International Game Technology PLC has reported financial results for its fourth quarter and full year ended December 31, 2017. The Q4 performance shows a modest three per cent year-on-year improvement to $1,346m. However, full-year results fell from $5,154m in 2016 to $4,939m.
According to the update, adjusted operating income stood at $268m compared to the $281m generated in the prior year period. Adjusted EBITDA was ahead at $452m compared to $422m in Q4 2016 which was driven mainly, says the company, by strong international performance, Italy sports betting results, and lower operating expenses.
Revenue for North America Gaming & Interactive was $281m compared to $368m in the fourth quarter of 2016. At constant scope, revenue was down nine per cent, primarily on lower product sales. Gaming service revenue was $167m compared to $230m in the prior-year period. The decline is primarily attributed to the sale of DoubleDown and a year-over-year decrease in the installed base. Yields were stable with the prior year.
North American product sales revenue of $113m declined from $138m in the prior year, which benefited from significant new and expansion gaming machine and systems sales, as well as higher intellectual property revenue. The segment shipped 5,295 gaming machine units in the quarter compared to 5,419 units in the prior-year period.
Operating income for North America Gaming & Interactive was $69m compared to $102m in the fourth quarter of 2016. The decline is attributable to the sale of DoubleDown, lower revenue, and the timing of jackpot expense, partially offset by lower operating costs.
International revenue of $280m was ahead 27 per cent from the prior year, reflecting strong growth in both Lottery and Gaming. Gaming service revenue from terminals was up one per cent at constant currency, as a higher installed base was offset by lower average yields due to the geographic mix of revenue. The installed base grew to 15,543 machines from 10,453 in the fourth quarter of 2016 on unit growth in Africa, Greek VLTs, and video bingo machines.
Product sales revenue rose 20 per cent, benefiting from higher lottery software sales. The segment shipped a total of 5,565 gaming machine units during the fourth quarter of 2017 compared to 4,901 units in the prior-year period, as a 41% increase in replacement units more than offset lower new and expansion activity. Operating income of $72 million increased 64%, reflecting higher revenue and disciplined cost management.
Summarising the performance, IGT CEO Marco Sala stated: “We had a strong finish to 2017, amplifying the progress we made throughout the year. We delivered outstanding results in our Lottery business and improved our key performance indicators in the gaming business. These achievements were enhanced by disciplined expense management. Bringing innovative content and technology to market remains the cornerstone of our strategy. Last year, we executed well along this path and established a solid foundation for growth in 2018 and beyond.”
“We met all of our financial objectives for the year, including the top end of our EBITDA expectations. Net debt was slightly better than our outlook, despite the early Scratch & Win renewal in the fourth quarter,” said Alberto Fornaro, CFO of IGT. “The results for the fourth quarter and full year highlight the diversity and resilience of the IGT franchise.”
On the outlook, IGT stated that it expects to achieve adjusted EBITDA of $1,700-$1,780m in 2018. Capital expenditures are expected to be $575-$625m. The Company’s outlook assumes a 2018 average EUR/USD exchange rate of 1.22.