International Game Technology PLC Reports First Quarter 2021 Results

LONDON, May 11, 2021 /PRNewswire/ — International Game Technology PLC («IGT») (NYSE: IGT) today reported financial results for the first quarter…

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