IGT shares skyrocketed Thursday after executives reported a 3 percent revenue increase at a fixed exchange rate during the third quarter.
On a call with investors, the London-based slot machine manufacturing company’s CEO, Marco Sala, reported strong global gaming machine unit sales, with a 44 percent increase compared with the same period last year driven by a strong demand for replacements.
He also pointed to strong free cash flow generation during the third quarter, with the company reaching a record $456 million for the first time in nine months.
Sala also voiced optimism for IGT’s future performance in Italy, where the government has proposed an increase in taxes on gaming machines and certain player winnings.
He said gross earnings before interest, tax, depreciation and amortization are expected to take a $30 million hit, but the company is working on a set of initiatives to offset the impact.
“We have been dealing with higher gaming taxes for the last several years,” Sala said. “In that time frame, our Italy EBITDA has grown despite the headwinds, including the year-to-date 2019 period.”
SunTrust Robinson Humphrey analyst Barry Jonas said in a Thursday note that Sala’s commentary was “encouraging,” and Jefferies analystDavid Katz said his company views the earnings report as “a productive capital improvement story.”
Shares were up 23.5 percent Thursday afternoon, up $3.03 to $15.93.