IGT 4Q earnings missed estimates pulled down by lower gaming service revenue.
Consolidated revenue declined 3 percent to $1.32 billion from $1.36 billion in the fourth quarter of 2015, which included approximately $20 million of revenue benefits related to the catch-up reclassification of Stability Law taxes on gaming machines in Italy. Lower revenue reflects global lottery growth that was more than offset by lower gaming service revenue, mostly at DoubleDown.
Adjusted EBITDA of $422 million was 6 percent below the fourth quarter of 2015. Net income attributable to IGT was $233 million in the fourth quarter of 2016, reflecting the impact of $196 million in primarily non-cash foreign exchange gains and the favorable settlement of discrete tax items. On an adjusted basis, net income attributable to IGT was $179 million.
The company currently expects to achieve adjusted EBITDA of $1.68-$1.76 billion for the full year 2017 period, as operational growth compensates for the Powerball and late numbers benefits recorded in 2016, in addition to new Lotto concession impacts in 2017.
“We expect 2017 to evolve as a year of two halves, with difficult comparisons in the first part of the year easing as we reach the second half,” said Chief Financial Officer Alberto Fornaro.
Wells Fargo analyst Cameron McKnight said the results were 5 percent below consensus on EBITA, while the outlook for 2017 was 4 percent below consensus.
“The miss relative to expectation was related to International, Interactive and Italy operations. Positively, the North American installed base of games was up qtr/qtr,” he wrote in a note.