IGT first quarter results disappoint

International Game Technology (IGT) attributes an “unusually high comparison base,” record jackpot activity and a poor performance from social business DoubleDown for lack lustre first quarter results.

The company reported a net loss of $55 million, adjusted Net income of $59 million, adjusted EBITDA of $371 million – down 19 percent; but reduced net debt from 7,569 million to $7,398 million.

Consolidated revenue was $1,153 million compared to $1,282 million in the first quarter of 2016. The decline reflects comparisons with high jackpot levels of the prior year, new Italy Lotto concession dynamics, and lower gaming product sales, the company said.

“As we noted in March, a unique combination of elements affected first quarter revenue and profit comparisons, including record jackpot activity in 2016,” Alberto Fornaro, chief financial officer of IGT, said. “Disciplined asset and operational management are a top priority for the Company, and this is evident in the strong first quarter cash flow.

“We are updating our outlook to incorporate the DoubleDown transaction and the impact of increased taxation on gaming machines in Italy.”

The DoubleDown transaction refers to the sale of the social casino business for $825 million to DoubleU Games as part of a new strategic partnership in social casino (see previous reports).

Upon closing the sale, the parties will enter into a game development and distribution agreement which will enable DoubleU Games to offer IGT’s extensive casino game library on DoubleU Games’ combined social casino platforms, in exchange for ongoing royalties to IGT.

In anticipation of the DoubleDown sale, expected to complete in the second quarter, IGT updated EBITDA expectations to $1.6 billion and $1.68 billion and net debt of $6.95 billion and $7.15 billion.

US markets reacted negatively to the fiscal report with IGT shares initially falling as much as 17.9 percent pre-market Thursday.