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GTech Profit Up as Lottery Sales Rise

GTECH CorporationGTECH Corporation: GTech Profit Up as Lottery Sales Rise

GTech Holdings Corp., a leading lottery systems operator, on Thursday said quarterly earnings rose 14 percent, on acquisitions and higher lottery ticket sales driven by big jackpots.

The fiscal fourth-quarter earnings topped Wall Street estimates, but GTech stock fell slightly.

"It was a good quarter, but not a phenomenal one," Farmhouse Equity Research analyst J.P. Mark said. "People expected them to beat estimates."

For the fiscal fourth quarter ended Feb. 28, the West Greenwich, Rhode Island, company said net income rose to $47.8 million, or 72 cents a share, from $41.9 million, or 72 cents a share, a year earlier. The number of shares outstanding increased in the latest quarter.

Wall Street analysts, on average, expected 67 cents a share, according to Reuters Research, a unit of Reuters Group, Plc.

Fourth-quarter revenue rose to $279.6 million from $270 million a year earlier.

GTech, which provides services and equipment to the lottery industry in 44 countries and 25 U.S. states, benefited in the fourth quarter from three major jackpots. Also, the 2003 acquisitions of PolCard, a leading credit card company in Poland, and Interlott, a maker of vending machines that sell lottery tickets, added to earnings.

GTech, which has a 70 percent share of the online lottery market, more recently acquired video lottery terminal maker Spielo and Caribbean-based lottery operator Leeward Islands Lottery Holding Company.

Leeward, bought for $40 million in cash, is expected to add $20 million to $25 million to GTech's gross revenue in fiscal 2005. GTech expects revenue in 2005 to grow between 20 percent and 21 percent.

GTech said it expects fiscal first-quarter earnings in a range of 72 cents and 77 cents a share, including a pre-tax gain of $5 million to $6 million on the sale of its stake in Harrington Raceway.

Excluding the gain, analysts, on average, had expected 69 cents a share.

For fiscal 2005, the company expects earnings between $3.00 and $3.10 per share, including the one-time gain. It previously forecast earnings $2.95 to $3.05 a share.

GTech shares fell 25 cents to $59.05 on the New York Stock Exchange.

"People are a bit nervous about Brazil," said Mark, of Farmhouse Equity Research. GTech's contract in Brazil, which accounts for 10 percent of its revenue, expires in a year.

GTech management in Brazil is under investigation for bribery, and investors are unsure if its contract will be extended, Mark said.

Still, Mark, who has a "buy" rating on the stock, expects it to grow in the coming months. "They have great visibility, great opportunities, they've made some smart acquisitions and they have a phenomenally good balance sheet," said Mark, who does not own GTech stock.

Russia, India and China, three huge markets with no lottery systems, are potential markets for GTech to expand into, according to Mark. "They have tremendous opportunity for growth."

Reuters

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2 comments. Last comment 13 years ago by keystonechas.
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United States
Member #379
June 5, 2002
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Posted: May 11, 2004, 5:29 pm - IP Logged

Whooppee!

    Avatar
    Columbia,Pa
    United States
    Member #3522
    January 27, 2004
    372 Posts
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    Posted: May 11, 2004, 10:57 pm - IP Logged
    Quote: Originally posted by CASH Only on May 11, 2004


    Whooppee!



    Calm down  Cash Only. Your had ten posts in the News forum threads in 16 minutes or so. Whats up?..... did you forget to take your medication?

    Chas