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International Game Technology PLC Reports First Quarter 2017 Results

LONDON, May 25, 2017 /PRNewswire/ -- 

  • Continued growth in instant and draw-based lottery same-store revenue and in global gaming machine installed base
  • Net loss of $55 million, adjusted Net income of $59 million; adjusted EBITDA of $371 million reflects comparison with unusually high base in prior year
  • Net debt of $7,398 million, down from $7,569 million at 2016 year end
  • 2017 outlook updated for pending DoubleDown transaction and new gaming machine taxation in Italy
  • Cash dividend declared of $0.20 per ordinary share

IGT is the global leader in gaming. We enable players to experience their favorite games across all channels and regulated segments, from Gaming Machines and Lotteries to Interactive and Social Gaming. Leveraging a wealth of premium content, substantial investment in innovation, in-depth customer intelligence, operational expertise and leading-edge technology, our gaming solutions anticipate the demands of consumers wherever they decide to play. We have a well-established local presence and relationships...

International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the first quarter ended March 31, 2017. Today, at 8:00 a.m. EDT / 1:00 p.m. BST / 2:00 p.m. CEST, management will host a conference call and webcast to present the first quarter results; access details are provided below.

"The first quarter of 2017 has been a dynamic period for us," said Marco Sala, CEO of IGT. "Our revenue and profit are consistent with the pattern of the year that we described in March. Year to date, we've strengthened our leading positions in global lotteries and begun the rollout of a new generation of gaming machines. We are monetizing non-core assets that will allow us to significantly reduce debt, and we are adopting a new business model for our future participation in the social casino space."

"As we noted in March, a unique combination of elements affected first quarter revenue and profit comparisons, including record jackpot activity in 2016," said Alberto Fornaro, CFO of IGT. "Disciplined asset and operational management are a top priority for the Company, and this is evident in the strong first quarter cash flow. We are updating our outlook to incorporate the DoubleDown transaction and the impact of increased taxation on gaming machines in Italy."

Summary of Consolidated First Quarter 2017 Financial Results

 

Quarter Ended March 31,

Change

Constant
Currency
Change 

 

2017

2016

(%)

(%)

(In $ millions, unless otherwise noted)

       

Revenue

1,153

1,282

-10%

-9%

Operating Income

119

188

-37%

-33%

Net (loss) income per diluted share

(0.27)

(0.46)

41%

NA

Net debt

7,398

7,722

-4%

NA

Adjusted EBITDA

371

460

-19%

-17%

Adjusted Operating Income

238

310

-23%

-21%

Adjusted net income per diluted share

0.29

0.57

-49%

 NA 

 

Note: Adjusted EBITDA, adjusted operating income, and adjusted net income per diluted share are non-GAAP financial measures. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release. 

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 2017 are calculated using the same foreign exchange rates as the corresponding 2016 period.

Management believes that referring to certain constant currency or adjusted measures is a useful way to evaluate the Company's underlying performance.

Overview of Consolidated First Quarter Results

Consolidated revenue was $1,153 million compared to $1,282 million in the first quarter of 2016. The decline in revenue reflects comparisons with the high jackpot levels of the prior year, new Italy Lotto concession dynamics, and lower gaming product sales.

Global lottery same-store revenue, excluding Italy, declined 11% in the first quarter, following record jackpot activity in North America and the United Kingdom during the prior-year period. Excluding multi-state jackpot games, global lottery same-store revenue grew nearly 2%. Italy lottery wagers decreased 2% due to higher late numbers activity in the first quarter of 2016.  

Gaming service revenue was impacted by lower DoubleDown revenue, and gaming product sales were down due to large system and software sales in the first quarter of 2016. The Company shipped 5,953 gaming machines worldwide during the first quarter, and the global installed base rose to 59,034.

Adjusted EBITDA of $371 million was 19% below the first quarter of 2016. Operating income was $119 million compared to $188 million in the first quarter of 2016, and Adjusted operating income was $238 million compared to $310 million. The declines in Adjusted EBITDA and Adjusted operating income primarily reflect lower revenues, International segment performance, and unfavorable foreign exchange translation.

Interest expense was $115 million compared to $118 million in the prior-year period.

Net loss attributable to IGT was $55 million in the first quarter of 2017, reflecting the after-tax impacts of $70 million in purchase price accounting and $36 million impact in non-cash foreign exchange losses. On an adjusted basis, net income attributable to IGT was $59 million. The Company reported net loss per diluted share of $(0.27) and earned $0.29 per diluted share on an adjusted basis.

In the first three months of the year, cash from operations was $284 million and capital expenditures were $172 million.

Cash and cash equivalents were $463 million as of March 31, 2017, compared to $294 million as of December 31, 2016. Net debt was $7,398 million as of March 31, 2017.

Operating Segment Review

North America Gaming & Interactive
Revenue for North America Gaming & Interactive was $305 million compared to $339 million in the first quarter of 2016.

Service revenue was $234 million compared to $258 million in the prior-year period, primarily driven by a year-over-year decrease in the installed base and fewer daily active users at DoubleDown.

Product sales were $71 million compared to $81 million in the first quarter of 2016, which benefitted from a large system sale. The segment shipped 3,944 gaming machine units in the quarter compared to 3,951 units in the prior-year period.

Operating income for North America Gaming & Interactive was $66 million compared to $89 million in the first quarter of 2016. The decline is primarily due to lower revenues, increased depreciation on investments in the installed base, and higher jackpot expense.

North America Lottery
North America Lottery revenue was $281 million compared to $315 million in the first quarter of 2016, which benefitted from record multi-state jackpot activity.

Service revenue of $268 million reflects a 14.0% decline in same-store revenue growth on comparisons with record Powerball sales in the prior year. Excluding multi-state jackpot games, same-store revenue for draw-based games and instant tickets grew 1.5%.

Product sales rose to $13 million in the first quarter of 2017 from $11 million in the prior-year period, and included higher instant ticket printing revenue.

Operating income for North America Lottery was $69 million compared to $88 million in the first quarter of 2016 on lower jackpot revenue and associated profit.

International
International revenue was $164 million compared to $185 million in the first quarter of 2016. On a constant currency basis, International revenue declined 9%.

Lottery same-store revenue was up 2.0% on broad-based strength in Latin America and Europe, that was partially offset by continued weakness in the United Kingdom, including elevated jackpot activity in the prior-year period.

Gaming service revenue was $41 million compared to $47 million in the first quarter of 2016, down 9% on a constant currency basis, mainly due to the exit from certain interactive operations. The installed base grew sequentially on increased unit placements in Greece and South Africa.

Product sales revenue was lower due to large, high-margin gaming software sales in the first quarter of 2016. The segment shipped a total of 2,009 gaming machine units during the first quarter of 2017 compared to 1,744 units in the prior-year period. A portion of the new and expansion unit revenue was deferred and is expected to be recognized in the second quarter of 2017.

International operating income was below the prior-year period due to lower revenue; product sales mix and discounts; as well as unfavorable foreign exchange translation and bad debt expense.

Italy
Italy revenue was $402 million compared to $444 million in the first quarter of 2016. At constant currency, revenue declined 6% as growth in machine gaming was more than offset by the new Lotto concession dynamics, primarily amortization of the upfront payment, and lower sports betting revenue. 

Total Lotto wagers in the quarter were €1,873 million compared to €1,928 million in the prior-year period, reflecting significantly lower late numbers activity. 10eLotto performance remained strong, with wagers increasing 4% over the prior-year period. Instant-ticket wagers were essentially unchanged at €2,341 million.

Machine gaming service revenue was up over the first quarter of 2016 on increased vertical integration and higher installed units. Sports betting revenue declined during the first quarter of 2017 on higher payout, consistent with industry trends during the period.

Italy operating income was $125 million compared to $148 million in the first quarter of 2016. The decline was mainly attributable to the new Lotto concession dynamics and sports betting performance, partially offset by machine gaming growth. 

Other Developments

As announced on April 17, 2017, the Company has reached a definitive purchase agreement to sell its social casino subsidiary, DoubleDown Interactive, to an affiliate of DoubleU Games, a leading global social casino operator, for a cash purchase price of $825 million. The sale is expected to be completed in the second quarter of 2017. Upon the closing of the sale, the parties will enter into a game development and distribution agreement which will enable DoubleU Games to offer IGT's extensive casino game library on DoubleU Games' combined social casino platforms, in exchange for ongoing royalties to IGT.

The board of directors of the Company appointed Heather J. McGregor as a fourth member of the audit committee, effective May 24, 2017. McGregor previously joined the board of directors as an independent director on March 8, 2017.

Additionally, the Company's board of directors has declared a quarterly cash dividend of $0.20 per ordinary share. The dividend is payable on June 22, 2017 to all shareholders of record as of the close of business on June 8, 2017.

Outlook

The Company updated its outlook to account for the closing of the DoubleDown transaction by the end of the second quarter and the impact of new taxation on gaming machines in Italy. The Company currently expects full year 2017 adjusted EBITDA of $1,600-$1,680 million, compared to its previous outlook of $1,680-$1,760 million. Net debt is now expected to be $6,950-$7,150 million at the end of 2017, compared to the previous $7,600-$7,800 million outlook, as net proceeds from the DoubleDown sale will be used to reduce debt.

Adjusted EBITDA is a non-GAAP measure. 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.

Conference Call and Webcast

Today, at 8:00 a.m. EDT / 1:00 p.m. BST / 2:00 p.m. CEST, management will host a conference call to present the first quarter 2017 results. Listeners may access a live webcast of the conference call along with accompanying slides under "News, Events & Presentations" on IGT's Investor Relations website at www.IGT.com. A replay of the webcast will be available on the website following the live event. To listen by telephone, the dial in number is +44 (0) 20 3427 1914 for participants in the United Kingdom and +1 877 280 2342 for listeners outside the United Kingdom. The conference ID/confirmation code is 9529556. A telephone replay of the call will be available for one week at +44 (0) 20 3427 0598 or +1 347 366 9565 using the conference ID/confirmation code 9529556.

About IGT
IGT (NYSE:IGT) is the global leader in gaming. We enable players to experience their favorite games across all channels and regulated segments, from Gaming Machines and Lotteries to Interactive and Social Gaming. Leveraging a wealth of premium content, substantial investment in innovation, in-depth customer intelligence, operational expertise and leading-edge technology, our gaming solutions anticipate the demands of consumers wherever they decide to play. 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 over 12,000 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 possibility that the sale of Double Down Interactive LLC, as described in the Company's news  release dated April 17, 2017 furnished to the United States Securities and Exchange Commission (the "SEC") on April 18, 2017 (File No. 17765611) (the "DDI Transaction"), may not be consummated in a timely manner or at all, including as a result of a failure to satisfy a condition to closing (including regulatory approvals); the possibility that there may be an adverse effect or disruption from the DDI Transaction that negatively impacts the Company's remaining businesses; the possibility that the anticipated benefits of the DDI Transaction or the strategic partnership with DoubleU Games may not be realized as presently contemplated or at all; the costs and charges related to the DDI Transaction being greater than anticipated; the possibility that International Game Technology PLC will be unable to pay future dividends to shareholders or that the amount of such dividends may be less than anticipated; the possibility that International Game Technology PLC may not obtain its anticipated financial results in one or more future periods; reductions in customer spending; a slowdown in customer payments and changes in customer demand for products and services as a result of changing economic conditions or otherwise; unanticipated changes relating to competitive factors in the industries in which the Company operates; the Company's ability to hire and retain key personnel; the Company's ability to attract new customers and retain existing customers in the manner anticipated; reliance on and integration of information technology systems; changes in legislation or governmental regulations affecting the Company; international, national, or local economic, social or political conditions that could adversely affect the Company or its customers; conditions in the credit markets; risks associated with assumptions the Company makes in connection with its critical accounting estimates; the resolution of pending and potential future legal, regulatory or tax proceedings and investigations; and the Company's international operations, which are subject to the risks of currency fluctuations and foreign exchange controls. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the Company's business, including those described in the Company's annual report on Form 20-F for the financial year ended December 31, 2016 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. Nothing in this news release is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per share of International Game Technology PLC for the current or any future financial years will necessarily match or exceed the historical published earnings per share 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 its entirety by this cautionary statement.

Contact:
Robert K. Vincent, Corporate Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
James Hurley, Investor Relations, +1 (401) 392-7190
Simone Cantagallo, +39 06 51899030; for Italian media inquiries

 

International Game Technology PLC

Condensed Consolidated Statements of Operations

($ and shares in thousands, except per share data)

Unaudited

       
 

 For the three months ended 

 

 March 31, 

 

2017

 

2016

       

Service revenue

1,026,945

 

1,135,121

Product sales

125,639

 

146,440

Total revenue

1,152,584

 

1,281,561

       

Cost of services

624,294

 

648,763

Cost of sales

114,336

 

121,776

Selling, general and administrative

200,524

 

227,526

Research and development

82,621

 

84,707

Restructuring expense

9,267

 

9,418

Transaction expense, net

2,321

 

1,474

Total operating expenses

1,033,363

 

1,093,664

       

Operating income

119,221

 

187,897

       

Interest income

2,626

 

4,293

Other income (expense), net

2,667

 

(7,326)

Foreign exchange loss, net

(46,837)

 

(161,556)

Interest expense

(114,799)

 

(118,415)

Total non-operating expenses

(156,343)

 

(283,004)

       

Loss before benefit from income taxes

(37,122)

 

(95,107)

       

Benefit from income taxes

(10,330)

 

(8,658)

       

Net loss

(26,792)

 

(86,449)

       

Less: Net income attributable to non-controlling interests

27,998

 

6,325

       

Net loss attributable to IGT PLC

(54,790)

 

(92,774)

       
       

Net loss attributable to IGT PLC per common share - basic

(0.27)

 

(0.46)

Net loss attributable to IGT PLC per common share - diluted

(0.27)

 

(0.46)

       

Weighted-average shares - basic

202,479

 

200,449

Weighted-average shares - diluted

202,479

 

200,449

 

International Game Technology PLC

Condensed Consolidated Balance Sheets

($ thousands)

Unaudited

       
 

 March 31,  

 

 December 31, 

 

2017

 

2016

Assets

     

Current assets:

     

Cash and cash equivalents

463,296

 

294,094

Restricted cash and investments

262,696

 

247,222

Trade and other receivables, net

818,944

 

947,237

Inventories

361,067

 

347,494

Other current assets

435,275

 

424,727

Income taxes receivable

25,542

 

28,792

 Total current assets

2,366,820

 

2,289,566

       

Systems, equipment and other assets related to contracts, net

1,277,898

 

1,199,674

Property, plant and equipment, net

207,390

 

357,841

Goodwill, net

6,819,062

 

6,810,012

Intangible assets, net

2,763,959

 

2,874,031

Other non-current assets

1,463,025

 

1,497,662

Deferred income taxes

33,020

 

31,376

 Total non-current assets

12,564,354

 

12,770,596

       

Total assets

14,931,174

 

15,060,162

       

Liabilities, redeemable non-controlling interests, and shareholders' equity

     

Current liabilities:

     

Accounts payable

1,223,107

 

1,216,079

Other current liabilities

1,022,788

 

1,097,045

Current portion of long-term debt

530,250

 

77

Short-term borrowings

52

 

-

Income taxes payable

58,858

 

28,590

 Total current liabilities

2,835,055

 

2,341,791

       

Long-term debt, less current portion

7,331,266

 

7,863,085

Deferred income taxes

714,563

 

761,924

Other non-current liabilities

447,062

 

444,556

 Total non-current liabilities

8,492,891

 

9,069,565

       

Total liabilities

11,327,946

 

11,411,356

       

Commitments and contingencies

-

 

-

       

Redeemable non-controlling interests and shareholders' equity

3,603,228

 

3,648,806

       

Total liabilities, redeemable non-controlling interests, and shareholders' equity

14,931,174

 

15,060,162

 

International Game Technology PLC

Consolidated Statements of Cash Flows

($ thousands)

Unaudited

         
         
     
   

 For the three months ended 

   

 March 31, 

   

2017

 

2016

Operating activities

       

Net loss

 

(26,792)

 

(86,449)

Adjustments for:

       

Amortization 

 

116,241

 

125,496

Depreciation 

 

91,921

 

98,517

Amortization of upfront payments to customers

 

49,399

 

27,409

Foreign exchange loss, net

 

46,837

 

161,556

Debt issuance cost amortization

 

4,678

 

4,511

Stock-based compensation expense

 

849

 

9,302

Other, net

 

2,964

 

3,552

Cash flows before changes in operating assets and liabilities

 

286,097

 

343,894

Changes in operating assets and liabilities:

       

Trade and other receivables

 

136,694

 

10,259

Inventories

 

158

 

1,812

Accounts payable

 

(14,946)

 

(1,785)

Other assets and liabilities

 

(124,335)

 

(148,575)

Net cash flows from operating activities

 

283,668

 

205,605

         

Investing activities

       

Capital expenditures

 

(172,052)

 

(97,671)

Proceeds from sale of assets

 

160,924

 

32,504

Purchases of jackpot annuity investments

 

-

 

(1,061)

Proceeds from jackpot annuity investments

 

-

 

7,472

Other

 

(2,570)

 

(4,894)

Net cash flows used in investing activities

 

(13,698)

 

(63,650)

         

Financing activities

       

Principal payments on long-term debt

 

(54,406)

 

(318,832)

Net (payments of) receipts from financial liabilities

 

(27,154)

 

49,564

Dividends paid - non-controlling interest 

 

(13,093)

 

-

Other

 

(1,642)

 

(2,964)

Net cash flows used in financing activities

 

(96,295)

 

(272,232)

         

Net increase (decrease) in cash and cash equivalents

 

173,675

 

(130,277)

Effect of exchange rate changes on cash

 

(4,473)

 

8,589

Cash and cash equivalents at the beginning of the period

 

294,094

 

627,484

Cash and cash equivalents at the end of the period

 

463,296

 

505,796

         
         

Supplemental Cash Flow Information:

       

Interest paid

 

(210,936)

 

(216,834)

Income taxes paid

 

(7,933)

 

(16,319)

 

International Game Technology PLC

Net Debt

($ thousands)

       
       
 

March 31,

 

December 31,

 

2017

 

2016

       

6.250% Senior Secured Notes due 2022

1,470,955

 

1,472,150

6.500% Senior Secured Notes due 2025

1,085,872

 

1,085,537

4.750% Senior Secured Notes due 2023

897,900

 

884,917

4.125% Senior Secured Notes due 2020

741,423

 

730,465

5.625% Senior Secured Notes due 2020

594,397

 

593,954

7.500% Senior Secured Notes due 2019

519,841

 

521,894

4.750% Senior Secured Notes due 2020

517,599

 

509,050

5.500% Senior Secured Notes due 2020

126,148

 

126,294

5.350% Senior Secured Notes due 2023

61,163

 

61,187

6.625% Senior Secured Notes due 2018

-

 

521,556

Senior Secured Notes

6,015,298

 

6,507,004

       

Term Loan Facilities due 2019

851,969

 

839,552

Revolving Credit Facilities due 2021

463,999

 

516,529

Long-term debt, less current portion

7,331,266

 

7,863,085

       

6.625% Senior Secured Notes due 2018

530,210

 

-

Other

40

 

77

Current portion of long-term debt 

530,250

 

77

       

Short-term borrowings

52

 

-

Total debt

7,861,568

 

7,863,162

       

Cash and cash equivalents

463,296

 

294,094

       

Net debt

7,398,272

 

7,569,068

  

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

 ($ and shares in thousands, except per share data) 

                         
                         
   

Q1 2017

 

Adjustments

 

Q1 2017

   

As

 

Purchase

 

Foreign

 

Restructuring

 

Transaction

 

As

   

Reported

 

Accounting

 

Exchange

 

Expense

 

Expense, net

 

Adjusted

                         

Total revenue 

 

1,152,584

 

(178)

 

-

 

-

 

-

 

1,152,406

                         

Cost of services 

 

624,294

 

(42,230)

 

-

 

-

 

-

 

582,064

Cost of sales 

 

114,336

 

(29,682)

 

-

 

-

 

-

 

84,654

Selling, general and administrative 

 

200,524

 

(34,928)

 

-

 

-

 

-

 

165,596

Research and development 

 

82,621

 

(201)

 

-

 

-

 

-

 

82,420

Restructuring expense 

 

9,267

 

-

 

-

 

(9,267)

 

-

 

-

Transaction expense, net 

 

2,321

 

-

 

-

 

-

 

(2,321)

 

-

Total operating expenses 

 

1,033,363

 

(107,041)

 

-

 

(9,267)

 

(2,321)

 

914,734

                         

Operating income 

 

119,221

 

106,863

 

-

 

9,267

 

2,321

 

237,672

                         

Foreign exchange loss, net 

 

(46,837)

 

-

 

46,837

 

-

 

-

 

-

Other income, net 

 

2,667

 

34

 

-

 

-

 

-

 

2,701

Interest expense, net 

 

(112,173)

 

1,088

 

-

 

-

 

-

 

(111,085)

Total non-operating expenses 

 

(156,343)

 

1,122

 

46,837

 

-

 

-

 

(108,384)

                         

(Loss) income before (benefit from) provision for income taxes 

 

(37,122)

 

107,985

 

46,837

 

9,267

 

2,321

 

129,288

                         

(Benefit from) provision for income taxes (a) 

 

(10,330)

 

38,229

 

10,668

 

3,172

 

853

 

42,592

                         

Net (loss) income 

 

(26,792)

 

69,756

 

36,169

 

6,095

 

1,468

 

86,696

                         

Less: Net income attributable to non-controlling interests 

 

27,998

 

25

 

-

 

-

 

-

 

28,023

                         

Net (loss) income attributable to IGT PLC 

 

(54,790)

 

69,731

 

36,169

 

6,095

 

1,468

 

58,673

                         

Net (loss) income per common share - diluted 

 

(0.27)

                 

0.29

Weighted-average shares - diluted 

 

202,479

                 

203,052

                         
 

 (a) Provision for income taxes was determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. 

  

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

 ($ and shares in thousands, except per share data) 

                         
                         
   

Q1 2016

 

Adjustments

 

Q1 2016

   

As

 

Purchase

 

Foreign

 

Restructuring

 

Transaction

 

As

   

Reported

 

Accounting

 

Exchange

 

Expense

 

Expense, net

 

Adjusted

                         

Total revenue 

 

1,281,561

 

692

 

-

 

-

 

-

 

1,282,253

                         

Cost of services 

 

648,763

 

(45,804)

 

-

 

-

 

-

 

602,959

Cost of sales 

 

121,776

 

(29,664)

 

-

 

-

 

-

 

92,112

Selling, general and administrative 

 

227,526

 

(34,746)

 

-

 

-

 

-

 

192,780

Research and development 

 

84,707

 

(498)

 

-

 

-

 

-

 

84,209

Restructuring expense 

 

9,418

 

-

 

-

 

(9,418)

 

-

 

-

Transaction expense, net 

 

1,474

 

-

 

-

 

-

 

(1,474)

 

-

Total operating expenses 

 

1,093,664

 

(110,712)

 

-

 

(9,418)

 

(1,474)

 

972,060

                         

Operating income 

 

187,897

 

111,404

 

-

 

9,418

 

1,474

 

310,193

                         

Foreign exchange loss, net 

 

(161,556)

 

-

 

161,556

 

-

 

-

 

-

Other expense, net 

 

(7,326)

 

2,832

 

-

 

-

 

-

 

(4,494)

Interest expense, net 

 

(114,122)

 

2,038

 

-

 

-

 

-

 

(112,084)

Total non-operating expenses 

 

(283,004)

 

4,870

 

161,556

 

-

 

-

 

(116,578)

                         

(Loss) income before (benefit from) provision for income taxes 

 

(95,107)

 

116,274

 

161,556

 

9,418

 

1,474

 

193,615

                         

(Benefit from) provision for income taxes (a) 

 

(8,658)

 

40,571

 

36,277

 

3,126

 

294

 

71,610

                         

Net (loss) income 

 

(86,449)

 

75,703

 

125,279

 

6,292

 

1,180

 

122,005

                         

Less: Net income attributable to non-controlling interests 

 

6,325

 

25

 

-

 

-

 

-

 

6,350

                         

Net (loss) income attributable to IGT PLC 

 

(92,774)

 

75,678

 

125,279

 

6,292

 

1,180

 

115,655

                         

Net (loss) income per common share - diluted 

 

(0.46)

                 

0.57

Weighted-average shares - diluted 

 

200,449

                 

201,526

                         
   

 (a) Provision for income taxes was determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. 

  

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)

         
         
   

For the three months ended

   

March 31,

   

2017

 

2016

         

Net loss

 

(26,792)

 

(86,449)

Benefit from income taxes

 

(10,330)

 

(8,658)

Non-operating expenses

 

156,343

 

283,004

Amortization

 

116,241

 

125,496

Depreciation 

 

91,921

 

98,517

Amortization of upfront payments to customers

 

49,399

 

27,409

Restructuring expense

 

9,267

 

9,418

Transaction expense, net

 

2,321

 

1,474

Stock-based compensation expense

 

849

 

9,302

Non-cash purchase accounting (excluding D&A)

 

(183)

 

631

Bad debt recovery

 

(17,873)

 

-

Adjusted EBITDA

 

371,163

 

460,144

         
         
         

Cash flows from operating activities

 

283,668

 

205,605

Capital expenditures

 

(172,052)

 

(97,671)

Free Cash Flow

 

111,616

 

107,934

   

International Game Technology PLC Segment Performance

 

Revenue Detail

 

($ millions)

 
                     
                     
     

INTERNATIONAL GAME TECHNOLOGY PLC

   

Quarter Change

   
     

2016

2017

   

Percentage

Constant FX

   
     

Q1

Q1

   

Q1

Q1

   

Gaming

Total Revenue

631

596

   

-5.5%

-4.2%

   
                   

Gaming Services

500

487

   

-2.5%

-0.8%

   
 

Terminal

315

323

   

2.4%

4.3%

   
 

Social (DDI)

80

68

   

-15.3%

-14.7%

   
 

Other

104

96

   

-7.6%

-5.7%

   
                   

Product Sales

131

109

   

-17.0%

-16.8%

   
 

Terminal

79

77

   

-2.6%

-1.9%

   
 

Other

52

32

   

-38.9%

-39.2%

   
                     

Lottery

Total Revenue

565

484

   

-14.3%

-12.8%

   
                   

Lottery Services

550

470

   

-14.6%

-13.0%

   
 

FM/Concessions

492

433

   

-12.0%

-10.0%

   
 

LMA

39

32

   

-17.6%

-17.6%

   
 

Other Services

19

4

   

-76.9%

-84.2%

   
                   

Product Sales

15

14

   

-4.3%

-3.6%

   
 

Terminal

0

0

   

0.0%

0.0%

   
 

Systems/Other

15

14

   

-5.2%

-4.6%

   
                     

Other

Total Revenue

86

73

   

-15.5%

-13.5%

   
                   

Service Revenue

86

70

   

-18.0%

-16.3%

   

Product Sales

0

2

   

1662.2%

1833.8%

   
                     

Consolidated

Revenue

1,282

1,153

   

-10.1%

-8.6%

   
                   
                   

Operating Income:

               
 

Segment Total

359

269

   

-25.1%

-23.0%

   
 

Purchase Accounting

(111)

(107)

   

-4.1%

-4.0%

   
 

Corporate Support

(59)

(42)

   

-28.3%

-26.3%

   
 

Total

188

119

   

-36.5%

-33.2%

   
                   
                     
   
 
                     
     

NORTH AMERICA GAMING & INTERACTIVE

   

Quarter Change

   
     

2016

2017

   

Percentage

Constant FX

   
     

Q1

Q1

   

Q1

Q1

   

Gaming

Total Revenue

339

305

   

-9.8%

-9.7%

   
                   

Gaming Services

258

234

   

-9.0%

-8.9%

   
 

Terminal

134

126

   

-6.5%

-6.6%

   
 

Social (DDI)

80

68

   

-15.3%

-14.7%

   
 

Other

43

41

   

-5.3%

-5.4%

   
                   

Product Sales

81

71

   

-12.2%

-12.2%

   
 

Terminal

50

51

   

2.5%

2.5%

   
 

Other

31

20

   

-35.8%

-35.8%

   
                     

Total

Revenue

339

305

   

-9.8%

-9.7%

   
                   

Operating Income

89

66

   

-26.1%

-27.9%

   
                   
                     
   
 
                     
                     
     

NORTH AMERICA LOTTERY

   

Quarter Change

   
     

2016

2017

   

Percentage

Constant FX

   
     

Q1

Q1

   

Q1

Q1

   

Gaming

Total Revenue

37

36

   

-3.7%

-4.0%

   
                   

Gaming Services

37

36

   

-3.9%

-4.2%

   
 

Terminal

25

25

   

-2.2%

-2.2%

   
 

Social (DDI)

0

0

   

0.0%

0.0%

   
 

Other

12

11

   

-7.4%

-8.3%

   
                   

Product Sales

0

0

   

710.8%

710.8%

   
 

Terminal

(0)

0

   

-101.3%

-101.3%

   
 

Other

0

0

   

109.2%

109.2%

   
                     

Lottery

Total Revenue

278

245

   

-11.9%

-11.9%

   
                   

Lottery Services

267

232

   

-13.2%

-13.2%

   
 

FM/Concessions

201

166

   

-17.1%

-17.1%

   
 

LMA

39

32

   

-17.6%

-17.6%

   
 

Other Services

27

33

   

21.9%

21.9%

   
                   

Product Sales

11

13

   

19.8%

19.9%

   
 

Terminal

0

0

   

0.0%

0.0%

   
 

Systems/Other

11

13

   

19.3%

19.4%

   
                     

Total

Revenue

315

281

   

-10.9%

-11.0%

   
                   

Operating Income

88

69

   

-21.3%

-21.7%

   
                   
                     
   
 
                     
                     
     

INTERNATIONAL

   

Quarter Change

   
     

2016

2017

   

Percentage

Constant FX

   
     

Q1

Q1

   

Q1

Q1

   

Gaming

Total Revenue

97

78

   

-19.5%

-17.2%

   
                   

Gaming Services

47

41

   

-12.9%

-9.1%

   
 

Terminal

13

12

   

-7.6%

-6.2%

   
 

Social (DDI)

0

0

   

0.0%

0.0%

   
 

Other

34

29

   

-15.0%

-10.2%

   
                   

Product Sales

50

37

   

-25.6%

-24.8%

   
 

Terminal

29

26

   

-11.4%

-9.6%

   
 

Other

21

12

   

-45.1%

-45.8%

   
                     

Lottery

Total Revenue

70

67

   

-4.0%

-0.7%

   
                   

Lottery Services

66

66

   

0.0%

3.3%

   
 

FM/Concessions

51

49

   

-3.5%

0.3%

   
 

LMA

0

0

   

0.0%

0.0%

   
 

Other Services

15

16

   

12.0%

13.9%

   
                   

Product Sales

4

2

   

-64.5%

-62.3%

   
 

Terminal

0

0

   

0.0%

0.0%

   
 

Systems/Other

4

1

   

-66.7%

-64.5%

   
                     

Other

Total Revenue

18

19

   

6.7%

6.1%

   
                   

Service Revenue

18

17

   

-5.8%

-7.6%

   

Product Sales

0

2

   

1662.2%

1833.8%

   
                     

Total

Revenue

185

164

   

-11.1%

-8.8%

   
                   

Operating Income

33

8

   

-76.4%

-64.0%

   
                   
                     
   
 
                     
                   
     

ITALY

   

Quarter Change

   
     

2016

2017

   

Percentage

Constant FX

   
     

Q1

Q1

   

Q1

Q1

   

Gaming

Total Revenue

158

176

   

11.1%

15.2%

   
                   

Gaming Services

158

176

   

11.3%

15.3%

   
 

Terminal

143

160

   

12.5%

16.7%

   
 

Social (DDI)

0

0

   

0.0%

0.0%

   
 

Other

15

15

   

-0.1%

3.2%

   
                   

Product Sales

0

0

   

-46.9%

-46.1%

   
 

Terminal

0

0

   

-100.0%

-100.0%

   
 

Other

0

0

   

-46.1%

-45.3%

   
                     

Lottery

Total Revenue

217

172

   

-20.7%

-17.8%

   
                   

Lottery Services

217

172

   

-20.7%

-17.8%

   
 

FM/Concessions

240

217

   

-9.5%

-6.2%

   
 

LMA

0

0

   

0.0%

0.0%

   
 

Other Services

(23)

(45)

   

94.2%

101.2%

   
                   

Product Sales

0

0

   

0.0%

0.0%

   
 

Terminal

0

0

   

0.0%

0.0%

   
 

Systems/Other

0

0

   

0.0%

0.0%

   
                     

Other

Total Revenue

68

54

   

-21.2%

-18.6%

   
                   

Service Revenue

68

54

   

-21.2%

-18.6%

   

Product Sales

0

0

   

0.0%

0.0%

   
                     

Total

Revenue

444

402

   

-9.4%

-6.2%

   
                   

Operating Income

148

125

   

-15.2%

-11.6%

   
                   

   

Consolidated Key Performance Indicators (KPIs)

   

First Quarter

Period Ended March 31

 

2017

2016

% change 

         

Installed base (end of period)

       

   Casino

 

34,364

34,214

0.4%

   VLT - Government Sponsored (ex-Italy)

 

15,627

15,581

0.3%

   VLT - Italy Supplier (B2B)

 

9,043

8,270

9.3%

   Total installed base

 

59,034

58,065

1.7%

   Yield (average revenue per unit per day - $0.00)

 

30.89

32.79

-5.8%

         

   Additional Italian Network Details:

       

   VLT - Operator (B2C)

 

10,961

11,120

-1.4%

   AWP

 

58,746

55,991

4.9%

         

Machine units shipped

       

   New/Expansion

 

1,752

1,087

61.2%

   Replacement 

 

4,201

4,608

-8.8%

   Total machines shipped

 

5,953

5,695

4.5%

         

Global lottery same-store revenue growth

       

   Instants & draw games

     

1.9%

   Multistate Jackpots

     

-56.3%

   Total lottery same-store revenue growth (ex-Italy)

     

-10.7%

   Italy lottery revenue growth

     

-17.7%

         
         
         
         

North America KPIs

       
   

First Quarter

Period Ended March 31

 

2017

2016

% change 

         

Installed base (end of period)

       

    Casino

 

23,701

24,958

-5.0%

    VLT - Government Sponsored

 

15,009

15,331

-2.1%

   Total installed base

 

38,710

40,289

-3.9%

         

Machine units shipped

       

   New/Expansion

 

1,157

902

28.3%

   Replacement 

 

2,787

3,049

-8.6%

   Total machines shipped

 

3,944

3,951

-0.2%

         

DoubleDown 

       

   Revenue ($ Thousands)

 

67,893

80,133

-15.3%

   Mobile penetration

 

58%

54%

8.4%

   DAU (Daily Active Users) 1 

 

1,455

1,859

-21.8%

   MAU (Monthly Active Users) 1

 

3,525

4,310

-18.2%

   Bookings per DAU ($0.00) 1

 

$   0.52

$   0.47

10.6%

         

Lottery same-store revenue growth

       

   Instants & draw games

     

1.5%

   Multistate Jackpots

     

-59.5%

   Total lottery same-store revenue growth

     

-14.0%

         

1As a single application with multiple games, active users equal unique users

         
         
         

International KPIs

       
   

First Quarter

Period Ended March 31

 

2017

2016

% change 

         

Installed base (end of period)

       

    Casino

 

10,663

9,256

15.2%

    VLT - Government Sponsored

 

618

250

147.2%

   Total installed base

 

11,281

9,506

18.7%

         

Machine units shipped

       

   New/Expansion

 

595

185

221.6%

   Replacement 

 

1,414

1,559

-9.3%

   Total machines shipped

 

2,009

1,744

15.2%

         

Lottery same-store revenue growth

       

   Instants & draw games

     

3.2%

   Multistate Jackpots

     

-13.1%

   Total lottery same-store revenue growth

     

2.0%

         
         
         
         

Italy KPIs

       
   

First Quarter

Period Ended March 31

 

2017

2016

% change 

(In € millions, except machines)

       

Lottery

       

Lotto wagers

 

1,873

1,928

-2.8%

   10eLotto

 

1,243

1,193

4.2%

   Core

 

525

559

-6.0%

   Late Numbers

 

106

176

-40.1%

         

Scratch & Win Wagers

 

2,341

2,355

-0.6%

         

Italy lottery revenue growth

     

-17.7%

         

Gaming

       

Installed base (end of period)

       

   VLT - Operator (B2C)

 

10,961

11,120

-1.4%

   VLT - Supplier (B2B)

 

9,043

8,270

9.3%

   AWP

 

58,746

55,991

4.9%

   Total Installed Base

 

78,750

75,381

4.5%

         

Wagers

       

   VLT - Operator (B2C)

 

1,415

1,398

1.2%

   AWP

 

1,009

1,080

-6.6%

   Interactive Wagers (Gaming)

 

468

424

10.3%

         

Other

       

   Sports Betting Wagers1

 

257

221

16.7%

   Sports Betting Payout (%)1

 

89.4%

80.9%

8.5 pp

         

1Includes Virtual Wagers and Pools & Horses

 

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/international-game-technology-plc-reports-first-quarter-2017-results-300463812.html

SOURCE International Game Technology PLC