International Game Technology on Tuesday reinstated its quarterly cash dividend, announced $40 million in share buybacks, posted fourth-quarter increases in cash flow and revenue, and reversed a year-earlier loss. But the earnings-per-share figure fell far short of Wall Street forecasts and the gambling-equipment maker’s shares fell nearly 14 percent as investors sold them off.
In a statement, London-based IGT said its net income was $55 million, or 9 cents per share, for the three months ended Dec. 31, reversing a net loss of $220 million, or $1.18 per share, a year earlier.
Analysts surveyed by Seeking Alpha had expected 35 cents per share for the quarter.
IGT shares fell $4.25, or 13.88% per share, Tuesday to close at $26.37 on the New York Stock Exchange. The shares rebounded after hours, rising 23 cents, or 0.87%, to settle at $26.60.
IGT’s fourth-quarter adjusted earnings before interest, taxes, depreciation, and amortization, a cash-flow measure excluding one-time costs, rose 31.2% to $387 million from $295 million.
Revenue rose 18.6% to $1.05 billion from $885 million and topped the $1.02 billion forecast of Seeking Alpha-polled analysts. IGT said 45% global gaming-revenue growth, 9% global lottery-revenue growth, and 27% digital- and betting-revenue growth boosted the overall revenue increase.
“The broad appeal and high entertainment value of lottery games is clear,” Vince Sadusky said in his first conference call as IGT’s chief executive officer. “In the last two years, we have established a much higher baseline to grow from, and it is important to highlight the tremendous operating leverage in the business as operating income increased at more than double the top-line growth rate in 2021.”
Sadusky, a former Univision Communications chief executive, took IGT’s helm from Marco Sala, now executive chairman. Sadusky said IGT has coped with challenges from the omicron variant, which hurt Italy lottery revenue, along with cost inflation, labor shortages, and supply-chain pressure. Nevertheless, he said IGT has aggressive, but achievable, financial goals, including cash-flow generation.
“We have a disciplined strategy to allocate that cash flow to maximize value for all stakeholders,” he said.
IGT entered Tuesday’s conference call a day after selling Italian proximity payment business to Patrimonio Destinato IMEL for $788.3 million. As mentioned, the company on Tuesday reinstated a 20-cents-per-share dividend.
The Motley Fool’s Travis Hoium surmised that IGT’s daytime stock plunge reflected analysts’ dashed expectations for quicker post-COVID normalization of revenue and earnings. However, he saw positives for IGT — strong cash flow, narrowing debt (a $1.4 billion year-to-year reduction), and gambling-industry growth.
“The market might not like IGT today,” Hoium wrote. “But long term, this is a company well positioned to profit from gambling growth around the world.”
IGT’s full-year net income was $670 million, 31 cents a share, reversing a year-earlier net loss of $839 million, or $4.59 a share. Twelve-month revenue rose 31.1% to $4.09 billion from $3.12 billion.
