International Game Technology, a major slot machine and lottery company, reported its second-quarter earnings today.
Company: International Game Technology PLC (NYSE: IGT)
Revenue: $1.29 billion, up 36 percent from the second quarter of 2014.
The current iteration of the company was formed when the $6.4 billion merger of Gtech, an Italian lottery operator, and IGT became final in April. The company’s reported net revenue compares its current performance to last year’s results from only Gtech, which acquired IGT in the merger.
On a more comparable, “constant currency” basis consolidating IGT and Gtech, net revenue increased 1 percent year over year.
Loss: $116.9 million, compared to net income of $55.2 million in the second quarter last year. Expenses were much higher: For example, IGT’s interest expense was $122 million this quarter compared to $56 million last year, which it said reflected increased debt to finance the merger.
Loss per share: 59 cents, compared to earnings per share of 32 cents last year.
What it means: This was the first time the combined version of IGT and Gtech has reported its earnings as one company.
The newly merged IGT is divided into four segments: North American gaming, North American lottery, Italian and international outside North America and Italy.
The North American segment, which also includes interactive gaming, reported net revenue of $353 million compared to $28 million in the same time period last year. But revenue declined 8 percent on a more comparable basis, which IGT said stemmed largely from “lower participation revenue and non-machine sales.”
The North American lottery segment increased revenue 24 percent on a reported basis and 14 percent when making a more fair comparison to the operations of both companies last year. International revenue rose 67 percent on a reported basis and 17 percent when making a more fair comparison.
Italian revenue, meanwhile, dropped 22 percent year over year. IGT said this was because of how the euro has declined compared to the U.S. dollar.
CEO Marco Sala said in a statement that the second quarter results are indicative of “stable growth characteristics” in his company’s global lottery business, as well as “meaningful sequential improvement” in its gaming business.
“We have accomplished a lot in the past four months, notably organizing ourselves under a single leadership team and consolidating our manufacturing footprint,” Sala said. “There is much more ahead of us. In this year of transformation, we will continue to focus on integration to provide a solid foundation for future growth and value creation."
IGT said it’s expecting $230 million in cost savings by April 2018, and it thinks it can reach two-thirds of its projected savings by April of next year.
The company also announced a quarterly cash dividend today of 20 cents per ordinary share. Net debt at the end of the quarter was $8.38 billion.