International Game Technology said it shipped more games globally, increased lottery performance in several markets and posted first quarter net income, reversing a year-earlier loss. But declines in revenue and earnings per share missed Wall Street forecasts.
In a statement issued Monday before stock markets opened, London-based IGT said net income was $40 million, or 20 cents a share, for the three months ended March 31, reversing a net loss of $103.1 million, or 51 cents a share, a year earlier.
Filtering out nonrecurring costs, adjusted net income in the quarter was 12 cents per share, missing the 21 cents per share consensus forecast by analysts polled by FactSet.
Zacks Investment Research noted that IGT has topped Wall Street earnings per share once in the past four quarters.
Adjusted earnings before income, taxes, depreciation and amortization, a tax flow measure that excludes nonrecurring costs, fell 4.4 percent to $417 million from $436 million.
Revenue fell 5.8 percent to $1.14 billion from $1.21 billion. Fact Set-polled analysts had expected $1.15 billion in revenue.
During a Monday conference call, IGT CEO Marco Sala said global machine sales rose 20 percent from a year earlier and replacement game sales in North America rose 6 percent from a year earlier. New and expansion unit sales got a boost from the June 2018 opening of Wynn Resorts Ltd.’s Encore Boston Harbor.
Looking at lottery business, Sala said a 5 percent increase in instant draw games pushed global same-store revenue outside Italy up by 3 percent in the quarter. Instant draw game revenue in the quarter was a “mid-single digit” percentage, Sala said without further specifics.
Furthermore, Sala said, larger U.S. lotteries including Texas, Michigan and North Carolina registered higher-than-average same-store revenue growth, including double-digit-percentage increases for instant tickets. Pricing and price optimization strategies helped boost sales, Sala said.
“We like IGT’s defensive revenues, long-term contracts, Italian gaming and lottery business, stabilizing U.S. gaming business and leverage to U.S. sports betting,” said Credit Suisse gaming analyst Ben Combes. “Offsetting this is low growth, and medium term deleverage over capital returns.”
During the quarter, IGT’s IGT Global Solutions Corp. unit entered a three-year extension agreement with the Kansas Lottery to continue providing a central computer system and services to monitor electronic gaming machines throughout the state. Financial terms weren’t disclosed.
Marketwatch said IGT’s North America lottery revenue was flat in the first quarter at $296 million, in line with analysts’ forecasts.
Sala said IGT also stands poised to benefit from sports betting, Sala said. The company, for example, has QuickBet kiosks in New Jersey, Mississippi, Rhode Island and expects to introduce them soon in Pennsylvania.
During the conference call, IGT said it declared a quarterly dividend of 20 cents per share payable June 3 to shareholders of record June 17.
In a statement accompanying the results, Sala said IGT is looking to grow.
“As we look to the future,” he said, “our focus remains on improving revenue and profits from gaming activities, innovating with new lottery games and technologies, and pursuing emerging growth opportunities.”
Jefferies gaming analyst David Katz told investors IGT management has goal of normalizing quarterly cash flow.
“Although this goal has taken longer than expected to achieve, the quarterly report supports progress, with the variability within the business beside the point,” Katz said.
IGT shares fell 25 cents, or 1.78 percent, Monday to close at 13.83 on the New York Stock Exchange. The shares are down 53.4 percent in the past 12 months.
Follow Matthew Crowley on Twitter @copyjockey
