WEST GREENWICH – The GTECH Holdings Corp., the world’s largest operator of lottery systems, says its revenues for the second quarter of fiscal 2006, which ended Aug. 27, were $309.9 million, 4.2 percent lower than in the same period last year. Net income was $49 million, down 7.8 percent from last year.
Despite this, the company says it expects service revenues for the year ending Feb. 25, 2006, to be 10 to 12 percent higher than last year’s, and product sales to be in the range of $190 million to $210 million, together generating free cash flows of $210 million to $230 million.
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Based upon this outlook, the company predicted earnings per share for fiscal 2006 to be in the range of $1.64 to $1.70 on a fully-diluted basis.
“GTECH experienced a significant quarter-over-quarter increase in service revenues, despite difficult comparisons due to the significant jackpot activity in the second quarter of last year,” said GTECH president and CEO W. Bruce Turner. “In addition, we clearly benefited from increased revenue contributions from newer lottery service contracts such as Florida, Virginia, and LILHCo’s Caribbean markets.”
“We are pleased with the continued strength of our core lottery business, and we are excited about the opportunities we see in each of the markets we serve,” added senior vice president and chief financial officer Jaymin B. Patel. “Based upon our current outlook, we are confident we can achieve our goals and objectives in the current fiscal year and beyond.”
Earlier this month, GTECH said it was entertaining an acquisition offer from an unidentified party. The company has hired Citigroup Global Markets as an adviser to help review the offer.
During the first six months of fiscal 2006, GTECH says it generated $215.2 million of cash from operations, much of which was used to fund $59.9 million of systems, equipment, and other assets relating to contracts; to repurchase $32.1 million worth of shares of common stock, and to pay cash dividends of $20.3 million. As of Aug. 27, the company says it had $167.8 million of cash and cash equivalents and $236.2 million of short-term investment securities on hand.
During the second quarter, GTECH won a contract for an online and instant lottery system from the Washington Lottery; extended a two-year contract and added a second contract in Ohio; leased about 700 instant-ticket vending machines to Indiana, and finalized a three-year contract in New Hampshire for another 300 machines.
Internationally, GTECH signed an agreement, following a competitive bidding process, with the New Zealand Lotteries Commission for a complete lottery system conversion to include a new integrated online and instant lottery system and new terminals. GTECH’s joint venture in Thailand, LOXLEY GTECH Technology Co. Ltd., signed a five-year agreement to provide equipment and services for a national online lottery in Thailand. GTECH also made major new deals in Switzerland, Germany, France and Spain.
A detailed report from the company is available here.
