Improved liquidity and shrunken debt helped International Game Technology boost revenue and the third quarter. Although the company felt the weight of foreign exchange losses to post a quarterly loss and negative per-share earnings that missed Wall Street forecasts, revenue, bolstered by surging global lottery performance, topped the projections
IGT also said its debt dropped 2% to $7.24 billion from $7.38 billion. The company’s stock price surged 19% immediately after the news and finished the day 9.2% higher, up 92 cents to $10.90 on the New York Stock Exchange.
In a Wednesday afternoon statement, London-based IGT, which produces and operates gaming and lottery machines in more than 100 countries, had a net loss of $128 million, or 62 cents per diluted share, in the three months ended Sept. 30, reversing net income of $104 million, or 51 cents per diluted share, a year earlier.
“The better than expected revenue and (cash flow) should be well-received by the market, as it demonstrates the stability of the lottery business as well as the recurring revenue strength in gaming,” Jefferies gaming analyst David Katz told investors.
Analysts surveyed by Seeking Alpha had, on average, forecast a 41-cents-per-share loss. IGT said $149 million in foreign exchange losses, primarily noncash, factored in the quarterly loss.
Adjusted earnings before income, taxes, depreciation, and amortization, a cash flow measure that excludes one-time costs, fell 13% to $354 million from $407 million.
Revenue fell 14.6% to $982 million from $1.15 billion and topped the $801 million average estimate of Seeking Alpha-polled analysts.
Global lottery revenue rose 3% to $570 million, boosted by double-digit-percentage growth in North America same-store sales. Global lottery EBDITA rose 14.4% to $309 million from $270 million and hit the highest level in the segment in seven quarters.
IGT extended contracts extension with the New York and Western Canada lotteries and survived competitive bids to land seven-year contracts with the Nebraska Lottery and Poland’s lottery.
However, the coronavirus pandemic stifled global gaming revenue, which fell 31%. IGT said gambling revenue has shown signs of recovery since casinos have begun reopening.
In a statement, IGT CEO Marco Sala said COVID-19 had prompted his company to streamline business and become leaner and stronger. IGT Chief Financial Officer Max Chiara added the company is on track to hit 2020 cost-reduction targets and gain $200 million9n structural savings in the next two years.
IGT kept its eye on sports betting with third-quarter deals with Boyd Gaming Corp. and the National Basketball Association.
The multiyear partnership deal with the NBA, announced Oct. 14, will let IGT’s U.S. clients use NBA intellectual property, including official data, team and league logos on IGT PlaySports sports betting platform. Financial terms weren’t disclosed.
IGT on Aug. 20 reached a deal to have its IGT’s PlaySports platform used in Boyd Gaming’s Nevada sportsbooks and its Nevada-based mobile sports app and online sports betting portal. Financial terms weren’t disclosed.
“The resilience of our portfolio, particularly in lottery, and benefits from our swift cost reduction initiatives are on full display in our third-quarter results,” Sala said. “Strong player demand and a host of compelling new games, systems, and digital solutions led to a sharp, sequential improvement in our most important markets.”
Follow Matthew Crowley on Twitter @copyjockey
