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US – GTech restructures North American team

By - 24 March 2014

GTech has revealed a newly structured management team for its American facing business alongside a new lottery management service structure.

The move follows a disappointing fourth quarter where results impacted a full year loss despite the company saying it had ‘met or exceeded’ key indicators during the year.

It said the restructure would support the need to shape up as an ‘integrated offering across multiple gaming channels’ including VLT, lottery, casino and interactive divisions.

The new management team will include Alan Eland, Senior Vice President and Chief Operating Officer of North America, as well as Jay Gendron, Senior Vice President of US operations. Victor Duarte, Senior Vice President of North American commercial gaming, and Matteo Monteverdi, Senior Vice President Americas Initiative, and Connie Laverty O’Connor, Senior Vice President and Chief Customer Officer, will all be included in the new team.

A new lottery serves management team has been created to support the company’s operational expertise and best practices drawn from its experience as a private manager and outsourced operator in the states of Illinois, Indiana and New Jersey. Marco Tasso, Senior Vice-president lottery management services will head the new look team and will be responsible for overall profit and loss for the North American lottery division.

Scott Howarth, Senior Vice President of lottery management services and Tim Simonson, Chief Executive Officer of Northstar Lottery Group, will also join the structure.

Colin Hadden, Vice President and General Manager of GTech Indiana will be added to the management team alongside and Russ Knapp, Vice President and General Manager of Northstar New Jersey.

Jaymin Patel, President and CEO of GTECH Americas, said: “This new management structure will ensure that our customers are armed with the knowledge and innovation they need to build sustainable operations and responsibly grow revenues.”

For the full year 2013, Revenues were €3.06bn, compared to €3.08bn in 2012. Although at constant currency, revenues would have been €3.11bn. Product sales for the year were up 10 per cent to €279m driven by a higher portion of the Canadian replacement cycle taking place in 2013 compared to the prior year.

Americas Lottery same store revenues grew 3.1 per cent to €518m, benefiting from multistate jackpot activity, as well as continuous growth of instant ticket sales principally in Texas, California and North Carolina.

Despite unfavourable jackpot activity, International Lottery same store revenues were up slightly to €109m when compared to 2012, driven by continued strong performance in the Czech Republic.

Lotto wagers in Italy were up two per cent to €6.33bn compared to €6.22bn in 2012 whilst machine gaming wagers were €11bn versus €12bn in 2012.

Marco Sala, CEO of GTech, said: “During 2013, GTECH met or exceeded its key performance objectives and made significant gains in strategic growth segments while successfully executing a major reorganisation. For the coming year, we expect to sustain our momentum as we build on these achievements. We continue to advance our interactive capabilities, notably in the mobile gaming space, to address some of the fastest growing areas of the market. We are also well positioned to secure new international operator opportunities.”

CFO Alberto Fornaro added: “We generated full-year significant levered free cash flow of €326m, up eight over 2012. Our Net Financial Position improved to €2.51bn compared to €2.55bn. Over the next two years we expect to achieve approximately €50m of annual recurring cost savings, through a number of initiatives that we have identified and started to implement.”

The company’s fourth quarter results saw consolidated revenues of €773m down from €813m in the fourth quarter of 2012.  Product sales were €51m versus €90m in the same period last year when the company recorded significant machine gaming product sales in Canada. EBITDA, at €245m, was in line with the 2012 fourth quarter level.

Revenues in the Americas segment were €238m versus €242m in 2012 although at constant currency, Americas’ revenues would have been €252m.

The higher revenues were driven by an increase in same store revenues of €7m along with higher service revenues from lottery management agreements in Illinois, Indiana, and New Jersey. Same store revenue growth was principally driven by the Mega Millions game, which had the second largest jackpot in history at $648m in December 2013, the introduction of Powerball in California, higher instant-ticket sales, principally in California where they were driven by the introduction of a $20 price point ticket, and higher revenues in Latin America.

Revenues from the International segment were €85m, versus €103m in the prior year when GTech recorded a peak in product deliveries in France, Lithuania and other countries.  Revenues were also impacted by lower EuroMillions jackpot activity and foreign exchange. Revenues from the Italy segment were €450m, compared to €467m in the fourth quarter of 2012.

GTech recently launched 65 interactive games for Norsk Tipping in Norway, the largest launch of  its kind in Norsk Tipping’s history. The company was also selected by OPAP as its strategic partner for OPAP’s expansion into online betting in Greece.

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