International Game Technology, global leader in driving technology innovations in the gaming industry, has reported it operating results for the fiscal third quarter ended June 30, 2012.
Patti Hart, IGT CEO, stated, “Our third quarter revenue growth and strong cash flows are reflective of our diverse business model. Against the backdrop of an inconsistent global economic recovery, we are generally pleased with this quarter’s results and remain on track to meet our fiscal year 2012 financial goals. The recent announcement of our $1 billion share repurchase is further evidence of our confidence in the outlook for IGT.”
Consolidated Results – Report
– Revenues increased 9 percent to $533m in Q3, primarily due to the interactive businesses and North America machine sales;
– Non-GAAP adjusted measures primarily reflect the exclusion of charges related to the acquisition of Double Down.
Gaming Operations (including Interactive) – Report
– Revenues increased 13 percent to $301m in Q3, primarily due to increases in the interactive businesses, excluding the interactive businesses, revenues were flat;
– Gross margin decreased to 59 percent from 62 percent in Q3, primarily due to the inclusion of the interactive businesses and lower MegaJackpots® yields;
– Installed base increases were primarily driven by global lease operations growth;
– Double Down Interactive bookings per daily user were $0.25 in Q3 compared to $0.24 in Q2 subsequent to acquisition;
– Double Down monthly users were 5.2m as of June 30, 2012, a decrease of 7 percent compared to March 31, 2012.
Product Sales – Report
– Revenues increased 5 percent to $232m in Q3, primarily due to higher North American machine sales, partially offset by lower international machine sales;
– Units recognized increased 30 percent in Q3, due to an increase in new openings in North America and a 44 percent increase in North America replacement units;
– Average machine sales price decreased 11 percent in Q3, mainly due to an unfavorable pricing mix related to increased lottery and used game sales;
– North America gross margin increased to 56 percent from 55 percent due to higher production volumes.
Operating Expenses and other Income/Expense – Report
– Operating expenses increased primarily due to additional expenses related to the interactive businesses;
– Excluding the revenue and operating expenses associated with the interactive businesses, total operating expenses increased 140 bps as a percentage of revenue compared to the prior year quarter;
– Other expense, net, in Q3 totaled $21m compared to $19m in the prior year quarter, primarily attributable to reduced interest income.
Cash Flows, Balance Sheet and Capital Deployment – Report
– Cash and working capital decreased 41 percent and 31 percent, respectively;
– On June 14, 2012 the company announced a new $1bn share repurchase authorization and entered into a $400m accelerated stock buyback (ABS) agreement;
– Contractual debt obligations increased $280m in Q3 due to increased borrowings under the company’s revolving credit facility used to fund a portion of the ASB;
– Under the ASB, the company received 21m shares in June and an additional 2m shares in July;
– The company repurchased 2m shares of its common stock in the open market during Q3, under its previous authorization at an average price of $14.48 per share for a total cost of $25m.
International Game Technology is a global leader in the design, development and manufacture of gaming machines and systems products, as well as online and mobile gaming solutions for regulated markets.