IGT Experiences Q3 Growth Despite Italian Decline

Nov 15

New York-listed International Game Technology (IGT) has reported third-quarter revenue of $1.15 billion, which reflects a 3% increase year-on-year at constant currency. This revenue growth came despite their operating income falling 19% to $154 million and their adjusted EBITDA dropping 5% to $407 million. The supplier’s net debt also went down by 3% to $7.35 billion.IGT’s revenue growth is flat when it isn’t measured at constant currency, and the company has attributed it mainly to an increase in the sales logged by their global gaming products. Unit sales of the company’s gaming machines are 44% higher than the previous year, with replacement units logging a 62% increase. Led by such titles as Fortune Coin and Griffin’s Throne, North America replacement units increased by 38%.

The revenue IGT earned from North America gaming and interactive products was $253 million, which reflects a 10% increase, while their lottery revenue in the country was $38 million, increasing by 1% from 2018.

The company did experience a 1% decrease in their total Italian revenue, which was at $402 million. The sharpest drop in Italian revenue was felt in gaming, which went down 7% at $154 million. IGT attributed the decline mainly to the impact of higher machine gaming taxes implemented in the country.

IGT CEO Marco Sala has this to say: “Our core businesses achieved significant momentum in the third quarter and year-to-date periods. Key performance indicators were solid in the quarter--gaming machine unit shipments increased 44%, while same-store revenue for draw games and instants rose 4%. Our leading positions are rooted in our focus on player-driven performance, which was on display at recent lottery and gaming trade shows and should sustain our momentum going forward.”

Just last month, the supplier was granted the license to operate Brazil’s Lotex instant lottery in partnership with Scientific Games. Their revenue increase for the third quarter also shows the company overcoming a significant Finland multi-year software sale as well as high-margin Finland software transactions in the prior year.

The company has also reported a strong year-to-date operating cash flow, which is at $789 million as well as free cash flow of $456 million. Furthermore, they declared a cash dividend of $0.20 per ordinary share. The company’s CFO, Alberto Fornaro, said: “IGT has generated free cash flow in excess of $450 million in the first nine months. This confirms the inflection we expected to achieve this year. We are well-positioned to achieve our 2019 strategic and financial goals.”

Sala also deemed it worth noting during their Third Quarter Results Conference Call that they had strong North America lottery products sales in the last two quarters of this year. Furthermore, he reported that their expanding suite of self-service machines have drawn a significant amount of interest from customers at the most recent trade shows they have participated in. About 1200 units of these machines have been deployed across ten states, and more states are expected to roll them out next year.