International Game Technology Plc reported a full-year net loss of nearly US$21.4 million for the 12 months ended December 31, improving on the approximately US$1.07-billion loss a year earlier. In a written statement issued on Thursday, the United Kingdom-based gaming and lottery services provider said the net loss for 2018 included US$120 million of non-cash impairment charges.
Revenue at IGT declined by 2 percent in the 12 months to the end of last year. The company reported US$4.94 billion in sales and service revenue in 2017, which fell to US$4.83 billion last year.
IGT chief executive Marco Sala said the company’s position was “in line” with the “improved outlook” provided in October when third-quarter data was released.
“The year was characterised by strong global lottery performance, resilience in Italy and progress in North America gaming,” Mr Sala said in a prepared statement included in Thursday’s earnings release.
“We’ve established solid foundations to build on – securing large, long-term lottery contracts in key markets and executing a full refresh of our gaming machine cabinet and content portfolio. These efforts will translate into improved free cash flow beginning in 2019,” he added.
IGT’s net debt stood at about US$7.57 billion at the end of the third quarter and had increased to US$7.76 billion by the end of the year.
Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) grew from US$1.68 billion in 2017 to nearly US$1.74 billion last year.
“We achieved 4 percent adjusted EBITDA growth on stable revenue at constant currency and scope in 2018,” said IGT’s chief financial officer Alberto Fornaro. “Our outlook for 2019 adjusted EBITDA of US$1.70 billion to US$1.76 billion assumes underlying growth for our core lottery and gaming businesses.”
The IGT statement said the company had registered “underlying improvement” in its United States operations and “broad-based strength” in the company’s key European market, Italy.
However, revenue from markets outside of the U.S. and Italy shrunk by 7 percent last year, from US$889 million in 2017 to US$820 million at the end of last year.
The statement said the “non-cash, non-tax-deductible impairment charge” had reduced the carrying value of IGT’s international products and services segment.
The number of IGT slot machines in casinos in the company’s “international markets” fell by 17 percent across 2018, from more than 12,800 in 2017 to 10,636 last year. The “underlying international growth outlook (was) unchanged”, the company said.
The company shipped 13,700 gaming machine units to international markets during the 12 months to December 31, compared to 13,974 units in 2017.
There was no breakdown of the company’s performance data in Asia.
For the fourth quarter of 2018, IGT said its revenue was approximately US$1.27 billion, down 6 percent in year-on-year terms. Adjusted EBITDA for the three months to December 31 was US$416 million compared to US$452 million in the fourth quarter of 2017. The group posted a quarterly net loss of US$102 million, compared with a profit of US$79.7 million in the fourth quarter of 2017.
In a note published following IGT’s results announcement, brokerage Deutsche Bank Securities Inc said that IGT’s missing its fourth quarter 2018 guidance – which had been raised in late October – “was cringe worthy”, albeit partly due to unfavourable foreign exchange transactions. “But we don’t truly believe the cadence of the business is materially different,” said Deutsche Bank’s analysts.
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