IGT net improves on growth in slot sales

Thursday, April 22, 2004 | 10:45 a.m.

Reno-based International Game Technology, the nation's largest manufacturer of slot machines, today reported record results for its fiscal second quarter and announced two major contracts with Las Vegas companies.

IGT reported revenue increased 20 percent over the prior year quarter to $636.1 million and earnings from continuing operations increased 32 percent over the prior-year quarter to $117.7 million, or 32 cents a share.

Net income for the company was $116.9 million, or 32 cents a share, compared with $87.1 million, or 25 cents a share, for the same period a year earlier. Revenue for the second quarter 2003 was $529.1 million.

Earnings were in line with analysts' expectations.

In a conference call today, IGT officials said the quarter was buoyed by slot machine sales worldwide and the transition of replacement units to cashless machine technology.

Slot machine sales skyrocketed during the quarter, the company said. Worldwide machines sales were up 31 percent over the prior-year quarter, domestic sales were up 37 percent and domestic replacement units were up 68 percent.

An analyst said today that it was the replacement business that provided the company with the record boost.

"IGT sold 45,400 units worldwide, with the upside to our expectations coming from domestic sales, where replacement units totaled a solid 23,400 units in the quarter after a year of sales in the range of 15,000," said Robin Farley, a gaming analyst with UBS Securities LLC in a report issued today.

"As we noted earlier, IGT has a very strong pipeline of replacement sales in 2004 as Harrah's (Entertainment Corp.), Station (Casinos) and Caesars (Entertainment Inc.) among others are completing accelerated replacements this year," she said.

Despite the improvements, IGT stock was down 4 percent this morning from Wednesday's closing price to $44.71 a share.

The company also announced two big contracts.

IGT said Wynn Resorts Ltd., Las Vegas, plans to install an Acres Advantage loyalty card system platform from IGT's Acres Gaming Inc. subsidiary.

IGT also announced that it had reached an agreement with Station Casinos Inc. for the purchase of 2,100 slot machines for the Red Rock Station hotel-casino, which broke ground earlier this month.

The Wynn Las Vegas property is expected to open in spring 2005, while the Red Rock Station development, in the Summerlin area, will open in later 2005 or early 2006.

Terms of the deals were not disclosed.

"We are very pleased with our quarterly and six-month results, as the diversification of our business continues to yield consistent earnings and cash flows," IGT Chief Executive T.J. Matthews said. "Our industry leading technology culminated in record top-line revenue and operating income during the quarter on the strength of record domestic replacement sales and product sales margins."