IGT 17Q1 results lower than expected

Interactive and lottery giant IGT reported lower than expected results for the first quarter of 2017, due in part to underperformance of its international business and an usually high base in 16Q1.

The group reported adjusted EBITDA of $371 million for the first quarter of 2017, around 7 percent below analyst expectations.

Net revenue was $1.15 billion, down 10 percent year-on-year, while net loss for the quarter was $55 million.

During a conference call, CEO Marco Sala said that, while the results for the period were not optimal, they were affected by larger factors.

“We are experiencing the reality of comparisons with the last year’s unusually high base and the headwinds that we expected in our gaming business,” Sala said. “While revenue and adjusted EBITDA did not match the record levels achieved in the first quarter last year, it is important to note that the results we are reporting today are consistent with the pattern for the year that we described in March.”

“A unique combination of elements affected first quarter revenue and profit comparisons, including record jackpot activity in 2016,” added Alberto Fornaro, CFO of IGT.

Global lottery revenues fell 11 percent in the quarter due to abnormal jackpot activity.

“The performance of our international business was uncharacteristically low in the first quarter for a combination of reasons, which we expect to fully offset in the balance of the year,” said Sala.

“Relative to our model, the biggest delta came in the International segment where the company cited several headwinds, including weakness in the UK, unfavorable mix-shift in product sales, unfavorable FX, and higher discounting,” said Union Gaming in a note on Friday. “The North America and Italy businesses performed relatively in line with our expectations.”