wait; the conference will begin shortly.

Speaker Change: After some prepared remarks, Vince and Max will be available for your questions.

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 filing. During this call, we will discuss certain non-GAAP financial measures.

Speaker Change: 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.

Speaker Change: 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.

James Hurley: 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, and our press release slides accompanying this webcast and our filings with the SEC, each of which is posted on our investor relations website.

James Hurley: 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. Now, I'll turn the call over to Vince.

Speaker Change: During this call, we will discuss certain non-GAAP financial measures.

Speaker Change: You'll find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP measures, and 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.

Vincent Sadusky: And now I'll turn the call over to Vince. Thank you, Jim, and welcome everyone on the call. We are reporting strong first-hand results today, with over 2 billion of revenue and an operating margin of 23 percent, in line with the upgraded outlook provided in May. Native separation to investor costs, we achieved 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.

Vincent L. Sadusky: 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 divestiture costs, we achieved 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.

Vince: Thank you, Jim, and welcome everyone on the call.

Vince: 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.

Vince: Net of separation divestiture costs, we achieved record operating income and adjusted EBITDA, reflecting strong performance from both the global lottery and gaming and digital segments.

Vince: We are delivering these results while maintaining a solid commitment to good corporate citizenship, including the publication of our 17th Annual Sustainability Report.

Vince: 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.

Vincent Sadusky: We look forward to continuing to build on our achievements.

Vincent L. Sadusky: 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 holding. 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.

Vincent Sadusky: 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.

Vincent L. Sadusky: 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-caste structure also eliminates the tax timing impact on IGT shareholders from the previously contemplated equity distribution.

Vince: 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.

Vince: Apollo's $4.05 billion cash offer is a positive evolution of our previously announced every transaction in many ways.

Vince: This simple, straightforward transaction provides a clear-cut separation of global lottery from gaming and digital for IGT shareholders.

Vince: 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.

Vincent Sadusky: 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.

Vince: The all-caste structure also eliminates the tax timing impact to IGT shareholders from the previously contemplated equity distribution.

Vincent L. Sadusky: 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.

Vince: 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.

Vincent Sadusky: Partners. 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 for odd 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.

Vince: Upon the successful completion of the transaction, IGT's remaining operations will be comprised of its current global lottery business and corporate support functions.

Vince: 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.

Vince: 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.

Vincent L. Sadusky: 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, and 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 iLottery adoption, especially in the U.S. 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.

Vince: 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.

Vincent Sadusky: 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 eye-lottery adoption, especially in the US. It's ultimately establishes a financial profile characterized by strong profit margins, significant free cash flow generation, a solid balance sheet with substantial liquidity, and focus capital allocation. This puts us in a good position to extend and secure our contract portfolio over the coming years.

Vince: It's relatively unique to find a business that offers such good visibility into the future.

Vince: That visibility is bolstered by attractive fundamentals.

Vince: Lottery is a large, consistently growing and resilient industry with recession-proof characteristics.

Vince: It also has significant tailwinds from potential iLottery adoption, especially in the U.S.

Speaker Change: 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.

Vincent L. Sadusky: 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.

Vincent Sadusky: 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 rub modestly consolidating significant growth in the underlying sales-based experience 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 4th lottery draw introduced last summer, and 10-y lottery special draws introduced last fall were important drivers of increased retail and digital sales.

Vincent L. Sadusky: Three-and-a-half percent 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 elotto 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. However, same store sales outside of Italy were slightly below the prior year as 7.5% growth in multi-jurisdictional jackpot games was mostly offset by lower instant tickets.

Speaker Change: Moving on to the results we are reporting today, we continue to see high levels of lottery play around the world.

Speaker Change: The 2% increase in revenue for the first 6 months comes on top of a 5% increase in the prior year.

Speaker Change: Global same-store sales were up modestly, consolidating significant growth in the underlying sales base experience in the last four years.

Speaker Change: 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.

Speaker Change: In Q2, the fourth lotto draw introduced last summer, and 10 elotto special draws introduced last fall, were important drivers of increased retail and digital sales.

Vincent Sadusky: For Italy instance, the new 25-euros super-gold instant 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 a prior year as 7.5% growth in multi-jurisdiction jackpot games, mostly all set lower instant ticket sales. We did see sequential improvement trends in the 2nd quarter, again fueled by strong Powerball and Euro-million 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 veterans and ticket sales trends in the 2nd half of 2024.

Speaker Change: For Italy, for instance, the new €25 super gold instant ticket game and the launch of several tickets at different price points under proven franchises fueled growth.

Speaker Change: 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.

Vincent L. Sadusky: We did see sequential improvement in trends in the second quarter, again fueled by strong Powerball and Euromillion jackpots during the period. There are a dozen or so more higher-priced games that will launch over the next several months compared to last year, and that should support veterans and ticket sales trends in the second half of 2024.

Speaker Change: We did see sequential improvement in trends in the second quarter, again fueled by strong Powerball and Euromillion jackpots in the period.

Speaker Change: 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 veterans and ticket sales trends in the second half of 2024.

Vincent Sadusky: Global I lottery sales are maintaining excellent momentum, rising 27% in the first half with strong growth across regions, especially in the U.S. and Italy. Over the last few months, we've bolstered our global lottery portfolio in advance of some key strategic initiatives with important multi-year contract wins and extensions. We secured a new 7-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 experience. 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.

Vincent L. Sadusky: Global eye lottery sales are maintaining excellent momentum, rising 27% in the first half, with strong growth across regions, especially in the U.S. 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 7-year contract with the Colorado Lottery to install a full suite of our newest products and solutions that will offer players an enhanced retail and mobile experience.

Speaker Change: Global iLattery sales are maintaining excellent momentum, rising 27% in the first half, with strong growth across regions, especially in the U.S. and Italy.

Vincent L. Sadusky: 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 We also recently went live with our iLottery 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.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: 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.

Vincent Sadusky: We signed a five-year contract to launch cloud-based I-Lottery solutions, including our RGS platform, and 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 online lottery 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.

Speaker Change: We signed a five-year contract to launch cloud-based iLottery solutions, including our RGS platform, in a vast array of eInstant games for Canada's Atlantic Lottery, which is the nation's largest digital instant market.

Speaker Change: We also recently went live with our iLottery platform in Connecticut, enabling digital draw-based gameplay there.

Speaker Change: 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.

Vincent Sadusky: A robust pipeline of new games is driving gaming and digital performance. The global install 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 Eilers 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.

Vincent L. Sadusky: A robust pipeline of new games is driving gaming and digital performance. The global installed base continues to expand, with Q2 marking the 8th consecutive quarter of sequential growth led by premium games. In fact, IGT has 9 of the top 25 new premium games based on the latest Eilers survey data. Among them is Tiger and Dragon, which secured its third month as the number one new premium game released in WAP Games. Generating productivity of about three times the 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.

Speaker Change: A robust pipeline of new games is driving gaming and digital performance.

Speaker Change: The global installed base continues to expand, with Q2 marking the 8th consecutive quarter of sequential growth, led by Premium Games.

Speaker Change: In fact, IGT has 9 of the top 25 new premium games based on the latest EILER survey data.

Speaker Change: Among them is Tiger and Dragon, which secured its third month as the number one new premium leased in WAP Game.

Speaker Change: 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.

Vincent Sadusky: In June, we launched the Whitney Houston WAP 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-breaking MLP, 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 AMIA, Asia Pacific, and Latin American regions.

Vincent L. Sadusky: In June, we launched the 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 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.

Speaker Change: Mystery of the Lamp is another and demand remains high.

Speaker Change: In June , we launch 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.

Speaker Change: 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.

Speaker Change: The progress we are making in core video is evident with seven spots in the top 25 new core game rankings

Vincent L. Sadusky: With approximately 80% of gaming and digital revenue coming from the U.S. and Canada, there is a 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 U.S. for the first time ever, and rolling out the largest peak bar top video poker installation in Europe.

Speaker Change: With approximately 80% of gaming and digital revenue coming from the U.S. and Canada, there is considerable opportunity for IGT to grow in the EMEA, Asia Pacific, and Latin American regions.

Vincent Sadusky: 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 US, supporting 20% growth in US iGaming GGR in the first half of the year. Earlier this month, we launched our highly successful land-based prosperity link into five US iGaming markets.

Speaker Change: 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 U.S. for the first time ever, and rolling out the largest peak bar top video poker installation in Europe .

Vincent L. Sadusky: On the digital front, our Cache Eruption and Blackjack games continue to maintain their spots as the number one slot in table games in the U.S., supporting 20 percent 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 divestiture costs confirm that 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. Now, I'll turn the call over to Matt.

Speaker Change: On the digital front, our Cache 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.

Speaker Change: Earlier this month we launched our highly successful land-based prosperity link into five US iGaming markets. Providing customers and players with multi-channel game content is a cornerstone of our global content strategy.

Vincent Sadusky: Providing customers and players with multi-channel game content is a cornerstone of our global content strategy. The record first half operating income and adjust to the EBITDA we achieved before the separation of extra short 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.

Speaker Change: The record first half operating income and adjusted EBITDA we achieved before the separation divestiture costs confirms we are very much on track with our core operational and strategic objectives.

Speaker Change: 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.

Max Chiara: Now I'll tell the call over to Max. Thank you, Vincent. Hello to everyone joining us today. I get to report the second quarter of 2024 results this morning, solidly meeting expectations for both revenue and profit. Revenue of 1.05 billion was in line with the prior year, as growth in gaming and digital was offset by elevated global lottery product sales in the prior year. We deliver operating income of 230 million, including 26 million in separation and divestiture cost compared to 251 million in the prior year. Excluding those costs, operating income margin in pro 40 basis points to 24.4%.

Massimiliano Chiara: Thank you, Vince, and hello to everyone joining us today. IGT reported second quarter 2024 results this morning, solidly meeting expectations for both revenue and profit. Revenue of $1.05 billion was in line with the prior year as growth in gaming and digital was offset by elevated global lottery product sales in the prior year. We delivered operating income of $230 million, including $26 million in separation and divestiture costs, compared to $251 million in the prior year.

Speaker Change: Now I'll turn the call over to Max.

Massimiliano Chiara: Excluding those costs, the operating income margin improved 40 basis points to 24.4%. Adjusted EBITDA was $420 million versus $443 million in the prior year period. Net of separation and divestiture costs, adjusted EBITDA was $446 million, and the margin expanded 30 basis points to 42.5%. We generated diluted earnings per share of $0.20 and an adjusted EPS of $0.36. On a six-month basis, our adjusted EPS, excluding separation and divestiture expense, reached $1 per share, a record for the company.

Max: Thank you, Vince, and hello to everyone joining us today.

Max: IGT report the second quarter 2024 results this morning solidly meeting expectations for both revenue and profit. Revenue of $1.05 billion was in line with the prior year as growth in gaming and digital was offset by elevated global lottery product sales in the prior year.

Max: We deliver operating income of $230 million, including $26 million in separation and divestiture costs, compared to $251 million in the prior year. Excluding those costs, operating income margin improved 40 basis points to 24.4%.

Max Chiara: Adjusted EBDA was 420 million versus 443 million in the prior year period. Net of separation and divestiture cost adjusted EBDA was 446 million, and the margin expanded 30 basis points to 42.5%. We generated deluded earnings per share of 20 cents and adjusted EBS of 36 cents. On a six-month basis, our adjusted EBS, excluding separation and divestiture expense, reached $1 per share, a record for the company.

Max: Adjusted EBITDA was $420 million versus $443 million in the prior year period. Net of separation and divestiture cost adjusted EBITDA was $446 million, and the margin expanded 30 basis points to 42.5%.

Max: We generated diluted earnings per share of $0.20 and an adjusted EPS of $0.36.

Max: On a six-month basis, our adjusted EPS, excluding separation and divestiture expense, reached $1 per share, a record for the company.

Max Chiara: Now let's take a look at the result of which business segment starting with Global Lottery. Revenue declined 2% in the second quarter to 600 and 13 million, primarily due to elevated product sales from a multi-year software license sale in the prior year period. Service revenue was in line with the prior year as a global increase in same-store sales of about 1% and revenue generated by the new facilities management contract in Connecticut were offset by a one-time benefit from the resolution of a customer contract dispute, recognizing the prior year. Operating profitability was strong with operating income of 212 million and a 35% to I margin.

Massimiliano Chiara: Now let's take a look at the results of each business segment, starting with Global Lottery. Revenue declined 2% in the second quarter to $613 million, primarily due to elevated product sales from a multi-year software license sale in the prior year period. Service revenue was in line with the prior year, as a global increase in same-store sales of about 1% and revenue generated by the new facilities management contract in Connecticut were offset by a one-time benefit from the resolution of a customer contract dispute recognized in the prior year.

Max: Now let's take a look at the results of each business segment, starting with Global Lottery.

Speaker Change: Revenue declined 2% in the second quarter to $613 million, primarily due to elevated product sales from a multi-year software license sale in the prior year period.

Speaker Change: Service revenue was in line with the prior year as a global increase in same-store sales of about 1% and revenue generated by the new facilities management contract in Connecticut were offset by a one-time benefit from the resolution of a customer contract dispute recognized in the prior year.

Massimiliano Chiara: Operating profitability was strong, with operating income of $212 million and a 35% OI margin. Year-over-year operating income comparisons reflect the impact of the software license and the customer contract resolution I just mentioned. Lottery profitability reflects the resilience of demand towards elevated play levels, despite moderation in certain markets.

Speaker Change: Operating profitability was strong with operating income of $212 million and a 35% OI margin. Year-over-year operating income comparisons reflect the impact of the software license and the customer contract resolution I just mentioned.

Max Chiara: Year-over-year operating income comparisons reflect the impact of the software license and the customer contract resolution I just mentioned. Lottery profitability reflects resilience of demand towards elevated play levels despite moderation in certain markets. Our ability to innovate and sequence compelling new games represents a solid support to demand conditions via new launches of high price point tickets in the second part of the year.

Speaker Change: Lottery profitability reflects resilience of demand towards elevated play levels, despite moderation in certain markets. Our ability to innovate and sequence compelling new games represent a solid support to demand conditions via new launches of high-priced point tickets in the second part of the year.

Massimiliano Chiara: Our ability to innovate and sequence compelling new games represents a solid support to demand conditions via new launches of high-priced point tickets in the second part of the year. Turning to gaming and digital, revenue increased 1% year-over-year to $436 million as growth in the installed base, resilient yields, and higher IP and software license sales were partially offset by lower terminal units shipped. After recovering from the supply chain delays that characterized some of the excellent performance of last year, we are ready to continue to pick up momentum in product sales going forward, as we expect to reap the benefit of the recent Core Video Game launch. The global install base increased over 2,100 units year-over-year, primarily due to the popularity of our multi-level progressive games.

Max Chiara: Turning to gaming and digital, revenue increased 1% year-over-year to 436 million as growth in the install base, resilient yield, and higher IP and software sales license sales were partially offset by lower terminal unit shipments. After the recovery from the supply chain delays that characterized some of the excellent performance of last year, we're ready to continue to pick a momentum in product sales going forward as we expect to reap the benefit of recent core video game launches. The global install base increased over 2,100 units year-over-year, primarily due to the popularity of our multi-level progressive games. The success coupled with resilient yields and higher software sales led to a 2% increase in service revenue in the quarter.

Speaker Change: Turning to gaming and digital, revenue increased 1% year-over-year to $436 million, as growth in the install base, resilient yields, and higher IP and software license sales were partially offset by lower terminal unit shipments.

Speaker Change: After the recovery from the supply chain delays that characterized some of the excellent performance of last year, we are ready to continue to pick up momentum in product sales going forward, as we expect to reap the benefit of recent core video game launches.

Speaker Change: The global install base increased over 2,100 units year-over-year, primarily due to the popularity of our multi-level progressive games. The success, coupled with resilient yields and higher software sales, led to a 2% increase in service revenue in the quarter.

Massimiliano Chiara: The success, coupled with resilient yields and higher software sales, led to a 2% increase in service revenue in the quarter. On the product sales front, revenue was up 1% compared to the prior year. We continue to leverage our broad portfolio of intellectual property with the licensing of game feature patents, helping to drive non-terminal revenue up 45% in the second quarter. Global terminal unit shipments of 7,600 units declined 640 units year-over-year, reflecting a return to more normal levels following a multi-year period of pent-up demand due to supply chain challenges.

Max Chiara: On the product sales front, revenue was up 1% compared to the prior year. We continue to leverage our broad portfolio of intellectual property with a licensing of game feature patents, helping to drive non-termina revenue up 45% in the second quarter. Global Terminal Unit Shipments of 7,600 units, the client 640 units here over here, reflecting a return to more normal levels, following a multi-appeared of pent-up demand due to supply change challenges. Stronger gaming performance in the U.S. was upset by game mix and timing of jackpots in Canada. Operating income increased 16% to over 100 million, with UI margin improving 300 basis points to 24%.

Speaker Change: On the product sales front, revenue was up 1% compared to the prior year. We continue to leverage our broad portfolio of intellectual property with the licensing of game feature patents, helping to drive non-terminal revenue up 45% in the second quarter.

Speaker Change: Global terminal unit shipments of 7,600 units declined 640 units year-over-year, reflecting a return to more normal levels following a multi-year period of pent-up demand due to supply chain challenges.

Massimiliano Chiara: Stronger gaming performance in the U.S. was upset by game mix and timing of jackpots in Canada. Operating income increased 16% to over $100 million, with the high margin improving 300 business points to 24%, driven by high-margin IP and software sales and easing of supply chain costs partially offset by lower terminal sales. This is the highest operating income margin achieved by the gaming and digital segment since providing long-term targets at the November 2021 Investor Day.

Speaker Change: Stronger gaming performance in the U.S. was offset by game mix and timing of jackpots in Canada.

Speaker Change: Operating income increased 16% to over 100 million with a high margin improving 300 basis points to 24% driven by high margin IP and software sales and easing of supply chain cost partially offset by lower terminal sales.

Max Chiara: Revened by high margin IP and software sales and easing of supply chain cost, partial of set by lower terminal sales. This is the highest operating income margin achieved by the gaming and digital segments since providing long-term target at the November 2021 Investor Day.

Speaker Change: This is the highest operating income margin achieved by the gaming and digital segment since providing long-term targets at the November 2021 Investor Day.

Max Chiara: In the first half of the year, we generated 463 million in cash from operations, representing a solid 54% cash conversion. We invested about 200 million in capital expenditures and license obligations, resulting in free cash flow of around 264 million. Not that leverage was confirmed at 2.9 times, the lowest level in company history, liquidity of 1.7 billion consisted of 400 million in average-directed cash and 1.3 billion in and wrong capacity under our credit facilities. This coupled with manageable near-term debt maturities puts us in a very strong financial position.

Massimiliano Chiara: In the first half of the year, we generated $463 million in cash from operations, representing a solid 54% cash conversion. We invested about $200 million in capital expenditures and license obligations, resulting in free cash flow of around $264 million. Net debt leverage was confirmed at 2.9 times, the lowest level in company history.

Speaker Change: In the first half of the year, we generated $463 million in cash from operations, representing a solid 54% cash conversion. We invested about $200 million in capital expenditures and license obligations, resulting in free cash flow of around $264 million.

Speaker Change: Net debt leverage was confirmed at 2.9 times, the lowest level in company history. Liquidity of $1.7 billion consisted of $400 million in unrestricted cash and $1.3 billion in undrawn capacity under our credit facilities.

Massimiliano Chiara: Liquidity of $1.7 billion consisted of $400 million in unrestricted cash and $1.3 billion in undrawn capacity under our credit facility. This, coupled with manageable near-term debt maturities, puts us in a very strong financial position. I'd like to highlight some of the key financial impacts associated with the gaming and digital sale. As with the initial EVRI transaction, tax leakage from the sale is expected to be modest, up to $100 million, or less than $0.50 per IGT share. This is because, as a UK company, IGT PLC has the benefit of the participation exemption regime upon the sale of assets.

Speaker Change: This, coupled with manageable near-term debt maturities, puts us in a very strong financial position.

Max Chiara: I'd like to highlight some of the key financial impacts associated with the gaming and digital sales. As with the initial average transaction tax leakage from the sale, is expected to be modest, up to 100 million or less than 50 cents per IGT share. This is because, as a UK company, IGT PLC has the benefit of the participation exemption regime upon sale of assets. Total transaction related cash outflows continues to be estimated at approximately 400 million, including the tax leakage I just mentioned, 200 million in transaction related costs, and about 100 million of other items, primarily cash within the gaming and digital business that will convey upon closing.

Speaker Change: I'd like to highlight some of the key financial impacts associated with the gaming and digital sale. As with the initial every transaction, tax leakage from the sale is expected to be modest.

Speaker Change: up to $100 million, or less than $0.50 per IGT share. This is because, as a UK company, IGT PLC has the benefit of the participation exemption regime upon sale of assets.

Massimiliano Chiara: Total transactional-related cash outflows continue to be estimated at approximately $400 million, including the tax leakage I just mentioned, $200 million in transaction-related costs, and about $100 million of other items, primarily cash, within the gaming and digital business that will convey upon closing. The $4.05 billion of gross proceeds significantly improves our Proforma Net Debt leverage compared to the prior Avery transaction, using the $1.2 billion of Remainco LTM EBITDA as a reference point.

Speaker Change: Total transaction-related cash outflows continues to be estimated at approximately $400 million, including the tax leakage I just mentioned, $200 million in transaction-related costs, and about $100 million of other items, primarily cash, within the gaming and digital business that we'll convey upon closing.

Max Chiara: The 405 billion of gross proceeds significantly improves our performance at that leverage, compared to the prior average transaction, using the 1.2 billion of remain co-LTM ABDA as a reference point. While we aren't yet specifying the amount of capital we expect to return to shareholders, we're targeting to maintain our leverage around current levels, enabling us to maintain strong financial conditions through the lottery investment cycle, primarily around the Italy-Loto bid and certain other large contracts we bid.

Speaker Change: The $4.05 billion of gross proceeds significantly improves our pro forma net debt leverage compared to the prior Avery transaction, using the $1.2 billion of Remainco LTM EBITDA as a reference point.

Massimiliano Chiara: While we aren't yet specifying the amount of capital we expect to return to shareholders, we're targeting to maintain our leverage around current levels, enabling us to maintain strong financial conditions through the lottery investment cycle, primarily around the Italy Lotto bid and certain other large contract rebids. As a result, we delivered strong revenue, profit, and cash flow performance in the first half of the year, all while making excellent progress on key strategic objectives. In light of the planned sale of gaming and digital to Apollo, we expect to classify and report gaming and digital results as discontinued operations beginning in the third quarter of this year.

Speaker Change: While we aren't yet specifying the amount of capital we expect to return to shareholders, we're targeting to maintain our leverage around current levels.

Speaker Change: enabling us to maintain strong financial conditions through the lottery investment cycle, primarily around the Italy lottery bid and certain other large contract rebids.

Max Chiara: So, we deliver strong revenue, profit, and cash flow performance in the first half of the year, all while making excellent progress on key strategic objectives. In light of the planned sale of gaming and digital to Apollo, we expect to classify and report gaming and digital results as discontinued operations, beginning in the third quarter of this year. As a result, we are withdrawing the fully financial outlook we provided in May. I'd like to emphasize this decision is not related to a change in underlying KPI or margin expectations for the business. It is simply a matter of a change in accounting treatment, as we expect to classify the sole business as discontinued operations from Q3 onwards.

Speaker Change: So, we deliver strong revenue, profit and cash flow performance in the first half of the year, all while making excellent progress on key strategic objectives.

Speaker Change: In light of the planned sale of Gaming & Digital to Apollo, we expect to classify and report Gaming & Digital results as discontinued operations beginning in the third quarter of this year.

Massimiliano Chiara: As a result, we are withdrawing the full-year financial outlook we provided in May. I'd like to emphasize this decision is not related to a change in underlying KPI or margin expectations for the business. It is simply a matter of a change in accounting treatment as we expect to classify the sole business as discontinued operations from Q3 onward. I will now ask the operator to please open the line for questions.

Speaker Change: As a result, we are withdrawing the full year financial outlook we provided in May. I'd like to emphasize this decision is not related to a change in underlying KPI or margin expectations for the business.

Speaker Change: It is simply a matter of a change in accounting treatment, as we expect to classify the sole business as discontinued operations from Q3 onwards.

Operator: I will now ask the operator to please open the line for questions. Thank you. We will now begin the question and answer session.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. Your first question comes from the line of Jeffrey Stantial from Stiefel. Your line is open.

Speaker Change: I will now ask the operator to please open the line for questions.

Operator: If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. Your first question comes from the line of Jeffrey Stantial from Stiefel. Your line is open.

Jeffrey Stantial: Your first question comes from the line of Jeffrey Stantial from Steeple. Your line is open. Hey, great. Thanks. Good morning, Vince Max. Thanks for taking our questions.

Jeffrey Austin Stantial: Hey, great. Thanks. Good morning, Vince.

Vincent L. Sadusky: Max, thanks for taking our questions. Maybe starting off here on last Friday's announcement, Vince, can you just walk us through how you're thinking about timing and process to receive various antitrust and regulatory approvals? I would think having just cleared HSR and with Apollo being licensed currently as an operator and historically as a manufacturer, the process should prove quicker than some historical transactions. But just curious to get your thoughts here as it relates to the Q3 2025 closing timeline that you laid out in the merger talks. Thanks. Yeah, no, I think that's it.

Vincent Sadusky: Maybe starting off here on last Friday's announcement, Vince, could you just walk us through how you think about timing and process to receive various antitrust and regulatory approvals? I would think having just cleared HSR and with Apollo being licensed currently as an operator and historically as a manufacturer, the process should prove quicker than some historical transactions, but just curious to get your thoughts here. So it relates to the queue 325 closing timeline that you laid out in the merger talks. Yeah, no, I think that's good observations. Apollo is in the gaming business, so they have experience with regulators.

Jeffrey Austin Stantial: Hey, great. Thanks. Good morning. Vince, Max, thanks for taking our questions.

Jeffrey Austin Stantial: Maybe starting off here on last Friday's announcement, Vince, could you just walk us through how you're thinking about timing and process to receive various antitrust and regulatory approvals, I would think?

Speaker Change: having just cleared HSR and with Apollo being licensed currently as an operator and historically as a manufacturer.

Speaker Change: the process should prove quicker than some historical transactions. But just curious to get your thoughts here as it relates to the Q3 2025 closing timeline that you laid out in the merger talks. Thanks. Yeah, no, I think that's good, good observations. You know, Apollo is in the gaming business, so they have experience.

Vincent L. Sadusky: Yeah, no, I think that's good, good observations. You know, Apollo is in the gaming business, so they have experience with regulators. We've, we had our transaction, as you know, our original transaction with Every, that combination was evaluated by the DOJ. So, you know, we were in good shape there. So we think it's, you know, it's logical that the focus from an antitrust perspective would be on, you know, Apollo's business since the, you know, both the Every and the IGT business have already been, been evaluated. And, you know, they really, you know, they're not in the equipment manufacturing business and, and, you know, own a casino.

Vincent Sadusky: We had our transactions, our original transaction with Every, that combination was evaluated by the DOJ, so we were in good shape there. So we think it's logical that the focus from an antitrust perspective would be on, you know, Apollo's business since both the Every and the IGD business has already been evaluated, and they really, you know, they're not in the equipment manufacturing business and own casinos. So we're hopeful that that will move along pretty quickly on both fronts. But, you know, we've estimated roughly a year, just given the timing and, of course, per the, you know, pretty agreement, it could be as far out as 15, 15 months.

Speaker Change: with regulators. We've, we had our transaction as you know, our original transaction with Every, that combination was evaluated by the

Speaker Change: the DOJ. So, you know, we were in good shape there. So, we think it's, you know, it's logical that...

Speaker Change: The focus from an antitrust perspective would be on, you know, Apollo's business.

Speaker Change: since both the EVRI and the IGT business has already been evaluated. And, you know, they really, you know, they're not in the...

Speaker Change: in the equipment manufacturing business and own...

Vincent L. Sadusky: So, you know, we're hopeful that that will be, that they'll move along pretty, pretty quickly on both fronts. But, you know, we've estimated roughly a year, just given the timing. And, of course, per the, you know, per the agreement, it could be as far out as, you know, 15, 15 months.

Speaker Change: Casino, so y'all.

Speaker Change: We're hopeful that that will move along pretty quickly on both fronts, but we've estimated roughly a year, just given the timing, and of course, per the agreement, it could be as far out as 15 months.

Jeffrey Stantial: Okay, perfect.

Jeffrey Austin Stantial: Okay, perfect. Thanks for that, Culler.

Jeffrey Stantial: Thanks for that color.

Max Chiara: For my follow-up, turning to the lottery business, you max appreciate the comment that you just made related to guidance and no changes to the underlying KPIs or margins assumptions.

Speaker Change: Okay, perfect. Thanks for that color. For my follow-up, turning to the lottery business, Max, I appreciate the comment that you just made related to guidance and no changes to the underlying KPIs or margins assumptions. I just, I guess I want to be crystal clear on this. You know, I think

Massimiliano Chiara: For my follow-up, turning to the lottery business, Max, I appreciate the comment that you just made related to guidance and no changes to the underlying KPIs or margin assumptions. I guess I want to be crystal clear on this. I think previously you had guided, if I'm not mistaken, same-store sales, flat-ish, excluding jackpots, low single digits for the year. I believe that implies some acceleration in the back half of the year. I guess does this guidance for the lottery business still hold? Has anything changed incrementally since you last updated it in mid-May? Just any follow-up there would be great. Thanks.

Max Chiara: I just, I guess I want to be crystal clear on this. You know, I think previously you had guided, if I'm not mistaken, same-store sales flatish, excluding jackpot, low single digit for the year. You know, I believe that implied some acceleration in the back half of the year. I guess this is, you know, does this guidance for the lottery business still hold? Does anything change incrementally since you last updated it at mid-May? Any color there will be, will be great. Thanks.

Speaker Change: previously you had guided

Speaker Change: If I'm not mistaken...

Speaker Change: Same store sales, flat-ish, excluding jackpots, low single digits.

Speaker Change: For the year, I believe that implies some acceleration in the back half of the year. I guess, does this guidance for the lottery business still hold? Has anything changed incrementally since you last updated it at mid-May? Just any follow-up there would be great. Thanks.

Max Chiara: Yes, very good, Jeff. So, for lottery, we don't expect any change in our outlook assumptions. We expect to be up low single digit X jackpot function in terms of the remaining part of the year. As you know, we tend not to project large jackpot events. So if they come, they represent an upside to our outlook. And right now, again, the underlying business conditions are related to be slightly better than the first half, partially aided by a sequencing of higher price point launch expected in North America in the second part of the year and the continuation of a successful new game launch campaign in both games in Italy, similarly to what we have generated in the first half of the year.

Jeffrey Austin Stantial: Yes, very good, Jeff. So, for Lottery, we don't expect any change in our outlook assumptions. We expect it to be up low single-digit X jackpot function in terms of the remaining part of the year. As you know, we tend not to project large jackpot events. So, if they come, they represent an upside to our outlook. And right now, again, the underlying business conditions are slated to be slightly better than the first half, partially aided by the sequencing of a higher price point launch expected in North America in the second part of the year and the continuation of a successful new game launch campaign for both games in Italy, similarly to what we generated in the first half of the year. So, all in all, the underlying market conditions for lottery remain very solid. We are consolidating elevated play levels, and we don't project significant jackpots between now and the end of the year.

Speaker Change: Yes, very good, Jeff. So, for lottery we don't expect any change in our outlook assumptions.

Speaker Change: We expect it to be up low single digit x jackpot function

Speaker Change: in terms of the remaining part of the year. As you know, we tend not to project large jackpot events, so...

Speaker Change: If they come, they represent an upside to our outlook, and right now...

Speaker Change: Again, the underlying business conditions are slated to be slightly better than the first half, partially aided by a sequencing of higher price point launch expected in North America.

Speaker Change: in the second part of the year, and the continuation of a successful new game launch campaign in both games in Italy.

Speaker Change: similarly to what we have generated in the first half of the year. So all in all, the underlying market conditions for Lottery remain very solid.

Max Chiara: So all in all, the underlying market conditions for lottery have remained very solid. We are consolidating elevated play levels, and we don't project significant jackpots between now and the end of the year.

Speaker Change: We are consolidating elevated play levels and we don't project significant jackpots between now and the end of the year.

Jeffrey Stantial: Thank you. Okay, great, very helpful. Thank you both.

Operator: Okay, great, very helpful. Thank you both. I'll pass it on.

Barry Jonas: I'll pass it on. Your next question comes from the line of Barry Jonas from Truist. Your line is open.

Speaker Change: Okay, great. Very helpful. Thank you both. I'll pass it on.

Barry Jonathan Jonas: Your next question comes from the line of Barry Jonas from Truist. Your line is open.

Speaker Change: Your next question comes from the line of Barry Jonas from Truist. Your line is open.

Vincent L. Sadusky: Hey guys, good morning. Vince, a big change for you personally going from running the gaming entity to now running the lottery business. Maybe you could walk us through that change and just generally how are you thinking about your strategic goals for the lottery over the next few years?

Barry Jonas: Hey guys, good morning. Been big change for you personally going from running the gaming entity to now the lottery business.

Barry Jonathan Jonas: Hey guys, good morning. Vince, big change for you personally going from running the gaming entity to now the lottery business. Maybe walk us through that change and just generally how are you thinking about your strategic goals for lottery over the next few years?

Vincent Sadusky: Maybe walk us through that change. And just generally, how are you thinking about your strategic goals for lottery over the next few years? Yeah, yeah, great question. Yeah, so, you know, I think both businesses have, you know, terrific upside potential. I was excited to help the company in the separation and integration activities associated with, you know, with the combination with Every. And the time it would take to execute that, but, you know, that would have necessitated finding a CEO to run Reminco, the public lottery company. Now that this is a different transaction with Apollo acquiring both entities, both Every and our gaming digital entities going private, you know, it provided the opportunity for me to stay with Reminco with the public company.

Vincent L. Sadusky: Yeah, yeah, great question. Yeah, so, you know, I think both businesses have, you know, terrific upside potential. I was excited to help the company with the separation and integration activities associated with a combination with Every and the time it would take to execute that. But, you know, that would have necessitated finding a CEO to run RemainCo, the public lottery company.

Vince: Yeah, yeah, great question. Yeah. So, you know, I think both businesses have, you know, terrific upside potential. I was excited to help the company in the separation and integration.

Vince: activities associated with, you know, with a combination with every, and the time it would take to execute.

Vince: that but

Vince: You know, that would have necessitated finding a CEO to run Remainco, the public lottery company. Now that this is a different transaction with Apollo acquiring both entities, both Everee and our gaming and digital entities, going private.

Vincent L. Sadusky: Now that this is a different transaction with Apollo acquiring both entities, both Every and our gaming and digital entities going private, you know, it provided the opportunity for me to stay with RemainCo, with the public company, and help to drive our goals there. So I'm very excited about the prospects for both businesses. Unfortunately, I can't be in both places at the same time. And, you know, I think they both have, you know, very different profiles.

Vince: You know, it provided the opportunity for...

Vincent Sadusky: And help to help to drive our goals there. So I'm very excited about the prospects for both businesses. Unfortunately, I can't be in both places. And, you know, I think they both got, you know, very different profiles. And I really believe both are terrifically undervalued, which really was the, you know, the driving force behind this entire strategic alternative initiative that we undertook with the board. Or if I, a year and a half ago or so, beginning it in earnest. So definitely excited about the opportunity for both. And in particular, now the opportunity to remain with the lottery with the public lottery company.

Vince: for me to stay with RemainCo, with the public company.

Vince: and help to drive our goals there. So I'm very excited about the prospects for both businesses. Unfortunately, I can't be in both places.

Vince: And, you know, I think they've both got, you know, very different profiles, and I really believe both are terrifically undervalued, which really was the...

Vincent L. Sadusky: And I really believe both are terrifically undervalued, which really was the driving force behind this entire strategic alternative initiative that we undertook with the board a year and a half ago or so, beginning it in earnest. So definitely excited about the opportunity for both, and in particular now the opportunity to remain with the public lottery company. Of course, as we kind of get closer to the closing, we'll have a pretty detailed and pretty thoughtful long-range plan and activities and goals, and cash flows that we'll take the investment community through to try to present our case as to why we think it's a very good business.

Vince: The driving force behind this entire strategic alternative initiative that we undertook with the board.

Vince: about a year and a half ago or so, beginning in earnest, so definitely excited about the opportunity for both, and in particular now the opportunity to remain with the public lottery company.

Vincent Sadusky: You know, of course, you know, as we kind of get closer to the closing, we'll have a pretty detailed and pretty thoughtful, long-range plan and activities and goals, cash flows that, you know, we'll take the investment community through to try to present our case as to why we think it's, you know, it's a very good, very good business. But, you know, when I step back and think about, you know, where the business has been, you know, over the last three or four years. You know, there are some, you know, certainly some ups and downs in the business, just given, you know, the timing around multi-state jackpots, both in Europe and the US, as well as things like scratch and wind, game launches, different price points, especially in significant jurisdictions that really move the needle like Florida, Texas, California, New York.

Vince: You know, of course, as we kind of get close to the closing, we'll have a pretty detailed and pretty thoughtful long-range plan and activities and goals.

Vince: cash flows that, you know, will take the investment community through to, you know, try to...

Vince: present our case as to why we think it's, you know, it's a very good...

Vincent L. Sadusky: But when I step back and think about where the business has been over the last three or four years, there are certainly some ups and downs in the business, just given the timing around multi-state jackpots, both in Europe and the U.S., as well as things like scratch and win, game launches, different price points, especially in significant jurisdictions that really move the needle, like Florida, Texas, California, and New York. But overall, the business has grown at something around a 4% CAGR since, if you go back to 2019, through the first half of 2024.

Vince: a very good business. But, you know, when I step back and think about, you know, where the business has been, you know, over the last three or four years,

Vince: There are certainly some ups and downs in the business, just given the timing around multi-state jackpots, both in Europe and the U.S., as well as...

Vince: things like...

Vince: Scratch and win, game launches, different price points, especially in significant jurisdictions that really move the needle, like Florida, Texas, California, New York. But overall, the business has grown at something around a 4% CAGR since, if you go back to 2019, through the first half of...

Vincent Sadusky: But overall, you know, the business has grown at, you know, something around a 4% CAGR since if you go back to 2019 through the first half of 2024. And the research that we've looked at has supported the fact that there's more players that got introduced to lottery and enjoy the game. And then when you take a look at the digital opportunity, you know, some fortunate that states have been slow to slower than than we would have hoped to approve I lottery. The none the less the ones who have, you know, the numbers are significantly, and we're a significant player having just launched the Connecticut lottery.

Vincent L. Sadusky: And the research that we've looked at has supported the fact that there are more players that were introduced to lottery and enjoy the game. And then when you take a look at the digital opportunity, it's unfortunate that states have been slower than we would have hoped to approve iLottery. Nonetheless, the ones who have, the numbers are up significantly, and we're a significant player, having just launched the Connecticut Lottery and, as I mentioned, getting our content on in more and more approved jurisdictions where we don't run iLottery.

Vince: of 2024, and the research that, you know, we've looked at has...

Vince: has supported the fact that there's more players.

Vince: that got introduced to Lottery and enjoy the game. And then when you take a look at the digital opportunity, it's unfortunate that states have been slow, slower than we would have hoped.

Vince: to approve iLottery. Nonetheless, the ones who have...

Vince: You know, the numbers are...

Speaker Change: significantly and we're a significant player having just lost the Connecticut Lottery and as I mentioned

Vincent Sadusky: And as I mentioned, you know, getting our content on in more and more approved jurisdictions where we don't run i lottery. So there's several opportunities for revenue growth in that. And we've seen no decline in play in retail as a result of digital as well. So it's been slower than expected in North America in terms of the rollout you approval, but we think that will pick up over time. And meanwhile, you know, you've had the career services continue to show that the digital activity for their businesses continues to grow and that, you know, that benefits us when we are the, you know, the provider of the system in these markets.

Speaker Change: you know, getting our content in more and more.

Vincent L. Sadusky: So there are several opportunities for revenue growth through that, and we've seen no decline in play in retail as a result of digital as well. It's been slower than we expected in North America in terms of the rollout and approval, but we think that will pick up over time. And meanwhile, courier services continue to show that the digital activity for their businesses continues to grow, and that benefits us when we are the provider of the system in these markets.

Speaker Change: approved jurisdictions where we don't run.

Speaker Change: So there's several opportunities for revenue growth in that, and we've seen no decline in play in retail as a result of digital as well. So it's been slower than we expected in North America in terms of the rollout, the approval, but we think that will pick up over time.

Speaker Change: time, and meanwhile, you know, you've had the courier services continue to show that the digital activity for their businesses continues to grow and that, you know, that benefits.

Speaker Change: us when we are the, you know, the provider of the...

Vincent Sadusky: So I'm excited about it. I think it's a very good growth business. And I think it's a great, it's a great yield story, in particular for something that's very solid. I think it's been hampered by the conglomerate discount that our company received. We heard from all of you, and our investors certainly long before I got here, but certainly since I got here that, you know, we're. We're not one thing or another. We're effectively primarily a lottery company that is trading at the low end of an equipment supplier business. We think this separation activity will be a step in the right direction.

Vincent L. Sadusky: So I'm excited about that. I think it's a very good growth business, and I think it's a great yield story, in particular for something that's very solid. I think it's been hampered by the conglomerate discount that our company received. We heard from all of you and our investors, certainly long before I got here, but certainly We're not one thing or another; we're effectively, you know, primarily a lottery company that is trading at the low end of an equipment supplier business, and so we think this separation activity will be a step in the right direction, and as I say, we're excited to get out and tell our lottery story as to why it's a compelling investment.

Speaker Change: of the system in these markets. So I'm excited about it. I think it's a very good growth business and I think it's a great yield story in particular for something that's very solid. I think it's been hampered by the conglomerate discount that our company received. We heard from all of you and our investors.

Speaker Change: certainly long before I got here, but certainly since I got here, that, you know, we're...

Speaker Change: You know, we're not one thing or another, we're effectively...

Speaker Change: You know, primarily a lottery company that is trading at the low end of an equipment supplier business.

Speaker Change: And so we think this...

Vincent Sadusky: As I say, we're excited to get out and tell our lottery story as to why it's a compelling investment.

Speaker Change: This separation activity will be a step in the right direction, and as I say, we're excited to get out and tell our lottery story as to why it's a compelling investment.

Vincent Sadusky: That's extremely helpful. Thank you for that.

Barry Jonathan Jonas: That's extremely helpful. Thank you for that. And just as a follow-up, any updates on the Italian Lotto in terms of process timing? And then, I guess, just related to that, as we think about ROI on any new potential Lotto renewal deal, assuming you're successful, how do you see the growth potential for Lotto in what's already, I guess, a developed market?

Barry Jonas: It's just as a follow-up. Any update on the Italian Lotto in terms of process timing, and then I guess just related to that as we think about ROI on any new potential lot over new old deal, assuming you're successful. How do you see the growth potential for Lotto in what's already, I guess, a developed market? Yeah, yeah, so Lotto to me in Italy is really remarkable. It's one of the oldest lotteries in the world. You could argue the penetration is higher than almost any lottery in the world. Yet, because we run it, we actually operated.

Speaker Change: That's extremely helpful. Thank you for that. And just as a follow up, any updates on the Italian Lotto in terms of process, timing, and then I guess just related to that, as we think about ROI on any new potential Lotto renewal deal, assuming you're successful, how do you see the growth potential for Lotto in what's already, I guess, a developed market?

Vincent L. Sadusky: Yeah, yeah. So, you know, a lot of the, a lot of, to me, Italy is really remarkable. You know, it's one of the oldest lotteries in the world. It's, you know, you could argue the penetration is higher than almost any lottery in the world. Yet, because we run it, you know, we actually operate it.

Speaker Change: Yeah, yeah, so, you know, a lot of the...

Speaker Change: Lotto to me in Italy is really remarkable. It's one of the oldest lotteries in the world. You could argue the penetration is higher than almost any lottery in the world.

Vincent L. Sadusky: We've had, the team has had, amazing ability, and it's continued to perform and continue to drive growth, which is what makes, I think, that lottery a good business and also makes it a difficult business for an unproven competitor to come into the marketplace and, you know, and invest a billion plus dollars in upfront fees and then significant capital. You know, I think, as we mentioned last time, we've got pretty good insight now into what the new license terms would be, nine years non-renewable. It's consistent with the existing license, a billion dollar minimum upfront fee, and we're currently working on things like the what the technology plan would be, etc.

Speaker Change: Yet, because we run it, you know, we actually operate it.

Vincent Sadusky: We've had the team has had the amazing ability, and it's continued to perform and continue to drive growth, which is what makes, I think, that lottery a good business and also makes it a difficult business for an unproven competitor to come into the marketplace and invest a billion plus dollars in upfront fee and a significant capital investment. I think, as we mentioned last time, we've got pretty good insight now into what the new license terms would be. Nine years non-renewable. It's consistent with the existing license, billion dollar minimum up front fee, and we're currently working on things like what the technology plan would be, et cetera.

Speaker Change: The team has had the amazing ability and has continued to perform and continue to drive growth.

Speaker Change: which is what makes, I think, that lottery a good business.

Speaker Change: It also makes it a difficult business for an unproven competitor to come into the marketplace.

Speaker Change: and invest a billion plus dollars in upfront fee and then significant capital investment.

Speaker Change: You know, I think, as we mentioned last time, we've got pretty good insight now into what the new license terms would be, nine years, non-renewable, it's consistent with the existing license, billion dollar minimum up front fee.

Vincent L. Sadusky: So, things are on track, and I think that, you know, again, we've said over and over again, we're pretty confident in our abilities, obviously, given the expertise we bring and, and the results being as, as, as effective as they have been. It's been truly a win-win for, you know, for, for Italy as well as, certainly, we've benefited as, as well. Really, the increase in fee is something that we experienced last time around as well, and, you know, the ROI was fine.

Speaker Change: And we're currently working on things like the...

Vincent Sadusky: So things are on track, and I think that, again, we've said over and over again. We're pretty confident in our capabilities, obviously, given the expertise we bring and the results being as effective as they have. It's been truly a win-win for Italy, as well as certainly, we've benefited as well. Really, the increase in fee is something that we experienced last time around as well, and the ROI was fine. The reason is the team; we bet on our team to be able to assist in making games more interesting and innovative and continuing to develop games that would be compelling to players.

Speaker Change: what the technology plan would be, et cetera. So things are on track. And I think that, you know, again, we've said over and over again, you know, we're pretty confident in our capabilities, obviously, given the...

Speaker Change: the expertise we bring and the results.

Speaker Change: being as effective as they have been.

Speaker Change: Truly a win-win for, you know, for Italy as well as

Speaker Change: certainly, you know, we've benefited as well.

Speaker Change: Really, the increase in fee is something that we experienced last time around as well.

Vincent L. Sadusky: The reason is the team. We bet on our team to be able to assist in making games more interesting and innovative and continuing to, to, develop games that would be compelling for players, and, and fortunately, they've done that. So, the level of play has gone up by something like a billion dollars or so in sales from when we first got this, you know, this latest renewal to today.

Speaker Change: And, you know, the ROI was fine. The reason is the team, you know, we bet on our team.

Speaker Change: to be able to assist in making games more interesting and innovative.

Speaker Change: and continuing to develop.

Vincent Sadusky: And fortunately, they've done that. So the level of play has gone up something like a billion dollars or so in sales from when we first got the latest renewal to today. So that's really, again, you've got to have a high level of confidence in your capabilities to be able to continue to drive these ROIs. I'm not sure if I was a third party coming in. I would have that level of confidence. It's a big bet. For us, we've got the experience, and we do have the confidence. So we think we can maintain a good ROI on this business, despite the fact that the fee is increased over the previous renewal.

Speaker Change: games that would be compelling to players. And fortunately they've done that, so the level of play has gone up.

Speaker Change: something like a billion dollars or so in sales from when we first got this latest renewal to...

Vincent L. Sadusky: So, that's really, again, you've got to have a high level of confidence in your capabilities to be able to continue to drive these ROIs. I'm, I'm not sure if I were a third party coming in, I would have that level of confidence. It's a big bet. For us, we, you know, we've got the experience, and we, we, we do, we do have the confidence. So, we think we can maintain a good ROI on this business despite the fact that the, you know, the fee is, is increased over the previous renewal.

Speaker Change: to today. So that's really, again, you've got to have a high level of confidence in your capabilities to be able to continue to drive these.

Speaker Change: These ROIs, I'm not sure if I was a third party coming in I would have that level of confidence, it's a big bet.

Speaker Change: For us, we've got the experience and we do have the confidence, so we think we can maintain a good ROI on this business, despite the fact that the fee is increased over the previous renewal.

Barry Jonas: Great. Thank you for that, and congrats on the transaction.

Barry Jonathan Jonas: Great, thank you for that, and congrats on the transaction.

Vincent Sadusky: Yeah, thank you.

Speaker Change: Great, thank you for that and congrats on the transaction.

Operator: Your next question comes from a line of Chad Beynon from Macquarie. Your line is open.

Chad Beynon: Oh, excuse me, your next question comes from a line of Chad Beynon from Macquarie. Your line is open. Hi, good morning. Congrats on everything, and thanks for taking my question.

Speaker Change: Yeah, thank you.

Speaker Change: Your next question comes from a line of Chad Beynon from Macquarie. Your line is open.

Chad C. Beynon: Hi, good morning. Congratulations on everything and thanks for taking my question.

Vincent L. Sadusky: I wanted to start in the gaming business. You mentioned some opportunities outside of North America, a few different avenues in terms of where you can increase your presence. Can you just talk about, A, maybe the timing around this, if this is more of a back half of 24 or something further into 25? And then, more importantly, what was kind of the genesis of this? Was it getting games approved? Was it implementing some kind of local sales team? Or just maybe something that the customers have asked for; just trying to size up what these opportunities could be. Thanks.

Chad C. Beynon: Hi, good morning. Congrats on everything and thanks for taking my question. I wanted to start on the gaming business. You mentioned some opportunities outside of North America, a few different avenues in terms of where you can increase your presence. Can you just talk about A, maybe the timing around this, if this is more of a back half 24 or more something further into 25? And then more importantly, what was kind of the genesis of this? Was it getting games approved? Was it implementing kind of a local sales team? Or just maybe something that the customers have asked for, just trying to size up what these opportunities could be? Thanks.

Vincent Sadusky: I wanted to start on the gaming business. You mentioned some opportunities outside of North America of a few different avenues in terms of where you can increase your presence. Can you just talk about a maybe the timing around this if this is more of a back half 24 or more something further into 25?

Vincent Sadusky: And then, more importantly, what was kind of the genesis of this? Was it getting games approved? Was it implementing kind of a local sales team? Or just maybe something that the customers have asked for, just trying to size up what these opportunities could be? Thanks. Yeah, yeah, sure things. So, you know, we've just recognized over the years that when you have games that perform very well in North America, they have a tendency to perform well internationally, especially in Europe and in Latin. And that's been the case for our games. So, this really good run that the company's experience, especially in the premium space, has created demand in international markets.

Vincent L. Sadusky: Yeah, yeah, sure thing. So we've recognized over the years that when you have games that perform very well in North America, they have a tendency to perform well internationally, especially in Europe and in LATAM. And that's been the case for our games. So this really good run that the company has experienced, especially in the premium space, has created demand in international markets. We've been increasing our installed base pretty steadily in Latin America, for example.

Speaker Change: Yeah, yeah, sure thing. So, you know, we've just recognized over the years that when you have games that perform very well in North America, they have a tendency to perform well internationally, especially in Europe and in LATAM. And that's been the case for our games.

Speaker Change: So this really good run that the company's experienced, especially in the premium space.

Speaker Change: has created demand.

Vincent Sadusky: We've been increasing our install base pretty steadily in Latin America, for example. And when you look at the titles that have done really well in the US, such as Magic Treasures, Prosperity Link, and Mystery of the Lab, those are all growing really well. And that's allowed us to continue to grow our install base footprint, and we think that can continue. In places like Amea, very similar, Magic Treasures, Mystery of the Lab, Prosperity Link, have all been really strong performers. And I think recently, you know, the teams did a good job of convincing operators to take things like video poker and mechanical real games.

Speaker Change: in international markets.

Speaker Change: We've been increasing our install base pretty steadily.

Vincent L. Sadusky: And when you look at the titles that have done really well in the US, such as Magic Treasures, Prosperity Link, and Mystery of the Lamp, those are all growing really well, and that's allowed us to continue to grow our installed base. And we think that can continue. In places like EMEA, very similar, Magic Treasures, Mystery of the Lamp, and Prosperity Link have all been really strong performers. And I think recently the team's done a good job of convincing operators to take things like video poker and mechanical real games, some things that really weren't consumed all that highly in EMEA. And early signs are good. And then, in Australia, it's a market that we've really struggled to get our fair share. I'll be down there in a couple of weeks.

Speaker Change: in Latin America, for example, and when you look at the titles that have done really well in the US, such as Magic Treasures, Prosperity Link, Mystery of the Lamp, those are all growing really well, and that's allowed us to continue to grow our install-based footprint, and we think that can

Speaker Change: That can continue.

Speaker Change: In places like EMEA, very similar. Magic Treasures, Mystery of the Lamp, Prosperity Link have all been, you know, really strong performers, and I think recently, you know, the team's done a good job of

Speaker Change: you know, convincing operators to take things like video poker and mechanical real games, some things that, you know, really weren't consumed all that highly in EMEA, and early signs are good.

Vincent Sadusky: Some things that really weren't consumed all that highly in Amea, and early signs are good.

Vincent Sadusky: And then in Australia, you know, it's a market that we've really struggled to get our fair share. I'll be down there in a couple of weeks, and we feel like we've got the right organization. We've got the right game developers, and it's, you know, it's early days in terms of our reorganization. But we've had a combination of, you know, good early signs, both from North American games like Prosperity Link; we are doing very well down there. And some locally produced games as well that are starting to get some traction. But the other area really, in addition to the, you know, kind of the premium space in the install base, is in game sales.

Speaker Change: And then in Australia, you know, it's a market that we've really struggled to get our fair share.

Vincent L. Sadusky: And we feel like we've got the right organization. We've got the right game developers, and it's early days in terms of our reorganization.

Speaker Change: I'll be down there in a couple of weeks and we feel like we've...

Speaker Change: We've got the right organization, we've got the right...

Speaker Change: game developers, and it's early days in terms of our reorganization.

Vincent L. Sadusky: We've had a combination of good early signs, both from North American games like Prosperity Link, which are doing very well down there, and some locally produced games as well that are starting to get some traction. But the other area, in addition to the premium space and the installed base, is in-game sales. And the fact that we've now benefited so much from our good premium game production, we've been able to focus on core games as well.

Speaker Change: But we've had a combination of, you know, good early signs, both from North American games like Prosperity Link, which are doing very well down there, and some locally produced games as well that are starting to get some.

Speaker Change: some traction. But the other area really, in addition to the, you know, kind of the premium space and the install base, is in-game sales. And, you know, the fact that we've...

Vincent Sadusky: And, you know, the fact that we've now benefited so much from our good premium game production, we've been able to focus on core games as well. And, you know, you've heard of who we've got, you know, seven to top 25 ranked games in core now, which is, you know, I mean, I don't know about an all-time high, but for the last 10 plus years, certainly a high for ICT to be doing so well in that category. And those, you know, those games were, we're beginning to introduce into international markets as well. So, you know, we do believe that.

Speaker Change: Now, benefited so much from our good premium game production, we've been able to focus on core games as well, and you know, you heard of it, we've got seven of the top 25 ranked games in core now, which is, you know.

Vincent L. Sadusky: And you heard me, we've got seven of the top 25 ranked games in core now, which is, I don't know about an all-time high, but for the last 10 plus years, certainly a high for IGT to be doing so well in that category. And those games, we're beginning to introduce into international markets as well. So yeah, we do believe that. You know, our growth, at the back half of the year, fourth quarter in particular, going into 2025, a lot of that growth is going to be driven by international.

Speaker Change: I mean, I don't know about an all-time high, but for the last 10-plus years, certainly a high for IGT to be doing so well in that category. And those games we're beginning to introduce into international markets as well. So we do believe that...

Vincent Sadusky: and our growth at the back after the fourth quarter, in particular, going into 2025. A lot of that growth is going to be driven by international.

Speaker Change: you know, our growth at the back half of the year, fourth quarter in particular, going into 2025, a lot of that growth is going to be driven by by international.

Chad Beynon: That's great. Thanks, Vince.

Chad C. Beynon: That's great. Thanks, Vince.

Vincent Sadusky: And then on eye lottery, given some state deficit changes here and some of the conversations that we've had particularly in the last six months with legislators, has the temperature changed at all in terms of acceptance towards eye lottery and our conversations with, you know, state lottery executives or potentially legislators picking up? Could that be an opportunity or a catalyst for 25, or in your conversations are these groups kind of looking at other areas in terms of raising revenues for their states? Yeah, I think as we've seen historically, when states are challenged with their budgets, they certainly look towards gaming and lotteries as a potential opportunity.

Speaker Change: That's great. Thanks, Vince. And then on iLottery, given some state deficit changes here and some of the conversations that were had, particularly in the last six months with legislators, has the temperature changed at all in terms of acceptance towards iLottery and our conversations with, you know,

Vincent L. Sadusky: And then on iLottery, given some state deficit changes here and some of the conversations that have been had, particularly in the last 6 months with legislators, has the temperature changed at all in terms of acceptance of iLottery? And are conversations with state lottery executives or potentially legislators picking up? Could that be an opportunity or a catalyst for 25? Or, in your conversations, are these groups kind of looking at other areas in terms of raising revenues for their states?

Speaker Change: state lottery executives or potentially legislators picking up. Could that be an opportunity or a catalyst for 25? Or in your conversations, are these groups kind of looking at other areas in terms of raising revenues for their states?

Vincent L. Sadusky: Yeah, I think as we've seen historically, when states are challenged with their budgets, they certainly look towards gaming and lotteries as a potential opportunity. As you know, states ran a budget surplus for many years post-COVID, and lottery sales did particularly well, and a lot of the focus was on sports betting. So, now sports betting has done fine. In some places, it hasn't done great in terms of meeting state revenue projections, and states are certainly struggling now to fill budget gaps.

Speaker Change: Yeah, I think as we've seen historically when states are challenged with their budgets they certainly look towards gaming and lotteries as a potential opportunity.

Vincent Sadusky: As you know, as states ran a budget surplus for many years, post-COVID and lottery sales did particularly well, and a lot of the focus was on sports betting. So now sports betting, you know, has done fine in some places that hasn't done great in terms of meeting the revenue projections, and states are certainly struggling now to fill budget gaps.

Speaker Change: As you know, the state ran a budget surplus for

Speaker Change: for many years post-COVID, and lottery sales did particularly well.

Speaker Change: and a lot of the focus was on...

Speaker Change: on sports betting, right? So now sports betting's...

Speaker Change: has done fine. In some places it hasn't done great in terms of meeting state revenue projections and states are certainly struggling now to fill budget gaps. So yeah, we're hopeful that that accelerates.

Vincent L. Sadusky: So we're hopeful that that accelerates legislation being brought to the various legislators to be able to pass a lottery in those states. In the meantime, we continue to refine our business. As I mentioned, we were up, I think, 27 percent for the first half of 2024, and we've added a bunch of new customers. I think one of the most interesting things that the team's been able to accomplish is, in states where we don't have the iLottery platform, we've been able to add content customers, and our content is doing very well.

Vincent Sadusky: So, yeah, we're hopeful that that accelerates legislation being brought to, you know, the various legislators to be able to pass eye lottery in those states. We, you know, in the meantime, I mean, we continue to refine our business. As I mentioned, we were up, I think 27% for the first half of 2024, and we've added a bunch of new customers. And even, I think one of the most interesting things that the team's been able to accomplish is in states where we don't have the eye lottery platform. We've been able to add content customers, and our content is doing very well.

Speaker Change: legislation being brought to, you know, the various...

Speaker Change: various legislators to to be able to to pass.

Speaker Change: I-Lottery in those states. We, you know, in the meantime, I mean, we continue to, you know, refine our business. As I mentioned, we were up, I think, 27% for the first half of 2020.

Speaker Change: for, and we've added, you know, a bunch of new customers and

Speaker Change: Even I think one of the most interesting things that the teams

Speaker Change: been able to accomplish is in states where we don't have the iLottery platform.

Vincent L. Sadusky: So we've got the opportunity to participate. But overall, we've got 12 platform customers live. We're getting better and better at this, especially with the diversity of customer needs and requirements, both internationally and in the U.S. So our focus is to continue to grow this business, to continue to make great content, to continue to answer RFPs, many of those are international, and improve our products so that as the states do open up, we're considered a premier player.

Speaker Change: we've been able to add content customers in our content.

Vincent Sadusky: So there's, you know, we've got the opportunity to participate. But, you know, overall we've got 12 platform customers live. We're getting, you know, better and better at this, especially with the diversity of customer needs and requirements, both internationally and in the US. So, you know, our focus is to continue to grow this business, to continue to make great content, to continue to, you know, answer RFPs. Many of those are international and improve our product. So that as the states do open up, you know, we are, we're, we're considered a premier player. That's great. Thank you very much.

Speaker Change: is doing is doing very well. So there's you know, we've got the opportunity to to participate, but you know overall we've got 12 platform customers live We're getting you know better and better at this

Speaker Change: especially with the diversity of customer.

Speaker Change: needs and requirements both internationally and in the U.S.

Speaker Change: So, you know, our focus is to continue to grow this business, to continue to make great content, to continue to, you know, answer RFPs, many of those are international, and improve our products so that as the states do open up, you know, we are, we're considered a premier player.

Chad C. Beynon: That's great. Thank you very much.

Speaker Change: That's great. Thank you very much.

David Katz: Again, if you'd like to ask a question, press start at the number one on your telephone. Keep ad. Your next question comes from a line of David Katz from Jeffries. Your line is open.

Operator: Again, if you would like to ask a question, press star, then number one on your telephone keypad. Your next question comes from David Katz from Jeffreys. Your line is open.

Speaker Change: Again, if you'd like to ask a question, press star then the number one on your telephone keypad. Your next question comes from a line of David Katz from Jeffreys. Your line is open.

David Katz: Hi, good morning everyone, and congrats on all the hard work, which I'm sure is not, should not be unnoticed. Thank you. With respect, you're welcome.

David Brian Katz: Hi, good morning, everyone, and congrats on all the hard work; the score is not, and should not go unnoticed. With respect to the Italy process that we're going through, you mentioned earlier that, you know, you have some insight and you're working on some of the technology. You know, I just want to make sure that in your prior release, I think it was a quarter ago, you gave us the sense that the sort of economics or the partnership structure was going to remain the same as last time. How firm is that today? And should we still consider that to be the case?

David Brian Katz: Hi, good morning everyone and congrats on all the hard work.

David Brian Katz: I'm sure is not.

David Brian Katz: It should not be unnoticed.

David Katz: With respect to the Italy process that we go through. You know, you mentioned earlier that you, you know, you have some, some insight and you're working through on some of the technology. You know, I just want to make sure in your prior release, I think it was a quarter ago. You gave us the sense that the sort of economics of the partnership structure was going to remain the same as last time. How firm is that today, and should we still consider that to be the case?

Speaker Change: Thank you. Look, with respect, you're welcome. With respect to the Italy process that we go through, you mentioned earlier that you have some insight and you're working through on some of the technology.

Speaker Change: I just want to make sure in your prior release, I think it was a quarter ago, you gave us the sense that the sort of economics or the partnership structure was going to remain the same as last time. How firm is that?

Speaker Change: today, and should we still consider that to be the case?

Vincent Sadusky: We mentioned previously that we did execute a memorandum of understanding to maintain our joint venture with each one of our joint venture partners, and everyone is positively inclined to move forward with the partnership. As we get closer to the actual renewal of the RFP process, you know, that becomes even more important, but I have no update to that other than we're in agreement with our partners, and the intention is to move ahead together.

Vincent L. Sadusky: I mean, we mentioned previously that we did execute a memorandum of understanding to maintain our joint venture with each one of our joint venture partners. And I think everyone is positively inclined to move forward with the partnership, and as we get closer to the actual renewal, the RFP process, that becomes, I think, even more important, but I have no update on that other than we're in agreement with our partners, and the intention is to move ahead together.

Speaker Change: I mean we mentioned previously that we did execute a memorandum of understanding to maintain our joint venture with each one of our joint venture partners and I think everyone is

Speaker Change: You know, positively inclined to move forward with the partnership and as we

Speaker Change: get closer to the actual renewal of the RFP process, that becomes even more important. But I have no update to that other than we've...

Speaker Change: We're in agreement with our partners and the intention is to move ahead together.

Max Chiara: Perfect, and in some of your remarks you mentioned, you know, in LGM, Iba Dah on Remain spoke about a billion, too, and I just wanted to walk through that a little bit, right? But what we, you know, what we're thinking about, and this is a discussion with investors since the deal announcement, and ongoing, is there's a minority interest, you know, back out that's neighborhood 175, and then there should be some corporate, you know, considered in there also. You know, any sort of qualitative help you can give us around, you know, what those pieces remain, or, you know, is a corporate number of 75, at least in place for us to estimate, you know, when we do our math?

David Brian Katz: Perfect. And in some of your remarks, you mentioned, you know, an LTM EBITDA on Romaine Cove of about a billion two. And I just wanted to walk through that a little bit, right? But what we're thinking about, and this has been a discussion with investors since the deal announcement and ongoing, is there's a minority interest, you know, back out that's in the neighborhood of 175. And then there should be some corporate, you know, considered in there also, you know, any sort of qualitative help you can give us around, you know, what those pieces remain core, you know, is a corporate number of 75, a decent place for us to estimate, you know, when we do our math.

Speaker Change: Perfect. And in some of your remarks you mentioned...

Speaker Change: you know, and LTM.

Speaker Change: Ibiza on remains of about a billion two.

Speaker Change: And I just wanted to walk through that a little bit, right? But what we, you know, what we're thinking about, and this is a discussion with investors since the deal announcement,

Speaker Change: and ongoing is there's a minority interest, you know, back out, that's neighborhood 175. And then there should be some corporate.

Speaker Change: You know, any sort of qualitative help you can give us around, you know, what those pieces remain, or, you know, is a corporate number of 75 a decent place for us to estimate, you know, when we do our math?

Max Chiara: Yeah, so David, this is Max speaking, so I'll pick this one up. So on the minority interest, there's no majority of that item is covered by the two Italian contracts, JVs, that we have consortium, that we have down there, so that's unchanged, and I think your number is a good proxy going forward. It's something in the neighborhood of 200 million per year. Obviously, with the consideration that in the year of renewal, that number is affected by their own contribution of funds to the new bid from a cash flow perspective. So obviously, you have only to take the product portion of our piece of the bid going forward.

Massimiliano Chiara: Yes, David, this is Max speaking. So I'll pick this one up. So on the minority interest, as you know, the majority of that item is covered by the two Italian contracts, JVs that we have, and the consortium that we have down there. So that's unchanged. And I think your number is a good proxy going forward.

Speaker Change: So David, this is Max speaking. So I'll pick this one up. So on the minority interest, as you know, majority of that item is covered by the two Italian contracts, JVs, that we have.

David Brian Katz: consortium that we have down there. So that's unchanged and I think your number is a good proxy going forward. It's something in the neighborhood of 200 million per year.

Massimiliano Chiara: It's something in the neighborhood of $200 million per year. Obviously, with the consideration that in the year of renewal, that number is affected by their own contribution of funds to the new bid from a cash flow perspective. So, obviously, you only have to take the pro rata portion of our piece of the bid going forward. As far as corporate costs are concerned, the 1.2 is an all-in number for Remainco right now, as we discussed last quarter.

David Brian Katz: Obviously, with the consideration that in the year of renewal, that number is affected by their own contribution of funds.

David Brian Katz: to the

David Brian Katz: to the new bid from a cash flow perspective.

Speaker Change: Obviously, you have only to take the pro rata portion of our piece of the bid going forward. As far as the corporate costs are concerned, the 1.2 is an all-in number for Remainco right now, as we have discussed last quarter.

Max Chiara: As far as the corporate costs are concerned, the 1.2 is an only number for remain code right now, as we have discussed last quarter, and as a matter of reference, what we are expecting is an amount of stranded cost net of TSA contributions of about 20 million, that we expect to absorb in the next 12 to 24 months, so that to take into account the TSA period, and then an extra quality year extra, until we are able to absorb this 20 million of stranded cost that effectively comes back to us.

Massimiliano Chiara: And as a matter of reference, what we are expecting is an amount of stranded cost, net of TSA contributions, of about $20 million that we expect to absorb in the next 12 to 24 months so that to take into account the TSA period and then an extra, call it a year, extra until we are able to absorb this $20 million of stranded cost that effectively comes back to us.

Speaker Change: And as a matter of reference, what we are expecting is an amount of stranded cost, net of TSA contributions of about $20 million, that we expect to absorb in the next

Speaker Change: 12 to 24 months so that to take into account the TSA period and then an extra call it a year extra Until we are able to absorb this 20 million of stranded cost that effectively comes back to us

David Brian Katz: All right. Helpful. Thank you.

Max Chiara: Helpful. Thank you.

Joseph Stauff: Your next question comes from a line of Joe Stealth from Susquehanna. Your line is open. Thanks.

Operator: Your next question comes from a line from Joe Stauff from Susquehanna. Your line is open. Uh, thanks. Good morning.

Speaker Change: Your next question comes from a line of Joe Stauff from Susquehanna. Your line is open.

Joseph Robert Stauff: Just maybe a quick, you know, follow-up on the Italian lotto renewal process. Is it fair to say that, you know, we'll all know everything, say, in the first quarter of 2025, if not later this year? Is there any, I'd say, tighter sense of timing you can give us on that. And then I just want to go back.

Joseph Robert Stauff: Thanks. Good morning, Vince. Good morning, Max.

Joseph Stauff: Good morning, Vince. Good morning. Good morning, Max.

Joseph Stauff: Just maybe a quick follow-up on the Italian lotto renewal process, is it fair to say that, you know, we all know everything, say, in the first quarter of '25, if not later this year? Is there any, I'd say, tighter sense of timing you can give us on that. And then I just wanted to go back, I believe, very acid earlier on the lottery business and, you know, kind of your outlook, and I think about the strategy.

Joseph Robert Stauff: Thanks. Good morning, Vince. Good morning, Max. Just maybe a quick...

Joseph Robert Stauff: You know, follow up on the Italian lotto renewal process, is it fair to say that, you know, we all know everything, say, in the first quarter of 25, if not later this year, is there any, I'd say, tighter

Speaker Change: sense of timing you can give us on that. And then I just wanted to go back...

Vincent L. Sadusky: I believe Barry asked it earlier about the lottery business and, you know, kind of your outlook and how you think about the strategy. Can you also discuss maybe the competitive landscape and how that has changed, you know, over the last couple of years in particular, and the advantages that you have? Obviously, you know, part of the exercise here is to try to figure out what the natural right trading multiple is for the lottery business. There are a number of international comps. And so I was looking if you could help, you know, kind of beef up some of that discussion, please.

Speaker Change: I believe Barry asked it earlier on the lottery business and you know kind of your outlook and how you think about the strategy. Can you also discuss maybe the competitive landscape and and how that has changed?

Joseph Stauff: Can you also discuss maybe the competitive landscape, and how that has changed, you know, over the last couple of years in particular, and the advantages that you have, obviously. You know, part of the exercise here is to try to figure out what, naturally, the right trading multiple is for the lottery business.

Speaker Change: You know over the last couple years in particular

Speaker Change: and the advantages that you have, obviously.

Speaker Change: Part of the exercise here is to try to figure out what...

Joseph Stauff: There are a number of international comps, and so I was looking if you could help, you know, kind of beef up some of that discussion, please.

Speaker Change: Naturally, the right trading multiple is for the lottery business. There are a number of international comps, and so I was looking if you could help, you know, kind of beef up some of that discussion, please.

Vincent Sadusky: All start with the process on the Italian law. So, as we said last time, early in April, the Italian government issued a decree that has established the rules for the new bid. Since then, the process has kicked off in terms of preparing the new bid document that has to go through a couple of legislative steps to confirm in sync with European Union rules for public bid. And also, it's consistent with the Italian principles.

Massimiliano Chiara: I'll start with the process for the Italian lotto. So, as we said last time, early in April, the Italian government issued a decree that established the rules for the new bid. Since then, the process has kicked off in terms of preparing the new bid document that has to go through a couple of legislative steps to confirm that it is in sync with European Union rules for public bids, and it's also consistent with Italian principles.

Speaker Change: I'll start with the process on the Italian lotto. So, as we said last time, early in April the Italian government issued a decree that established the rules for the new bid. Since then, the process has kicked off in terms of preparing the new bid document.

Speaker Change: that has to go through a couple of legislative steps to confirm is in sync with...

Speaker Change: European Union rules for public bids.

Speaker Change: and also it's consistent with the Italian principles.

Massimiliano Chiara: So, all in all, we expect that the tender may be issued by the end of the year or, worst case, early next year. Then it's a matter of the typical step-after-step process. So, all in all, we don't expect to have a definitive outcome until probably the second quarter of next year, with obviously some time left beyond that for the integration from the existing contract run to the new period. So all in all, again, we expect 12 months probably to get an outcome and then maybe 18 months up to the run rate of the new contract. Yeah, that would be good.

Vincent Sadusky: So all in all, we expect that the tender may be issued by the end of the year; worst case, early next year. Then it's a matter of the typical step of the step process. So all in all, we don't expect to have a definitive outcome until probably the second quarter of next year, with obviously some time left beyond that for the integration from the existing contract one to the new period. So all in all, again, we expect 12 months probably to get an outcome, and then maybe 18 months up to the run rate of the new contract.

Speaker Change: So, all in all, we expect that the tender...

Speaker Change: may be issued by the end of the year, worst case early next year, then it's a matter of the typical step after step process. So all in all,

Speaker Change: We don't expect to have a definitive outcome until probably the second quarter of next year, with obviously some time left beyond that for the integration from the existing contract run to the new period.

Speaker Change: So, all in all, again, we expect 12 months, probably, to get an outcome, and then maybe 18 months up to the run rate of the new contract.

Vincent Sadusky: Yeah, thank you.

Max Chiara: Then I would pick up on the opportunity going forward for lottery. Again, we'll have plenty more time to talk about our thoughts in detail. But we expect to maintain a low mid-single digit long-term growth profile for lottery over time. And that's really based upon a combination of innovation and the greater number of people that have discovered the lottery is fun and enjoyable post-COVID, coupled with high lottery as well. So again, we've had really, really good growth since going back to 2019. When you take a look at the current elevated levels of play in our region, in our areas, the first half of 2024, we had 2% revenue growth, but that was on top of 5% in the prior year, putting aside product sales, which is a spiky business.

Vincent L. Sadusky: And then I would pick up, uh..., on the kind of opportunity going forward for the lottery. Again, we'll have plenty more time to talk about our thoughts in detail.

Speaker Change: Thank you.

Speaker Change: And then I would pick up...

Speaker Change: on the you know kind of the opportunity going forward for for lottery again we'll have plenty more time to to talk about you know our thoughts in

Vincent L. Sadusky: But, you know, we expect to maintain kind of a low, mid, single-digit, long-term growth profile for lottery over time. And that's really based upon a combination of innovation and the greater number of people that have discovered the lottery is fun and enjoyable, you know, post COVID, coupled with high ticket prices as well. So again, we've had, you know, really, really good growth since going back to 2019. When you take a look at the current elevated levels of play, and in our region, in our areas, in the first half of 2024, we had 2% revenue growth that was on top of 5% in the prior year, putting aside product sales, which is kind of a, you know, a lumpy, you know, a spiky, And we've had, you know, terrific growth in North American, but that's now moderated. We don't see any structural issues associated with that.

Speaker Change: in detail, but, you know, we expect to maintain kind of low, mid, single-digit, long-term growth profile for lottery over time, and that's really based upon

Speaker Change: a combination of innovation

Speaker Change: and the greater number of people that have discovered the lottery.

Speaker Change: It's fun and enjoyable, you know, post-COVID, coupled with High Lottery as well. So, again, we've had, you know, really, really good growth since going back to...

Speaker Change: to 2019, when you take a look at, you know, the current elevated levels of play and in

Speaker Change: in our regions, in our areas.

Speaker Change: The first half of 2024, we had 2% revenue growth, but that was on top of 5% in the prior year, putting aside product sales, which is kind of a lumpy, spiky business.

Max Chiara: And we've had terrific growth in North American instance. That's now moderated. We don't see any structural issues associated with that. And we do think the improved focus of new game launches, higher price points, et cetera, that we're working with states on. We'll have a positive impact as well as the really nice cagaring growth trajectory in Italy. So when you take a look at all of that coupled with high lottery, which has grown, you know, something like 60% or so over the last four years, and you have the numbers becoming more meaningful and has the opportunity to become even more meaningful as more states, you know, eventually approve some type of high lottery play.

Speaker Change: And we've had, you know, terrific growth in North American instance, you know, that's now moderated.

Vincent L. Sadusky: And we do think that, you know, the improved focus and game launches, new game launches, higher price points, et cetera, that we're working with states on will have a positive impact, as well as the really nice Kager and growth trajectory in Italy. So when you take a look at all of that, coupled with iLottery, which has grown, you know, something like 60% or so over the last four years, and, you know, the number is becoming more meaningful and has the opportunity to become even more meaningful as more states, you know, eventually approve some type of iLottery game, I think all of that is pretty attractive. And then you asked about the competitive set, assuming you meant, you know, worldwide. You know, as you know, it's an interesting industry.

Speaker Change: We don't see any structural issues associated with that. And we do think the improved focus and new game launches, higher price points, etc.

Speaker Change: that we're working with states on will have a positive impact, as well as the really nice Kager and growth trajectory in Italy. So when you take a look at all of that, coupled with iLottery, which has grown...

Speaker Change: You know, something like 60% or so over the last four years and, you know, the number is becoming more meaningful and has the opportunity to become even more meaningful as more states

Speaker Change: you know, eventually approve.

Speaker Change: some type of iLottery play. I think all of that is pretty attractive. And then you had asked about the competitive set.

Max Chiara: I think all of that is pretty attractive.

Max Chiara: And then you'd ask about the competitive set, assuming you met. You know, as you know, it's an interesting industry. It's not that big in terms of the revenue opportunity for the B2B providers. There's a few international players that are primarily focused on B2C. So there's not that many players that have both the B2C experience as well as the B2B expertise, the ability to be able to consistently help jurisdictions to not only improve sales, but consistently deliver a high-quality product with virtually no disruption. And offer up, have the ability to offer up, you know, anything on the product suite from, you know, from instance to various draw games to multi-jurisdictional games.

Speaker Change: Assuming you meant, you know, worldwide, you know, as you know, it's an interesting industry. It's not that big in terms of the revenue opportunity for the B2B providers.

Vincent L. Sadusky: It's not that big in terms of the revenue opportunity for B2B providers. There are, you know, a few international players that are primarily focused on B2C. So there are not that many players that have both the B2C experience as well as the B2B expertise, the ability to be able to consistently help jurisdictions to not only improve sales but consistently deliver a high-quality product with virtually no disruption and offer up, have the ability to offer up, anything on the product suite, from instance, to various draw games to multi-jurisdictional games.

Speaker Change: There's, you know, a few international players that are primarily focused on

Speaker Change: B2C, so there's not that many players that have both the B2C experience.

Speaker Change: as well as

Speaker Change: the B2B expertise, the ability to be able to consistently help jurisdictions to not only improve sales but consistently deliver a high quality product with virtually no disruption and have the ability to offer up

Speaker Change: anything on the product suite from

Speaker Change: You know, from instance to very strong games to multi-jurisdictional games. There's just not that many players out there, and the ones that are out there, and the few, even fewer, are public. You know, most of those public ones are focused in one...

Vincent L. Sadusky: There's just not that many players out there. And the ones that are out there, and the few, even fewer, are public. Most of those public ones are focused in one or two jurisdictions and certainly don't have the broad base of expertise. And also, on top of that, in many cases, those particular providers, their expertise is B2C. In some cases, we're actually the technology provider to some of these players. So I really think as we get out and have the ability to tell our story, investors will recognize the uniqueness of our product offering.

Max Chiara: There's just not that many players out there, and the ones that are out there, and the few, even if you are a public, you know, most of those public ones are focused in one or two jurisdictions. And certainly don't have the broad base expertise. And also on top of that, in many cases, those particular providers, their expertise is B2C. In some cases, we're actually the technology provider to some of these players.

Speaker Change: or two jurisdictions and certainly don't have the broad-based expertise and also on top of that in many cases those particular providers their expertise is B2C and

Speaker Change: In some cases, we're actually the technology provider to some of these players. So, I really think as we get out and have the ability to tell our story...

Max Chiara: So I really think as we get out and have the ability to tell our story, you know, investors will recognize the uniqueness of our product offering. You know, certainly we're heavily, we have a lot of cash flow coming from Italy, a lot of cash flow coming from the North American jurisdictions, but, you know, relative to our competition we think, you know, our diversification is outstanding, and our product capabilities is, you know, is unparalleled.

Speaker Change: You know, investors will recognize the uniqueness of our...

Vincent L. Sadusky: Certainly, we have a lot of cash flow coming from Italy, a lot of cash flow coming from North American jurisdictions, but relative to our competition, we think our diversification is outstanding, and our product capabilities are unparalleled.

Speaker Change: product offering.

Speaker Change: You know certainly we're

Speaker Change: heavily, we have a lot of cash flow coming from Italy, a lot of cash flow coming from

Speaker Change: from the North American jurisdictions.

Speaker Change: But, you know, relative to our competition we think, you know, our diversification is outstanding and our product capabilities is, you know, is unparalleled.

Max Chiara: Thanks a lot.

David Hargreaves: Your final question comes from Alina of David Hargreaves from Barclays. Your line is open. Hi, I hope this isn't nitpicking at all, but just, you know, looking back to your monologue, it said that you plan to maintain leverage at current levels, and I'm just looking back to prior announcements. I'm just wondering, so that looks like around three times, depending on net or gross. Is that a bit of a revision from what you were previously revealing?

Operator: Your final question comes from the line of David Hargreades from Barclays. Your line is open.

Speaker Change: Thanks a lot.

Speaker Change: Your final question comes from the line of David Hargreaves from Barclays. Your line is open.

David Hargreaves: Hi, I hope this isn't nitpicking at all, but just, you know, looking back to your monologue, it said that you plan to maintain leverage at current levels, and I'm just looking back to prior announcements. I'm just wondering, so that looks like around three times, depending on net or gross, is that a bit of a revision from what you were previously.

David Hargreaves: Hi, I hope this isn't nitpicking at all, but just, you know, looking back to your monologue, it said that you plan to maintain leverage at current levels.

David Hargreaves: And I'm just looking back to prior announcements. I'm just wondering, so that looks like around three times, depending on net or gross. Is that a bit of a revision from what you were...

David Hargreaves: previously.

Max Chiara: No, absolutely not. It's a different perspective. I mean, right now the leverage is around 2.9, so below three. What we said today, just a few minutes ago, is that we expect; we like where we are today, all in all.

Massimiliano Chiara: No, absolutely not. It's a different perspective.

David Hargreaves: Revealing?

Speaker Change: No, absolutely not. It's a different perspective. I mean, right now the leverage is around 2.9, so below 3. What we said today just...

Massimiliano Chiara: I mean, right now, the leverage is around 2.9, so it's below 3. What we said today just a few minutes ago is that we like where we are today, all in all, and we have to consider that in the next 12 to 18 months, we are going to have to put a significant amount of money on the table for upfront fees, for contract rebids, and also a significant investment amount in the lottery business for some contract rebids in the U.S.

Speaker Change: a few minutes ago, is that we like where we are today, all in all, and we have to consider that in the next 12 to 18 months, we are going to have...

Max Chiara: And we have to consider that in the next 12 to 18 months, we are going to have to put a significant amount of money on the table for up front fees for contract rebate and also significant investment amount in the lottery business for some contract rebate in the US. So when you consider everything, including the cash proceeds from the transaction, the cash to be used to pay down that and provide the shareholder moderation and fund the future business of lottery, all in all, we think that the below three targets is where we would like to be.

Speaker Change: to put a significant amount of money on the table for upfront fees for contract rebids.

Speaker Change: and also significant investment amount in the lottery business for some contract rebate in the U.S. So, when you consider everything, including the cash proceeds from the transaction...

Massimiliano Chiara: So when you consider everything, including the cash proceeds from the transaction, the cash to be used to pay down debt and provide shareholder remuneration, and fund the future business of the lottery, all in all, we think that below three targets is where we would like to be. So again, I gave you an all-in perspective, which is a different way to look at this number versus the pro forma exercise that we did when we issued the announcement on the AVERY transaction originally, which was a purely pro forma calculation for the transaction. So I think we believe the information today is more helpful for investors going forward because they understand where the company is expected to be in the long run when you consider

Speaker Change: the cash to be used to pay down debt and provide the shareholder remuneration.

Speaker Change: and fund the future business of lottery, all in all, we think that the below three target is where we would like to be.

Max Chiara: So again, I gave you an all-in perspective, which is a different way to look at this number versus the pro forma exercise that we did when we issued the announcement on the every transaction originally, which was a purely pro forma calculation for the transaction. So I think we believe the information today is more helpful for investors going forward because they understand where the company is expecting to be in the long run. When you consider everything.

Speaker Change: So, again, I gave you an all-in perspective, which is a different way to look at this number versus the pro forma exercise that we did when we issued the announcement on the AVERY transaction originally, which was a purely pro forma calculation for the transaction.

Speaker Change: So I think we believe the information today is more helpful for investors going forward because they understand where the company is expecting to be on the long run when you consider everything.

Max Chiara: Okay, and when you talk about repaying two billion of debt, does that assume that the bank debt rolls and then that's just two billion of bonds, or should we be thinking two billion of bonds and bank debt combination? Look in the disclosures that have been provided to the market between deal one and deal two; there are sufficient information to understand that we have some requirements to repay a portion of the bank debt on the term loan only. So the revolver is not going to be touched. It's just a voluntary decision if we want to apply some of that money to reducing the revolver instead of paying down bond, which is part of our flexibility.

Speaker Change: Okay and when you talk about repaying two billion of debt, does that assume that the bank debt rolls and then that's just two billion of bonds or should we be thinking two billion of bonds and bank debt combination?

Speaker Change: Look, in the disclosures that have been provided to the market between deal one and deal two, there are sufficient information to understand that we have some...

Speaker Change: requirements to repay a portion of the bank debt.

Speaker Change: on the term loan only.

Speaker Change: So, the revolver is not going to be touched, it's just a voluntary decision if you want to apply some of that money to reducing the revolver instead of paying down bond.

Max Chiara: So we expect to pay down half of the term loan remaining at the time of closing. Everything else will be of the two billion dollars will be allocated to either bonds or reduction in the revolver usage.

Speaker Change: which is part of our flexibility. So we expect to pay down half of the term loan remaining at the time of closing. Everything else will be of the $2 billion, will be allocated to either bonds or reduction in the revolver usage.

Max Chiara: Besides the two billion that are obviously, we have to fund the 400 million in transaction-related cash outflows that I mentioned during the call. And then the balance will be used for capital returns to shareholders, plus some amount will remain for corporate general purpose. But again, I think at the end of the day for investors, the most important thing is to understand the mindset of the company in terms of net leverage going forward, including the round of investments, including the upfront fee for the lottery renewal that we will have to entertain between the second part of 24 and 25 and early 26.

Speaker Change: Besides the $2 billion, obviously we have to fund the $400 million in transaction-related cash outflows that I mentioned during the call, and then the balance will be used for capital returns to shareholders plus some amount will remain for corporate general purposes.

Speaker Change: But again, I think at the end of the day for investors, the most important thing is to understand the mindset of the company in terms of...

Speaker Change: net leverage going forward, including the round of investments in including the upfront fee for the lottery new one that we will have to entertain between the second part of 24 and 25 and early 26. Thank you. Really appreciate the clarification and congrats on everything. Thank you.

Max Chiara: Thank you.

Max Chiara: Really appreciate the clarification, and congrats on everything. Thank you.

Vincent Sadusky: That concludes our question-and-answer session.

Vincent Sadusky: I will now turn the call back over to CEO Vince Sadusky for closing remarks. Yeah, thank you. So just to sum it up, the record first half operating income and adjusted EBITDA we achieved before the separation to best your cause. We think confirms we're very much on track with our core operational and strategic objectives. Consistent investments in our technology, our game content and innovation, innovative solutions provide us a really good foundation to build from. The recently announced sale of gaming and digital businesses for 4.05 billion cash is an important step in unlocking the intrinsic value of IGT's best-in-class business.

Speaker Change: That concludes our question and answer session. I will now turn the call back over to CEO Vince Sadusky for closing remarks.

Vincent L. Sadusky: Yeah, thank you. So just to sum it up, you know, the record first half operating income and adjusted EBITDA we achieved before the separation divestiture costs.

Vincent L. Sadusky: we think confirms we're very much on track with our core operational and strategic objectives.

Vincent L. Sadusky: Consistent investments in our technology, our game content, and innovative solutions provide us a really good foundation to build from.

Vincent L. Sadusky: The recently announced sale of gaming and digital businesses for $4.05 billion in cash is an important step in unlocking the intrinsic value of IGT's best-in-class business. So thank you all today for joining us, and we always appreciate your interest in IGT.

Vincent Sadusky: So thank you all today for joining us, and we always appreciate your interest in IGT.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for your participation. You may now disconnect.

David Hargreaves: Okay, and when you talk about repaying $2 billion of debt, does that assume that the bank debt rolls and then that's just $2 billion of bonds, or should we be thinking about $2 billion of bonds and bank debt combined?

Operator: Please wait.

Massimiliano Chiara: Look, in the disclosures that have been provided to the market between deal one and deal two, there is sufficient information to understand that we have some requirements to repay a portion of the bank debt on the term loan only. So the revolver is not going to be touched.

Operator: The conference will begin shortly.

David Hargreaves: It's just a voluntary decision if we want to apply some of that money to reducing the revolver instead of paying down the bond, which is part of our flexibility. So we expect to pay down half of the term loan remaining at the time of closing. Everything else will be of the $2 billion will be allocated to either bonds or reduction in the revolver usage. Besides the $2 billion, obviously, we have to fund the $400 million in transaction-related cash outflows that I mentioned during the call, and then the balance will be used for capital returns to shareholders plus some amount will remain for corporate general purposes.

David Hargreaves: But again, I think at the end of the day, for investors, the most important thing is to understand the mindset of the company in terms of net leverage going forward, including the round of investments, including the upfront fee for the lottery renewal that we will have to entertain between the second part of 2024 and 2025 and early 2026. Thank you.

David Hargreaves: Thank you. I really appreciate the clarification and congrats on everything.

Vincent L. Sadusky: That concludes our question and answer session. I will now turn the call back over to CEO Vince Sadusky for closing remarks.

Vincent L. Sadusky: Yeah, thank you. So, just to sum it up, the record first half operating income and adjusted EBITDA we achieved before the separation divestiture costs, we think confirms we're very much on track with our core operational and strategic objectives. Consistent investments in our technology, our game content, and innovative solutions provide us with a really good foundation to build from. The recently announced sale of our gaming and digital businesses for $4.05 billion in cash is an important step in unlocking the intrinsic value of IGT's best-in-class business. So, thank you all today for joining us, and we always appreciate your interest in IGT.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

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