Global sales growth in gaming and lottery products pushed a key cash flow measure to a three-year high and helped International Game Technology top Wall Street forecasts for adjusted net income and revenue in the second quarter.
Thursday’s news sent IGT shares up 5.77 percent in regular trading; the shares rose 77 cents to $14.12.
In a statement, London-based IGT, which produces and operates gaming and lottery machines in more than 100 countries, said its adjusted net income, which filters out nonrecurring costs, was $91 million, or 44 cents per diluted share, in the three months ended June 30, beating the 31 cents per share analysts surveyed by Zacks Investment Research had forecast.
A year earlier, IGT, which has a strong presence in Las Vegas and Reno, had $57 million, or 28 cents per share, in adjusted net income.
IGT’s unadjusted earnings were $5 million, or 2 cents per share, in the quarter.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure filtering out one-time costs, rose 5 percent to $453 million, which Chief Financial Officer Alberto Fornaro called a three-year high.
Quarterly revenue rose 2.5 percent to $1.23 billion from $1.2 billion a year earlier and topped the $1.17 billion forecast of Zacks-polled analysts.
North American game sales were particularly strong in the quarter; revenue in the segment rose 22 percent from a year earlier to $104 million.
In the quarter, IGT shipped 4,661 units, up from 4,550 units last year, a 2 percent year-to-year jump. The gain was helped by a 53.7 percent rise in replacement units. During a conference call with investors, IGT Chief Executive Officer Marco Sala said sales of core video-reel game sales, especially Fortune Coin and Griffins Throne, drove the revenue gains.
“We believe there is opportunity to leverage many of our popular legacy titles with innovative new gaming mechanics to drive additional growth,” he said.
IGT’s lottery business also excelled as North American lottery revenue rose 7 percent from a year earlier, boosted by gains in instant-draw games. IGT positioned itself for further gains in July, when it signed a four-year contract extension to provide the Colorado Lottery with lottery technology through 2025. Financial terms weren’t disclosed.
IGT’s international lottery revenue rose 3 percent in the quarter, buoyed by sustained double-digit-percentage revenue growth in the United Kingdom.
“In gaming as well in lottery, it was a strong quarter and first half,” Sala said. “I’m pleased with the broad-based improvement in (key performance indicators) for our most meaningful businesses. We are well positioned to deliver on our financial commitment for the year, which include a significant inflection in free cash generation.”
In other news from the quarter, IGT named Samantha Ravich as an independent director on its board. She is chairwoman of the Center on Cyber and Technology Innovation at the Foundation for Defense of Democracies.
Also, IGT declared a quarterly dividend of 20 cents per share, payable Aug. 29 to shareholders of record on Aug. 15.
Follow Matthew Crowley on Twitter @copyjockey.
