IGT beats analyst estimates with strong third-quarter earnings
Slot machine and gaming systems manufacturer IGT on Tuesday reported its strongest quarter in years, beating analysts’ estimates as the company’s operating income more than doubled.
The board of directors of the London-based company, which has a major presence in Reno and Las Vegas, approved bonuses for employees not covered by existing incentive compensation plans who were affected by furloughs and salary reductions during the pandemic. It also instituted a 20-cent-per-share dividend for investors.
“Broad-based momentum across our lottery, gaming, and digital and betting activities drove significant improvement in key financial and performance metrics in the third quarter,” said Marco Sala, CEO of IGT. “Revenue grew over 20 percent and operating income more than doubled, highlighting the strength of our portfolio. Based on our excellent year-to-date results and our solid financial condition, the board reinstated a quarterly cash dividend, signaling their confidence in the company’s prospects.”
Results from the quarter that ended Sept. 30 smashed analysts’ estimates.
“This (Tuesday) morning, IGT reported a strong third quarter, beating our model handily on both the revenue and adjusted cash flow lines,” Carlo Santarelli, a New York-based analyst for Deutsche Bank, said in a note to investors. “Net revenue of $984 million was up 21 percent year over year and was $21 million ahead of our $963 million forecast.
“Net-net, we think the beat, coupled with the implied higher-than-consensus fourth quarter, as well as the dividend institution, should bode well for shares,” he said.
All IGT divisions contributed to the rebound, with the company capitalizing on the high demand being experienced by casinos, lottery operations and sportsbooks worldwide.
Sala said during the earnings call that slot machine and systems sales were higher in the third quarter thanks to expansions in New Jersey and Pennsylvania coming off an earlier boost of three casino openings in Southern Nevada over a nine-month period — Circa, Virgin Hotels Las Vegas and Resorts World Las Vegas.
In IGT’s lottery division, the company won a 10-year contract with the Connecticut Lottery Corp. and signed a seven-year deal with the operator of the French National Lottery to upgrade its central system.
The company’s new digital and betting division took little time to ramp up as IGT brought former William Hill US CEO Joe Asher out of retirement to become president of sports betting, with Gil Rotem appointed president of iGaming.
The company was recognized at last month’s Global Gaming Expo in Las Vegas for “Product Innovation of the Year” for its Resort Wallet and IGTPay cashless technologies.
Sala did not detail bonus amounts to be paid to employees or how many would be paid. But dividends will be paid to Nov. 23 shareholders of record on Dec. 7.
IGT shares, traded on the New York Stock Exchange, rose $1.93, 6.4 percent, to close at $32.26 a share on volume nearly twice the daily average on Tuesday. After hours, shares dipped 65 cents, 2 percent, to end at $31.61 a share.
Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.