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Long-term partnerships lift IGT

| By iGB Editorial Team
Adjusted EBITDA up despite 5% revenue drop

IGT CEO Marco Sala has cited the impact of the company’s long-term contracts for a “solid performance” in the third quarter.

In the three months through to September 30, operating income amounted to $200m (£157m/€176m), up from a loss of $556m in the same period last year.

Adjusted EBITDA climbed 3% year-on-year to $443m, but revenue was down 4% on a constant currency basis from $1.22bn to $1.16bn. Net debt also increased by 3% to $7.57bn.

“Solid performance and important, long-term contracts drove very good third-quarter and year-to-date results,” Sala (pictured) said.

“Global Lottery same-store revenues for instants and draw games rose mid-single digits. The installed base of gaming machines was up, and unit shipments of gaming machines increased 10%.

“And, we enjoyed particularly strong sales and profit growth in Italy, confirming the vitality of that important market. We are firmly on track to achieve our 2018 financial and operational goals.”

IGT also confirmed in an earnings call that it expects adjusted EBITDA to come in at the top range of guidance for the year, between $1.7bn and $1.78bn. Capital expenditure is also currently on track for the full year.

During the period, IGT pushed forward with growth plans in regulated sports betting markets across the US following the repeal of PASPA earlier this year.

IGT last month struck a partnership with William Hill US to offer lotteries a full-service solution for sports betting, having already secured a joint deal with the Rhode Island Lottery.

IGT has also expanded its sports betting services into the tribal gaming sector by linking up with the Mississippi Band of Choctaw Indians, secured a sports betting licence in West Virginia, agreed to provide sports betting services to MGM in New Jersey, and is also working with FanDuel in the state.

Reflecting on the results, analysts from Regulus Partners said that IGT could face problems moving forward in terms of its lack of commitment to digital research and development.

Regulus said IGT is “over-indexing in capital intensive volume retail gambling”, noting that this market sector is “suffering from channel shift pressure, increased regulatory scrutiny and an increasingly challenging R&D environment”.

The analysts added: “While an enhanced digital capability might form part of the potential strategic solution, this remains a tiny part of the group and execution thus far has been poor.

“With the US potentially now adopting digital gambling products at a faster rate than the previous snail’s pace, and both channel shift and regulatory scrutiny starting to bite in Italy, emerging weaknesses in IGT’s last major bastions of semi-protected 20th Century business practices might start to make the lack of digital scale and credibility a pressing strategic issue.”

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