Supplier News

UK – IGT revenue rises by 30 per cent with GTech inclusion

By Phil - 16 November 2015

Slot-machine giant and lottery operator International Game Technology saw its third quarter revenue increase by 30 per cent although earnings were hit by increased expenses and currency effects.

The merger between GTech and IGT was completed in April, with GTECH paying $4.7bn in cash and stock for IGT. Reported consolidated revenue grew 30 per cent to $1.22bn from $938m in the third quarter of 2014, reflecting GTECH’s acquisition of legacy IGT. However, when the revenues of the newly formed company are compared with the combined results of the separate companies, a year ago, revenue actually dropped by 18 per cent.

Resilience in global lottery operations was more than offset by an expected decrease in gaming product sales, largely due to significant Oregon VLT and casino conversion sales in the third quarter of 2014, in addition to the variability in the timing of new casino openings. During the quarter, the company sold 6,622 gaming machines worldwide and global lottery same-store revenue, excluding Italy, increased six per cent.

Overall, the company posted a profit of $7.1m, down from $76.1m or 44 cents a share a year earlier. Expenses increased by 44 per cent during the quarter.

“We are pleased to report third quarter profitability in line with our expectations in this year of transformation,” said Marco Sala, CEO of IGT. “In our global lottery operations, we delivered another resilient set of results and we are encouraged by our new game performance. As expected, product sales moderated from the second quarter’s high level. We are focused on driving growth through innovation. Our recent showcases at the leading gaming and lottery trade shows demonstrated that commitment and the power of combining our compelling content and leading-edge technology to cement our industry leadership.”

Revenue for the North America Gaming & Interactive segment was $341 million compared to $37 million in the third quarter of 2014. On a pro forma basis, North America Gaming & Interactive revenue was 19% below the prior year as relative stability in recurring service revenues was more than offset by an expected contraction in product sales on difficult comparisons with large VLT sales and intellectual property revenue in the third quarter of 2014.

The company sold 3,326 machines compared to 6,541 units in the third quarter of 2014, which included 1,864 Oregon VLT units and shipments related to stronger new casino openings. Year-to-date, total replacement unit sales were up four per cent while new and expansion units were down, reflecting the cadence of new casino openings and VLT programs.

Revenue for the North America Lottery segment was $253 million in the quarter, six per cent higher than the prior year.

International revenue was $211m compared to $138m in the third quarter of 2014 on a reported basis.
Revenue in the Italy segment was $414m compared to $525m the third quarter of 2014, primarily due to the weakening of the euro against the US dollar.

Alberto Fornaro, CFO of IGT, said: “Our third quarter results reflect the diversity of our business and disciplined operational management. Our synergy plans remain on track, free cash flow generation was strong, net debt was reduced, and our financial condition remains solid. We planned our first year as a combined company prudently; based on our year-to-date results and current top-line visibility, we are confident in reaching the top half of our 2015 adjusted EBITDA outlook.”