IGT SLIPS TO Q1 LOSS AS COVID-19 WRITE-DOWNS IMPACT RESULTS
New York-listed supplier International Game Technology (IGT) has reported an 18 per cent fall in revenue to $940.2m for the first quarter of 2020, as results were affected by COVID-19 related lockdowns in March.
The company said that the global closure of casinos and gaming halls and widespread mobility restrictions significantly hindered gaming service revenue generation during the quarter, while lottery service revenue was lower due to reduced traffic to points of sale.
“After a solid start in the first two months of the year, we quickly shifted our focus to the global COVID-19 health crisis in March,” said IGT CEO Marco Sala. “The safety and well-being of our people, customers, and communities have been our highest priority since day one.
“We implemented robust business continuity plans and maintain service levels at our normal, high standards. I am grateful for the passion and perseverance the entire IGT team has demonstrated during these unprecedented times and I am confident IGT is well positioned to emerge from the crisis a stronger, even more competitive organization.”
Q1 2020 Revenue Comparison (US$)
|Q1 2020||Q1 2019||% Change|
|North America Gaming & Interactive||196m||240m||(18%)|
|North America Lottery||251m||296m||(15%)|
Revenue from North America Gaming & Interactive declined by 18 per cent year-on-year to $196m as casino closures impacted gaming terminal revenue, while North America Lottery revenue fell by 15 per cent to $251m as results were hit by mobility restrictions implemented in March and the closure of video lottery terminal (VLT) venues.
International revenue was down 1 per cent at $164m, while revenue from Italy declined by 25 per cent to $329m following decreases in lottery and gaming service revenue as a result of the effects of the coronavirus pandemic, although interactive wagers were up 20 per cent.
Total operating expenses increased by 18 per cent to $1.14bn after including a non-cash goodwill impairment charge of $296m, reducing the carrying value of the International and North America Gaming & Interactive segments, driven by lower near-term forecasts as a result of COVID-19.
As a result, the company recorded an operating loss of $197.3m for the quarter, compared to operating income of $178.2m a year ago. Following a reduction in non-operating expenses by 25 per cent to $33.7m, IGT posted a net loss of $234.1m, compared to net income of $80.5m in Q1 2019.
Q1 2020 Results Comparison (US$)
|Q1 2020||Q1 2019|
|Cost of Services||(521.8m)||(595.3m)|
|Cost of Product Sales||(91.1m)||(100.2m)|
|Selling, General and Administrative||(163.6m)||(201.8m)|
|Research and Development||(60.7m)||(66.1m)|
|Other Operating Expense, Net||(4.2m)||(3.3m)|
|Total Non-Operating Expenses||(33.7m)||(45.0m)|
|Provision for Income Taxes||3.1m||52.7m|
|Net Income Attributable to Non-Controlling Interests||(14.2m)||(40.2m)|
|Net Income/(Loss) Attributable to IGT||(248.3m||40.3m|
“We’ve taken swift actions across all non-essential costs and are now switching our focus to structural cost savings initiatives,” said IGT chief financial officer Max Chiara. “At the same time, we have adopted strict measures to preserve liquidity in the current environment.
“Given the uncertainty created by COVID-19, we are withdrawing our previous financial outlook for 2020, but we are confident that with $2.2bn of liquidity, we are geared with sound financial flexibility to weather the storm caused by the COVID-19 pandemic.”
IGT added that about $500m in cost savings and capital spending avoidance have been identified to help mitigate the impact of COVID-19. These actions include temporary, company-wide salary reductions, furloughs and a hiring freeze, as well as significant reductions in discretionary costs such as marketing, travel and outside services
As at 31 March the company held liquidity totaling $2.2bn, comprised of $1.5bn in unrestricted cash and $743m available under revolving credit facilities.
Shares in International Game Technology plc (NSQ:IGT) closed up 8.62 per cent at $6.93 per share in New York Friday.
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