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International Game Technology (IGT) Q1 2021 Earnings Call Transcript

By Motley Fool Transcribing - May 11, 2021 at 10:30AM

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IGT earnings call for the period ending March 31, 2021.

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International Game Technology (IGT 2.96%)
Q1 2021 Earnings Call
May 11, 2021, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Ladies and gentlemen, thank you for standing by and welcome to the IGT 2021 first-quarter results conference call. [Operator instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions] Thank you.

It is now my pleasure to turn the call over to Mr. Jim Hurley, senior vice president of investor relations. Sir, the floor is yours.

Jim Hurley -- Senior Vice President of Investor Relations

Thank you and thank you all for joining us on IGT's first-quarter 2021 conference call, which is hosted by Marco Sala, our chief executive officer; and Max Chiara, our chief financial officer. After their prepared remarks, we'll open the call up for your questions. We are again presenting results from multiple locations, so please bear with us if we encounter any technical difficulties. During today's calls -- call, we'll be making some forward-looking statements within the meaning of federal securities laws.

Forward-looking statements are not guarantees, and our actual results may differ materially from those expressed or implied in the forward-looking statements based on a number of factors and uncertainties, including those related to the effects of the COVID-19 pandemic. The principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our latest earnings release and in our SEC filings. During this call, we may discuss certain non-GAAP financial measures. In our press release, slides accompanying this webcast, and our filings with the SEC, each of which is posted on our investor relations website, you will find additional disclosures regarding these non-GAAP measures, including reconciliation to -- of these measures with comparable GAAP measures.

With that, I'll turn the call over to Marco Sala.

Marco Sala -- Chief Executive Officer and Executive Director

Thank you, Jim, and hello to everyone. As you have seen from today's announcement, we had an outstanding quarter. Stronger player demand drove improved momentum across all our main activities in Q1. This translated into 25% revenue growth from the prior-year period and a 6% increase from Q1 '19.

Lottery reached the record levels with the same-store sales up over 30%, including double-digit gains across games and regions. The land-based slot business merely recovered to prior-year levels, thanks to strong gains on the active installed base and a 40% increase in the machine units sold in the U.S. and Canada. Growth accelerated for our digital and betting activities where revenues nearly doubled in Q1.

We continue to monitor costs as the top line recovers and we are making excellent progress on structural cost reductions with the OPtiMa program, which Max will discuss later. You can see these in the over 70% increase in EBITDA and 44% EBITDA margin for the first quarter. It was an outstanding performance and among the highest levels ever achieved. With such strong Q1 results and an expectation of progressive recovery for land-based gaming as we move through the year, we believe we can return to pre-pandemic revenue, profit, and leverage levels this year.

This swift recovery from the impact of the pandemic is due to the unique and resilient nature of our business model across products and regions. I'd like to spend some time on Q1's lottery performance. The 32% same-store sales increase was fueled by 52% growth in Italy and 28% in North America and the rest of the world. Even without the benefit of stronger multi-jurisdiction jackpot activity, same-store sales for North America and the rest of the world were up over 20%.

Compared to 2019, global same-store sales were up 24%. The sustained strength in lottery same-store sales for the last three quarters confirms a complete recovery from the pandemic. This is supported by the highest segment revenue and profit levels we have ever achieved. And the momentum continues.

Global same-store sales are trending up over 20% for the Q2-to-date period compared to the second quarter of 2019. We must acknowledge that some of the recent strength comes from the relative lack of other entertainment alternatives. In the U.S., higher disposable income, which includes the benefit of government stimulus, is another factor. But lottery has always maintained a steady growth profile.

This is because it is a content-driven business. The games have high entertainment value with broad player appeal. A consistent stream of new games offers fresh opportunities for player engagement. Throughout the pandemic, the lottery has become a valued and routine activity in the new normal.

We expected that to continue. According to our research, many intend to play lottery at higher levels than they did before COVID. This is an encouraging sign. Innovation is another important contributor.

In the draw-based arena, add-on and progressive jackpot games are fueling double-digit growth in the U.S., while the 10eLotto Extra is an important driver in Italy. Instant ticket sales are benefiting from higher average ticket prices, as well as player interest in the second chance and the free ticket games. Multi-jurisdictions and [Inaudible] jackpot games were almost double the prior year, thanks to a $1 billion Mega Millions and $750 million Powerball jackpot in the U.S. and strong EuroMillions sales in Europe.

It is reasonable to expect sales to moderate from current levels as other entertainment options become more widely available, especially in Italy. We believe we will see a return to more normal steady increases after we cycle through the pandemic-related peaks and valley over the next several quarters. Our expectation is that when the restriction of the pandemic will be largely over to see some stickiness to the recent increased play levels, particularly in North America, and the market will resume a more normal growth rate, mid-single digits in the U.S., but starting from a higher individual consumption. The recovery for our global gaming segment is progressing well in the U.S., which accounts for about 70% of the segment revenue.

U.S. casinos are open for business as the pace of vaccination is driving confidence among players and operators This has led to a substantial improvement in slot GGR since January, not only in the regional U.S. markets where most of our business is conducted but also in Las Vegas. Core players ever returned and new players, mostly younger, are entering the market as other entertainment options are limited.

This is translating into a swift recovery in our business. Recurring revenues are improving month over month, thanks to a stable installed base, and more of those units are being activated. Even as more units are powered up is on active U.S. units were up high single digits sequentially.

New multilevel progressive such as Dragon Lights, Gong Xi Fa Cai, along with the Wheel of Fortune franchise, are driving these stronger results. We also had good unit sales in the quarter, fueled by a 40% increase in the U.S. and Canada units, including double-digit growth in replacement, which were not far from Q1 '19 levels. The resilience speaks to the diversity in our customer mix across regional, tribal, and commercial casinos, as well as the VLTs.

Regal Riches and the Lion Dance were among the top-selling core video titles, while Wild Life Extreme and the Big City 5s were the best realty titles. We expect continued progressive improvement throughout the year across all aspects of our global gaming segment. It is clear from our meetings over the last few months that the digital and betting is of great interest to you. It is for us, too, as IGT plays an important role in the iGaming, sports betting, and iLottery ecosystems.

During Q1, GGR across the portfolio was two to three times the prior-year levels. Most of that growth came from an expanding player base in existing markets. There are no signs of the digital trend cannibalization in the land-based business. Digital and betting revenue nearly doubled in Q1, posting the strongest quarterly increase in the last year.

We expect the business to maintain a strong double-digit growth profile for the next several years through a combination of organic growth including the contribution from new jurisdictions. We are investing to support this growth and maintain leadership positions in all three verticals. In iGaming, we are expanding our content portfolio through a combination of internally developed games and those developed with third-party studios. There is an additional opportunity for IGT to act as a distributor of third-party content.

And this is an emerging area of opportunity for us. All these should result in IGT having 20%, 30% share of the North American iGaming market. Outside North America, there is also an opportunity to penetrate emerging international markets such as Germany, Greece, and the Netherlands. We intend to maintain a leading role in the iLottery industry, leveraging the longest standing relationship we have with the world's leading lottery today into our commitment to investing in three main objectives: first, expand the portfolio of games; second, to enhance our platform capabilities; and third, by increasing the marketing and other activities to support players acquisition and retention for our customers.

As we look out over the next three to five years, we see the potential for the number of U.S. jurisdictions authorizing the iLottery to double from current levels. Today, our presence in the U.S. sports betting markets powers 16 states representing over 40 sportsbooks.

IGT's land-based sports betting platform is the most widely used in the country. We see the greatest opportunity for us in offering turnkey sports betting solutions to commercial and tribal casino operators. Since the launch of our in-house trading team last summer, we have made good progress assigning customers including Maverick Gaming, Snoqualmie, and Emerald Queen, among others. We have many more deals in the pipeline.

There are 17 states where legislation is spending this year and four more where legislation has been passed but sports betting is not yet operational. We are proactively securing a partnership in jurisdictions where regulatory approval is spending, ensuring our customer is with the launch as markets go live. Our first-quarter results marked a strong start to the year and illustrate the compelling foundation IGT can build on over the next several years. This is especially true for our global lotteries segment where record sales and profits confirm the high entertainment value and broader player appeal of the games, bolstering our favorable long-term growth outlook.

The faster recovery in our land-based U.S. gaming activities is accentuated by accelerating the momentum for the right growth of digital and betting businesses. Stronger revenue trends are further enhanced by significant structural cost reductions that improve our outlook for profit margins and cash flows. With the proceeds of the recent sale of certain Italy B2C gaming businesses that will be used for debt reduction, our leverage profile should be significantly improved by yearend.

Now, I'll turn the call over to Max.

Max Chiara -- Chief Financial Officer

Thank you, Marco, and hello, everyone, on the call today. Similar to our last call in my prepared remarks, I will be speaking primarily to continuing operations due to the recent sale of our Italy B2C gaming business. The financial performance exhibited in the first quarter of 2021 displays the strength of the IGT portfolio with our lottery business running at a fast pace both on a core basis and supported by exceptional jackpot activity in the early part of the period. Our gaming unit is on an accelerated path to recovery with a strong contribution from our OPtiMa program as well as sustained robust growth in our digital platform verticals.

These trends brought a performance of over $1 billion in revenue and $450 million in adjusted EBITDA. Our profitability showcases the dynamic margin leverage of our lottery business as well as disciplined cost-saving actions throughout the company. We achieved roughly one-third of this year's over 200 million OPtiMa savings target during Q1, mainly through product simplification and margin improvement efforts. As giving volume gradually improved throughout the year, we expect to see an increase in benefit from our operational excellence initiatives.

Compared to the prior year, we saw the expected reoccurrence of certain normal running expenses in the first quarter, primarily employee-related costs. Continued healthy cash conversion and capex discipline drove over 200 million in free cash flow, which is high for a first-quarter performance. Interesting to note, we return to profitability and net income level this quarter, generating $0.38 per share. Turning to our lottery segment on Slide 13.

Revenue increase over 40% to 749 million. Global same-store sales rose over 30% on broad-based growth across instant tickets, drawer-based games, multi-state jackpots, and iLottery. Same-store sales grew double-digit in January and February where there were no prior real impacts from the pandemic, highlighting the strong underlying play of demand. In fact, the comparison to Q1 2019 in terms of the top line is showing an astounding 20 percent-plus growth.

Part of the same-store sales growth includes roughly 20 million in revenue from higher multi-state jackpot activity and outside of same-store sales, lottery service revenue includes approximately 60 million in performance-driven incentive accruals from our U.S. lottery management agreements. There's 80 million in total in Q1, benefits flow through almost entirely to profit. Product sales, which are naturally lumpy and represent about 5% of annual lottery revenue, were down 10 million on large software license sales in the prior year, partly offset by an increase in instant ticket printing revenue.

The margin leverage from lotteries largely fixed cost structure is particularly evident this quarter as our revenue growth translated into incremental margins of over 80%. And we also had the benefit of the 80 million in Q1 revenue items indicated before. Operating income more than doubled from the prior-year period to 337 million with adjusted EBITDA growing 74% to 447 million. So all in all, an excellent performance by a vibrant and pandemic-resilient lottery business.

Turning to global gaming, the revenue of 266 million was down 14% over the prior year. We continue to see sequential improvement in this business with higher revenue and adjusted EBITDA and lower operating loss. Compared to the fourth quarter, KPIs are improving and the contribution from digital and betting continues to accelerate with revenue growing over 80% from the prior year. Sequentially, the global installed base was stable.

Over 75% of our U.S. casino installed base was active and service revenues close to prior levels due to higher productivity on the active machines. In North America, yields on active units increased double-digit compared to the previous-year period. We sold just over 4,400 units globally in the quarter, up 20% over the prior year, and up 2% sequentially.

Unit shipments were driven by VLT replacement sales in the U.S. and Canada and the casino opening of Resorts World Las Vegas and Hard Rock Indiana. Overall, product sales are down due to a multi-year strategic agreement booked in Q1 last year and AWP upgrades in the prior year as well. Operating loss and adjusted EBITDA reflect a lower base of revenue, partially offset by the benefit of cost savings actions.

Margin leverage improved in the quarter as expenses have come down. On Slide 15, you can see that the recovery of top-line trends and diligent cost-savings initiatives are driving strong cash flow in the quarter. Cash from operations was 251 million despite the concentration of interest payments in the first quarter. Free cash flow was 204 million, and you can see the direct impact on net debt and leverage, which was down at full-term versus yearend 2020.

We now expect leverage to return to pre-COVID levels by the end of this year, highlighting the unique resilience of the IGT business. On the next slide, we can see our debt maturities. In the last year, we have made significant improvements to our capital structure as we pay down debt, extending maturities, and reduce interest costs. Each of our most recent debt transactions in euros and dollars was at the lowest coupon rate in company history.

Since our last earnings call, there have been two additional improvements. First, in late March, we successfully refinance approximately 1 billion notes due in 2022 with a combination of new notes and bank debt and extended maturity date to 2026. Second, the 630-plus-million euro in net proceeds from the sale of the Italy gaming business will contribute to the full redemption of our euro-denominated 2023 note through the exercise of the make-whole call. As you can see, these two changes meaningfully reduce our net near-term debt maturities and will allow us to save, going forward, about 60 million in annual interest cost with the full run rate of savings starting to materialize in Q3 this year.

In summary, our strong first-quarter performance was driven by a combination of global lottery growth, progressive recovery in U.S. gaming, and OPtiMa cost-savings initiatives. We are on track to structurally reduce our cost structure by more than 200 million this year with each segment contributing according to plan. We continue to convert adjusted EBITDA to cash flow at a healthy rate and the free cash flow we generate is used primarily to reduce debt, allowing us to reach pandemic levels of leverage by the end of the year.

Now I'd like to share our perspectives on the second quarter on Slide 18. Quarter to date, global lottery same-store sales growth is over 20%, so our second-quarter revenue should be higher on a year-over-year basis, though we do not expect the $80 million in Q1 lottery revenue benefits related to jackpot activity and LMA contract incentive to recur. We expect continuous sequential improvement in the gaming business in line with what we have seen in the last few quarters. While second-quarter profitability will be lower sequentially, we expect second-quarter operating income and adjusted EBITDA will be higher than prior year, even without the benefit of the drastic temporary reductions in cost savings during the second quarter of 2020.

Depreciation and amortization should be relatively stable, and for the full year, let me reiterate that we expect all relevant key financial metrics to return in line with 2019 trends. The meaningful progress on vaccination campaigns in our core markets and overall has convinced us that it is time to update the market on our long-term targets in line with sentiments echoed by several market participants we have interacted with recently. I'm excited to announce we will be hosting an Investor Day later in the year where we can elaborate and update you on our strategic priorities, long-term financial targets, and capital allocation plans. We will have many opportunities to connect before that including second-quarter earnings in early August, G2E in early October, and our normal conference and roadshow participation.

Then on November 9, we will report our third-quarter earnings, as well as hosted our Investor Day. Hopefully, it will be in person in New York City. So, please mark your calendars. That concludes our prepared remarks.

Operator, can you please open the call for questions.

Questions & Answers:


Operator

[Operator instructions] Your first question comes from the line of Carlo Santarelli from Deutsche Bank.

Carlo Santarelli -- Deutsche Bank -- Analyst

Hey, guys, good morning. Max, maybe this one's best for you as you kind of talked about it a lot in your prepared remarks. But as you guys have started to see kind of the revenue tick back and obviously acknowledging the $200 million run rate that you set forth your expenses, clearly when you guys put those targets out there, it was probably some ambiguity as to what costs would need to return as revenue started to ramp. Given the result here, it doesn't look like a lot of that have returned, and obviously, a lot of it's on the lottery side, you spoke to somebody the incremental flowthrough drivers.

But have you noticed, you know, perhaps maybe that that estimate of cost that we're returning could perhaps be lower than what you were previously articulating as you've seen revenues start to ramp across the business?

Max Chiara -- Chief Financial Officer

Hi, Carlo. Look, at the end of the day, we have been able to bank on actions that we have executed throughout 2020 in the early part of the year. So, we are continuing to enjoy the same kind of benefit in nature than last year in terms of reduction on discretionary costs. As the year will unfold, and eventually revenue particularly on the gaming side will start to pick up, we'll probably be -- we'll probably experience a shift into cost-saving programs away from those discretionary cost savings more into structural permanent long-term savings as we have been announcing since the beginning of the year with these operational excellence initiatives and the product simplification coming to fruition.

So, we expect to still be able to beat our $200 million target for the full year, but the mix of the savings will change over time.

Carlo Santarelli -- Deutsche Bank -- Analyst

Great, Max. That's super helpful. I appreciate that. And then secondly and, you know, acknowledging there is some seasonality in the business.

But when you look at the digital and betting revenue business right now, I mean, you're kind of run-rating $230 million, $240 million if you were to just annualize the $58 million in the first quarter. How -- given the attention paid to kind of those streams, obviously, iLotterty, iCasino, and your OSB platform business. How much do you guys contemplate perhaps maybe breaking that business out even further down the road to give investors? Obviously, with the revenue disclosure, that's great, but, you know, obviously, that business is profitable for you guys as well. But how much have you thought about kind of featuring that a little bit more disclosure and maybe providing a little bit more granular color on kind of exactly how that business is doing from a profit perspective as well?

Max Chiara -- Chief Financial Officer

So, this is a very good question, Carlo. Obviously, we enhanced the visibility of our fast-growing digital and betting activities since we launched the new organization back in Q3 of last year. And we have also dedicated more time to talk about our business activities in digital and betting over the last few earnings calls based on the success that we have been able to track across the verticals in iGaming, iLottery, and sports betting, which is driving as you mentioned a phenomenal revenue growth. The number we generated last year in digital betting revenue of $170 million is in front of everyone and the further growth experienced in Q1 is very -- speaks by itself.

Obviously, the business continues to expand at a rapid pace we expect at a certain point. It may make sense for us to consider breaking out as a stand-alone segment.

Carlo Santarelli -- Deutsche Bank -- Analyst

Great, Max. Thank you very much. Take care, guys.

Operator

Your next question comes from the line of Chad Beynon from Macquarie.

Chad Beynon -- Macquarie Group -- Analyst

Hi. Good morning. Thanks for taking my question. I wanted to start on the gaming improvement, Max.

You said, you know, in the second quarter, you'll start to see this business start to come in. I wanted to focus on your installed base. I believe you said 75% of the units are currently active and I'm sure this differs across many jurisdictions where you have units. But how should we think about when, you know, more of these units will be turned on? And then by the end of the second quarter, do you think we can get closer to, you know, closer to 100%? And then finally on that, how should we think about the incremental costs that are needed as this comes back on? Should this mostly flow through to the bottom line? Thanks.

Marco Sala -- Chief Executive Officer and Executive Director

Good morning, Chad. I think while speaking in April, we had already 80% of our installed base active and we think we will progressively grow 'till the end of the year when we believe we will reach almost the totality of our installed base active. And we do not anticipate much additional costs in order to get it done.

Chad Beynon -- Macquarie Group -- Analyst

Perfect. Thank you. And then just now that the free cash flow picture and your recovery to previous free cash flow levels is in sight, how are you thinking about an organic lottery growth opportunities? Are there other opportunities that you have your eye on, or tuck-in acquisitions either on the digital side or any of the other segments that could help position you guys for the future? Thank you.

Marco Sala -- Chief Executive Officer and Executive Director

No. For the time being, we are not working on any acquisition. I think we have a -- all we need to grow on all the digital verticals and regarding lottery in general, we do not expect anything to be acquired short term.

Chad Beynon -- Macquarie Group -- Analyst

Thanks, Marco. Congrats on the quarter.

Marco Sala -- Chief Executive Officer and Executive Director

Thank you. Thank you, Chad.

Operator

Your next question comes from Barry Jonas from Truist Securities.

Barry Jonas -- Truist Securities -- Analyst

Hey, guys. So, if you think you'll get back to 2019 EBITDA levels, and I guess that's with cost cuts netting with the sale of the Italy gaming B2C, I have a bit lower than your historical forex net leverage target by year-end. So, I guess the question is how are you thinking about capital returns like share repurchases and dividends here?

Max Chiara -- Chief Financial Officer

I'll take this, Marco. Obviously, returning capital to shareholders is an important objective for us. For now, although the priorities for capital allocation are still maintenance capex and paying down the debt until we achieve our four times leverage target. Having said that, since we expect leverage to return to pre-pandemic levels by the end of this year, there is potential for the board to reconsider restarting dividend payments as those results materialize toward the end of the year.

Barry Jonas -- Truist Securities -- Analyst

Got it. Got it. OK. And then just a quick one on the New York sports betting market.

We've got a couple inbounds from clients. Just curious how you're thinking about potentially bidding there as a platform provider.

Marco Sala -- Chief Executive Officer and Executive Director

For New York, you said?

Barry Jonas -- Truist Securities -- Analyst

Yeah. For the New York sports betting -- mobile sports betting market.

Marco Sala -- Chief Executive Officer and Executive Director

Yeah. No, I think the visibility on New York is not as big as you know, but we are preparing ourselves to take advantage of any opportunity we might have there. So, we will learn more details on the potential opportunity, but we are still thinking that there will be further compelling opportunities for us.

Barry Jonas -- Truist Securities -- Analyst

Got it. All right. Thanks so much, guys, and congrats on a great quarter.

Marco Sala -- Chief Executive Officer and Executive Director

Thank you.

Max Chiara -- Chief Financial Officer

Thank you.

Operator

Your next question comes from the line of Domenico Ghilotti from Equita.

Domenico Ghilotti -- Equita -- Analyst

Hi, good morning. A couple of questions. The first is on the Italian lotteries, if you can give us the contribution of Scratch & Win. Because if I'm not wrong, they've been extremely strong.

And so, I -- if you can elaborate on the performance and if you see any mismatch between sell-in or sell-out or any one-off contribution? And the second question is on the savings. Let's understand how much of the savings have been flowing to the P&L, in particular, to the gaming compared to the lottery business.

Marco Sala -- Chief Executive Officer and Executive Director

Hi, Domenico. I will take the first question and Max will elaborate on the second one. But the first question, we do not see any mismatch on Scratch & Win in Italy. It is doing great, and we have great sell-in and great sell-out.

And of course, we are taking advantage by the closure of gaming goals and sports betting shops. But the business is doing very well with a high level of satisfaction from players accordingly to our research.

Domenico Ghilotti -- Equita -- Analyst

So, it discontinues. So, basically, we can take it, as I say, sustainable level at least for this part of the year?

Marco Sala -- Chief Executive Officer and Executive Director

Yes. I think the trend is continuing. It is quite solid, and I think we can expect a very solid performance until the reopening of the point of sales I've just mentioned.

Domenico Ghilotti -- Equita -- Analyst

OK.

Max Chiara -- Chief Financial Officer

On the second question, Domenico -- hi, this is Max. So I was -- as I was elaborating before with Carlo, our OPtiMa program, combination of initiatives will shift over time. Right now, we see a little bit more contribution coming from lottery than what should be the run rate and a little bit less from gaming in terms of percentage of the total, but we are ahead of our -- we are in line and slightly ahead of our target so far. The gaming will ramp up as soon as these operational excellence initiatives will come to fruition, starting with the second part of the year and more so going forward.

Domenico Ghilotti -- Equita -- Analyst

And just a follow-up, a clarification on the guide, on the indication of being back to 2019 level. So should I take it on a reported number, not on adjusted for pro forma for the disposal?

Max Chiara -- Chief Financial Officer

We have recast our historicals to run the continuing ops through all the financials. So we are comparing apple with apple. That's what we should be doing.

Domenico Ghilotti -- Equita -- Analyst

OK. Gotcha. Thanks.

Max Chiara -- Chief Financial Officer

OK. Thank you.

Operator

[Operator instructions] Your next question comes from the line of David Katz from Jefferies. 

David Katz -- Jefferies -- Analyst

Hi, good morning, everyone. Max and -- I guess everyone appreciates all the commentary. I wanted to -- I'm looking at Slide 16, which has the maturity schedule out there. And trying to think about the degree to which there, you know, could be more opportunities in there, given how well you did on the most recent raise.

You know, clearly, there's some bank debt and some, you know, bonds in the next few years. Have you gone through any sort of thoughts or math as to what those opportunities might look like to, you know, save some interest and drive some cash flow? 

Max Chiara -- Chief Financial Officer

Yes. So for -- thank you for the question, David. I would first acknowledge the fact that with the two significant actions that we have taken and the second is of today with the make-whole on the euro 2023 debt. We're basically taking away towers fundamentally, public market towers we had in '22 and '23 now for good.

The next chapter is probably looking more into the bank situation, the bank debt situation. We have a term loan that will come due in '22 and '23. And then obviously, we have the revolver expiring in 2024. On the bonds, obviously, we can always opportunistically look at tendering some of those bonds.

We actually are now a couple of years out in terms of early calls that we started to create into the structure as we mature our issuance program in the last few years. So I would say the long story short, bank debt first and then bonds later on. But I think we're pretty happy now with the situation that we have achieved by lowering the total amount of debt by a significant amount and also reducing the leverage by one full turn versus year-end.

David Katz -- Jefferies -- Analyst

Yeah. Yeah. OK. And I mean, is it a fair -- I mean, maybe this is not the right forum, but is there a fair, you know, sort of thought that those interest costs are going to wind up being lower than where they were, directionally, at least on the bank debt?

Max Chiara -- Chief Financial Officer

Definitely, the bank debt is the low-cost liability -- financial liability for us. So, changing in the mix definitely improves our average cost of debt, which has come down probably 0.25 points in the last year or so. Obviously, we continue to look opportunistically at the capital market to see if there is any chance to construct the transaction that is effective. But again, I would really bank on the 60 million that we have now generated throughout the last two actions.

That will start to come to fruition on a quarterly basis, obviously, one-quarter of that amount starting with Q3 of this year. 

David Katz -- Jefferies -- Analyst

Perfect. OK. Thank you very much.

Operator

And we'll take our last question from John DeCree from Union Gaming.

John DeCree -- Union Gaming -- Analyst

Hi, everyone. Thanks for taking my questions.

Marco Sala -- Chief Executive Officer and Executive Director

Hi, John.

John DeCree -- Union Gaming -- Analyst

Marco or Max, I wanted to ask a question on the iGaming business, you know, and where you're seeing your revenue lift. Obviously, you have a lot of content to provide. So I'm curious if you could help us unpack that revenue a little bit. It's mostly your slot content available on iGaming? Or are there other B2B services that you're providing iGaming customers, I guess, specifically in the U.S.

related to technology? And the follow-up question is, is that business -- iGaming in general, tied to revenue in terms of getting a revenue share? Or is it maybe fixed fee cost of services? How do we think about as the market -- the iGaming market grows? How should IGT grow with that market?

Marco Sala -- Chief Executive Officer and Executive Director

John, I think I can elaborate on this question. Let me start by saying that over 80% of our iGaming revenues is in North America, where we enjoy a 25% share in the U.S. based on the first quarter and 50% share in Canada. And so our performance is very good.

We expect for the full year to double our GGR as we expect the market will double. And the base of our strength that we expect will be maintained as the market grows -- stays on our game offering. Because our success is driven by the success of our games. For the time being, our share is driven by our proprietary games.

We are working on our strong franchises, Cleopatra, Wheel of Fortune, Da Vinci Diamonds, that are truly working well across all channels. Yes, the point is that you cannot adjust porting from the land base to the digital space, the games. But you have to rework them significantly to better attune them to the digital space. And that is where we devoted a lot of effort and energy in order to build up from solid brand and franchises a very good digital games.

In some cases, we have to change the mechanics. So in some cases, we change the payout because we need to make them stronger digital content. Sometimes in order to develop some specific feature, we ask the contribution from third-party studios. A recent example has been a collaboration for Wheel of Fortune Megaways that we have launched in New Jersey in Q4, and now is in Michigan, Canada, and it would be launched in Italy, too.

It means that we take features. We work the product with the third-party studios in order to enhance the quality of our offering. Third, we are also thinking about distributing -- to become a distributor of a third-party content. So, this is an emerging area of focus for us.

That can also bolster our market share. So it's all about content. And with that said, we are very well prepared to wave the solid growth profile of this business, considering the number of jurisdictions that might decide, especially in the United States to regulate this segment. And business model is revenue sharing.

So you have to look better to think about this business in terms of revenue sharings accordingly to the performance of our content.

John DeCree -- Union Gaming -- Analyst

Excellent. Thanks, Marco. I think you answered a number of my questions in there. So, I appreciate all the help.

Congratulations on the quarter.

Marco Sala -- Chief Executive Officer and Executive Director

Thank you very much.

Operator

And I show no further questions at this time. I will now turn the call back to management for any closing remarks.

Marco Sala -- Chief Executive Officer and Executive Director

Thank you for joining us today. The outstanding Q1 results we deliver give us confidence that we can return on to key pre-pandemic financial measures this year. The swift recovery reflects the unique and resilient nature of our business model across products and regions and the tremendous efforts of the IGT team around the world. We are building for the future of a stronger foundation of each of our core business activities.

We look forward to speaking with you about this over the next weeks. Have a great day. 

Operator

[Operator signoff]

Duration: 47 minutes

Call participants:

Jim Hurley -- Senior Vice President of Investor Relations

Marco Sala -- Chief Executive Officer and Executive Director

Max Chiara -- Chief Financial Officer

Carlo Santarelli -- Deutsche Bank -- Analyst

Chad Beynon -- Macquarie Group -- Analyst

Barry Jonas -- Truist Securities -- Analyst

Domenico Ghilotti -- Equita -- Analyst

David Katz -- Jefferies -- Analyst

John DeCree -- Union Gaming -- Analyst

More IGT analysis

All earnings call transcripts

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IGT
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