IGT THIRD QUARTER REVENUE FALLS 15% DESPITE GROWTH ONLINE
New York-listed lottery and gaming supplier International Game Technology (IGT) has posted a 15 per cent fall in total revenue to $982m for the third quarter of 2020, despite seeing strong growth in digital and betting revenue during the period.
Third quarter results reflected the continued global impact of the COVID-19 pandemic, but at a lower level compared to the second quarter.
Global lottery revenue grew by 3 per cent to $570m, driven by double-digit growth in North America same-store sales. This was offset by a 31 per cent fall in global gaming revenue to $412m, impacted by pandemic-related closures and restrictions.
The US and Canada represented just under a half of IGT’s Q3 total as revenue fell by 18 per cent to $443m, while revenue from Italy rose 3 per cent to $416m and the rest of world revenue declined 42 per cent to $123m.
Overall, digital and betting revenue rose 41 per cent to $104m, equivalent to 11 per cent of total revenue.
“The resilience of our portfolio, particularly in lottery, and benefits from our swift cost reduction initiatives are on full display in our third quarter results,” said IGT CEO Marco Sala. “Strong player demand and a host of compelling new games, systems, and digital solutions led to a sharp, sequential improvement in our most important markets.
“We continue to monitor the evolution and impact of the pandemic around the world. With a simplified organization firmly in place, we are creating a leaner, stronger IGT.”
Q3 AND JAN-SEP 2020 RESULTS COMPARISON (US$)
|Q3 2020||Q3 2019||Jan-Sep 2020||Jan-Sep 2019|
|Cost of Services||(541.1m)||(575.6m)||(1,479.6m)||(1,765.5m)|
|Cost of Product Sales||(81.5m)||(136.2m)||(239.8m)||(397.2m)|
|Selling, General and Administrative||(180.3m)||(201.4m)||(515.9m)||(616.5m)|
|Research and Development||(48.0m)||(68.8m)||(140.1m)||(200.3m)|
|Other Operating Expenses/(Income), Net||2.1m||1.2m||3.7m||(24.7m)|
|Total Non-Operating (Expenses)/Income||(257.5m)||21.2m||(490.5m)||(145.2m)|
|(Benefit from)/Provision for Income Taxes||(26.6m)||44.5m||(34.8m)||160.5m|
|Less: Net Income Attributable to Non-Controlling Interests||(25.7m)||(27.0m)||(37.3m)||(101.4m)|
|Net Income/(Loss) Attributable to IGT||(128.0m)||103.6m||(655.9m)||148.7m|
IGT reduced total operating expenses by 15 per cent to $853.0m in Q3, as cost of services fell 6 per cent to $541.1m and cost of product sales declined 40 per cent to $81.5m. Selling, general and administrative expenses were down 10 per cent at $180.3m, while research and development costs fell by 30 per cent to $48.0m.
Operating income in the third quarter was 17 per cent lower than a year ago at $128.5m, while total non-operating expenses amounted to $257.5m, comprised of $101.0m of interest expense and foreign exchange losses of $149.4m. As a result, IGT posted a net loss of $128.0m for Q3 compared to net income of $103.6m a year ago.
For the first nine months of 2020, total revenue was down 28 per cent at $2.56bn, generating a net loss of $655.9m compared to net income of $148.7m last year.
“Robust cash flow generation during the quarter and year-to-date periods have enabled us to improve our liquidity and reduce net debt,” said IGT chief financial officer Max Chiara. “We are on track to achieve our 2020 temporary cost-reduction targets and have identified a number of initiatives that will enable us to deliver over $200m of structural savings over the next two years.
“As a result, the improvement in our profitability should support our continued focus on reducing debt.”
As at 30 September the company held cash and cash equivalents of $1.14bn compared to $763.7m a year ago.
Shares in International Game Technology plc (NYSE:IGT) closed 2.16 per cent lower at $9.96 per share in New York Wednesday.
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