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IGT reports 3Q17 operating loss on North American unit

Wednesday, 15 November 2017 06:02
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Global gaming conglomerate IGT reported a net loss of US$804 million revenue for the three months to 30 September 2017, due primarily to a US$714 million non-cash impairment charge and US$118 million of net foreign exchange loss.

Similarly, the company saw revenue fall 6% for the quarter to US$1.22 billion, with the decline attributed to the sale of Double Down Interactive and new Lotto concession amortization. But the company said that when adjusted for the Double Down sale, consolidated revenue actually increased 2% including 5% growth in the gaming service segment.

IGT explained the US$714 million impairment charge as the result of having to write down the carrying value of the company's North America Gaming and Interactive reporting unit to fair value.

“The impairment charge reflects a delayed recovery for the North America Gaming and Interactive reporting unit,” it said. “Going forward, revenue and profit levels for the North America Gaming and Interactive reporting unit are expected to grow as new games and cabinets come to market. The impairment charge has no impact on the company's operations, cash flow, ability to service debt, compliance with financial covenants, or underlying liquidity.”

Adjusted operating income for 3Q17 was US$258 million compared to US$286 million in the prior-year period. But Adjusted EBITDA held steady at US$428 million compared to $430 million in 3Q16 with higher product sales and lower operating expenses compensating for the DoubleDown sale.

IGT said that the global installed base grew 3,275 units year-on-year, including expansion for both casino and VLT units. Global gaming product revenue increased 9% on strong system and software sales, with the company shipping 6,406 gaming machines worldwide during the third quarter “with higher average selling prices than the prior year.”

“Thanks to a favorable product sales mix and reduced operating expenses, Adjusted EBITDA improved from the prior-year period, after considering certain non-comparable items, such as the DoubleDown sale,” explained IGT Chief Financial Officer Alberto Fornaro. “Based on the year-to-date results and current exchange rates, we expect to achieve Adjusted EBITDA of $1,640-$1,680 million for the full-year period.”

IGT’s international expansion continued to show strong results in 3Q17 with revenue outside of the US up 9% to US$234 million.

Although international lottery service revenue fell 1.4% to US$70 million, gaming service revenue increased 36% to US $59 million, “reflecting the benefit of discrete, non-recurring items and significant expansion in the installed base.”

Product sales revenue rose 5% to $US87 million with operating income up 7% to US$40 million.


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