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Howard Stutz
 

IGT reports fourth-quarter drop in net income, but profits increase for fiscal 2013

8 November 2013

Slot machine maker IGT - International Game Technology said Thursday that its net income fell 27.9 percent in the company’s fourth quarter, but profits for all of fiscal 2013 increased by 9 percent.

The company, which is considered the casino industry’s largest gaming equipment manufacturer, said its net income for the three months ended Sept. 30 was $63.5 million, or 24 cents per share, compared with net income of $88.1 million, or 33 cents per share, a year earlier.

For the fiscal year, IGT said its net income was $272.3 million, $1.03 per share.

In the fourth quarter, total revenues increased less than 1 percent to $632.3 million. For the year, IGT said its overall revenues increased 9 percent to $2.34 billion.

Analysts said the company badly missed fourth-quarter estimates by both the company and analysts. Zacks Consensus expected the company to report earnings of 34 cents per share in the quarter.

IGT blamed lower returns from its MegaJackpot line of slot machines for the fourth-quarter miss. The product line includes such games as Star Wars and Wheel of Fortune.

The company told investors it projects 2014 earnings per share of $1.28 to $1.38, which disappointed Wall Street.

“Judging from management’s tepid fiscal year 2014 outlook, it appears the company’s four-year run of delivering double-digit year-over-year earnings per share growth is in danger of coming to an end,” Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski told investors.

Shares of IGT closed at $17.18 on the New York Stock Exchange, down $2.43, or 12.39 percent, on a day when all major indexes recorded losses.

IGT credited its growing social gaming-interactive division, which includes placing versions of the company’s best-known slot machine titles on the DoubleDown Casino free-to-play website, with boosting revenues. Visitors to DoubleDown Casino can pay nominal fees to buy thousands of virtual gaming tokens.

In the fourth quarter, IGT’s social gaming revenues grew 72 percent to $61 million while the average player spent 40 cents per day on social gaming.

For all fiscal 2013, IGT said social gaming revenues increased 151 percent to $219 million and the average user spent 37 cents per day on the activity, an 42 percent increase.

IGT said it shipped 11,500 slot machines to North American markets during the fourth quarter, a 35 percent increase. For the year, IGT said its shipments grew 50 percent to 32,900 slot machines.

Analysts expressed some disappointment in the interactive division’s results, which followed a company announcement earlier this week that Robert Melendres, IGT’s vice president in charge of the business, will resign effective Jan. 1. IGT Chief Financial Officer John Vandemore is taking over Melendres’ job.

“While strong year-over-year growth was expected given the interactive segment is ramping, stagnant sequential growth is a concern,” Credit Suisse gaming analyst Joel Simkins told investors.

JP Morgan gaming analyst Joe Greff said higher-than-forecast slot machine sales were the lone bright spot in the earnings announcement.

“Earnings per share was mixed, with decelerating interactive revenue growth and declining performance in gaming operations as the negatives,” Greff said.

IGT also announced it would enter a $200 million accelerated share-repurchase agreement.
IGT reports fourth-quarter drop in net income, but profits increase for fiscal 2013 is republished from iGamingSuppliers.com.