GGRAsia – IGT reports wider 3Q loss, but raises 2017 guidance

IGT reports wider 3Q loss, but raises 2017 guidance

Nov 15, 2017 Newsdesk Latest News, Top of the deck, World

Global gaming and lottery supplier International Game Technology Plc (IGT) said total revenue for the third quarter 2017 was US$1.22 billion, down 3.5 percent in year-on-year terms.

Despite an increase in gaming and lottery product sales for the period, revenue was down primarily on the sale of Double Down Interactive LLC and amortisation costs associated with a new lotto concession in Italy, said the firm in a Tuesday press release.

Total revenue in the gaming segment stood at US$611 million for the three months ended September 30, down 5.1 percent from a year earlier. The firm said gaming services revenue declined 9.4 percent year-on-year, to US$443 million. Revenue from gaming product sales increased 8.6 percent year-on-year, to US$168 million.

IGT’s revenue from the international segment – that excludes sales in North America and Italy – rose 8.5 percent from the prior-year quarter, to US$234 million. The firm’s gaming revenue in the segment increased 4.8 percent year-on-year to US$128 million, including US$59 million from gaming services and US$69 million from product sales. The company said the segment results reflected “the benefit of discrete, non-recurring items and significant expansion in the installed base”.

The company’s global installed base grew by 3,275 units from the prior-year period, said IGT. The company shipped 6,406 gaming machines worldwide during the third quarter, with higher average selling prices than a year earlier, it said.

In the international segment, the firm shipped a total of 2,809 gaming machine units during the third quarter of 2017, compared to 3,742 units in the prior-year period.

IGT reported an operating loss of US$556 million, due to a non-cash, non-tax-deductible impairment charge of US$714 million to write down the carrying value of the company’s North America gaming and interactive reporting unit to “fair value”.

The company posted a net loss of US$804 million for the three months ended September 30. Aside from the US$714 million non-cash impairment charge, the quarterly loss also included US$118-million of net foreign exchange loss, the firm said.

Adjusted earnings before interest, taxation, depreciation and amortisation (EBIDTA) were flat at US$428.5 million. The company said it reflected “robust lottery same-store revenue growth, strong product sales, and reduced operating expenses”.

Higher guidance

“Our strong third quarter performance reflects the scope and balance of our business,” IGT’s chief executive, Marco Sala, said in a statement included in Tuesday’s release.

“Our largest global lottery operations are growing steadily and acceptance of our newest gaming machines is expanding around the world. The significant increase in gaming and lottery product sales demonstrates clear interest in our systems and technology solutions,” he added.

On Tuesday, IGT’s chief financial officer, Alberto Fornaro, said the company would update slightly its outlook for full-year 2017. “Based on the year-to-date results and current exchange rates, we expect to achieve adjusted EBITDA of US$1.64 billion to US$1.68 billion for the full-year period,” he stated as quoted in the results filing.

The figure is slightly up compared to the previous guidance of full-year adjusted EBITDA in the range of US$1.60 billion to US$1.68 billion.

Mr Fornaro added: “Thanks to a favourable product sales mix and reduced operating expenses, adjusted EBITDA improved from the prior-year period, after considering certain non-comparable items, such as the DoubleDown sale.”

IGT’s net debt was US$7.34 billion as of September 30. For full-year 2017, net debt is expected to remain essentially in line with the level registered in the third quarter, the firm said.

In a note published following IGT’s third quarter results announcement, brokerage Deutsche Bank Securities Inc said IGT’s third-quarter results were “good enough, ahead of anticipated fourth-quarter 2017 gaming momentum”.

“We view the third-quarter 2017 result as more than good enough and we believe the decision to raise the midpoint of adjusted EBITDA guidance will be well received,” said analysts Carlo Santarelli and Danny Valoy in a Tuesday note.

IGT declared on Tuesday a cash dividend of US$0.20 per ordinary share. The dividend is payable on December 12 to all shareholders of record as of the close of business on November 28.