Release Date: November 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Intralot SA (STU:9IL, Financial) reported improved financials in Q3 2024 compared to the first and second quarters, with both revenue and EBITDA showing positive trends.
- The company experienced organic growth in key markets such as Turkey and Argentina, which is expected to continue towards the end of the year.
- Management contract activities, particularly in Turkey, performed better year over year, driven by growth in the online sports betting market.
- Intralot SA (STU:9IL) saw positive revenue contributions from Europe and Oceania, mainly due to organic growth in Croatia, Netherlands, and Australia.
- The company successfully raised funds amounting to €237.7 million, which helped maintain the adjusted net leverage ratio at 2.7 times.
Negative Points
- Year-over-year, Q3 2024 saw a 14.2% decline in revenues and a 16.3% drop in EBITDA, primarily due to the absence of a major jackpot in the US and negative exchange rate impacts in Argentina and Turkey.
- The company faced a lower scope contract in Morocco, contributing to a negative impact on revenues.
- Operating cash flow decreased by €16 million, mainly due to lower recorded EBITDA and negative working capital swings.
- Intralot SA (STU:9IL) was not selected as the preferred bidder for the Ohio state lottery contract from 2027, with details on the evaluation process still pending.
- The company's technology activity line in Argentina experienced a negative impact of €0.9 million in quarter-on-quarter comparison.
Q & A Highlights
Q: Can you confirm the breakdown of the 14 million year-on-year revenue decline in Q3?
A: Yes, the US impact was 4.5 million, with an organic growth of 1.5 million, resulting in a net impact of 3 million. The total exchange rate impact was 6.4 million, including Argentina and TRY. The Moroccan contract had a lower scope, contributing to a 3 million decline. These negatives were partly offset by organic growth. (CFO)
Q: Why was Intralot not the preferred bidder for the Ohio state lottery contract from 2027?
A: We do not have official information regarding the evaluation or financial proposals of other bidders. We have requested details through the Freedom of Information Act and will analyze the situation once we receive the necessary information. (CEO)
Q: Could you discuss potential opportunities in British Columbia and other regions like the US and Australia?
A: In British Columbia, we have gone live with the central lottery system and retail sportsbook. We signed a contract for the digital lottery, which includes a revenue share model. We expect digital business to grow significantly. In Australia, the evaluation process is ongoing, with an outcome expected in Q1 2025. We are also awaiting results from other projects in the US. (CEO)
Q: Should we expect further improvement in Q4, and can you provide any guidance on EBITDA for the full year?
A: Historically, the second half of the year is better than the first. The final outcome will depend on whether there is a jackpot in the US. If a jackpot accumulates, it will further support the results, which are expected to be better than the first half. (CFO)
Q: Is the market in Turkey becoming less competitive, and do you foresee profitability improving?
A: Profitability in Turkey is improving, and the market is normalizing. We are also expanding our product portfolio, which should contribute to market growth. The signs in the last few months are encouraging for profitability and market share growth. (CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
