Switch to:
International Game Technology PLC (NYSE:IGT)
Operating Income
$753 Mil (TTM As of Dec. 2014)

International Game Technology PLC's operating income for the three months ended in Dec. 2014 was $120 Mil. Its operating income for the trailing twelve months (TTM) ended in Dec. 2014 was $753 Mil.

Operating margin is calculated as operating income divided by its revenue. International Game Technology PLC's operating income for the three months ended in Dec. 2014 was $120 Mil. International Game Technology PLC's revenue for the three months ended in Dec. 2014 was $998 Mil. Therefore, International Game Technology PLC's operating margin for the quarter that ended in Dec. 2014 was 11.98%.

Good Sign:

GTECH SPA operating margin is expanding. Margin expansion is usually a good sign.

International Game Technology PLC's 3-Year average Growth Rate for operating margin was 2.30% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt’s definition. International Game Technology PLC's annualized return on capital for the quarter that ended in Dec. 2014 was 20.52%. International Game Technology PLC's annualized return on capital (Joel Greenblatt’s) for the quarter that ended in Dec. 2014 was 21.65%.


Definition

Operating income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

International Game Technology PLC's Operating Income for the fiscal year that ended in Dec. 2014 is calculated as

Operating Income(A: Dec. 2014 )
=Revenue-Cost of Goods Sold-Selling, General, & Admin. Expense
=3785.02219482-1909.90628853-0
-Research & Development-Depreciation, Depletion & Amortization-Others
-0-562.150431566-613.792848335
=699

International Game Technology PLC's Operating Income for the quarter that ended in Dec. 2014 is calculated as

Operating Income(Q: Dec. 2014 )
=Revenue-Cost of Goods Sold-Selling, General, & Admin. Expense
=998.133168927-534.299630086-0
-Research & Development-Depreciation, Depletion & Amortization-Others (1)
-0-149.491985203-194.77188656
=120

Operating Income(Q: Dec. 2014 )
=EBITDA-Depreciation, Depletion & Amortization-Others (2)
=185.10974106-149.491985203--83.9519112207
=120

International Game Technology PLC Operating Income for the trailing twelve months (TTM) ended in Dec. 2014 was 250.128630705 (Mar. 2014 ) + 211.979619565 (Jun. 2014 ) + 171.646907216 (Sep. 2014 ) + 119.569667078 (Dec. 2014 ) = $753 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt’s definition.

International Game Technology PLC's annualized Return on Capital (ROC) for the quarter that ended in Dec. 2014 is calculated as:

Return on Capital (ROC)(Q: Dec. 2014 )
=NOPAT/Average Invested Capital
=Oper. Inc.*(1-Tax Rate)/( (Invested Capital (Q: Sep. 2014 ) + Invested Capital (Q: Dec. 2014 ))/2)
=478.278668311 * ( 1 - -158.53% )/( (6312.49871134 + 5741.05302096)/2)
=1236.49384118/6026.77586615
=20.52 %

where

Invested Capital(Q: Sep. 2014 )
=Book Value of Debt + Book Value of Equity - Cash
=Long-Term Debt + Short-Term Debt + Total Equity - Cash
=3427.57087629 + 297.380154639 + 3187.78350515 - 600.235824742
=6312.49871134

Invested Capital(Q: Dec. 2014 )
=Book Value of Debt + Book Value of Equity - Cash
=Long-Term Debt + Short-Term Debt + Total Equity - Cash
=2196.71146732 + 998.466091245 + 2880.73366215 - 334.858199753
=5741.05302096

Note: The Operating Income data used here is four times the quarterly (Dec. 2014) operating income data.

2. Joel Greenblatt’s definition of Return on Capital:

International Game Technology PLC's annualized Return on Capital (Joel Greenblatt’s) for the quarter that ended in Dec. 2014 is calculated as:

ROC (Joel Greenblatt’s)(Q: Dec. 2014 )
=EBIT/Average of (Net fixed Assets + Net Working Capital)
=EBIT/Average of (Net PPE+Net Working Capital)
     Q: Sep. 2014  Q: Dec. 2014
=EBIT/( ( (Net PPE + Net Working Capital) + (Net PPE + Net Working Capital) )/2 )
=142.471023428/( ( (98.7203608247 + max(-184.488402062, 0)) + (1217.6189889 + max(-609.273736128, 0)) )/2 )
=142.471023428/( ( 98.7203608247 + 1217.6189889 )/2 )
=142.471023428/658.169674864
=21.65 %

where Working Capital is:

Working Capital(Q: Sep. 2014 )
=(Accts Rec. + Inventory + Other Curr. Ass.) - (Accts Pay. + Defer. Rev. + Other Curr. Liab.)
=(0 + 199.927835052 + 1365.46134021) - (0 + 0 + 1749.87757732)
=-184.488402062

Working Capital(Q: Dec. 2014 )
=(Accts Rec. + Inventory + Other Curr. Ass.) - (Accts Pay. + Defer. Rev. + Other Curr. Liab.)
=(0 + 187.474722565 + 1255.47595561) - (0 + 0 + 2052.2244143)
=-609.273736128

When net working capital is negative, 0 is used.

Note: The Earnings Before Interest and Taxes (EBIT) data used here is four times the quarterly (Dec. 2014) EBIT data.

3. Operating Income is also linked to Operating Margin:

International Game Technology PLC's Operating Margin for the quarter that ended in Dec. 2014 is calculated as:

Operating Margin=Operating Income (Q: Dec. 2014 )/Total Revenue (Q: Dec. 2014 )
=119.569667078/998.133168927
=11.98 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Be Aware

Compared with a company’s EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company’s revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)’s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia’s Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus’s Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.


Related Terms

Revenue, Cost of Goods Sold, Selling, General, & Admin. Expense, Research & Development, Gross Profit, EBITDA, Depreciation, Depletion and Amortization, Return on Capital, Return on Capital (Joel Greenblatt’s), Earnings Yield, Operating Margin, EBIT


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

International Game Technology PLC Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Operating Income 252290575459534511710765767699

International Game Technology PLC Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Operating Income 173166248213137142250212172120
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK