CONF CALL
- Will not talk about IGT standalone results. IGT's results are for informational purposes only.
- Italy unfavorable sports betting by 10% points (which was in-line with industry average). This will normalize over time.
- North America: Same-store benefited from jackpot and instant ticket segments
- IGT's (Stand-alone) March quarter not indicative of its future
- Confident synergies remain on track
- Have consolidated production/maintenance...closing plants in Vegas and Canada
- FX did not have a meaningful impact on operating income
- Americas: Instants ticket sales (Double-digit increases in California and North America)
- MegaMillions declined in 1Q
- Gaming shipments declined due to hard comps boosted by Canada last year
- International: instant ticket sales led by UK growth
- Expect Greek VLTs revenues in 2H 2015
- Italy: machine gaming revenues impacted by Stability Law implementation. Excluding that rule, revs would have been flat.
- 2Q results will be on a consolidated entity basis and reported in US$
Q & A
- IGT results below expectations
- IGT: Reduction in receivables have improved its profitability
- Will provide some guidance at end of Q2. Expect 2H 2015 will have better performance, particularly on IGT's product sales with the introduction of new products
- Leverage target at closing: 4.5-4.9x ; longer-term, will be at 4x or below 4x
- Synergies: on time and on target
- IGT: conversion of units in Mexico impacted results. Weaker period in industry due to less newer openings.
- Installed base count will be more balanced as a combined entity
- Pro forma balance sheet shouldn't change much when translated to US GAAP.
- Italian Lottery contract: waiting for issue of tender. Expect 1st installment by end of year.
- IGT: conversion of 1,000 units in Maryland which fully explain the ASP difference.
- GTECH: no units were converted
- IGT/GTECH Oregon units: 300 IGT units. Basically concluded.
- Cost of debt: 5.25%-5.50% (depending on currency and product)
- Debt: 50% in euros, 50% in dollars
- 2015 Maintenance capex: US$150-$170m
- 2015 growth capex: some capex related to VLT Greece
- Do you need to borrow additional funds? It depends.
- IGT: have some visibility in the new openings (mainly Massachusetts)
- GTECH Italian taxes paid: paid 40% ($38m). Finalizing contracts and resolution before next payment is due. GTECH will only pay their portion of the 60% ($5m euros).
- IGT product sales will improve in US and international going forward. Spielo leading the charge.
- IGT product sales in 1Q 2014 not in 1Q 2015: 1,000 units in Illinois
- Synergies: will execute 65% by 1Q 2016
- Property sales: different mix sold resulted in lower intellectual property fees. Inventory write down.