IGT increases revenue and losses in Q1

International Game Technology PLC has registered revenue for the first quarter of this year amounting to US$1.28 billion (MOP10.23 billion), a 51 per cent increase year-on-year, but also a net loss increase of 132.13 per cent due to non-cash foreign exchange losses, a company statement revealed. International Game Technology PLC, a slot machine and lottery company created through a US$6.4 billion merger between Italian lottery company Gtech and slot machine company IGT, justified the revenue growth as due to ‘strong lottery performance, particularly in North America and Italy,’ as ‘global lottery same-store revenue, excluding Italy, increased 18 per cent during the first quarter, reflecting the benefit of the record Powerball jackpot in the United States’, but with gaming revenue lower than in 2015. Not all smiles However, for the same time period the gaming developer and manufacturer registered net losses of US$93 million in the first quarter of 2016, an increase of 136.13 per cent from last year, due to the impact of US$162 million in primarily non-cash foreign exchange losses, according to the company statement. ‘We begin 2016 with a solid first quarter, evidenced by good revenue growth with all operating segments contributing to an improvement in profitability. Continuing growth across all regions, especially North America and Italy, propelled our lottery revenues,’ Marco Sala – CEO of IGT – said in the company statement, adding that gaming revenues were resilient despite: ‘challenging market conditions in North America,’ IGT’s largest gaming market, with the company remaining ‘focused on re-energising gaming operations’. The company also registered an adjusted EBITDA of US$460 million, up 43 per cent year-on-year, with an overall sales growth due to the ‘favourable revenue mix and synergy savings.’ Alberto Fornaro – CFO of IGT – justified the first quarter results growth on the ‘diversity’ of IGT’s product’ and ‘geographic mix’ with ‘revenue growth, disciplined cost management, and synergy savings’ all contributing to ‘sharp profit expansion.’ However, adjusted operating income was 35 per cent above the first quarter of 2015, with a ‘significant bad debt expense’ totalling US$7.72 million in net debt. Analyst firm Wells Fargo stated that the company registered ‘better than expected 1Q results’ with revenue ‘in-line and EBITDA was 5 per cent above consensus expectations,’ but that ‘while leverage remains high, management focused on reducing debt burden.’ Great expectations The CFO of IGT stated that ‘even after large interest payments during the period, we generated significant free cash flow, enabling us to reduce debt in constant currency and further improve our leverage profile,’ as IGT registered US$206 million in cash operations in the first quarter and capital expenditures of US$98 million. The company predicts an adjusted EBITDA of US$1.79 million in 2016, supported by growth in core operations and an average euro/dollar exchange rate of 1.10 instead of 1.11, an estimate in consensus with analyst company Wells Fargo’s predictions, while capital expenditures excluding lottery concession payments are expected to be between US$575 million to US$625 million. Also, Lotto-related capital expenditure was estimated at US$695 million, with US$660 million for upfront payments and approximately US$35 million for infrastructure upgrades, while net debt could reach US$7.9 million at the end of 2016, the company statement predicted.