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International Game Technology PLC Reports First Quarter 2021 Results
- 25% revenue growth to $1,015 million on outstanding Global Lottery performance; continued recovery in Global Gaming including acceleration in Digital & Betting activities
- Income from continuing operations of $138 million; Adjusted EBITDA of $450 million, among the highest levels in Company history, driven by revenue momentum and structural cost savings
- Achieved cash from operations of $251 million; free cash flow of $204 million driven by strong results and invested capital discipline
- Completed sale of Italy B2C gaming businesses; net proceeds to partially fund full redemption, by make-whole call, of 4.75% Senior Secured Euro Notes due February 2023
- Company to host Investor Day on November 9, 2021

LONDON, May 11, 2021 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE: IGT) today reported financial results for the first quarter ended March 31, 2021. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the results; access details are provided below.

"We delivered some of our strongest profit results ever during the first quarter, fueled by robust player demand and significant, structural cost savings," said Marco Sala, CEO of IGT. "Our Global Lottery segment achieved record same-store sales levels on impressive increases around the world. The Global Gaming segment is demonstrating swift, progressive recovery, including accelerated momentum for Digital & Betting activities. We expect to return to 2019 levels for key financial metrics this year."

"With the recovery in our business in full swing, we are delivering strong operating leverage which, when coupled with invested capital discipline, drove strong cash flows in the quarter," said Max Chiara, CFO of IGT. "This enabled us to accelerate our debt retirement strategy and gives us confidence in a return to pre-pandemic leverage levels by the end of the current year."

Overview of Consolidated First Quarter 2021 Results

All amounts from continuing operations

Quarter Ended

Y/Y
Change
(%)

Constant
Currency
Change
(%)

March 31,

2021

 

2020

(In $ millions, unless otherwise noted)

         

GAAP Financials:

         

Revenue

         

Global Lottery

749

 

505

48%

42%

Global Gaming

266

 

310

(14)%

(16)%

Total revenue

1,015

 

814

25%

20%

           

Operating income/(loss)

         

Global Lottery

337

 

144

133%

121%

Global Gaming

(19)

 

(6)

(208)%

(177)%

Corporate support expense

(19)

 

(13)

(50)%

(32)%

    Other(1)

(39)

 

(343)

89%

89%

Total operating income/(loss)

260

 

(218)

NA

NA

           

Net cash provided by operating activities

251

 

26

NM

 
           

Cash and cash equivalents

748

 

1,449

(48)%

 
           

Non-GAAP Financial Measures:

         

Adjusted EBITDA

         

Global Lottery

447

 

243

84%

74%

Global Gaming

19

 

31

(39)%

(35)%

Corporate support expense

(16)

 

(13)

(26)%

(10)%

Total Adjusted EBITDA

450

 

261

72%

64%

           

Free cash flow

204

 

(60)

   
           

Net debt

7,069

 

7,170

(1)%

 
           
 

(1) Primarily includes purchase price amortization and goodwill impairment

Note: Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release

Key Highlights:

  • Achieved among highest revenue and profit levels in Company history, fueled by Global Lottery
  • Delivered strong cash flow driven by performance and invested capital discipline; return to pre-pandemic leverage expected by end of the year
  • Achieved ~1/3 of $200M+ 2021 OPtiMa savings targets during the first quarter
  • Sequential improvement in Global Gaming as industry recovers from pandemic-driven restrictions; growth in Digital & Betting continues with 85% year-over-year increase in revenue in the quarter
  • Successfully refinanced ~$1.0 billion in 6.25% Notes due 2022 with $750 million 4.125% Notes due 2026 and draws on revolving credit facilities
  • Signed seven-year contract extension with Jamaica Lottery; four-year iLottery contract extension with Kentucky Lottery; two-year contract extension with Mexico Lottery

Financial highlights:

Consolidated revenue of $1,015 million, up 25% from the prior year

  • Global Lottery revenue of $749 million, up 48%, driven by 32.4% growth in same-store sales
  • Global Gaming revenue totals $266 million, versus $310 million in the prior year; up sequentially from $255 million in Q4'20 as U.S. gaming markets continue to recover

Operating income of $260 million, compared to operating loss of $218 million in the prior year

  • Global Lottery same-store sales growth translates into high profit flow-through
  • Benefits from OPtiMa structural cost-savings
  • Goodwill impairment of $296 million in prior-year period

Net interest expense of $94 million compared to $100 million in the prior year

Provision for income taxes of $148 million, compared to a benefit from income taxes of $1 million in the prior year

  • Higher valuation allowances on deferred tax assets in the current period
  • Income taxes paid of $4 million versus $11 million in the prior year

Net income attributable to IGT was $92 million versus a net loss attributable to IGT of $248 million in the prior-year period

  • After-tax goodwill impairment of $296 million in prior-year period
  • Higher non-cash foreign exchange gains, primarily on Euro-denominated debt instruments, in the current period

Net income per diluted share of $0.38 compared to a net loss per diluted share of $1.28 in the prior year

Adjusted EBITDA of $450 million compared to $261 million in the prior-year period; Global Lottery achieves among the highest segment-level Adjusted EBITDA

Net debt of $7.07 billion compared to $7.32 billion at December 31, 2020; Net debt to LTM Adjusted EBITDA of 5.40x, down from 6.39x at December 31, 2020, driven by strong financial results and cash flow generation

Cash and Liquidity Update

  • Total liquidity of $2.1 billion as of March 31, 2021; $748 million in unrestricted cash and $1.4 billion in additional borrowing capacity

Other Developments

  • As previously announced, completed sale of Italy B2C gaming businesses on May 10, 2021; net proceeds to partially fund full redemption, by make-whole call, of €850 million 4.75% Senior Secured Euro Notes due February 2023
  • In March 2021, issued $750 million 4.125% Notes due 2026, as previously announced
    • Net proceeds used to fund redemption of 6.25% Notes due 2022
    • Lowest USD-denominated coupon ever issued by the Company

Recast historical financial information for Q2'20 and Q3'20 included at the end of this release

Conference Call and Webcast:

May 11, 2021, at 8:00 a.m. EDT

Live webcast available under "News, Events & Presentations" on IGT's Investor Relations website at www.IGT.com; replay available on the website following the live event

Dial-In Numbers

  • US/Canada toll-free dial-in number: +1 844 842 7999
  • Outside the US/Canada toll-free number: +1 612 979 9887
  • Conference ID/confirmation code: 6783961
  • A telephone replay of the call will be available for one week
    • US/Canada replay number: +1 855 859 2056
    • Outside the US/Canada replay number: +1 404 537 3406
    • ID/Confirmation code: 6783961

Note: Certain totals in the tables included in this press release may not add due to rounding

Comparability of Results

All figures presented in this news release are prepared under U.S. GAAP, unless noted otherwise. Adjusted figures exclude the impact of items such as purchase accounting, impairment charges, restructuring expense, foreign exchange, and certain one-time, primarily transaction-related items. Reconciliations to the most directly comparable U.S. GAAP measures are included in the tables in this news release. Constant currency changes for 2021 are calculated using the same foreign exchange rates as the corresponding 2020 period. Management uses non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate the Company's financial performance. Management believes these non-GAAP financial measures reflect the Company's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of business trends. These constant currency changes and non-GAAP financial measures should however be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with U.S. GAAP.

About IGT
IGT (NYSE:IGT) is the global leader in gaming. We deliver entertaining and responsible gaming experiences for players across all channels and regulated segments, from Gaming Machines and Lotteries to Sports Betting and Digital. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, our solutions deliver unrivalled gaming experiences that engage players and drive growth. We have a well-established local presence and relationships with governments and regulators in more than 100 countries around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has approximately 11,000 employees. For more information, please visit www.IGT.com.

Cautionary Statement Regarding Forward-Looking Statements
This news release may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning International Game Technology PLC and its consolidated subsidiaries (the "Company") and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, dividends, results of operations, or financial condition, or otherwise, based on current beliefs of the management of the Company as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as "aim," "anticipate," "believe," "plan," "could," "would," "should," "shall", "continue," "estimate," "expect," "forecast," "future," "guidance," "intend," "may," "will," "possible," "potential," "predict," "project" or the negative or other variations of them. These forward-looking statements speak only as of the date on which such statements are made and are subject to various risks and uncertainties, many of which are outside the Company's control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance, or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) the factors and risks described in the Company's annual report on Form 20-F for the financial year ended December 31, 2020 and other documents filed from time to time with the SEC, which are available on the SEC's website at www.sec.gov and on the investor relations section of the Company's website at www.IGT.com. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. You should carefully consider these factors and other risks and uncertainties that affect the Company's business. Nothing in this news release is intended, or is to be construed, as a profit forecast or to be interpreted to mean that the financial performance of International Game Technology PLC for the current or any future financial years will necessarily match or exceed the historical published financial performance of International Game Technology PLC, as applicable. All forward-looking statements contained in this news release are qualified in their entirety by this cautionary statement. All subsequent written or oral forward-looking statements attributable to International Game Technology PLC, or persons acting on its behalf, are expressly qualified in their entirety by this cautionary statement.

Non-GAAP Financial Measures
Management supplements the reporting of financial information, determined under GAAP, with certain non-GAAP financial information. Management believes the non-GAAP information presented provides investors with additional useful information, but it is not intended to nor should it be considered in isolation or as a substitute for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. The Company encourages investors to review its financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Adjusted EBITDA represents net income (loss) from continuing operations (a GAAP measure) before income taxes, interest expense, foreign exchange gain (loss), other non-operating expenses, depreciation, impairment losses, amortization (service revenue, purchase accounting and non-purchase accounting), restructuring expenses, stock-based compensation, litigation expense (income), and certain other non-recurring items. Other non-recurring items are infrequent in nature and are not reflective of ongoing operational activities. For the business segments, Adjusted EBITDA represents segment operating income (loss) before depreciation, amortization (service revenue, purchase accounting and non-purchase accounting), restructuring expenses, stock-based compensation, litigation expense (income) and certain other non-recurring items. Management believes that the non-GAAP measures just mentioned are useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance.

Net debt is a non-GAAP financial measure that represents debt (a GAAP measure, calculated as long-term obligations plus short-term borrowings) minus capitalized debt issuance costs and cash and cash and equivalents. Cash and cash equivalents are subtracted from the GAAP measure because they could be used to reduce the Company's debt obligations. Management believes that net debt is a useful measure to monitor leverage and evaluate the balance sheet.

Free cash flow is a non-GAAP financial measure that represents cash flow from operations (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing  IGT's  ability to fund its activities, including debt service and distribution of earnings to shareholders.

Constant currency is a non-GAAP financial measure that expresses the current financial data using the prior-year/period exchange rate (i.e., the exchange rates used in preparing the financial statements for the prior year). Management believes that constant currency is a useful measure to compare period-to-period results without regard to the impact of fluctuating foreign currency exchange rates.

A reconciliation of the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this release. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.

Contact:
Phil O'Shaughnessy, Global Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
Francesco Luti, +39 3485475493; for Italian media inquiries
James Hurley, Investor Relations, +1 (401) 392-7190 

Select Performance and KPI data: ($ in millions, unless otherwise noted)

             

Constant

   

Q1'21

 

Q1'20

 

Y/Y Change

 

Currency

GLOBAL LOTTERY

   

(%)

 

Change (%)(1)

Revenue

               

Service

               

Operating and facilities management contracts

 

695

 

454

 

53%

 

47%

Upfront license fee amortization

 

(52)

 

(48)

 

(9)%

 

—%

Operating and facilities management contracts, net

 

643

 

406

 

58%

 

52%

Other

 

83

 

66

 

24%

 

15%

Total service revenue

 

725

 

472

 

54%

 

47%

                 

Product sales

 

23

 

32

 

(28)%

 

(30)%

Total revenue

 

749

 

505

 

48%

 

42%

                 

Operating income

 

337

 

144

 

133%

 

121%

Adjusted EBITDA(1)

 

447

 

243

 

84%

 

74%

                 

Global same-store sales growth (%)

               

Instant ticket & draw games

 

27.4%

 

(4.8)%

       

Multi-jurisdiction jackpots

 

94.7%

 

(30.0)%

       

Total

 

32.4%

 

(7.2)%

       
                 

North America & Rest of world same-store sales growth (%)

               

Instant ticket & draw games

 

20.9%

 

0.3%

       

Multi-jurisdiction jackpots

 

94.7%

 

(30.0)%

       

Total

 

27.8%

 

(3.5)%

       
                 

Italy same-store sales growth (%)

               

Instant ticket & draw games

 

52.2%

 

(19.8)%

       
 
 

(1) Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein

 

               

Constant

   

Q1'21

 

Q1'20

 

Y/Y Change

 

Currency

GLOBAL GAMING

     

(%)

 

Change (%)(1)

Revenue

               

Service

               

Terminal

 

90

 

106

 

(16)%

 

(16)%

Systems, software, and other

 

86

 

77

 

11%

 

8%

Total service revenue

 

175

 

184

 

(5)%

 

(6)%

                 

Product sales

               

Terminal

 

62

 

53

 

17%

 

14%

Other

 

29

 

73

 

(61)%

 

(62)%

Total product sales revenue

 

91

 

126

 

(28)%

 

(30)%

Total revenue

 

266

 

310

 

(14)%

 

(16)%

                 

Operating loss

 

(19)

 

(6)

 

(208)%

 

(177)%

Adjusted EBITDA(1)

 

19

 

31

 

(39)%

 

(35)%

                 

Installed base units

               

Casino

 

48,230

 

48,911

 

(1)%

   

Casino - L/T lease (2)

 

1,135

 

917

 

24%

   

Total installed base units

 

49,365

 

49,828

 

(1)%

   
                 

Installed base units (by geography)

               

US & Canada

 

34,138

 

35,065

 

(3)%

   

Rest of world

 

15,227

 

14,763

 

3%

   

Total installed base units

 

49,365

 

49,828

 

(1)%

   
                 

Yields (by geography)(3), in absolute $

               

US & Canada

 

$32.27

 

$33.72

 

(4)%

   

Rest of world (ex-Italy)

 

$2.58

 

$6.55

 

(61)%

   

Total yields (ex-Italy)

 

$22.93

 

$25.67

 

(11)%

   
                 

Global machine units sold

               

New/expansion

 

884

 

119

 

NM

   

Replacement

 

3,521

 

3,563

 

(1)%

   

Total machine units sold

 

4,405

 

3,682

 

20%

   
                 

US & Canada machine units sold

               

New/expansion

 

620

 

36

 

NM

   

Replacement

 

2,276

 

2,036

 

12%

   

Total machine units sold

 

2,896

 

2,072

 

40%

   
 

(1) Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein

(2) Excluded from yield calculations due to treatment as sales-type leases

(3) Excludes Casino L/T lease units due to treatment as sales-type leases

 

               

Constant

   

Q1'21

 

Q1'20

 

Y/Y Change

 

Currency

GLOBAL GAMING (Continued)

     

(%)

 

Change (%)(1)

Rest of world machine units sold

               

New/expansion

 

264

 

83

 

218%

   

Replacement

 

1,245

 

1,527

 

(18)%

   

Total  machine units sold

 

1,509

 

1,610

 

(6)%

   
                 

Average Selling Price (ASP), in absolute $

               

US & Canada

 

$13,900

 

$14,300

 

(3)%

   

Rest of world

 

$13,700

 

$13,600

 

1%

   

Total ASP

 

$13,800

 

$14,000

 

(1)%

   
                 

Gaming Systems Revenue

 

30

 

44

 

(32)%

   
                 
                 
                 

CONSOLIDATED

               

Revenue (by geography)

               

US & Canada

 

542

 

447

 

21%

 

21%

Italy

 

348

 

202

 

72%

 

58%

Rest of world

 

124

 

166

 

(25)%

 

(29)%

Total revenue

 

1,015

 

814

 

25%

 

20%

                 

Digital & Betting Revenue (2)

 

58

 

32

 

85%

 

78%

 

(1) Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein

(2) Included within consolidated revenue

 

International Game Technology PLC

Consolidated Statements of Operations

($ in millions and shares in thousands, except per share amounts)

Unaudited

   
 

For the three months ended

 

March 31,

 

2021

 

2020

Service revenue

901

 

656

Product sales

114

 

158

Total revenue

1,015

 

814

       

Cost of services

441

 

415

Cost of product sales

73

 

92

Selling, general and administrative

186

 

164

Research and development

55

 

61

Goodwill impairment

 

296

Restructuring

 

4

Total operating expenses

755

 

1,032

       

Operating income (loss)

260

 

(218)

       

Interest expense, net

94

 

100

Foreign exchange gain, net

(145)

 

(70)

Other expense, net

25

 

Total non-operating (income) expenses

(27)

 

30

Income (loss) from continuing operations before provision for (benefit from) income
taxes

287

 

(248)

Provision for (benefit from) income taxes

148

 

(1)

Income (loss) from continuing operations

138

 

(247)

Income from discontinued operations, net of tax

11

 

13

Net income (loss)

149

 

(234)

Less: Net income attributable to non-controlling interests from continuing operations

59

 

15

Less: Net loss attributable to non-controlling interests from discontinued operations

(2)

 

(1)

Net income (loss) attributable to IGT PLC

92

 

(248)

       

Net income (loss) from continuing operations attributable to IGT PLC per
common share - basic

0.39

 

(1.28)

Net income (loss) from continuing operations attributable to IGT PLC per
common share - diluted

0.38

 

(1.28)

Net income (loss) attributable to IGT PLC per common share - basic

0.45

 

(1.21)

Net income (loss) attributable to IGT PLC per common share - diluted

0.44

 

(1.21)

Weighted-average shares - basic

204,857

 

204,435

Weighted-average shares - diluted

206,504

 

204,435

 

International Game Technology PLC

Consolidated Balance Sheets

($ in millions)

Unaudited

       
   

March 31,

 

December 31,

   

2021

 

2020

Assets

       

Current assets:

       

Cash and cash equivalents

 

748

 

907

Restricted cash and cash equivalents

 

184

 

199

Trade and other receivables, net

 

912

 

846

Inventories

 

167

 

169

Other current assets

 

489

 

480

Assets held for sale

 

808

 

839

Total current assets

 

3,308

 

3,440

Systems, equipment and other assets related to contracts, net

 

1,018

 

1,068

Property, plant and equipment, net

 

128

 

132

Operating lease right-of-use assets

 

274

 

288

Goodwill

 

4,679

 

4,713

Intangible assets, net

 

1,531

 

1,577

Other non-current assets

 

1,622

 

1,774

Total non-current assets

 

9,252

 

9,552

Total assets

 

12,560

 

12,992

         

Liabilities and shareholders' equity

       

Current liabilities:

       

Accounts payable

 

1,201

 

1,126

Current portion of long-term debt

 

375

 

393

Other current liabilities

 

804

 

847

Liabilities held for sale

 

174

 

250

Total current liabilities

 

2,554

 

2,615

Long-term debt, less current portion

 

7,441

 

7,857

Deferred income taxes

 

430

 

333

Operating lease liabilities

 

256

 

266

Other non-current liabilities

 

330

 

360

Total non-current liabilities

 

8,458

 

8,816

Total liabilities

 

11,012

 

11,431

Commitments and contingencies

       

IGT PLC's shareholders' equity

 

835

 

777

Non-controlling interests

 

714

 

784

Shareholders' equity

 

1,548

 

1,561

Total liabilities and shareholders' equity

 

12,560

 

12,992

 

International Game Technology PLC

Consolidated Statements of Cash Flows

($ in millions)

Unaudited

 

For the three months ended

 

March 31,

 

2021

 

2020

Cash flows from operating activities

     

Net income (loss)

149

 

(234)

Less: Income from discontinued operations, net of tax

11

 

13

Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating
activities from continuing operations:

     

Deferred income taxes

100

 

(23)

Depreciation

82

 

86

Amortization of upfront license fees

55

 

50

Amortization

49

 

56

Loss on extinguishment of debt

24

 

Debt issuance cost amortization

6

 

5

Stock-based compensation

4

 

(13)

Goodwill impairment

 

296

Foreign exchange gain, net

(145)

 

(70)

Other non-cash items, net

 

(5)

Changes in operating assets and liabilities, excluding the effects of acquisitions:

     

Trade and other receivables

(86)

 

279

Inventories

4

 

(15)

Accounts payable

115

 

(195)

Other assets and liabilities

(95)

 

(178)

Net cash provided by operating activities from continuing operations

251

 

26

Net cash (used in) provided by operating activities from discontinued operations

(36)

 

132

Net cash provided by operating activities

215

 

157

       

Cash flows from investing activities

     

Capital expenditures

(48)

 

(85)

Proceeds from sale of assets

6

 

6

Other

 

11

Net cash used in investing activities from continuing operations

(42)

 

(69)

Net cash used in investing activities from discontinued operations

(10)

 

(14)

Net cash used in investing activities

(51)

 

(83)

       

Cash flows from financing activities

     

Principal payments on long-term debt

(1,387)

 

(432)

Payments in connection with the extinguishment of debt

(22)

 

Payments of debt issuance costs

(6)

 

Net proceeds from short-term borrowings

 

110

Net receipts from financial liabilities

9

 

51

Net proceeds from Revolving Credit Facilities

432

 

988

Proceeds from long-term debt

750

 

Dividends paid

 

(41)

Dividends paid - non-controlling interests

(69)

 

(16)

Return of capital - non-controlling interests

(11)

 

Capital increase - non-controlling interests

10

 

2

Other

(5)

 

(2)

Net cash (used in) provided by financing activities

(301)

 

660

       

Net (decrease) increase in cash and cash equivalents and restricted cash and cash equivalents

(137)

 

734

Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents

(36)

 

(10)

Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period

1,129

 

894

Cash and cash equivalents and restricted cash and cash equivalents at the end of the period

956

 

1,618

Less: Cash and cash equivalents and restricted cash and cash equivalents of discontinued operations

24

 

18

Cash and cash equivalents and restricted cash and cash equivalents at the end of the period of continuing
operations

932

 

1,600

       

Supplemental Cash Flow Information

     

Interest paid

166

 

182

Income taxes paid

4

 

11

 

International Game Technology PLC

Net Debt

($ in millions)

Unaudited

         
   

March 31,

 

December 31,

   

2021

 

2020

6.250% Senior Secured U.S. Dollar Notes due February 2022

 

 

1,004

4.750% Senior Secured Euro Notes due February 2023

 

992

 

1,038

5.350% Senior Secured U.S. Dollar Notes due October 2023

 

61

 

61

3.500% Senior Secured Euro Notes due July 2024

 

583

 

610

6.500% Senior Secured U.S. Dollar Notes due February 2025

 

1,092

 

1,092

4.125% Senior Secured U.S. Dollar Notes due April 2026

 

743

 

3.500% Senior Secured Euro Notes due June 2026

 

873

 

913

6.250% Senior Secured U.S. Dollar Notes due January 2027

 

744

 

744

2.375% Senior Secured Euro Notes due April 2028

 

581

 

608

5.250% Senior Secured U.S. Dollar Notes due January 2029

 

743

 

743

Senior Secured Notes

 

6,413

 

6,813

         

Euro Term Loan Facility due January 2023

 

624

 

1,044

Euro Revolving Credit Facility B due July 2024

 

137

 

U.S. Dollar Revolving Credit Facility A due July 2024

 

267

 

Long-term debt, less current portion

 

7,441

 

7,857

         

Euro Term Loan Facility due January 2023

 

375

 

393

Current portion of long-term debt

 

375

 

393

         

Total debt

 

7,817

 

8,250

         

Less: Cash and cash equivalents

 

748

 

907

Less: Debt issuance costs, net - Revolving Credit Facilities due July 2024

 

 

24

Net debt

 

7,069

 

7,319

         

Note: Net debt is a non-GAAP financial measure

       

 

International Game Technology PLC

Reconciliation of Non-GAAP Financial Measures

($ in millions)

Unaudited

                     
   

For the three months ended March 31, 2021

           

Business

       
   

Global

 

Global

 

Segment

 

Corporate

 

Total IGT

   

Lottery

 

Gaming

 

Total

 

and Other

 

PLC

Income from continuing operations

                 

138

Provision for income taxes

                 

148

Interest expense, net

                 

94

Foreign exchange gain, net

                 

(145)

Other non-operating expense, net

                 

25

Operating income (loss)

 

337

 

(19)

 

318

 

(58)

 

260

Depreciation

 

47

 

35

 

83

 

(1)

 

82

Amortization - service revenue (1)

 

55

 

 

55

 

 

55

Amortization - non-purchase accounting

8

 

1

 

9

 

1

 

10

Amortization - purchase accounting

 

 

 

 

39

 

39

Stock-based compensation

 

1

 

1

 

2

 

2

 

4

Adjusted EBITDA

 

447

 

19

 

466

 

(16)

 

450

                     

Cash flows from operating activities - continuing operations

             

251

Capital expenditures

                 

(48)

Free Cash Flow

                 

204

                     
 
 

(1) Includes amortization of upfront license fees

 

International Game Technology PLC

Reconciliation of Non-GAAP Financial Measures

($ in millions)

Unaudited

                     
   

For the three months ended March 31, 2020

           

Business

       
   

Global

 

Global

 

Segment

 

Corporate

 

Total IGT

   

Lottery

 

Gaming

 

Total

 

and Other

 

PLC

Loss from continuing operations

                 

(247)

Benefit from income taxes

                 

(1)

Interest expense, net

                 

100

Foreign exchange gain, net

                 

(70)

Operating income (loss)

 

144

 

(6)

 

138

 

(356)

 

(218)

Goodwill impairment

 

 

 

 

296

 

296

Depreciation

 

46

 

40

 

85

 

 

86

Amortization - service revenue (1)

 

50

 

 

50

 

 

50

Amortization - non-purchase accounting

 

7

 

1

 

8

 

1

 

9

Amortization - purchase accounting

 

 

 

 

47

 

47

Restructuring

 

 

1

 

1

 

3

 

4

Stock-based compensation

 

(4)

 

(5)

 

(9)

 

(4)

 

(13)

Adjusted EBITDA

 

243

 

31

 

274

 

(13)

 

261

                     

Cash flows from operating activities - continuing operations

             

26

Capital expenditures

                 

(85)

Free Cash Flow

                 

(60)

 
 

(1) Includes amortization of upfront license fees

Recast Historical Financial Information

Recast data reflects the treatment of IGT's Italian B2C gaming machine, sports betting, and digital gaming businesses as discontinued operations.

Select Performance and KPI data: ($ in millions, unless otherwise noted)

GLOBAL LOTTERY

   

Q2'20

 

Q3'20

Revenue

         

Service

         

Operating and facilities management contracts

   

416

 

525

Upfront license fee amortization

   

(48)

 

(52)

Operating and facilities management contracts, net

   

367

 

474

Other

   

70

 

76

Total service revenue

   

438

 

549

           

Product sales

   

22

 

20

Total revenue

   

460

 

570

           

Operating income

   

107

 

196

Adjusted EBITDA(1)

   

221

 

309

           

Global same-store sales growth (%)

         

Instant ticket & draw games

   

(7.1)%

 

10.6%

Multi-jurisdiction jackpots

   

(24.2)%

 

(14.3)%

Total

   

(8.5)%

 

8.7%

           

 North America and Rest of world same-store sales growth (%)

         

Instant ticket & draw games

   

3.5%

 

15.0%

Multi-jurisdiction jackpots

   

(24.2)%

 

(14.3)%

Total

   

0.6%

 

12.1%

           

Italy same-store sales growth (%)

         

Instant ticket & draw games

   

(40.5)%

 

(3.5)%

           
 

(1) Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein

 

GLOBAL GAMING

   

Q2'20

 

Q3'20

Revenue

         

Service

         

Terminal

   

25

 

81

Systems, software, and other

   

59

 

82

Total service revenue

   

84

 

163

           

Product sales

         

Terminal

   

44

 

49

Other

   

12

 

34

Total product sales revenue

   

56

 

83

Total revenue

   

140

 

247

           

Operating loss

   

(111)

 

(50)

Adjusted EBITDA(1)

   

(36)

 

(8)

           

Installed base units

         

Casino

   

48,704

 

48,280

Casino - L/T lease (2)

   

930

 

1,102

Total installed base units

   

49,634

 

49,382

           

Installed base units (by geography)

         

US & Canada

   

34,800

 

34,584

Rest of world

   

14,834

 

14,798

Total installed base units

   

49,634

 

49,382

           

Yields (by geography)(3), in absolute $

         

US & Canada

   

$8.69

 

$26.79

Rest of world

   

$0.49

 

$4.31

Total yields

   

$6.21

 

$19.88

           

Global machine units sold

         

New/expansion

   

1,443

 

818

Replacement

   

1,538

 

2,853

Total machine units sold

   

2,981

 

3,671

           

US & Canada machine units sold

         

New/expansion

   

1,382

 

667

Replacement

   

1,330

 

2,007

Total machine units sold

   

2,712

 

2,674

           

Rest of world machine units sold

         

New/expansion

   

61

 

151

Replacement

   

208

 

846

Total machine units sold

   

269

 

997

           

Average selling price (ASP), in absolute $

         

US & Canada

   

$14,700

 

$13,800

Rest of world

   

$14,000

 

$12,100

Total ASP

   

$14,600

 

$13,300

           

Gaming systems revenue

   

23

 

31

 

(1) Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein

(2) Excluded from yield calculations due to treatment as sales-type leases

(3) Excludes Casino L/T lease units due to treatment as sales-type leases

 

CONSOLIDATED

   

Q2'20

 

Q3'20

Revenue (by geography)

         

US & Canada

   

369

 

443

Italy

   

150

 

246

Rest of world

   

80

 

127

Total revenue

   

600

 

816

           

Digital & Betting Revenue (1)

   

43

 

48

           
 

(1) Included within consolidated revenue

 

International Game Technology PLC

Consolidated Statements of Operations

($ in millions and shares in thousands, except per share amounts)

Unaudited

         
   

For the three months ended

   

June 30,

2020

 

September 30,

2020

Service revenue

 

522

 

713

Product sales

 

78

 

104

Total revenue

 

600

 

816

         

Cost of services

 

361

 

418

Cost of product sales

 

67

 

83

Selling, general and administrative

 

168

 

179

Research and development

 

31

 

48

Restructuring

 

43

 

Other operating expense, net

 

1

 

1

Total operating expenses

 

672

 

730

         

Operating (loss) income

 

(72)

 

87

         

Interest expense, net

 

96

 

101

Foreign exchange loss, net

 

74

 

149

Other expense, net

 

28

 

6

Total non-operating expenses

 

198

 

256

         

Loss from continuing operations before benefit from income taxes

 

(271)

 

(170)

Benefit from income taxes

 

(3)

 

(41)

Loss from continuing operations

 

(268)

 

(129)

(Loss) income from discontinued operations, net of tax

 

(15)

 

26

Net loss

 

(282)

 

(102)

Less: Net income attributable to non-controlling interests from continuing operations

 

 

25

Less: Net (loss) income attributable to non-controlling interests from discontinued
operations

 

(3)

 

1

Net loss attributable to IGT PLC

 

(280)

 

(128)

         

Net loss from continuing operations attributable to IGT PLC per common share -
basic and diluted

 

(1.31)

 

(0.75)

Net loss attributable to IGT PLC per common share - basic and diluted

 

(1.37)

 

(0.62)

Weighted-average shares - basic and diluted

 

204,748

 

204,857

         

 

International Game Technology PLC

Consolidated Statements of Cash Flows

($ in millions)

Unaudited

         
 

For the three months ended

   

June 30,

2020

 

September 30,

2020

Cash flows from operating activities

       

Net loss

 

(282)

 

(102)

Less: (Loss) income from discontinued operations, net of tax

 

(15)

 

26

Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities from
continuing operations:

       

Depreciation

 

88

 

91

Foreign exchange loss, net

 

74

 

149

Amortization

 

52

 

53

Amortization of upfront license fees

 

51

 

54

Loss on extinguishment of debt

 

28

 

Debt issuance cost amortization

 

5

 

5

Stock-based compensation

 

1

 

1

Deferred income taxes

 

(13)

 

(70)

Other non-cash items, net

 

4

 

1

Changes in operating assets and liabilities, excluding the effects of dispositions and acquisitions:

       

Trade and other receivables

 

(192)

 

81

Inventories

 

10

 

(3)

Accounts payable

 

175

 

(25)

Other assets and liabilities

 

111

 

(18)

Net cash provided by operating activities from continuing operations

 

127

 

191

Net cash provided by operating activities from discontinued operations

 

40

 

95

Net cash provided by operating activities

 

168

 

285

         

Cash flows from investing activities

       

Capital expenditures

 

(54)

 

(65)

Proceeds from sale of assets

 

(1)

 

1

Other

 

 

2

Net cash used in investing activities from continuing operations

 

(55)

 

(62)

Net cash used in investing activities from discontinued operations

 

(6)

 

(1)

Net cash used in investing activities

 

(61)

 

(63)

         

Cash flows from financing activities

       

Principal payments on long-term debt

 

(790)

 

(579)

Net payments of short-term borrowings

 

(35)

 

(83)

Payments in connection with the extinguishment of debt

 

(25)

 

Payments of debt issuance costs

 

(20)

 

(2)

Net (payments of) receipts from financial liabilities

 

(14)

 

59

Proceeds from long-term debt

 

750

 

Dividends paid - non-controlling interests

 

(76)

 

(45)

Capital increase - non-controlling interests

 

 

1

Other

 

(4)

 

(3)

Net cash used in financing activities

 

(213)

 

(650)

         

Net decrease in cash and cash equivalents and restricted cash and cash equivalents

 

(106)

 

(428)

Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents

 

18

 

38

Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period

 

1,618

 

1,530

Cash and cash equivalents and restricted cash and cash equivalents at the end of the period

 

1,530

 

1,140

Less: Cash and cash equivalents and restricted cash and cash equivalents of discontinued operations

 

19

 

19

Cash and cash equivalents and restricted cash and cash equivalents at the end of the period of continuing operations

 

1,511

 

1,121

         

Supplemental Cash Flow Information:

       

Interest paid

 

49

 

141

Income taxes paid

 

7

 

20

 

International Game Technology PLC

Reconciliation of Non-GAAP Financial Measures

($ in millions)

Unaudited

                     
   

For the three months ended June 30, 2020

   

Global
Lottery

 

Global
Gaming

 

Business
Segment
Total

 

Corporate
and Other

 

Total IGT
PLC

Loss from continuing operations

                 

(268)

Benefit from income taxes

                 

(3)

Interest expense, net

                 

96

Foreign exchange loss, net

                 

74

Other non-operating expense, net

                 

28

Operating income (loss)

 

107

 

(111)

 

(4)

 

(69)

 

(72)

Depreciation

 

50

 

37

 

87

 

 

88

Amortization - service revenue (1)

 

51

 

 

51

 

 

51

Amortization - non-purchase accounting

 

7

 

2

 

9

 

1

 

10

Amortization - purchase accounting

 

 

 

 

42

 

42

Restructuring

 

5

 

35

 

40

 

3

 

43

Stock-based compensation

 

 

 

 

1

 

1

Other (2)

 

 

 

 

1

 

1

Adjusted EBITDA

 

221

 

(36)

 

184

 

(20)

 

164

                     

Cash flows from operating activities - continuing operations

                 

127

Capital expenditures

                 

(54)

Free Cash Flow

                 

73

                     
 

(1) Includes amortization of upfront license fees

(2) Primarily includes transaction-related costs

 

   

For the three months ended September 30, 2020

   

Global
Lottery

 

Global
Gaming

 

Business
Segment
Total

 

Corporate
and Other

 

Total IGT
PLC

Loss from continuing operations

                 

(129)

Benefit from income taxes

                 

(41)

Interest expense, net

                 

101

Foreign exchange loss, net

                 

149

Other non-operating expense, net

                 

6

Operating income (loss)

 

196

 

(50)

 

146

 

(59)

 

87

Depreciation

 

51

 

40

 

91

 

 

91

Amortization - service revenue (1)

 

54

 

 

54

 

 

54

Amortization - non-purchase accounting

 

8

 

2

 

10

 

1

 

11

Amortization - purchase accounting

 

 

 

 

42

 

42

Stock-based compensation

 

 

 

 

1

 

1

Other (2)

 

 

 

 

1

 

1

Adjusted EBITDA

 

309

 

(8)

 

301

 

(13)

 

287

                     

Cash flows from operating activities - continuing operations

                 

191

Capital expenditures

                 

(65)

Free Cash Flow

                 

126

                     
 

(1) Includes amortization of upfront license fees

(2) Primarily includes transaction-related costs

 

 

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SOURCE International Game Technology PLC