GGRAsia – IGT, GTech post loss in quarter before merger

IGT, GTech post loss in quarter before merger

May 14, 2015 Newsdesk Latest News, Top of the deck, World

U.S.-listed International Game Technology Plc reported its results for the three months ended March 31 under two separate headings: one for Italy-based lottery specialist GTech SpA and one for U.S.-based slot machine maker International Game Technology (IGT). The two companies completed an US$6.4-billion merger as International Game Technology Plc on April 7.

GTech’s first quarter revenue rose 3.4 percent year-on-year to EUR807.7 million (US$917.2 million), but the company still swung to a net loss of EUR26.9 million, compared to a net profit of EUR75 million a year earlier.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) were little changed at EUR295.6 million.

GTech said it moved to a loss mainly because of acquisition-related items. The net loss “primarily reflects higher interest expense and other charges” associated with the acquisition of Nevada-based IGT, the firm said.

Excluding items related to the acquisition, the company said it would have reported a net profit of EUR105 million for the first quarter of 2015.

IGT’s standalone revenue was down 22 percent year-on-year to US$399 million in the three months to March 31. The company posted a net loss of US$13.1 million for the period, compared to a net profit of US$25.7 million in the prior-year period.

The slot machine maker said the decline in revenue was mainly due to a drop in product sales and gaming operations, which was partially offset by interactive gaming.

Revenue from gaming operations and product sales decreased 17 percent and 43 percent year-on-year respectively, IGT said. Social gaming revenue increased 17 percent year-on-year to US$81 million, it added.

“Revenue was marginally below our estimate as GTech strength was offset by softness in IGT’s gaming operations and product sales,” said a note from Cameron McKnight at Wells Fargo Securities LLC.

The analyst expects second quarter numbers to be “much cleaner” with the combined companies reporting consolidated group figures on a U.S. GAAP (generally accepted accounting principles) basis, aligning the fiscal reporting calendars, and reflecting a new organisational structure.

The combined company confirmed its US$280-million target for cost and revenue synergies. It said it expects to achieve two-thirds of savings “by the end of year one on [an] annualised basis”.

“We had a solid first quarter for GTech operations, continuing to run the underlying business efficiently and profitably, at the same time as we were completing a transformative merger,” said Marco Sala, chief executive of the now London-based IGT Plc.

“We were ready to launch the integration from day one, focusing on revitalising our R&D [research and development] capabilities. Exciting content delivered across the whole range of platforms is the key to consolidating our leadership of the global gaming industry,” he added.