Disappointing quarterly results from IGT

International Game Technology reported pre-merger business’ GTECH and IGT (referred as Legacy) first quarter and second quarter 2015 results respectively.

Key performance highlights for GTECH S.p.A.’s first quarter ending March 31, 2015 include:

Consolidated Revenue growth of 3 percent to Euro 808 million (Q1/2014: Euro 781 million).
EBITDA of Euro 296 million was in line with the first quarter of 2014 and near all-time peak levels.
Operating Income of Euro 149 million (Q1/2014: Euro 181 million), the disparity associated with one-off costs related to the acquisition of IGT Legacy.
Net Loss Attributable to the Owners was Euro 27 million compared to net income of Euro 75 million in the first quarter of 2014.  Again results reflect costs associated with the acquisition.
Cash from Operations was Euro 158 million compared to Euro 163 million in the prior year.
Capital Expenditures in the first quarter were Euro 65 million.
Net Financial Position – excluding acquisition costs –  of Euro 3.16 billion (Q4/2014: Euro 2.59 billion).

“We achieved near-record GTECH EBITDA during the first quarter on top of challenging, multi-year comparisons. We also improved our net financial position excluding one-off items linked to the transaction. We have confirmed our $280 million target for cost and revenue synergies and are on track to deliver them on schedule,” commented Alberto Fornaro, chief financial officer of IGT.

Marco Sala, chief executive officer of IGT, noted:  “We had a solid first quarter for GTECH operations, continuing to run the underlying business efficiently and profitably, at the same time as we were completing a transformative merger. We were ready to launch the integration from day one, focusing on revitalizing our R&D capabilities. Exciting content delivered across the whole range of platforms is the key to consolidating our leadership of the global gaming industry.”

In contrast, IGT Legacy’s only stellar performance was its interactive business.

Key performance indicators for IGT Legacy second quarter period ending March 31, 2015 (pre-merger), include:

Total revenue decrease of 22 percent to $399 million.
Adjusted earnings per share decreased to $0.09 from $0.20.
GAAP earnings per share decreased to ($0.05) from $0.10.
Social gaming revenue increased 17 percent to $81 million and average bookings per daily active user grew 9 percent to $0.47.
Returned $27 million to shareholders in the form of dividends.

The sharp decrease in Revenue was attributed to a decline in product sales and gaming operations which was partially offset by an increase in interactive revenue.

Interactive:
Interactive revenue was $94.1 million (Q2/2014: $79.8 million).
Mobile revenue comprised 41 percent of total bookings in the quarter and increased 52 percent compared to the prior year quarter.
Social gaming revenue increased 17 percent to $81 million (Q2/2014: $68.8 million). Average DAU were 1.9 million, an increase of 9 percent. Average bookings per DAU in the first quarter were $0.47, an increase of 9 percent over the same quarter last year.

IGT said it would begin reporting results as a combined entity with its second quarter 2015 results under GAAP.

In related news, changes to the board post-merger will see Philip G.Satre take up the Chairmanship of the Board of Directors with Patti S. Hart and Lorenzo Pellicioli appointed as vice chairmen.

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