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International Game Technology PLC Reports Fourth Quarter And Full Year 2019 Results
- Achieved record global gaming product sales in 2019
- Full-year net loss of $19 million includes $99 million non-cash goodwill impairment charge
- 2019 Adjusted EBITDA of $1.71 billion, in top half of outlook
- Fourth quarter net loss of $168 million reflects non-cash FX losses and impairment charge; Adjusted EBITDA of $436 million driven by higher profits from North America Gaming and International segments
- $1.09 billion in operating cash flow for 2019; free cash flow of $651 million

LONDON, March 3, 2020 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the fourth quarter and full year ended December 31, 2019. Today, at 8:00 a.m. EST, management will host a conference call and webcast to present the results; access details are provided below.

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...

"We achieved the high end of our profit and cash flow expectations for 2019, led by strong results for our North America Gaming and Italy segments," said Marco Sala, CEO of IGT. "In the full year, we grew global gaming product sales by more than 20% thanks to higher unit shipments and the success of our new games. Global lottery same-store revenue also rose. We are closely monitoring the impact of the Coronavirus outbreak. Apart from this, solid operational performance across products and regions should support continued momentum in 2020."

"2019 marked an important inflection in cash flows for IGT," said Timothy Rishton, Interim CFO of IGT. "Having generated $1.1 billion in cash from operations, we invested in the business, paid down debt, and returned capital to shareholders. We enter 2020 in strong financial condition."

Overview of Consolidated Fourth Quarter and Full Year 2019 Results

       

Constant

 

Quarter Ended

Y/Y

Currency

 

December 31,

Change

Change

 

2019

2018

(%)

(%)

         

(In $ millions, unless otherwise noted)

       

Revenue 

1,253

1,266

-1%

0%

Operating income 

81

41

99%

112%

Net income/(loss) per diluted share

($0.82)

($0.50)

-64%

 

Adjusted EBITDA 

436

416

5%

6%

Adjusted net income per diluted share 

$0.31

$0.24

29%

 

Net debt 

7,382

7,761

-5%

 

 

     

Constant

 

Year Ended

Y/Y

Currency

 

December 31,

Change

Change

 

2019

2018

(%)

(%)

         

(In $ millions, unless otherwise noted)

       

Revenue

4,786

4,831

-1%

2%

Operating income 

637

647

-2%

3%

Net income/(loss) per diluted share 

($0.09)

($0.10)

11%

 

Adjusted EBITDA 

1,713

1,737

-1%

2%

Adjusted net income per diluted share 

$1.08

$0.99

10%

 
 

Note: Adjusted EBITDA 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.

Overview of Consolidated Fourth Quarter 2019 Results 

Consolidated revenue of $1.25 billion, down 1% from the prior year as reported, in line at constant currency

  • Strong growth in global gaming and North America lottery product sales
  • Higher sports betting contribution from Italy and North America
  • Lower service revenues from reduced North American multistate jackpot activity and impact of Italy gaming machine taxes

Operating income of $81 million, up from $41 million in the prior year

  • Reduced goodwill impairment
  • Beneficial product sales mix
  • Lower bad debt expense

Adjusted EBITDA of $436 million, up 5% from the prior year period as reported, up 6% at constant currency

  • Higher profit contributions from North America Gaming & Interactive, International, and Italy segments
  • North America Lottery impacted by lower jackpot activity

Interest expense, net was $101 million, down 3% from the prior-year quarter

Income taxes of $13 million, down from $30 million on lower pre-tax income

Net loss attributable to IGT was $168 million; adjusted net income attributable to IGT of $63 million, up from $48 million in the prior year

  • Net loss includes non-cash, non-deductible goodwill impairment charge of $99 million, reducing the carrying value of the International segment, in addition to $102 million of non-cash foreign exchange losses
  • Adjusted net income increase driven by higher operating income

Net loss per diluted share of $0.82; adjusted net income per diluted share of $0.31 versus $0.24 in the prior year

Net debt of $7.38 billion, an improvement of 5% from $7.76 billion at December 31, 2018

Overview of Consolidated Full Year 2019 Results

Consolidated revenue was $4.79 billion, down 1% from 2018 as reported, up 2% at constant currency

  • Significant growth in global gaming product sales, sports betting, and Italy commercial services
  • Global service revenue impacted by higher gaming machine taxes in Italy, Illinois lottery contract conclusion, and exceptional North American jackpot activity in the prior year

Operating income of $637 million, down 2% from the prior year as reported, up 3% at constant currency

  • Reduced goodwill impairment

Adjusted EBITDA of $1.71 billion, down 1% as reported, up 2% at constant currency

  • Strong profit growth from North America Gaming & Interactive and Italy at constant currency

Interest expense, net was $410 million, down from $417 million in the prior year 

Income taxes of $173 million, down from $189 million on lower pre-tax income

Net loss attributable to IGT was $19 million; adjusted net income attributable to IGT of $221 million, up from $201 million in the prior year

  • Net loss includes non-cash, non-deductible goodwill impairment charge of $99 million, reducing the carrying value of the International segment
  • Adjusted net income increase driven by reduced interest expense and lower income taxes

Net loss per diluted share of $0.09; adjusted net income per diluted share of $1.08 versus $0.99 in the prior year

Capital expenditures of $442 million compared to $533 million in the prior year

Cash from operations totals $1.1 billion, up significantly from $30 million in the prior year, which included $878 million in Italy upfront license fees

Cash and cash equivalents were $663 million as of December 31, 2019, compared to $251 million as of December 31, 2018

Fourth Quarter Operating Segment Review

North America Gaming & Interactive

Select Financial Data

   

As

Constant

 

Key Performance Indicators

   

%

Period Ended December 31

Q4 '19

Q4 '18

Reported

FX

 

Period Ended December 31

Q4 '19

Q4 '18

Change 

Gaming

 

Total revenue

282

273

3%

3%

 

Installed base units (end of period) 

     
 

Gaming services

139

147

-6%

-6%

 

    Casino

20,493

23,108

-11.3%

   

Terminal 

98

101

-3%

-3%

         
   

Other

41

46

-11%

-11%

 

Machine units shipped

     
 

Product sales

143

126

13%

13%

 

   New/expansion

1,405

247

468.8%

   

Terminal 

111

96

16%

16%

 

   Replacement 

5,986

6,485

-7.7%

   

Other

32

30

5%

5%

 

   Total machines shipped

7,391

6,732

9.8%

                         

Other

 

Total revenue

18

2

NM

NM

         
 

Service revenue

4

2

140%

140%

         
 

Product revenue

14

0

NM

NM

         
                         

Total

 

Revenue

300

275

9%

9%

         
 

Operating income

68

51

33%

32%

         

Revenue up 9% to $300 million

  • Gaming product sales revenue of $143 million, up 13% over the prior year
    • Strong 16% increase in terminal revenue resulting from 10% increase in gaming machine units shipped and higher average selling prices
    • Increase in other product sales from higher software and systems revenue
  • Gaming service revenue of $139 million, compared to $147 million in the prior-year period
    • Installed base reflects removals in Oklahoma; yields higher
    • Impact of multi-year poker contracts executed in prior periods
  • Other product revenue driven by software license

Operating income of $68 million, up 33% over the prior year

  • Strong terminal, software, and systems sales

North America Lottery

Select Financial Data

   

As

Constant

 

Key Performance Indicators

   

%

Period Ended December 31

Q4 '19

Q4 '18

Reported

FX

 

Period Ended December 31

Q4 '19

Q4 '18

Change 

Gaming

 

Total revenue

37

40

-9%

-9%

 

Installed base units (end of period)

     
 

Gaming services

37

40

-9%

-9%

 

    VLT - Government sponsored

13,553

14,939

-9.3%

   

Terminal 

23

25

-5%

-5%

         
   

Other

13

16

-14%

-15%

 

Lottery same-store revenue growth

     
 

Product sales

0

0

0%

0%

 

   Instant ticket & draw games

   

3.8%

                 

   Multistate jackpots

   

-62.8%

Lottery

 

Total revenue

240

268

-10%

-10%

 

   Total lottery same-store revenue growth

   

-11.1%

 

Lottery services

222

255

-13%

-13%

         
   

FMC

204

226

-10%

-10%

         
   

  Instant ticket & draw games

168

193

-13%

-13%

         
   

  Other services

37

33

10%

10%

         
   

LMA

17

29

-41%

-41%

         
 

Product sales

19

13

46%

46%

         
                         

Other

 

Total revenue

2

0

NM

NM

         
 

Service revenue

2

0

NM

NM

         
                         

Total

 

Revenue

279

309

-9%

-9%

         
 

Operating income

51

79

-35%

-35%

         

Revenue of $279 million compared to $309 million in the prior-year period

  • Lottery service revenue of $222 million, compared to $255 million in the prior year
    • Instant ticket & draw game same-store revenue up 4%; overall same-store revenue growth impacted by significant multistate jackpot activity in the prior year and very low activity in the current year
    • Impact of Illinois contract conclusion
  • Lottery product sales revenue up on strong demand for self-service vending machines

Operating income of $51 million, compared to $79 million in the prior year

  • Principally due to lower jackpot activity
  • Continued growth in lottery service despite conclusion of Illinois contract

International

Select Financial Data

   

As

Constant

 

Key Performance Indicators

   

%

Period Ended December 31

Q4 '19

Q4 '18

Reported

FX

 

Period Ended December 31

Q4 '19

Q4 '18

Change 

Gaming

 

Total revenue

131

127

3%

6%

 

Installed base units (end of period)

     
 

Gaming services

27

34

-20%

-18%

 

    Casino

9,709

10,636

-8.7%

   

Terminal 

10

13

-20%

-16%

 

    VLT - Government sponsored

5,148

4,269

20.6%

   

Other

16

21

-20%

-19%

 

   Total installed base units

14,857

14,905

-0.3%

 

Product sales

105

94

12%

14%

         
   

Terminal 

77

64

21%

24%

 

Machine units shipped

     
   

Other

27

30

-9%

-7%

 

   New/expansion

406

528

-23.1%

                 

   Replacement 

5,818

4,730

23.0%

Lottery

 

Total revenue

80

76

5%

6%

 

   Total machines shipped

6,224

5,258

18.4%

 

Lottery services

75

72

5%

6%

         
   

FMC

75

72

5%

6%

 

Lottery same-store revenue growth

     
   

  Instant ticket & draw games

58

56

3%

3%

 

   Instant ticket & draw games

   

5.6%

   

  Other services

18

16

11%

16%

 

   Multistate jackpots

   

12.9%

 

Product sales

5

4

8%

10%

 

   Total lottery same-store revenue growth

   

6.1%

                         

Other

 

Total revenue

15

18

-17%

-14%

         
 

Service revenue

14

17

-17%

-14%

         
 

Product sales

0

0

0%

0%

         
                         

Total

 

Revenue

226

221

2%

4%

         
 

Operating income

53

28

87%

98%

         

Revenue of $226 million, up 2% from the prior-year period as reported, up 4% at constant currency

  • Gaming product sales revenue of $105 million, up 12% as reported, up 14% at constant currency
    • Significant increase in replacement units shipped, including 1,628 Sweden VLTs; lower new/expansion activity
  • Gaming service revenue was $27 million
    • Year-over-year decline in the installed base due to conversions in prior periods
    • Lower interactive revenue
  • Lottery service revenue of $75 million, up 5% as reported, up 6% at constant currency
    • 6% overall same-store revenue growth on broad-based European strength

Operating income of $53 million, up significantly compared to $28 million in the prior year

  • Improved gaming machine mix
  • Lower bad debt expense

Italy

Select Financial Data

   

As

Constant

 

Key Performance Indicators

   

%

Period Ended December 31

Q4 '19

Q4 '18

Reported

FX

 

Period Ended December 31

Q4 '19

Q4 '18

Change 

Gaming

 

Total revenue

171

192

-11%

-9%

 

(In € millions, except machines)

     
 

Gaming services

171

191

-11%

-9%

 

Lottery

     
   

Terminal 

154

174

-11%

-9%

 

Lotto wagers

2,062

2,089

-1.3%

   

Other

17

18

-5%

-3%

 

   10eLotto

1,468

1,495

-1.8%

 

Product sales

0

0

0%

0%

 

   Core

483

468

3.3%

                 

   Late numbers

65

78

-16.5%

Lottery

 

Total revenue

194

202

-4%

-2%

 

   MillionDAY

46

49

-7.2%

 

Lottery services

194

202

-4%

-2%

         
   

FMC

194

202

-4%

-2%

 

Scratch & Win wagers

2,354

2,383

-1.2%

   

  Instant ticket & draw games

240

248

-3%

-1%

         
   

  Other services

(46)

(46)

0%

2%

 

Italy lottery revenue growth

   

-2.1%

 

Product sales

0

0

0%

0%

         
                 

Gaming

     

Other

 

Total revenue

83

68

22%

25%

 

Installed base (end of period)

     
 

Service revenue

83

68

22%

25%

 

   VLT - Operator (B2C)

11,020

10,991

0.3%

 

Product sales

0

0

0%

0%

 

   VLT - Supplier (B2B)

7,501

8,058

-6.9%

                 

   AWP

40,892

42,928

-4.7%

Total

 

Revenue

448

462

-3%

-1%

 

   Total installed base

59,413

61,977

-4.1%

 

Operating income

113

118

-4%

-2%

         
                 

Wagers

     
                 

   VLT - Operator (B2C)

1,414

1,564

-9.5%

                 

   AWP

958

997

-3.9%

                 

   Interactive wagers (gaming)

577

492

17.2%

                         
                 

Other

     
                 

   Sports betting wagers (1)

298

273

9.1%

                 

   Sports betting payout (%) (1)

83.3%

84.2%

-0.9 pp

                         
                 

(1) Includes virtual wagers and pools & horses

Revenue of $448 million, down 3% from the prior-year period as reported, in line at constant currency

  • Lottery service revenue of $194 million, down 4% as reported, down 2% at constant currency, on slightly lower wagers
  • Gaming service revenue of $171 million compared to $191 million in the prior year on impact of higher taxes on AWPs and VLTs
  • Other service revenue of $83 million, up 22% as reported, up 25% at constant currency
    • Increased sports betting wagers and lower payout versus the prior year
    • Growth in commercial services

Operating income of $113 million, down 4% as reported, down 2% at constant currency

  • Strong sports betting contribution nearly offsets impact of higher taxes

Other Developments

  • The Company will file its 2019 Annual Report on Form 20-F with the United States Securities and Exchange Commission (SEC) today
    • Report will be available in the Investor Relations section of the Company's website at www.IGT.com and on the SEC's website, www.SEC.com

2020 Outlook

  • Operating income of $740 - $790 million
  • Depreciation and amortization of $870 - $880 million
  • Capital expenditures of $400 - $500 million
  • Full-year EUR/USD exchange rate of 1.10
  • Outlook does not factor any potential COVID-19 impact

Conference Call and Webcast

March 3, 2020, at 8:00 a.m. EST

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 is +1 844 842 7999
  • Outside the US/Canada toll-free number is +1 612 979 9887
  • Conference ID/confirmation code is 1978149
  • A telephone replay of the call will be available for one week
    • US/Canada replay number is +1 855 859 2056
    • Outside the US/Canada replay number is +1 404 537 3406
    • ID/Confirmation code is 1978149

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 2019 are calculated using the same foreign exchange rates as the corresponding 2018 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 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 factors and risks described in the Company's annual report on Form 20-F for the financial year ended December 31, 2018 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 or 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.

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

 

International Game Technology PLC

Consolidated Statements of Operations

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

Unaudited

       
 

 For the three months ended 

 

 December 31, 

 

2019

 

2018

       

Service revenue

967,972

 

1,029,031

Product sales

285,418

 

237,101

Total revenue

1,253,390

 

1,266,132

       

Cost of services

614,836

 

638,105

Cost of product sales

156,076

 

157,965

Selling, general and administrative

229,531

 

238,654

Research and development

65,936

 

64,782

Goodwill impairment

99,000

 

118,000

Other operating expense, net

6,632

 

7,735

Total operating expenses

1,172,011

 

1,225,241

       

Operating income

81,379

 

40,891

       

Interest expense, net

(100,649)

 

(103,666)

Foreign exchange (loss) gain, net

(101,770)

 

32,096

Other expense, net

(4,758)

 

(9,040)

Total non-operating expenses

(207,177)

 

(80,610)

       

Loss before provision for income taxes

(125,798)

 

(39,719)

       

Provision for income taxes

12,587

 

30,337

       

Net loss

(138,385)

 

(70,056)

       

Less: Net income attributable to non-controlling interests

29,313

 

31,943

       

Net loss attributable to IGT PLC

(167,698)

 

(101,999)

       
       

Net loss attributable to IGT PLC per common share - basic

(0.82)

 

(0.50)

Net loss attributable to IGT PLC per common share - diluted

(0.82)

 

(0.50)

       

Weighted-average shares - basic

204,435

 

204,307

Weighted-average shares - diluted

204,435

 

204,307

 

International Game Technology PLC

Consolidated Statements of Operations

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

Unaudited

       
 

 For the year ended 

 

 December 31, 

 

2019

 

2018

       

Service revenue

3,860,746

 

4,046,314

Product sales

925,060

 

784,942

Total revenue

4,785,806

 

4,831,256

       

Cost of services

2,380,355

 

2,450,658

Cost of product sales

553,293

 

491,030

Selling, general and administrative

846,047

 

844,059

Research and development

266,241

 

263,279

Goodwill impairment

99,000

 

118,000

Other operating expense, net

3,742

 

17,239

Total operating expenses

4,148,678

 

4,184,265

       

Operating income

637,128

 

646,991

       

Interest expense, net

(410,129)

 

(417,387)

Foreign exchange gain, net

39,839

 

129,051

Other income (expense), net

17,929

 

(54,607)

Total non-operating expenses

(352,361)

 

(342,943)

       

Income before provision for income taxes

284,767

 

304,048

       

Provision for income taxes

173,109

 

189,401

       

Net income

111,658

 

114,647

       

Less: Net income attributable to non-controlling interests

130,683

 

135,997

       

Net loss attributable to IGT PLC

(19,025)

 

(21,350)

       
       

Net loss attributable to IGT PLC per common share - basic

(0.09)

 

(0.10)

Net loss attributable to IGT PLC per common share - diluted

(0.09)

 

(0.10)

       

Weighted-average shares - basic

204,373

 

204,083

Weighted-average shares - diluted

204,373

 

204,083

 

International Game Technology PLC

Consolidated Balance Sheets

($ thousands)

Unaudited

       
 

December 31,

 

December 31,

 

2019

 

2018

Assets

     

Current assets:

     

Cash and cash equivalents

662,934

 

250,669

Restricted cash and cash equivalents

231,317

 

261,108

Trade and other receivables, net

1,006,127

 

949,085

Inventories

161,790

 

282,698

Other current assets

571,869

 

543,136

Total current assets

2,634,037

 

2,286,696

Systems, equipment and other assets related to contracts, net

1,307,940

 

1,404,426

Property, plant and equipment, net

146,055

 

185,349

Operating lease right-of-use-assets

341,538

 

-

Goodwill

5,451,494

 

5,580,227

Intangible assets, net

1,836,002

 

2,044,723

Other non-current assets

1,927,524

 

2,147,081

Total non-current assets

11,010,553

 

11,361,806

Total assets

13,644,590

 

13,648,502

       

Liabilities and shareholders' equity

     

Current liabilities:

     

Accounts payable

1,120,922

 

1,142,371

Current portion of long-term debt

462,155

 

-

Short-term borrowings

3,193

 

34,822

Other current liabilities

882,081

 

824,931

Total current liabilities

2,468,351

 

2,002,124

Long-term debt, less current portion

7,600,169

 

7,977,267

Deferred income taxes

366,822

 

446,083

Operating lease liabilities

310,721

 

-

Other non-current liabilities

413,549

 

471,099

Total non-current liabilities

8,691,261

 

8,894,449

Total liabilities

11,159,612

 

10,896,573

Commitments and contingencies

     

Shareholders' equity

2,484,978

 

2,751,929

Total liabilities and shareholders' equity

13,644,590

 

13,648,502

 

International Game Technology PLC

Consolidated Statements of Cash Flows

($ thousands)

Unaudited

     
   

 For the year ended 

   

December 31

   

2019

 

2018

Cash flows from operating activities

       

Net income

 

111,658

 

114,647

Adjustments to reconcile net income to net cash provided by operating activities:

       

Depreciation 

 

434,264

 

432,899

Amortization 

 

279,193

 

272,561

Amortization of upfront license fees

 

205,739

 

217,341

Goodwill impairment

 

99,000

 

118,000

Stock-based compensation expense

 

26,514

 

33,086

Debt issuance cost amortization

 

22,436

 

22,042

Loss on extinguishment of debt

 

11,964

 

54,423

Foreign exchange gain, net

 

(39,839)

 

(129,051)

Gain on sale of assets

 

(64,714)

 

(318)

Deferred income taxes

 

(68,293)

 

(34,494)

Other non-cash costs, net

 

23,091

 

32,275

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

 

Trade and other receivables

 

(58,213)

 

(54,356)

Inventories

 

84,472

 

12,556

Upfront license fees

 

-

 

(878,055)

Accounts payable

 

7,180

 

(51,990)

Other assets and liabilities

 

18,683

 

(131,940)

Net cash provided by operating activities

 

1,093,135

 

29,626

         

Cash flows from investing activities

       

Capital expenditures

 

(442,084)

 

(533,052)

Proceeds from sale of assets

 

124,043

 

19,243

Other

 

5,851

 

2,272

Net cash used in investing activities

 

(312,190)

 

(511,537)

         

Cash flows from financing activities

       

Principal payments on long-term debt

 

(1,264,647)

 

(1,899,888)

Dividends paid

 

(163,503)

 

(163,236)

Net (payments of) receipts from financial liabilities

 

(34,324)

 

7,123

Net (payments of) proceeds from short-term borrowings

 

(32,067)

 

34,822

Debt issuance costs paid

 

(25,930)

 

(17,033)

Payments in connection with extinguishment of debt

 

(8,689)

 

(49,976)

Proceeds from long-term debt

 

1,397,025

 

1,687,761

Dividends paid - non-controlling interests

 

(136,655)

 

(126,926)

Return of capital - non-controlling interests

 

(98,788)

 

(85,121)

Capital increase - non-controlling interests

 

1,499

 

321,584

Other

 

(10,195)

 

(20,655)

Net cash used in financing activities

 

(376,274)

 

(311,545)

         

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

 

404,671

 

(793,456)

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

 

(22,197)

 

(197)

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

 

511,777

 

1,305,430

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

 

894,251

 

511,777

         
         

Supplemental Cash Flow Information:

       

Interest paid

 

(400,022)

 

(445,698)

Income taxes paid

 

(235,385)

 

(239,831)

 

International Game Technology PLC

Net Debt

($ thousands)

Unaudited

         
   

December 31,

 

December 31,

   

2019

 

2018

         

4.125% Senior Secured Notes due February 2020(2)

 

-

 

499,167

4.750% Senior Secured Notes due March 2020(2)

 

-

 

438,252

5.500% Senior Secured Notes due June 2020(1)

 

-

 

27,519

6.250% Senior Secured Notes due February 2022(1)

 

1,491,328

 

1,469,609

4.750% Senior Secured Notes due February 2023(2)

 

948,382

 

964,730

5.350% Senior Secured Notes due October 2023(1)

 

60,885

 

60,983

3.500% Senior Secured Notes due July 2024(2)

 

557,331

 

567,179

6.500% Senior Secured Notes due February 2025(1)

 

1,089,959

 

1,088,385

3.500% Senior Secured Notes due June 2026(2)

 

835,105

 

-

6.250% Senior Secured Notes due January 2027(1)

 

743,387

 

742,667

2.375% Senior Secured Notes due April 2028(2)

 

556,403

 

-

Senior Secured Notes, long-term

 

6,282,780

 

5,858,491

         

Term Loan Facilities due January 2023(2)

 

1,317,389

 

1,705,395

Revolving Credit Facilities due July 2024(1) (2)

 

-

 

413,381

Long-term debt, less current portion

 

7,600,169

 

7,977,267

         

4.750% Senior Secured Notes due March 2020(2)

 

434,789

 

-

5.500% Senior Secured Notes due June 2020(1)

 

27,366

 

-

Current portion of long-term debt 

 

462,155

 

-

         

Short-term borrowings

 

3,193

 

34,822

Total debt

 

8,065,517

 

8,012,089

         

Less: Cash and cash equivalents

 

662,934

 

250,669

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

 

20,464

 

-

         

Net debt

 

7,382,119

 

7,761,420

         

(1) U.S. dollar-denominated debt

       

(2) Euro-denominated debt

       

Note: Net debt is a non-GAAP financial measure

       

 

International Game Technology PLC

Reconciliations of Non-GAAP Financial Measures

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

Unaudited

         
         
   

For the three months ended

   

December 31,

   

2019

 

2018

         

Net loss

 

(138,385)

 

(70,056)

Provision for income taxes

 

12,587

 

30,337

Interest expense, net

 

100,649

 

103,666

Foreign exchange loss (gain), net

 

101,770

 

(32,096)

Other non-operating expense, net

 

4,758

 

9,040

Operating income

 

81,379

 

40,891

Goodwill impairment

 

99,000

 

118,000

Depreciation 

 

118,973

 

120,696

Amortization - purchase accounting

 

47,958

 

49,772

Amortization - non-purchase accounting (a)

 

75,183

 

70,922

Stock-based compensation expense

 

6,468

 

8,142

Other (b)

 

6,566

 

7,534

Adjusted EBITDA

 

435,527

 

415,957

         
         

Cash flows from operating activities

 

304,430

 

(219,686)

Capital expenditures

 

(109,368)

 

(158,739)

Free Cash Flow

 

195,062

 

(378,425)

         
         

Net loss attributable to IGT PLC

 

(167,698)

 

(101,999)

Foreign exchange loss (gain), net

 

101,770

 

(32,096)

Goodwill impairment

 

99,000

 

118,000

Depreciation and amortization - purchase accounting

 

48,591

 

51,774

Refinancing costs

 

-

 

5,004

Other (b)

 

6,566

 

7,534

Income tax impact on adjustments (c)

 

(25,668)

 

183

Adjusted net income attributable to IGT PLC

 

62,561

 

48,400

Weighted-average shares - diluted

 

204,435

 

204,307

Adjusted weighted-average shares - diluted (d)

 

204,631

 

204,328

Net loss attributable to IGT PLC per common share - diluted

 

(0.82)

 

(0.50)

Adjusted net income attributable to IGT PLC per common share - diluted

 

0.31

 

0.24

 

(a) Includes amortization of upfront license fees.

(b) Includes non-goodwill impairment charges, restructuring expense, and transaction-related costs.

(c) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated.

(d) Adjusted weighted-average shares – diluted includes shares that were excluded from the GAAP computation, due to the net loss as reported.  

 

International Game Technology PLC

Reconciliations of Non-GAAP Financial Measures

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

Unaudited

         
         
   

For the year ended

   

December 31,

   

2019

 

2018

         

Net income

 

111,658

 

114,647

Provision for income taxes

 

173,109

 

189,401

Interest expense, net

 

410,129

 

417,387

Foreign exchange gain, net

 

(39,839)

 

(129,051)

Other non-operating (income) expense, net

 

(17,929)

 

54,607

Operating income

 

637,128

 

646,991

Goodwill impairment

 

99,000

 

118,000

Depreciation

 

434,264

 

432,899

Amortization - purchase accounting

 

191,624

 

200,095

Amortization - non-purchase accounting (a)

 

293,308

 

289,807

Stock-based compensation expense

 

26,514

 

33,086

Other (b)

 

31,147

 

16,372

Adjusted EBITDA

 

1,712,985

 

1,737,250

         
         

Cash flows from operating activities

 

1,093,135

 

29,626

Capital expenditures

 

(442,084)

 

(533,052)

Free Cash Flow

 

651,051

 

(503,426)

         
         

Net loss attributable to IGT PLC

 

(19,025)

 

(21,350)

Foreign exchange gain, net

 

(39,839)

 

(129,051)

Goodwill impairment

 

99,000

 

118,000

Depreciation and amortization - purchase accounting

 

194,153

 

208,367

Refinancing costs

 

11,964

 

54,463

Other (b)

 

31,147

 

16,372

Income tax impact on adjustments (c)

 

(56,487)

 

(45,379)

Adjusted net income attributable to IGT PLC

 

220,913

 

201,422

Weighted-average shares - diluted

 

204,373

 

204,083

Adjusted weighted-average shares - diluted (d)

 

204,557

 

204,363

Net loss attributable to IGT PLC per common share - diluted

 

(0.09)

 

(0.10)

Adjusted net income attributable to IGT PLC per common share - diluted

 

1.08

 

0.99

 

(a) Includes amortization of upfront license fees.

(b) Includes non-goodwill impairment charges, restructuring expense, and transaction-related costs.

(c) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated.

(d) Adjusted weighted-average shares – diluted includes shares that were excluded from the GAAP computation, due to the net loss as reported.  

 

INTERNATIONAL GAME TECHNOLOGY PLC

               

Select Financial Data

   

As

Constant

 

Key Performance Indicators

   

%

Period Ended December 31

Q4 '19

Q4 '18

Reported

FX

 

Period Ended December 31

Q4 '19

Q4 '18

Change 

Gaming

 

Total revenue

622

632

-2%

-1%

 

Installed base units (end of period)

     
 

Gaming services

374

413

-9%

-8%

 

   Casino

30,202

33,744

-10.5%

   

Terminal 

286

312

-9%

-7%

 

   VLT - Government sponsored (ex-Italy)

18,701

19,208

-2.6%

   

Other

88

100

-12%

-12%

 

   VLT - Italy supplier (B2B)

7,501

8,058

-6.9%

 

Product sales

248

220

13%

14%

 

   Total installed base units

56,404

61,010

-7.5%

   

Terminal 

188

159

18%

19%

 

   Yield (average gross revenue per unit per day)

$  27.62

$  26.90

2.7%

   

Other

60

60

-1%

0%

         
                 

   Additional Italian network details:

     

Lottery

 

Total revenue

514

547

-6%

-5%

 

   VLT - Operator (B2C)

11,020

10,991

0.3%

 

Lottery services

491

530

-7%

-6%

 

   AWP

40,892

42,928

-4.7%

   

FMC

474

500

-5%

-4%

         
   

  Instant ticket & draw games

465

497

-6%

-5%

 

Machine units shipped

     
   

  Other services

8

3

161%

177%

 

   New/expansion

1,811

775

133.7%

   

LMA

17

29

-41%

-41%

 

   Replacement 

11,804

11,215

5.3%

 

Product sales

23

17

36%

37%

 

   Total machines shipped

13,615

11,990

13.6%

                         

Other

 

Total revenue

118

87

35%

38%

 

Global lottery same-store revenue growth

     
 

Service revenue

103

87

19%

22%

 

   Instant ticket & draw games

   

4.3%

 

Product sales

14

0

NM

NM

 

   Multistate jackpots

   

-56.6%

                 

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

 

-7.1%

Consolidated

 

Revenue

1,253

1,266

-1%

0%

 

   Italy lottery revenue growth

   

-2.1%

 

Operating Income:

                 
   

Segment total

286

277

3%

5%

         
   

Purchase accounting

(148)

(170)

-13%

13%

         
   

Corporate support

(57)

(67)

-15%

14%

         
   

Total

81

41

99%

112%

         

Full Year Comparisons by Segment:

NORTH AMERICA GAMING & INTERACTIVE

               

Select Financial Data

   

As

Constant

 

Key Performance Indicators

   

%

Period Ended December 31

FY '19

FY '18

Reported

FX

 

Period Ended December 31

FY '19

FY '18

Change 

Gaming

 

Total revenue

1,042

1,001

4%

4%

 

Installed base units (end of period) 

     
 

Gaming services

605

622

-3%

-3%

 

    Casino

20,493

23,108

-11.3%

   

Terminal 

407

420

-3%

-3%

         
   

Other

198

202

-2%

-2%

 

Machine units shipped

     
 

Product sales

437

379

15%

15%

 

   New/expansion

4,116

3,917

5.1%

   

Terminal 

321

262

23%

23%

 

   Replacement 

16,903

14,922

13.3%

   

Other

116

117

-1%

-1%

 

   Total machines shipped

21,019

18,839

11.6%

                         

Other

 

Total revenue

28

2

NM

NM

         
 

Service revenue

14

2

NM

NM

         
 

Product revenue

14

0

0%

0%

         
                         

Total

 

Revenue

1,071

1,003

7%

7%

         
 

Operating income

264

219

21%

18%

         

 

NORTH AMERICA LOTTERY

                 

Select Financial Data

   

As

Constant

 

Key Performance Indicators

   

%

Period Ended December 31

FY '19

FY '18

Reported

FX

 

Period Ended December 31

FY '19

FY '18

Change 

Gaming

 

Total revenue

153

154

0%

0%

 

Installed base units (end of period)

     
 

Gaming services

152

153

-1%

-1%

 

    VLT - Government sponsored

13,553

14,939

-9.3%

   

Terminal 

97

100

-3%

-3%

         
   

Other

54

54

2%

2%

 

Lottery same-store revenue growth

     
 

Product sales

2

0

NM

NM

 

   Instant ticket & draw games

   

4.6%

                 

   Multistate jackpots

   

-29.3%

Lottery

 

Total revenue

1,007

1,038

-3%

-3%

 

   Total lottery same-store revenue growth

   

-0.6%

 

Lottery services

915

958

-4%

-4%

         
   

FMC

807

829

-3%

-3%

         
   

  Instant ticket & draw games

663

697

-5%

-5%

         
   

  Other services

145

131

10%

10%

         
   

LMA

108

129

-16%

-16%

         
 

Product sales

91

80

14%

15%

         
                         

Other

 

Total revenue

5

0

NM

NM

         
 

Service revenue

5

0

NM

NM

         
                         

Total

 

Revenue

1,165

1,192

-2%

-2%

         
 

Operating income

256

297

-14%

-13%

         

 

INTERNATIONAL

                 

Select Financial Data

   

As

Constant

 

Key Performance Indicators

   

%

Period Ended December 31

FY '19

FY '18

Reported

FX

 

Period Ended December 31

FY '19

FY '18

Change 

Gaming

 

Total revenue

473

417

14%

18%

 

Installed base units (end of period)

     
 

Gaming services

112

140

-20%

-14%

 

    Casino

9,709

10,636

-8.7%

   

Terminal 

46

54

-15%

-7%

 

    VLT - Government sponsored

5,148

4,269

20.6%

   

Other

66

86

-23%

-19%

 

   Total installed base units

14,857

14,905

-0.3%

 

Product sales

361

277

30%

35%

         
   

Terminal 

259

193

34%

38%

 

Machine units shipped

     
   

Other

102

84

22%

27%

 

   New/expansion

1,698

1,880

-9.7%

                 

   Replacement 

19,308

11,820

63.4%

Lottery

 

Total revenue

303

329

-8%

-5%

 

   Total machines shipped

21,006

13,700

53.3%

 

Lottery services

284

283

1%

4%

         
   

FMC

284

283

1%

4%

 

Lottery same-store revenue growth

     
   

  Instant ticket & draw games

222

222

0%

4%

 

   Instant ticket & draw games

   

4.1%

   

  Other services

63

61

2%

5%

 

   Multistate jackpots

   

18.4%

 

Product sales

19

46

-60%

-58%

 

   Total lottery same-store revenue growth

   

4.9%

                         

Other

 

Total revenue

64

74

-13%

-7%

         
 

Service revenue

64

73

-12%

-5%

         
 

Product sales

0

2

NM

NM

         
                         

Total

 

Revenue

840

820

2%

7%

         
 

Operating income

127

142

-11%

-3%

         

 

ITALY

                   

Select Financial Data

   

As

Constant

 

Key Performance Indicators

   

%

Period Ended December 31

FY '19

FY '18

Reported

FX

 

Period Ended December 31

FY '19

FY '18

Change 

Gaming

 

Total revenue

633

734

-14%

-9%

 

(In € millions, except machines)

     
 

Gaming services

632

733

-14%

-9%

 

Lottery

     
   

Terminal 

566

665

-15%

-10%

 

Lotto wagers

8,149

8,017

1.7%

   

Other

65

68

-4%

1%

 

   10eLotto

5,860

5,728

2.3%

 

Product sales

1

1

6%

9%

 

   Core

1,941

1,877

3.4%

                 

   Late numbers

163

227

-28.3%

Lottery

 

Total revenue

760

793

-4%

1%

 

   MillionDAY

187

185

0.8%

 

Lottery services

760

793

-4%

1%

         
   

FMC

760

793

-4%

1%

 

Scratch & Win wagers

9,194

9,207

-0.1%

   

  Instant ticket & draw games

949

991

-4%

1%

         
   

  Other services

(189)

(198)

-4%

1%

 

Italy lottery revenue growth

   

0.9%

 

Product sales

0

0

0%

0%