International Game Technology reports 21 percent rise in net income

LAS VEGAS -- Slot machine maker IGT - International Game Technology grew profits and revenue in the first quarter despite what company officials described as “market challenges.”

IGT, which has headquarters in both Las Vegas and Reno, said Thursday its net income for the quarter ended Dec. 31 increased 21 percent to $79.2 million, compared with $65.3 million in the same quarter a year ago. Earnings per share were 31 cents, up from 24 cents per share a year earlier.

Overall company revenue for IGT rose 2.1 percent to $541.2 million from $530.3 million. The revenue increase was IGT’s lowest in the past four quarters.

IGT said slot machine sales to casinos in the United States and Canada and increased play on the company’s social games on the Internet attributed to the revenue increase.

“In our fiscal first quarter we expanded revenue while maintaining strong operating income and cash flows despite market challenges,” IGT CEO Patti Hart said in a statement.

Hart added that the company would continue to focus on game content and distribution and would continue to improve cost-efficiency initiatives.

In a statement, IGT warned investors that the company’s profits could drop over the next few quarters if declining gaming revenue trends continue in several markets. IGT said several “acquisition-related expenses” stemming from the 2012 purchase of DoubleDown will also kick in during the year.

In a note to investors before the company released results, Eilers Research founder Todd Eilers said he thought the company’s results “could be a little light.”

Eilers said sales of games into the Canadian video lottery terminal markets were beginning to slow while “weather issues” and competition could pressure several of the company’s divisions.

IGT said slot machine sales revenue increased 4 percent in the quarter to $243.6 million. Of that total, sales to casinos in the United States and Canada increased 7 percent to $170 million.

In the company’s interactive division, overall revenue increased 41 percent to $74.6 million while social gaming, which includes the company’s DoubleDown Casino, increased 57 percent to $64.8 million.

IGT said DoubleDown had more than 1.7 million average daily users in the quarter, 17 percent more that in the 2013 first quarter. Players spent on average 42 cents per day on DoubleDown to buy virtual gaming tokens, an increase of 35 percent from a year ago.

Union Gaming Group analyst Robert Shore noted that while results from IGT’s interactive division were growing “it is still the smallest of IGT’s three main segments.”

Shore said IGT and other slot machine manufacturers would benefit from a few casino openings in 2014, notably SLS Las Vegas (formerly the Sahara), racetrack casinos in Ohio, and the Horseshoe Casino Baltimore.

“We don’t expect these openings to move the needle much,” Shore said.

He also said IGT would be pressured by “the resurgence” in Aristocrat Technologies and WMS Industries Incorporated and the emergence of Multimedia Games, Inc. He said the slot machine providers could put “increased pressure on the leading companies in terms of floor space.”