What happened
Shares of gambling industry supplier International Game Technology (IGT 1.65%) jumped as much as 12.5% in trading on Tuesday after the company reported earnings. Shares closed the day up 10%.
So what
Revenue was up 4% in the quarter to $1.05 billion, and operating income fell 3% to $252 million. But the company remained free-cash-flow positive with $115 million in cash generated in the quarter.
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Net debt also dropped 17% from a year ago to $5.8 billion. The level of debt was always the biggest argument against IGT long term. The company has de-risked the balance sheet and become a better operator in the process.
NYSE: IGT
Key Data Points
Now what
Net income was down in the quarter, which isn't a great sign, but management has done a great job of improving the company's operations, and that seems to be what the market is rewarding.
Management also announced a $0.20 per-share dividend, which is a positive sign showing that management is expecting free cash flow to continue long term. I don't think this will be a great growth company given the lack of new casinos being built around the world, but it may be a good cash and dividend stock, which would have been hard to imagine just a few years ago.
