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International Game Technology PLC Reports Second Quarter 2019 Results
- Revenue increased 5% at constant currency on significant growth in global gaming product sales and continued strength in global lottery same-store revenue
- Operating income of $224 million; adjusted operating income of $274 million, up 6% at constant currency
- Adjusted EBITDA of $454 million, up 5% at constant currency, driven by higher North America Gaming and Italy profits
- Year-to-date operating cash flow of $592 million and free cash flow of $361 million, record first-half levels
- Cash dividend declared of $0.20 per ordinary share

 

LONDON, Aug. 1, 2019 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the second quarter ended June 30, 2019. Today, at 8:00 a.m. EDT, 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 had a strong second quarter, with top-line growth driven by a sharp increase in gaming product sales and impressive gains in global lottery same-store revenues. Profits were up nicely in our North America Gaming and Italy segments," said Marco Sala, CEO of IGT. "I am pleased with the broad-based improvement in key performance indicators for our main businesses."

"EBITDA in the quarter was the highest we achieved in three years and translated into substantial free cash flow for the first half," said Alberto Fornaro, CFO of IGT. "Recent capital markets activity strengthens our financial structure, enhances flexibility, and positions us well for the coming years."

Overview of Consolidated Second Quarter 2019 Results

 

 

     

Constant

 

Quarter Ended  

Y/Y

Currency

 

June 30,

Change

Change

 

2019

2018

(%)

(%)

(In $ millions, unless otherwise noted)

       

Revenue

1,234

1,202

3%

5%

Operating income 

224

209

7%

10%

Net income/(loss) per diluted share 

$0.02

$0.79

NM 

 

Adjusted EBITDA 

454

442

3%

5%

Adjusted operating income 

274

264

4%

6%

Adjusted net income per diluted share 

$0.44

$0.28

57%

 

Net debt 

7,637

7,530

1%

 
 

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.

Consolidated revenue of $1.23 billion, up 5% at constant currency

  • Significant growth in global gaming product sales
  • Sustained momentum in lottery same-store revenue
  • More than offset increased machine gaming taxes in Italy

At constant currency, operating income rose 10% to $224 million; adjusted operating income up 6% to $274 million

Adjusted EBITDA increased 5% at constant currency to $454 million

  • Growth in North America Gaming & Interactive and Italy profits
  • Solid North America Lottery results
  • Net impact of discrete items in North America Gaming & Interactive segment
    • Multi-year, strategic lease and distribution agreement in Oklahoma
    • Higher litigation charges

Interest expense, net was $104 million, in line with the prior-year quarter 

Income taxes of $63 million and adjusted taxes of $79 million on increased pre-tax income; adjusted tax rate improved due to higher income in lower-tax jurisdictions

Net income attributable to IGT was $5 million in the quarter; adjusted net income attributable to IGT was $91 million, up from $57 million in the prior year on growth in profit before taxes and a lower adjusted tax rate

Net income per diluted share of $0.02; adjusted net income per diluted share of $0.44 versus $0.28 in the prior year

Net debt of $7.64 billion, down from $7.76 billion at December 31, 2018

Operating Segment Review

North America Gaming & Interactive

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended June 30

Q2 '19

Q2 '18

FX

 

Period Ended June 30

Q2 '19

Q2 '18

Change 

Gaming

 

Total revenue

268

254

6%

 

Installed base units (end of period) 

     
 

Gaming services

165

169

-3%

 

    Casino

21,073

23,351

-9.8%

   

Terminal 

106

108

-2%

         
   

Other

59

61

-3%

 

Machine units shipped

     
 

Product sales

104

85

22%

 

   New/expansion

438

1,803

-75.7%

   

Terminal 

73

62

18%

 

   Replacement 

4,223

2,747

53.7%

   

Other

30

23

34%

 

   Total machines shipped

4,661

4,550

2.4%

                       

Other

 

Total revenue

6

0

NM

         
 

Service revenue

6

0

NM

 

Note:  Oklahoma agreement reduces installed base by 2,076 units; no impact to units shipped

                       

Total

 

Revenue

274

254

8%

         
 

Operating income

85

66

27%

         

Revenue of $274 million, up 8% at constant currency

  • Gaming service revenue of $165 million, compared to $169 million in the prior- year period
    • Installed base stable year-over-year; up sequentially on an underlying basis
      • Growth in Class II markets, opening of Encore Boston Harbor
      • Net of 2,076-unit reduction due to new Oklahoma agreement
    • Slight decrease in other gaming services; large, multi-year poker contract in each period
  • Product sales revenue of $104 million, up 22% over the prior year
    • Terminal product sales rose 18% at constant currency
      • 54% increase in replacement units driven by strength of product offering; higher average selling price
      • Lower new/expansion activity compared to the prior year
    • Other product sales up 34% on strong systems revenue
  • Other service revenue includes contributions from sports betting and interactive

Operating income up 27% at constant currency on net impact of discrete items

North America Lottery

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended June 30

Q2 '19

Q2 '18

FX

 

Period Ended June 30

Q2 '19

Q2 '18

Change 

Gaming

 

Total revenue

37

38

-2%

 

Installed base units (end of period)

     
 

Gaming services

37

38

-4%

 

    VLT - Government sponsored

14,215

15,176

-6.3%

   

Terminal 

25

25

-3%

         
   

Other

12

13

-5%

 

Lottery same-store revenue growth

     
 

Product sales

1

0

NM

 

   Instant ticket & draw games

   

5.4%

               

   Multistate jackpots

   

23.8%

Lottery

 

Total revenue

270

270

0%

 

   Total lottery same-store revenue growth

 

7.2%

 

Lottery services

238

236

1%

         
   

FMC

202

197

3%

         
   

  Instant ticket & draw games

168

164

3%

         
   

  Other services

34

33

1%

         
   

LMA

36

39

-8%

         
 

Product sales

32

34

-5%

         
                       

Other

 

Total revenue

1

0

NM

         
 

Service revenue

1

0

NM

         
                       

Total

 

Revenue

309

309

0%

         
 

Operating income

78

80

-3%

         

Revenue of $309 million, stable with the high level achieved in the prior year

  • Lottery service revenue of $238 million, essentially in line with the prior year
    • Overall same-store revenue up 7.2% driven by growth in instant ticket and draw games and increased jackpot activity
    • More than offsets impact of Illinois supply contract conclusion
  • Lottery product sales revenue of $32 million
    • Essentially matched significant contribution from Massachusetts hardware sales in the prior year

Operating income of $78 million, down 3% at constant currency on higher depreciation

International

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended June 30

Q2 '19

Q2 '18

FX

 

Period Ended June 30

Q2 '19

Q2 '18

Change 

Gaming

 

Total revenue

142

101

46%

 

Installed base units (end of period)

     
 

Gaming services

28

34

-11%

 

    Casino

10,039

13,034

-23.0%

   

Terminal 

12

13

3%

 

    VLT - Government sponsored

4,436

3,306

34.2%

   

Other

16

21

-20%

 

   Total installed base units

14,475

16,340

-11.4%

 

Product sales

114

67

76%

         
   

Terminal 

82

52

61%

 

Machine units shipped

     
   

Other

33

15

130%

 

   New/expansion

700

732

-4.4%

               

   Replacement 

5,863

2,388

145.5%

Lottery

 

Total revenue

70

78

-7%

 

   Total machines shipped

6,563

3,120

110.4%

 

Lottery services

67

70

-1%

         
   

FMC

67

70

-1%

 

Lottery same-store revenue growth

     
   

  Instant ticket & draw games

53

54

1%

 

   Instant ticket & draw games

   

2.4%

   

  Other services

14

16

-10%

 

   Multistate jackpots

   

11.0%

 

Product sales

3

8

-59%

 

   Total lottery same-store revenue growth

 

2.8%

                       

Other

 

Total revenue

17

19

-8%

         
 

Service revenue

16

19

-5%

         
 

Product sales

0

1

NM

         
                       

Total

 

Revenue

229

199

20%

         
 

Operating income

30

36

-11%

         

Revenue of $229 million, up 20% at constant currency

  • Gaming product sales revenue of $114 million, up 76% at constant currency
    • Significant increase in terminal units shipped, including approximately 1,600 Sweden VLTs; average selling price down due to mix 
    • Other product sales driven by higher software revenue
  • Lottery service revenue of $67 million, essentially stable at constant currency
  • Gaming service revenue was $28 million
    • Year-over-year and sequential declines in the installed base due to conversions
    • Other gaming service revenue down on interactive performance and non-wager-related items

Operating income of $30 million compared to $36 million in the prior year, down $4 million at constant currency

  • Lower profit flow-through on service and product revenue
  • Higher SG&A

Italy

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended June 30

Q2 '19

Q2 '18

FX

 

Period Ended June 30

Q2 '19

Q2 '18

Change 

Gaming

 

Total revenue

153

177

-9%

 

(In € millions, except machines)

     
 

Gaming services

153

176

-9%

 

Lottery

     
   

Terminal 

136

160

-11%

 

Lotto wagers

2,064

1,981

4.2%

   

Other

17

16

10%

 

   10eLotto

1,507

1,422

6.0%

 

Product sales

0

0

0%

 

   Core

479

471

1.6%

               

   Late numbers

31

33

-5.6%

Lottery

 

Total revenue

190

193

4%

 

   MillionDAY

47

54

-14.0%

 

Lottery services

190

193

4%

         
   

FMC

190

193

4%

 

Scratch & Win wagers

2,257

2,237

0.9%

   

  Instant ticket & draw games

238

243

3%

         
   

  Other services

(48)

(50)

0%

 

Italy lottery revenue growth

   

3.5%

 

Product sales

0

0

0%

         
               

Gaming

     

Other

 

Total revenue

79

71

16%

 

Installed base (end of period)

     
 

Service revenue

79

71

16%

 

   VLT - Operator (B2C)

10,929

10,991

-0.6%

 

Product sales

0

0

0%

 

   VLT - Supplier (B2B)

7,524

8,251

-8.8%

               

   AWP

40,268

43,657

-7.8%

Total

 

Revenue

422

441

1%

 

   Total installed base

58,721

62,899

-6.6%

 

Operating income

133

131

8%

         
               

Wagers

     
               

   VLT - Operator (B2C)

1,427

1,407

1.4%

               

   AWP

916

885

3.5%

               

   Interactive wagers (gaming)

508

459

10.7%

                       
               

Other

     
               

   Sports betting wagers (1)

252

244

3.1%

               

   Sports betting payout (%) (1)

82.2%

82.9%

-0.6 pp

                       
               

(1) Includes virtual wagers and pools & horses

Revenue of $422 million, relatively stable at constant currency

  • Lottery service revenue of $190 million, up 4% at constant currency
    • Lotto wagers up 4.2% on continued growth in 10eLotto
    • Scratch & Win wagers rose 0.9% on success of new games
  • Gaming service revenue of $153 million compared to $176 million in the prior year
    • Increased taxes on AWP and VLT machines
    • Wagers grew despite lower installed base on quality of distribution network and new game introductions
  • Other service revenue of $79 million, up 16% at constant currency
    • Beneficial sports betting payout comparison; higher wagers despite World Cup in the prior year

Operating income of $133 million, up 8% at constant currency

  • Strong profit flow-through from lotteries, sports betting, and interactive
  • Beneficial shift in expense timing
  • More than offsets increased gaming machine taxes

Other Developments

The Company's Board of Directors declared a quarterly cash dividend of $0.20 per ordinary share

  • Record date of August 15, 2019
  • Payment date of August 29, 2019

Issuance of €750 million 3.5% Notes due 2026, as previously announced

  • Net proceeds used to redeem ~ €438 million 4.125% Notes due 2020
  • Balance used to partially repay utilizations under revolving credit facilities

Revolving credit facility amendment and extension in July 2019, as previously announced

  • Maturity extended to July 31, 2024
  • Aggregate commitments reduced to ~ 1.75 billion
  • Modifications to certain provisions that increase flexibility

Board appointment, as previously announced

  • The Company's Board of Directors appointed Dr. Samantha Ravich as an independent director, effective July 30, 2019

Outlook

Outlook updated for currency; no change to operating assumptions

  • 2019 adjusted EBITDA of $1.675 - $1.735 billion
  • Capital expenditures of $450 - $550 million
  • Full-year EUR/USD exchange rate of 1.12 vs. prior 1.15 estimate

Conference Call and Webcast

August 1, 2019, 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 is +1 844 842 7999
  • Outside the US/Canada toll-free number is +1 612 979 9887
  • Conference ID/confirmation code is 1990309
  • 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 1990309

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 enable players to experience their favorite games across all channels and regulated segments, from Gaming Machines and Lotteries to Digital 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 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. All forward-looking statements contained in this news release are 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 

 

 June 30, 

 

2019

 

2018

       

Service revenue

980,031

 

1,007,067

Product sales

254,222

 

195,271

Total revenue

1,234,253

 

1,202,338

       

Cost of services

594,598

 

607,684

Cost of product sales

160,786

 

122,403

Selling, general and administrative

213,263

 

196,088

Research and development

65,383

 

63,957

Other operating (income) expense, net

(23,492)

 

3,129

Total operating expenses

1,010,538

 

993,261

       

Operating income

223,715

 

209,077

       

Interest expense, net

(103,860)

 

(102,888)

Foreign exchange (loss) gain, net

(41,061)

 

172,546

Other income (expense), net

23,493

 

(31,304)

Total non-operating (expenses) income

(121,428)

 

38,354

       

Income before provision for income taxes

102,287

 

247,431

       

Provision for income taxes

63,300

 

52,232

       

Net income

38,987

 

195,199

       

Less: Net income attributable to non-controlling interests

34,131

 

33,703

       

Net income attributable to IGT PLC

4,856

 

161,496

       
       

Net income attributable to IGT PLC per common share - basic

0.02

 

0.79

Net income attributable to IGT PLC per common share - diluted

0.02

 

0.79

       

Weighted-average shares - basic

204,407

 

204,118

Weighted-average shares - diluted

204,412

 

204,516

 

International Game Technology PLC

Consolidated Statements of Operations

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

Unaudited

       
 

 For the six months ended 

 

 June 30, 

 

2019

 

2018

       

Service revenue

1,971,062

 

2,054,018

Product sales

408,107

 

355,276

Total revenue

2,379,169

 

2,409,294

       

Cost of services

1,189,925

 

1,225,742

Cost of product sales

260,971

 

225,754

Selling, general and administrative

415,100

 

411,306

Research and development

131,501

 

135,220

Other operating (income) expense, net

(20,195)

 

5,200

Total operating expenses

1,977,302

 

2,003,222

       

Operating income

401,867

 

406,072

       

Interest expense, net

(206,929)

 

(210,168)

Foreign exchange gain, net

17,541

 

75,851

Other income (expense), net

22,995

 

(28,323)

Total non-operating expenses

(166,393)

 

(162,640)

       

Income before provision for income taxes

235,474

 

243,432

       

Provision for income taxes

115,992

 

112,737

       

Net income

119,482

 

130,695

       

Less: Net income attributable to non-controlling interests

74,372

 

72,345

       

Net income attributable to IGT PLC

45,110

 

58,350

       
       

Net income attributable to IGT PLC per common share - basic

0.22

 

0.29

Net income attributable to IGT PLC per common share - diluted

0.22

 

0.29

       

Weighted-average shares - basic

204,309

 

203,859

Weighted-average shares - diluted

204,532

 

204,345

 

International Game Technology PLC

Consolidated Balance Sheets

($ thousands)

Unaudited

       
 

June 30,

 

December 31,

 

2019

 

2018

Assets

     

Current assets:

     

Cash and cash equivalents

400,928

 

250,669

Restricted cash and cash equivalents

256,105

 

261,108

Trade and other receivables, net

948,520

 

949,085

Inventories

264,911

 

282,698

Other current assets

489,440

 

504,061

Income taxes receivable

45,576

 

39,075

Total current assets

2,405,480

 

2,286,696

Systems, equipment and other assets related to contracts, net

1,350,575

 

1,404,426

Property, plant and equipment, net

140,033

 

185,349

Operating lease right-of-use-assets

360,021

 

-

Goodwill

5,572,217

 

5,580,227

Intangible assets, net

1,940,656

 

2,044,723

Other non-current assets

2,030,137

 

2,108,964

Deferred income taxes

37,738

 

38,117

Total non-current assets

11,431,377

 

11,361,806

Total assets

13,836,857

 

13,648,502

       

Liabilities and shareholders' equity

     

Current liabilities:

     

Accounts payable

1,063,886

 

1,142,371

Other current liabilities

867,639

 

816,722

Current portion of long-term debt

829,601

 

-

Short-term borrowings

55,349

 

34,822

Income taxes payable

74,001

 

8,209

Total current liabilities

2,890,476

 

2,002,124

Long-term debt, less current portion

7,152,523

 

7,977,267

Deferred income taxes

450,003

 

446,083

Income taxes payable

25,654

 

25,654

Operating lease liabilities

325,477

 

-

Other non-current liabilities

386,584

 

445,445

Total non-current liabilities

8,340,241

 

8,894,449

Total liabilities

11,230,717

 

10,896,573

Commitments and contingencies

     

Shareholders' equity

2,606,140

 

2,751,929

Total liabilities and shareholders' equity

13,836,857

 

13,648,502

 

International Game Technology PLC

Consolidated Statements of Cash Flows

($ thousands)

Unaudited

     
   

 For the six months ended 

   

 June 30,

   

2019

 

2018

Cash flows from operating activities

       

Net income

 

119,482

 

130,695

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

       

Depreciation 

 

209,271

 

202,448

Amortization 

 

137,201

 

136,450

Service revenue amortization

 

103,935

 

111,115

Stock-based compensation expense

 

12,502

 

17,119

Debt issuance cost amortization

 

11,523

 

11,534

Loss on extinguishment of debt

 

9,628

 

29,584

Deferred income taxes

 

6,515

 

(9,817)

Foreign exchange gain, net

 

(17,541)

 

(75,851)

Gain on sale of assets

 

(63,239)

 

(1,129)

Other non-cash costs, net

 

31,392

 

1,610

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

     

Trade and other receivables

 

49,059

 

49,832

Inventories

 

802

 

(20,787)

Upfront Italian license fee

 

-

 

(366,270)

Accounts payable

 

(57,317)

 

(56,732)

Other assets and liabilities

 

38,508

 

(39,651)

Net cash provided by operating activities

 

591,721

 

120,150

         

Cash flows from investing activities

       

Capital expenditures

 

(231,003)

 

(258,967)

Proceeds from sale of assets

 

65,429

 

6,065

Other

 

2,545

 

1,458

Net cash used in investing activities

 

(163,029)

 

(251,444)

         

Cash flows from financing activities

       

Principal payments on long-term debt

 

(833,129)

 

(1,058,753)

Dividends paid - non-controlling interests

 

(129,394)

 

(125,808)

Dividends paid

 

(81,729)

 

(81,553)

Return of capital - non-controlling interests

 

(70,399)

 

(53,600)

Net payments of financial liabilities

 

(11,395)

 

(36,586)

Payments in connection with extinguishment of debt

 

(8,598)

 

(24,281)

Debt issuance costs paid

 

(5,934)

 

(4,047)

Capital increase - non-controlling interests

 

1,075

 

134,536

Net proceeds from short-term borrowings

 

19,573

 

28,400

Proceeds from long-term debt

 

846,975

 

863,911

Other

 

(6,733)

 

(17,696)

Net cash used in financing activities

 

(279,688)

 

(375,477)

         

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

 

149,004

 

(506,771)

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

 

(3,748)

 

22,352

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

 

657,033

 

821,011

         
         

Supplemental Cash Flow Information:

       

Interest paid

 

(211,591)

 

(262,886)

Income taxes (paid) refunded

 

(49,777)

 

13,313

 

International Game Technology PLC

Net Debt

($ thousands)

Unaudited

         
   

June 30,

 

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)

 

1,488,631

 

1,469,609

4.750% Senior Secured Notes due February 2023 (2)

 

959,758

 

964,730

5.350% Senior Secured Notes due October 2023(1)

 

60,936

 

60,983

3.500% Senior Secured Notes due July 2024 (2)

 

564,139

 

567,179

6.500% Senior Secured Notes due February 2025 (1)

 

1,089,159

 

1,088,385

3.500% Senior Secured Notes due June 2026 (2)

 

845,482

 

-

6.250% Senior Secured Notes due January 2027(1)

 

743,021

 

742,667

Senior Secured Notes, long-term

 

5,751,126

 

5,858,491

         

Revolving Credit Facilities due July 2021 (1) (2)

 

69,114

 

413,381

Term Loan Facilities due January 2023 (2)

 

1,332,283

 

1,705,395

Long-term debt, less current portion

 

7,152,523

 

7,977,267

         

4.750% Senior Secured Notes due March 2020 (2)

 

437,997

 

-

5.500% Senior Secured Notes due June 2020 (1)

 

27,444

 

-

Term Loan Facilities due January 2023 (2)

 

364,160

 

-

Current portion of long-term debt 

 

829,601

 

-

         

Short-term borrowings

 

55,349

 

34,822

Total debt

 

8,037,473

 

8,012,089

         

Less: Cash and cash equivalents

 

400,928

 

250,669

         

Net debt

 

7,636,545

 

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

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)

Unaudited

         
         
   

For the three months ended

   

June 30,

   

2019

 

2018

         

Net income

 

38,987

 

195,199

Provision for income taxes

 

63,300

 

52,232

Non-operating expenses (income)

 

121,428

 

(38,354)

Depreciation 

 

103,940

 

104,361

Amortization

 

69,117

 

68,058

Service revenue amortization

 

51,646

 

54,465

Stock-based compensation expense

 

2,912

 

2,941

Other

 

2,379

 

2,913

Adjusted EBITDA

 

453,709

 

441,815

         
         
         

Cash flows from operating activities

 

445,107

 

42,940

Capital expenditures

 

(111,818)

 

(124,306)

Free Cash Flow

 

333,289

 

(81,366)

 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)

Unaudited

         
         
   

For the six months ended

   

June 30,

   

2019

 

2018

         

Net income

 

119,482

 

130,695

Provision for income taxes

 

115,992

 

112,737

Non-operating expenses

 

166,393

 

162,640

Depreciation 

 

209,271

 

202,448

Amortization

 

137,201

 

136,450

Service revenue amortization

 

103,935

 

111,115

Stock-based compensation expense

 

12,502

 

17,119

Other

 

5,606

 

4,767

Adjusted EBITDA

 

870,382

 

877,971

         
         
         

Cash flows from operating activities

 

591,721

 

120,150

Capital expenditures

 

(231,003)

 

(258,967)

Free Cash Flow

 

360,718

 

(138,817)

 

 International Game Technology PLC 

 Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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

 Unaudited 

                     
                     
   

Quarter to date

             

Quarter to date

   

June 2019

 

Adjustments

 

June 2019

   

As

 

Purchase

 

Foreign

 

Refinancing and

 

As

   

Reported

 

Accounting

 

Exchange

 

Other

 

Adjusted

                     

 Total revenue 

 

1,234,253

 

(181)

 

-

 

-

 

1,234,072

                     

 Cost of services 

 

594,598

 

(17,769)

 

-

 

-

 

576,829

 Cost of product sales 

 

160,786

 

(3,912)

 

-

 

-

 

156,874

 Selling, general and administrative 

 

213,263

 

(26,502)

 

-

 

-

 

186,761

 Research and development 

 

65,383

 

(72)

 

-

 

-

 

65,311

 Other operating income, net 

 

(23,492)

 

-

 

-

 

(2,454)

 

(25,946)

 Total operating expenses 

 

1,010,538

 

(48,255)

 

-

 

(2,454)

 

959,829

                     

 Operating income 

 

223,715

 

48,074

 

-

 

2,454

 

274,243

                     

 Interest expense, net 

 

(103,860)

 

26

 

-

 

-

 

(103,834)

 Foreign exchange loss, net 

 

(41,061)

 

-

 

41,061

 

-

 

-

 Other income, net 

 

23,493

 

-

 

-

 

9,628

 

33,121

 Total non-operating expenses 

 

(121,428)

 

26

 

41,061

 

9,628

 

(70,713)

                     

 Income before provision for income taxes 

 

102,287

 

48,100

 

41,061

 

12,082

 

203,530

                     

 Provision for income taxes (a) 

 

63,300

 

11,552

 

3,264

 

558

 

78,674

                     

 Net income 

 

38,987

 

36,548

 

37,797

 

11,524

 

124,856

                     

 Less: Net income attributable to non-controlling interests 

 

34,131

 

26

 

-

 

-

 

34,157

                     

 Net income attributable to IGT PLC 

 

4,856

 

36,522

 

37,797

 

11,524

 

90,699

                     

 Net income per common share - diluted 

 

0.02

             

0.44

 Weighted-average shares - diluted 

 

204,412

             

204,412

                     
                     
 

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

 

 International Game Technology PLC 

 Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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

 Unaudited 

                     
                     
   

Year to date

             

Year to date

   

June 2019

 

Adjustments

 

June 2019

   

As

 

Purchase

 

Foreign

 

Refinancing and

 

As

   

Reported

 

Accounting

 

Exchange

 

Other

 

Adjusted

                     

 Total revenue 

 

2,379,169

 

(359)

 

-

 

-

 

2,378,810

                     

 Cost of services 

 

1,189,925

 

(36,544)

 

-

 

-

 

1,153,381

 Cost of product sales 

 

260,971

 

(7,781)

 

-

 

-

 

253,190

 Selling, general and administrative 

 

415,100

 

(52,580)

 

-

 

-

 

362,520

 Research and development 

 

131,501

 

(292)

 

-

 

-

 

131,209

 Other operating income, net 

 

(20,195)

 

-

 

-

 

(5,751)

 

(25,946)

 Total operating expenses 

 

1,977,302

 

(97,197)

 

-

 

(5,751)

 

1,874,354

                     

 Operating income 

 

401,867

 

96,838

 

-

 

5,751

 

504,456

                     

 Interest expense, net 

 

(206,929)

 

51

 

-

 

-

 

(206,878)

 Foreign exchange gain, net 

 

17,541

 

-

 

(17,541)

 

-

 

-

 Other income, net 

 

22,995

 

-

 

-

 

9,628

 

32,623

 Total non-operating expenses 

 

(166,393)

 

51

 

(17,541)

 

9,628

 

(174,255)

                     

 Income before provision for income taxes 

 

235,474

 

96,889

 

(17,541)

 

15,379

 

330,201

                     

 Provision for income taxes (a) 

 

115,992

 

23,242

 

174

 

1,362

 

140,770

                     

 Net income 

 

119,482

 

73,647

 

(17,715)

 

14,017

 

189,431

                     

 Less: Net income attributable to non-controlling interests 

 

74,372

 

51

 

-

 

-

 

74,423

                     

 Net income attributable to IGT PLC 

 

45,110

 

73,596

 

(17,715)

 

14,017

 

115,008

                     

 Net income per common share - diluted 

 

0.22

             

0.56

 Weighted-average shares - diluted 

 

204,532

             

204,532

                     
                     
 

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

 

 International Game Technology PLC 

 Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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

 Unaudited 

                     
                     
   

Quarter to date

             

Quarter to date

   

June 2018

 

Adjustments

 

June 2018

   

As

 

Purchase

 

Foreign

 

Refinancing and

 

As

   

Reported

 

Accounting

 

Exchange

 

Other

 

Adjusted

                     

 Total revenue 

 

1,202,338

 

(182)

 

-

 

-

 

1,202,156

                     

 Cost of services 

 

607,684

 

(21,061)

 

-

 

-

 

586,623

 Cost of product sales 

 

122,403

 

(3,912)

 

-

 

-

 

118,491

 Selling, general and administrative 

 

196,088

 

(26,736)

 

-

 

-

 

169,352

 Research and development 

 

63,957

 

(219)

 

-

 

-

 

63,738

 Other operating expense, net 

 

3,129

 

-

 

-

 

(3,129)

 

-

 Total operating expenses 

 

993,261

 

(51,928)

 

-

 

(3,129)

 

938,204

                     

 Operating income 

 

209,077

 

51,746

 

-

 

3,129

 

263,952

                     

 Interest expense, net 

 

(102,888)

 

508

 

-

 

-

 

(102,380)

 Foreign exchange gain, net 

 

172,546

 

-

 

(172,546)

 

-

 

-

 Other expense, net 

 

(31,304)

 

1

 

-

 

29,584

 

(1,719)

 Total non-operating income (expenses) 

 

38,354

 

509

 

(172,546)

 

29,584

 

(104,099)

                     

 Income before provision for income taxes 

 

247,431

 

52,255

 

(172,546)

 

32,713

 

159,853

                     

 Provision for income taxes (a) 

 

52,232

 

12,345

 

3,683

 

589

 

68,849

                     

 Net income 

 

195,199

 

39,910

 

(176,229)

 

32,124

 

91,004

                     

 Less: Net income attributable to non-controlling interests 

 

33,703

 

25

 

-

 

-

 

33,728

                     

 Net income attributable to IGT PLC 

 

161,496

 

39,885

 

(176,229)

 

32,124

 

57,276

                     

 Net income per common share - diluted 

 

0.79

             

0.28

 Weighted-average shares - diluted 

 

204,516

             

204,516

                     
                     
 

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

 

 International Game Technology PLC 

 Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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

 Unaudited 

                     
                     
   

Year to date

             

Year to date

   

June 2018

 

Adjustments

 

June 2018

   

As

 

Purchase

 

Foreign

 

Refinancing and

 

As

   

Reported

 

Accounting

 

Exchange

 

Other

 

Adjusted

                     

 Total revenue 

 

2,409,294

 

(359)

 

-

 

-

 

2,408,935

                     

 Cost of services 

 

1,225,742

 

(42,216)

 

-

 

-

 

1,183,526

 Cost of product sales 

 

225,754

 

(7,781)

 

-

 

-

 

217,973

 Selling, general and administrative 

 

411,306

 

(53,585)

 

-

 

-

 

357,721

 Research and development 

 

135,220

 

(454)

 

-

 

-

 

134,766

 Other operating expense, net 

 

5,200

 

-

 

-

 

(5,200)

 

-

 Total operating expenses 

 

2,003,222

 

(104,036)

 

-

 

(5,200)

 

1,893,986

                     

 Operating income 

 

406,072

 

103,677

 

-

 

5,200

 

514,949

                     

 Interest expense, net 

 

(210,168)

 

1,012

 

-

 

-

 

(209,156)

 Foreign exchange gain, net 

 

75,851

 

-

 

(75,851)

 

-

 

-

 Other expense, net 

 

(28,323)

 

(2,184)

 

-

 

29,584

 

(923)

 Total non-operating expenses 

 

(162,640)

 

(1,172)

 

(75,851)

 

29,584

 

(210,079)

                     

 Income before provision for income taxes 

 

243,432

 

102,505

 

(75,851)

 

34,784

 

304,870

                     

 Provision for income taxes (a) 

 

112,737

 

24,255

 

6,329

 

1,141

 

144,462

                     

 Net income 

 

130,695

 

78,250

 

(82,180)

 

33,643

 

160,408

                     

 Less: Net income attributable to non-controlling interests 

 

72,345

 

50

 

-

 

-

 

72,395

                     

 Net income attributable to IGT PLC 

 

58,350

 

78,200

 

(82,180)

 

33,643

 

88,013

                     

 Net income per common share - diluted 

 

0.29

             

0.43

 Weighted-average shares - diluted 

 

204,345

             

204,345

                     
                     
 

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

 

INTERNATIONAL GAME TECHNOLOGY PLC

           

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended June 30

Q2 '19

Q2 '18

FX

 

Period Ended June 30

Q2 '19

Q2 '18

Change 

Gaming

 

Total revenue

601

570

8%

 

Installed base units (end of period)

     
 

Gaming services

382

418

-6%

 

   Casino

31,112

36,385

-14.5%

   

Terminal 

279

307

-7%

 

   VLT - Government sponsored (ex-Italy)

18,651

18,482

0.9%

   

Other

103

111

-5%

 

   VLT - Italy supplier (B2B)

7,524

8,251

-8.8%

 

Product sales

219

152

46%

 

   Total installed base units

57,287

63,118

-9.2%

   

Terminal 

155

114

37%

 

   Yield (average gross revenue per unit per day)

$ 27.96

$ 27.74

0.8%

   

Other

64

38

72%

         
               

   Additional Italian network details:

     

Lottery

 

Total revenue

531

542

0%

 

   VLT - Operator (B2C)

10,929

10,991

-0.6%

 

Lottery services

495

499

2%

 

   AWP

40,268

43,657

-7.8%

   

FMC

460

460

2%

         
   

  Instant ticket & draw games

460

461

3%

 

Machine units shipped

     
   

  Other services

0

(1)

NM

 

   New/expansion

1,138

2,535

-55.1%

   

LMA

36

39