GGRAsia – IGT posts US$248mln 1Q loss, flags savings amid pandemic

IGT posts US$248mln 1Q loss, flags savings amid pandemic

May 19, 2020 Newsdesk Latest News, Top of the deck, World

Gaming and lottery provider International Game Technology Plc (IGT) has posted a net loss of nearly US$248.3 million for the first quarter of 2020, compared with a US$40.3-million profit in the corresponding period a year earlier. The firm said the result for the period included a non-cash goodwill impairment charge of US$296 million.

First-quarter revenue was just below US$940.2 million, down 17.9 percent from the prior-year period, the company said in a Monday press release.

For the three months ending March 31, adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by about 26.0 percent year-on-year, to US$308.5 million.

The quarterly results were “affected by Covid-19 related lockdowns beginning in March,” said IGT in its latest statement. 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.

The group said its revenue for the period was down as a “global closure of casinos and gaming halls and widespread mobility restrictions significantly hinder service-revenue generation.” The results for gaming product sales reflected fewer unit shipments in North America and international markets, partly offset by higher revenue in segments other than gaming terminal product, said IGT.

Lottery service revenue in the first quarter was also lower in year-on-year terms “on reduced traffic to points of sale”, it added.

IGT’s international division – including Asia – generated quarterly revenue of US$164 million, down 4.7 percent from a year earlier. Revenue from IGT’s international gaming division decreased 11.1 percent, to US$72 million in the first quarter of 2020.

IGT said there was a 45.9-percent decrease year-on-year in the number of machines it shipped to international markets last quarter, to 1,608 units.

Its installed base of slot machines in casinos within international markets during the first quarter shrank by 9.5 percent in year-on-year terms, to 9,653.

US$500mln in savings

IGT said it continued to implement its cost reduction plan amid the coronavirus pandemic – including avoiding extra capital spending – to target US$500 million in aggregate savings in 2020.

“After a solid start in the first two months of the year, we quickly shifted our focus to the global Covid-19 health crisis in March,” IGT chief executive Marco Sala said in prepared comments released with the financial data.

He added: “We implemented robust business continuity plans and maintain service levels at our normal, high standards … and I am confident IGT is well positioned to emerge from the crisis a stronger, even more competitive organisation.”

At March 31, IGT’s liquidity totalled US$2.2 billion, comprised of US$1.5 billion in unrestricted cash and US$743 million available under revolving credit facilities. Earlier this month the company said it had amended the terms of the group’s revolving credit facilities and term loan.

Max Chiara, chief financial officer of IGT, said the company had taken “swift actions across all non-essential costs” and was now focusing on “structural cost savings initiatives”, while adopting “strict measures to preserve liquidity.”

Such measures included temporary, company-wide salary reductions; cancellation of 2020 salary increases and short-term incentive compensation programmes; furloughs and a hiring freeze. The company was also reducing discretionary costs such as marketing and travel, as well as cutting down on planned maintenance capital expenditures for the remainder of the year.

Mr Chiara added: “Given the uncertainty created by Covid-19, we are withdrawing our previous financial outlook for 2020, but we are confident that with US$2.2 billion of liquidity, we are geared with sound financial flexibility to weather the storm caused by the Covid-19 pandemic.”

The company’s net debt position declined to US$7.17 billion as at the end of the first quarter, from US$7.38 billion as of December 31.