GGRAsia – IGT’s 2Q revenue down, firm posts loss

IGT’s 2Q revenue down, firm posts loss

Aug 02, 2017 Newsdesk Industry Talk, Latest News, Top of the deck

Global gaming and lottery supplier International Game Technology Plc (IGT) said that group wide consolidated revenue in the second quarter of 2017 declined by 5.1 percent year-on-year to US$1.22 billion.

The decline was “mostly attributable to the new [Italy] lotto concession dynamics and the sale of Double Down Interactive LLC which closed on June 1,” IGT stated in an announcement on Tuesday.

Double Down Interactive – a developer of so-called social casino games, mostly known for its DoubleDown Casino – was sold by IGT to DoubleU Games Co Ltd, a firm based in Seoul, South Korea for a cash purchase price of US$825 million. IGT said at the time it intended to use the proceeds from the transaction primarily to reduce debt.

IGT’s second quarter operating income grew 12.4 percent to US$191.9 million from US$170.7 million in the second quarter of 2016, the firm stated.

The firm posted a net loss of US$289.9 million for the second quarter of 2017 inclusive of US$220 million of net foreign exchange losses, compared to net income of US$72.7 million in the year-earlier period. On an adjusted basis, net income attributable to IGT was US$31.1 million, the firm said.

IGT’s international gaming service revenue – which excludes North America and Italy – declined by 7.0 percent year-on-year to US$43 million.

Revenue from international gaming product sales increased from the prior-year period by 15.4 percent year-on-year to US$74 million. The group shipped a total of 3,591 gaming machines – including video lottery terminals – to the international market during the second quarter of 2017 compared to 2,989 units in the prior-year period, “led by strong replacement unit demand,” the firm said.

“[IGT’s] second quarter adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$424 million was above consensus, driven by growth in lottery and international shipments,” JP Morgan analysts Donald Carducci, Shaun Cousins and Shalin Doshi wrote in a note following the gaming supplier’s results announcement.

Commenting on IGT’s second quarter results, Telsey Advisory Group analyst David Katz said in a Tuesday memo: “The better than expected results were driven by improvement in some of the most critical areas, particularly the North American and international gaming businesses, as well as profitability levels.”

IGT does not disclose detailed quarterly data for its gaming operations in Asia.

IGT is the result of a US$6.4-billion leveraged merger – completed in April 2015 – between International Game Technology, a Nevada-based supplier of slot machines, and Italy-based lottery equipment specialist GTech SpA. IGT’s net debt as of June 30 stood at US$7.00 billion.

“Our second quarter results reflect strong key performance indicators for both our global lottery and gaming businesses,” Marco Sala, chief executive of IGT, said in a statement.

He added: “In gaming, the global installed base was up and unit sales of gaming machines were higher, as were average selling prices, all supported by strong demand for new cabinets.”

IGT’s management stated it continued to expect adjusted EBITDA of between US$1.60 billion to US$1.68 billion for full 2017. “The expectation for net debt remains US$6.95 billion to US$7.15 billion for the full-year 2017 period,” it added.

The company’s board of directors also declared a quarterly cash dividend of US$0.20 per ordinary share. The dividend is payable on August 24 to holders of record as of the close of business on August 11.