International Game Technology (
reported second-quarter fiscal 2014 earnings (excluding one-time
items) of 20 cents per share, which beat the Zacks Consensus
Estimate by a penny.
Revenues decreased 14.5% year over year to $512.8 million but
surpassed the Zacks Consensus Estimate of $502.0 million. Product
sales and Gaming Operations declined 27.4% and 9.4% year over
Interactive was the only segment that reported growth (up 19.6%)
in the quarter. Social revenues increased 26.7% year over year
that fully offset an 11.3% decline in IGTi revenues.
Average revenue per unit per day decreased 4.6% from the year-ago
quarter to $47.00. Gaming Operations installed base of 53,400
units was down from 56,700 units in the year-ago quarter.
IGT shipped 7,600 machines during the quarter compared with
14,300 units in the year-ago quarter. Average machine sale price
was $14,700 versus $14,100 in the year-ago quarter.
Operating expenses as percentage of revenues increased 670 basis
points (bps) from the year-ago quarter to 36.7%. The
year-over-year increase was primarily attributed to higher
selling, general & administrative (up 570 bps) and research
& development expenses (up 170 bps). As a result, operating
margin contracted 630 bps from the year-ago quarter to 21.0%.
Net income was $49.4 million or 20 cents per share compared with
$95.1 million or 36 cents in the year-ago quarter.
IGT exited the second quarter with cash and investments
(including restricted cash) of $432.3 million versus $580.6
million in the previous quarter. Total debt stood at $2.20
billion. During the quarter, IGT paid $27.0 million as
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For fiscal 2014, IGT revised its previous earnings guidance range
of $1.28 to $1.38 per share to $1.00 to $1.10 per share.
Currently, the Zacks Consensus Estimate is pegged at $1.03.
We believe that increasing investment in product development will
increase operating costs. Moreover, intensifying competition from
the likes of
) in its core as well as interactive markets remains a major
However, the cost savings from the restructuring program ($30.0
million in 2014 and $50.0 million annually) will boost
profitability. The expanded partnership with
) is a significant positive that will boost the top line.
We believe that innovative product pipeline, growth from
cloud-based products in international markets and strong growth
from the DoubleDown business will boost IGT's overall growth in