Gaming and lottery provider International Game Technology Plc (IGT) reported on Tuesday revenue of nearly US$637.5 million for the second quarter of 2020, down 48.4 percent from the prior-year period. The company flagged additional cost-saving measures, but said that “improving trends” in the group’s business were “encouraging”.
IGT posted a net loss attributable to shareholders of just above US$279.6 million, compared to a nearly US$4.9-million profit in the corresponding period a year earlier, according to a Tuesday press release.
For the three months ending June 30, adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 62.9 percent year-on-year, to US$168.4 million.
The release quoted IGT’s chief executive, Marco Sala, as saying that the group’s second-quarter results reflected the “intense impact of global lockdowns” caused by the Covid-19 pandemic. The ongoing public health crisis has led to casino shutdowns in a number of jurisdictions, including in markets in the United States, Australia and the Asia-Pacific region.
“Thanks to strong North America lottery performance and our swift adoption of cost-saving and [cost-] avoidance measures, we delivered better cash flow than we expected back in May. Our resilience is a direct consequence of the diversity of our global portfolio of products and solutions,” stated Mr Sala.
He added: “The improving trends we are currently seeing are encouraging, but we remain prudent with our planning. Our new organisational structure enhances our readiness to adapt to changes in market conditions.”
IGT said the group’s liquidity and net debt improved on positive cash flow performance during the second quarter. The company said it generated US$167.8 million in cash from operating activities and nearly US$107.4 million in free cash flow in the three months to June 30. That compares with US$445.1 million in cash from operating activities and US$333.3 million in free cash flow a year ago.
The group said its revenue for the reporting period was down “across all business segments and all primary revenue streams except for digital activities, where revenue increased 35 percent.”
It added that “progressive easing of restrictions” relating to Covid-19 during the quarter and “cost-saving initiatives, helped mitigate the impact”.
IGT said its global gaming revenue declined by 72 percent, “driven by the closure of casinos and gaming halls, fewer unit shipments, and lower systems and software sales compared to the prior year”. The firm’s global lottery revenue was down 26 percent from a year earlier.
“Gaming and lottery trends improved each month as venues reopened and restrictions eased,” said the group.
Lower sales, additional savings
IGT’s international division – including Asia – generated quarterly gaming revenue of US$21 million, down 85.2 percent from a year earlier. Revenue from gaming product sales fell by 92.1 percent year-on-year, to US$9 million; revenue from gaming services was down 57.1 percent, to US$12 million.
The company said there was a 95.9-percent decrease year-on-year in the number of machines it shipped to international markets last quarter, to 269 units. Its installed base of slot machines in casinos within international markets during the second quarter shrank by 3.1 percent in year-on-year terms, to 9,724.
IGT said it continued to implement its cost-reduction plan amid the coronavirus pandemic to target US$500 million in aggregate savings in 2020.
In Monday’s release, IGT said also it had identified an additional US$200 million in “structural cost savings” compared to pre-pandemic levels.
The additional savings are mostly expected in 2021, the group said. They include: eliminating “duplicative functions” and streamlining back-office activities; optimising the global investment in technology “to focus on value-accretive know-how”; rationalising research and development; and optimising its supply chain “for maximum cost efficiency”.
At June 30, IGT’s liquidity amounted to US$2.3 billion, via US$1.3 billion in unrestricted cash and US$1.0 billion available under revolving credit facilities. The company completed recently the sale of US$750-million in 5.25-percent senior secured notes due in 2029. About US$500 million of the net proceeds were used to fund a partial tender of 6.25-percent notes due in 2022.
Max Chiara, chief financial officer of IGT, said cash generation and liquidity remained IGT’s “top financial priority.”
He added: “The proactive efficiency initiatives and focused capital-markets activity we executed in the quarter have us tracking ahead of plan on all key measures and we expect to deliver positive free cash flow this fiscal year.”
The company’s net debt position stood at US$7.29 billion as at the end of the second quarter, up from US$7.17 billion in the previous quarter, but down from US$7.38 billion as of December 31.
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