Friday, April 23, 2004
Copyright © Las Vegas Review-Journal

Strong sales revenue and margins stoke strong quarter for slot giant IGT

Mary Torino uses the Acres Advantage loyalty card system attached to an International Game Technology slot Tuesday at Green Valley Ranch. IGT on Thursday said its earnings rose. Photo by Gary Thompson.

Driven by huge replacement sales, slot machine giant International Game Technology on Thursday posted a net income of $117.7 million for the quarter ended March 31, up 34 percent from $87.1 million in the same quarter a year earlier.

IGT's Chief Financial Officer Maureen Mullarkey said the earnings marked the 17th consecutive quarter of earnings increases over the previous year's comparable period.

Net income from continuing operations was $117.7 million, or 32 cents per diluted share, up 32 percent from $89 million, or 25 cents per share, a year earlier.

Earnings per share matched Wall Street forecasts in most instances, although they fell 2 cents short of UBS Warburg's forecast.

Cash flow for Reno-based IGT increased in the just-ended quarter to $247.1 million, up 28 percent from $193 million in the same period a year earlier. Cash flow is defined as earnings before interest, taxes, depreciation and amortization.

Revenue rose 20 percent to $636.1 million from $529.1 million.

Deutsche Bank analyst Marc Falcone said product sales revenues and margins were both exceptional, driven by a "stunning" 23,400 units sold, which accounted for 86 percent of all U.S. sales during the quarter.

Joe Greff, gaming analyst for Fulcrum Global Partners, an independent Wall Street investment research firm, said the company's slot machine sales were extremely strong and its business plan remains on track for the remainder of the year.

He said IGT's earnings beat Wall Street expectations, and the market response to the company's earnings announcement was an overreaction based on its recent record growth patterns.

IGT closed Thursday at $44.01, down $2.57 or 5.52 percent on more than 10 million shares traded, four times the average daily trading volume.

IGT Chief Executive Officer T.J. Matthews said although his company has been disappointed by the failure of some states such as Maryland to approve expanded gaming, it remains optimistic about the prospect for new gaming opportunities as well as replacement sales.

Merrill Lynch analyst David Anders said in an investor advisory the potential for expansion and IGT sales remain high as state legislators in states such as Pennsylvania, California, Michigan, Kansas, Nebraska, Maine and New York debate gaming expansion in the coming months.

He said negotiations for new tribal casino compacts in California, in particular, are at a critical juncture, but that IGT believes the chances are good there as well as in the Midwest.