IGT reports growth in most areas of its core business

Slot machine manufacturer IGT - International Game Technology, facing a looming proxy fight with its former chairman, said Tuesday it grew most areas of its core business during the first quarter.

On a conference call with analysts, IGT Chief Executive Officer Patti Hart asked that questions be directed toward the company's first quarter results rather than the looming proxy fight. Analysts complied, and the proxy battle was not addressed.

IGT said its overall net income was $65.3 million for the period that ended Dec. 31, compared with $49.3 million in the first quarter of 2012. IGT said the profits translated into earnings per share of 24 cents, a 41 percent increase compared with 16 cents per share a year ago.

The company's overall revenues grew 19 percent to $530.3 million during the quarter, compared with $445.5 million a year ago. Hart said the first quarter revenues were the company's highest in four years for that time period.

"Our robust first quarter results provide a great start toward what we expect will be our fourth consecutive year of double digit growth," Hart said.

IGT said its revenues from social gaming, primarily its DoubleDown Casino product on Facebook, grew 15 percent to $41 million in the first quarter, as compared with the company's results in the fourth quarter of 2012.

IGT said DoubleDown Casino users spent an average of 30 cents per day on the website during the quarter, compared with 28 cents per day in the previous quarter.

Hart didn't address the proxy fight with former IGT Chairman Charles Mathewson and former analyst-turned-investor Jason Ader. The pair head a group which filed a proxy statement with the U.S. Securities and Exchange Commission to win three seats on the company's board of directors.

In the filing, the group said it wants to change some of the directions taken by the Las Vegas-based slot machine manufacturer.

The earnings report also did not address the proxy fight. During the conference call, Hart reiterated IGT's previous statements that shareholders should re-elect the company's slate of eight board members.

"We believe our strong performance demonstrates that our strategy is working and that IGT is moving in the right direction," Hart said.

In a report to investors before IGT's earnings release, Wells Fargo Securities gaming analyst Cameron McKnight said the proxy fight might serve as a positive mechanism to boost the price of the company's shares.

McKnight said he favors IGT over Bally Technologies or WMS Industries as the slot machine business remains "hyper-competitive" due to competition from smaller manufacturers and a boost in sales from Canadian Video Lottery Terminal sales.

McKnight said IGT's current management remains focused on three areas; the company's core slot machine business, a commitment to increase cash flow through corporate efficiency and limited mergers and acquisitions and returning capital to shareholders.

IGT's quarterly earnings were announced after the close of stock-market trading Tuesday. IGT shares gained 21 cents, or 1.4 percent, to close Tuesday at $15.22 on the New York Stock Exchange.