IGT returns to profit in Q3 despite revenue decline

IGT returns to profit in Q3 despite revenue decline

Thursday, November 1, 2018 Posted by News Team
Finance
CEO Marco Sala hails "very good" set of quarterly results

International Game Technology (IGT) chief executive Marco Sala has hailed the company’s performance in the third quarter of the year following a return to profit, despite revenue falling year-on-year. 

Revenue fell 4% on a constant currency basis to $1.16bn, due in part to a $22m negative impact that arose from IGT adopting a new accounting standard for reporting revenue generated through customer contracts. 

Its North American gaming and interactive business unit reported a 12% year-on-year decline in revenue to $231m, with gaming services and product sales revenue falling 11% and 13% respectively. 

The North American lottery division also reported a decline in revenue, with the 9% drop to $279m blamed on significantly lower multi-state jackpot activity in the reporting period. The division also suffered from a decline in revenue from Illinois, where it has been replaced by Camelot Global as the main service provider to the state lottery.

Also posting a decline for the period was the IGT International business, with a non-wagering revenue drop contributing to a 5% year-on-year fall to $216m. The quarter suffered in comparison to the prior year, which contained a number of non-recurring items, as well as a shift from fewer, but higher-cost, products being sold. 

IGT’s Italian business was the only unit to post growth in the period, with revenue up 4% to $430m. This was driven by growth in lottery and gaming service revenue, as well as an increase in amounts wagered on sports for a period that included the final stages of the 2018 FIFA World Cup. 

Despite this overall decline in revenue, the supplier saw profit grow, with earnings before interest, tax, depreciation and amortisation rising to $443m.

The supplier posted a $200m operating profit, compared to a $556m loss in the prior year. Total expenses for the quarter fell 86% to $996m. 

While Q3 2017’s loss was skewed by a non-cash impairment charge of $714m, cost of services fell 6% in Q3 2018, with cost of product sales down 29%. 

Once non-operating costs, including interest expenses of $107m, IGT posted a $22m post-tax profit for the quarter. 

"Solid performance and important, long-term contracts drove very good third quarter and year-to-date results," IGT chief executive Marco Sala said. "Global Lottery same-store revenues for instants and draw games rose mid-single digits. 

“The installed base of gaming machines was up, and unit shipments of gaming machines increased 10%. And we enjoyed particularly strong sales and profit growth in Italy, confirming the vitality of that important market,” he continued. “We are firmly on track to achieve our 2018 financial and operational goals.”

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