Operator News

US – IGT reports a loss in its second quarter

By Phil - 2 August 2017

International Game Technology (IGT) highlighted the affect of foreign exchange losses but its revenue also dropped by five per cent as it posted a net loss of $289.9m for its second quarter.

Revenue fell to $1,219.5m in the second quarter with the company saying the constant currency decline was mostly attributable to the new Lotto concession dynamics and the sale of Double Down Interactive.

Marco Sala, CEO of IGT, said: “Our second quarter results reflect strong key performance indicators for both our global Lottery and Gaming businesses. Lottery growth is benefiting from innovation and effective sales and product marketing initiatives. 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. Overall, we are pleased with the results of the first half, and we expect a more robust product offer to support stronger sales and profit levels in the second half of the year.”

“We’ve made a lot of good progress on many levels so far this year,” said Alberto Fornaro, CFO of IGT. “We are lowering our debt and we are enhancing cash generation through disciplined asset and financial management. We are maintaining our outlook for adjusted EBITDA and net debt for the year, and have modestly reduced capital expenditures to account for certain timing shifts.”

Revenue for North America Gaming & Interactive was $310m compared to $350m in the second quarter of 2016. Comparability is affected by the sale of DoubleDown.

Service revenue was $208 million compared to $246m in the prior-year period, reflecting the DoubleDown sale and a year-over-year decrease in the installed base. Product sales were $102 million compared to $104 million in the second quarter of 2016, which benefited from a large system sale. Terminal sales improved 16 per cent, driven by higher average selling prices and increased new and expansion unit shipments. The segment shipped 5,293 gaming machine units in the quarter compared to 5,163 units in the prior-year period.

Operating income for North America Gaming & Interactive was $76m compared to $88m in the second quarter of 2016. The decline is primarily due to lower revenues, largely from the sale of DoubleDown, and partially offset by a decrease in operating expenses.

North America Lottery revenue was $293 million in the second quarter of 2017, compared to $286 million reported in the second quarter of 2016. The growth reflects solid same-store revenue growth, as well as an incentive contribution from the New Jersey Lottery.

International revenue was $211m compared to $207m on broad-based strength in Latin America.
Product sale revenue rose to $79 million from $73 million in the prior-year period, driven by higher gaming terminal sales in Latin America and EMEA, including revenue recognized for gaming machines shipped in the first quarter of 2017. The segment shipped a total of 3,591 gaming machine units during the second quarter of 2017 compared to 2,989 units in the prior-year period, led by strong replacement unit demand.

Italy revenue was $404m compared to $443m in the second quarter of 2016. At constant currency, revenue declined eight per cent as a result of the new Lotto concession dynamics and a lower contribution from late numbers.

Total Lotto wagers in the quarter were €1,842m compared to €2,056m in the prior-year period, reflecting significantly lower late numbers activity.

Mr. Sala added: “Our new proven performer titles are doing well and there is a lot of interest in games and I anticipated that CrystalCurve cabinet which we began selling in the second quarter. This is a compelling new addition to great successful S3000 2323 and the CrystalCurve cabinet. Global installed base of machine continue to grow in the second quarter both year-over-year in situation, this was led by international expansion of casino customers in EMEA region and Greece VLT program. The total installed base in North America grows sequentially on higher VLTs and relatively stable casino resort which was led by the launch of the CrystalCurve cabinets during the quarter.

The installed base of 3D games continues to grow and advanced interest in the upcoming roster of new is running strong is included large format Wheel of Fortune, MegaTower, S3000XL, CrystalCurve Ultra cabinet that will be launched in the third quarter. Several high profile titles like Fort Knox, SPHINX 4D and The Voice return to market in the fourth quarter. We expected these to well maximize the impact of games as growth to market.”

Mr. Fornaro added: “We shipped 5293 units in the second quarter compared to 5,163 units a year ago. Terminal revenue grew 60 per cent on improved ASP and demand for our S3000 Crystal series cabinets and includes 862 units at line, sales of the new CrystalCurve cabinet also contributed in the quarter. Our international segment had a good quarter with positive trend across the board. Product sales improved substantially in the second quarter driven by 39% increase in terminal revenues. We shipped 3,591 gaming machine units in the period compared to 2,989 in the prior year led by casino replacement sales in Latin America. We also recognized the revenue some terminals that were shipped to Bahamas in the first quarter.”