IGT Q2 Losses Mostly Due to Poor Exchange Rates with Italian Lotto and Double Down Sale

Posted on: August 3, 2017, 12:00h. 

Last updated on: August 3, 2017, 12:09h.

Casino.org Staff Writer Read More

Expertise: Commercial Gaming.

Despite a second quarter loss and a decline in revenue from the same period last year, International Game Technology Plc. (IGT) beat Wall Street projections. The loss of $252.2 million on revenue of $1.22 billion was compared to earnings of $82.9 million on revenue of $1.29 billion in the second quarter of 2016. Analysts had forecast revenue of $1.2 billion.

The loss represented a 5.1 percent decline for the London-based gaming and lottery machine supplier for the period that ended June 30. Officials said on Tuesday in a statement that it was “mostly attributable to the new [Italy] lotto concession dynamics and the sale of Double Down Interactive LLC which closed on June 1.”

Translation: exchange rates were not favorable in both transactions, and that cost IGT $220 million in net losses.

But as reported by the Las Vegas Review-Journal and GGRAsia, IGT CEO Marco Sala was not discouraged by the news. On a conference call with investors Tuesday morning, Sala noted that the company has focused on debt reduction and increased cash generation through disciplined asset and financial management. He also added shareholders will receive a 20-cent-per-share dividend on August 24.

Slotted In

In addition to the dividend, Sala mentioned the company shipped out 8,884 gaming machines worldwide in the second quarter, as a result of strong replacement demand. A part of that was 3,591 gaming machines, including video lottery terminals, to the international market during the second quarter of 2017, an uptick compared to 2,989 units in the prior-year period.

The company chief also expressed excitement about new products in development that should provide future growth. He said seven new creations will be unveiled in October at the Global Gaming Expo (G2E) in Las Vegas.

Another plus was the sale of Double Down Interactive to Double U Games. IGT bought the company in 2012 for $500 million. This was at the height of the social gaming explosion and the Double Down suite was, at the time, the most popular social casino on Facebook and the fourth most popular Facebook game overall. The deal to Double U Games was for $825 million and closed in June.

Stock Slips

Experts tend to agree with Sala’s rosy outlook. Telsey Advisory Group analyst David Katz said in a statement that the IGT’s financials are in good shape.

“The better than expected results were driven by improvement in some of the most critical areas, particularly the North American and international gaming businesses, as well as profitability levels,” he said.

Three JP Morgan analsysts were also seeing the silver lining, noting that the Q2 adjusted earnings ” … before interest, taxation, depreciation and amortization (EBITDA) of US$424 million was above consensus, driven by growth in lottery and international shipments.”

That still wasn’t enough to help slow the slide IGT’s stock price has experienced since January, however. Shares have declined 25 percent since the first of the year. Over the past 12 months, stock value has fallen by nine percent. Shares were at $30.15 on November 18, 2016, but have fallen since then. They were down again after Wednesday trading, dropping 32 cents, to $21.14.