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US – IGT sees third quarter revenue rise by five per cent

By - 21 November 2016

International Game Technology has reported that its revenue rose by five per cent to $1,266m from $1,202m in the third quarter of 2015, due mainly to strong performance in the North America Lottery and Italy segments.

Global lottery same-store revenue, excluding Italy, increased six per cent during the third quarter while Italy lottery wagers increased seven per cent Gaming service revenue was below the prior year, primarily on lower DoubleDown revenues. Product sales increased in the quarter on higher gaming machine unit demand in the North America and International segments as well as on higher International systems sales. The company shipped 8,980 gaming machines worldwide during the third quarter.

Operating income increased 26 per cent to $164m from $130m in the third quarter of 2015. Adjusted operating income grew nine per cent to $286m, from $261m, as higher lottery profits were partially offset by the timing of bad debt expense, investment in the installed base, increased global product marketing costs, and research & development spending.

“Strong lottery performance across the world, a larger global installed base, and increased sales of gaming machines drove another quarter of solid revenue and profit expansion,” said Marco Sala, CEO of IGT. “IGT’s leadership positions in lottery and gaming machines were evident at the recent gaming and lottery trade shows. The engaging player experiences and technology solutions IGT creates are the cornerstones of our growth strategy, and we are encouraged by customer enthusiasm for our innovative new products.”

“We achieved broad-based growth across regions in the third quarter and our financial condition is strong,” said Alberto Fornaro, CFO of IGT. “Higher profitability enabled us to maintain our leverage ratio despite the significant interest and tax payments of the quarter. Based on our performance to date, we remain comfortable with our adjusted EBITDA outlook for the full year.”

North America Gaming & Interactive revenue was $317m compared to $341m in the third quarter of 2015.

Service revenue was $241 million compared to $267m in the prior-year period, largely driven by fewer daily active users at DoubleDown and a year-on-year decrease in the installed base. Sequentially, terminal service revenue and the installed base were relatively stable.

Product sales increased to $76m from $73m in the third quarter of 2015, primarily due to higher replacement unit volume.

The segment shipped 5,238 units compared to 3,326 units in the prior-year period. A portion of the new and expansion unit revenue was deferred and is expected to be recognised in the fourth quarter of 2016.

Operating income for North America Gaming & Interactive was $66 million compared to $85 million in the third quarter of 2015. The decrease was largely attributed to lower revenue, as well as costs to revitalise the installed base and higher research & development spending.

North America Lottery revenue was $307m, up 22 per cent from the third quarter of 2015. The strong growth reflects robust same-store revenue expansion as well as an incentive contribution from the New Jersey Lottery, largely driven by the record Powerball jackpot in the first quarter of 2016. Excluding the New Jersey contribution, revenue for the North America Lottery segment rose 10 per cent.
International revenue was $215m in the quarter, up from $210m in the third quarter of 2015. At constant currency, revenue for the International segment rose five per cent from the prior year.
International lottery service revenue of $71m was eight per cent higher than in the prior-year period at constant currency. Same-store revenue growth of 5.7 per cent was supported by strength in Latin America and Eastern Europe, partially offset by weakness in the United Kingdom.

International gaming service revenue was $43m compared to $50m in the third quarter of 2015, mainly due to the exit of certain interactive operations. At constant currency, terminal service revenue grew three per cent over the prior year and the installed base rose 500 units to 10,268. Revenue from gaming product sales rose 12 per cent at constant currency, supported by the 3,742 gaming machines shipped at higher average unit prices during the third quarter of 2016 compared to 3,296 units in the prior-year period. Product sales also benefited from a large systems sale in Asia.

Italy revenue was $426m, seven per cent higher than in the third quarter of 2015.

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