Q2 revenue drops for International Game Technology

Second quarter revenue drops for International Game Technology

International Game Technology (IGT), a supplier of gaming and lottery services and products, saw its second-quarter revenue for 2018 slide a little compared to last year. In a Tuesday filing, the company said that its consolidated revenue for the quarter had dipped almost 1.5% year-on-year, coming in at $1.20 billion. In the second quarter of 2017, the company reported $1.22 billion in consolidated revenue.

Second quarter revenue drops for International Game TechnologyAlmost $161.5 million in net income attributable to IGT was recorded for the quarter, following a loss of $290 million in the same period last year. This included a gain of $173 million from net foreign exchange, giving the company adjusted net income of $57 million.

IGT still carries a substantial amount of debt—$7.53 billion at the end of the quarter. This is up $210 million from the end of last year. Operating income for the company, however, increased by 8.9% for the quarter to reach $209 million.

The firm’s EBITDA (earnings before interest, taxation, depreciation and amortization) was $441.8 million, a bump up of 4.2% over the $423.7 million recorded in the same period last year. The increase in EBITDA was attributed to “robust global lottery performance and disciplined operational management.”

Prior to the filing, IGT CEO Marco Sala said, “The North America gaming installed base grew sequentially, and we have a compelling roster of new, for-sale video reel games coming to market in the second half.”

The company’s CFO, Alberto Fornaro, indicated that the results were in line with expectations for the entire year. “With better-than-expected adjusted EBITDA growth of 10 percent in the first half, we are raising our full-year outlook for the underlying business,” he said. “As a result, we are able to absorb the negative impact of foreign currency translation and maintain the adjusted EBITDA range of US$1,700 million to US$1,780 million for 2018.”

Deutsche Bank Securities likes what it sees with IGT. Two analysts with the company, Carlo Santarelli and Danny Valoy, said, “We believe IGT remains an inexpensive way to capitalise on: an expanded and well received gaming hardware and content library in a healthy domestic [U.S.] gaming environment; global lottery growth in the presence of major lottery contract stability/runway; continued international gaming expansion; and accelerating discretionary free cash flow generation.”

IGT indicated in the filing that its international market gaming revenue—revenue generated from everywhere except for North America and Italy—had fallen by 13.7% year-on-year. For the quarter, the revenue was $101 million following the delivery of 3,120 gaming machines to different markets during the second quarter. In 2017, the company shipped 3,591 in the same period.

Deutsche Bank pointed out that the drop came from a decrease in the delivery of replacement machines. It said, “International unit sales declined 13 percent year-on-year due to lower replacement activity (Latin America), as replacement units were down 24 percent year-on-year, while expansion units climbed 66 percent year-on-year.”

In its filing, IGT did not provide any details on its Asia operations.