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International Game Technology PLC Reports Third Quarter 2019 Results
- Revenue of $1.15 billion, up 3% at constant currency on significant growth in global gaming product sales
- Operating income of $154 million; Adjusted EBITDA of $407 million
- Strong year-to-date operating cash flow of $789 million and free cash flow of $456 million
- Cash dividend declared of $0.20 per ordinary share

LONDON, Nov. 14, 2019 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the third quarter ended September 30, 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...

"Our core businesses achieved significant momentum in the third quarter and year-to-date periods," said Marco Sala, CEO of IGT. "Key performance indicators were solid in the quarter – gaming machine unit shipments increased 44%, while same-store revenue for draw games and instants rose 4%. Our leading positions are rooted in our focus on player-driven performance, which was on display at recent lottery and gaming trade shows and should sustain our momentum going forward."

"IGT has generated free cash flow in excess of $450 million in the first nine months," said Alberto Fornaro, CFO of IGT. "This confirms the inflection we expected to achieve this year. We are well positioned to achieve our 2019 strategic and financial goals."

Overview of Consolidated Third Quarter 2019 Results

       

Constant

 

Quarter Ended

 Y/Y

Currency

 

 September 30,

 Change

Change

 

2019

2018

(%)

(%)

(In $ millions, unless otherwise noted)

       

Revenue

1,153

1,156

0%

3%

Operating income

154

200

-23%

-19%

Net income/(loss) per diluted share

$0.51

$0.11

NM

 

Adjusted EBITDA

407

443

- 8%

-5%

Adjusted operating income

221

257

-14%

-11%

Adjusted net income per diluted share

$0.21

$0.31

-32%

 

Net debt

7,354

7,570

-3%

 
 

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 $1.15 billion, up 3% at constant currency

  • Sharp growth in global gaming product sales
  • Overcame significant Finland multi-year software sale in prior-year quarter and impact of higher machine gaming taxes in Italy

At constant currency, operating income down 19% to $154 million; adjusted operating income down 11% to $221 million

  • Non-cash write-down of pre-paid social gaming-related license

Adjusted EBITDA declined 5% at constant currency to $407 million

  • Differential profit flow-through on revenue mix, primarily due to high-margin Finland software transaction in prior year
  • Higher R&D and SG&A expenses, primarily due to timing

Interest expense, net was $103 million, down 1% from the prior-year quarter

Income taxes of $45 million; adjusted taxes of $51 million, down from $60 million on lower pre-tax income

Net income attributable to IGT was $104 million; adjusted net income attributable to IGT was $43 million, down from $64 million in the prior year

Net income per diluted share of $0.51; adjusted net income per diluted share of $0.21 versus $0.31 in the prior year

Net debt of $7.35 billion, down 5% from $7.76 billion at December 31, 2018

Operating Segment Review

North America Gaming & Interactive

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended September 30

Q3 '19

Q3 '18

FX

 

Period Ended September 30

Q3 '19

Q3 '18

Change 

Gaming

 

Total revenue

253

231

10%

 

Installed base units (end of period) 

     
 

Gaming services

146

152

-4%

 

    Casino

21,071

23,357

-9.8%

   

Terminal 

103

106

-2%

         
   

Other

43

46

-7%

 

Machine units shipped

     
 

Product sales

107

79

36%

 

   New/expansion

791

843

-6.2%

   

Terminal 

74

54

37%

 

   Replacement 

4,150

2,998

38.4%

   

Other

33

25

34%

 

   Total machines shipped

4,941

3,841

28.6%

                       

Other

 

Total revenue

4

0

NM

         
 

Service revenue

4

0

NM

   
               

Note:  Oklahoma agreement executed in Q2'19 reduces installed base by 2,223 units; no impact to units shipped

Total

 

Revenue

257

231

12%

         
 

Operating income

62

45

34%

         

Revenue of $257 million, up 11%

  • Product sales revenue of $107 million, up 36% over the prior year
    • Terminal product sales rose 37%
      • Significant 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 high-margin, multi-year technology license
  • Gaming service revenue of $146 million, compared to $152 million in the prior-year period
    • Installed base stable year-over-year and sequentially on an underlying basis; yields higher
    • Impact of multi-year poker contracts executed in prior periods
  • Other service revenue driven by contribution from sports betting

Operating income of $62 million, up 38% compared to the prior year

  • Increased unit shipments
  • High-margin, multi-year technology license

North America Lottery

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended September 30

Q3 '19

Q3 '18

FX

 

Period Ended September 30

Q3 '19

Q3 '18

Change 

Gaming

 

Total revenue

38

37

1%

 

Installed base units (end of period)

     
 

Gaming services

37

37

1%

 

    VLT - Government sponsored

14,294

14,965

-4.5%

   

Terminal 

24

25

-4%

         
   

Other

13

12

11%

 

Lottery same-store revenue growth

     
 

Product sales

0

0

0%

 

   Instant ticket & draw games

   

3.9%

               

   Multistate jackpots

   

-28.2%

Lottery

 

Total revenue

242

242

0%

 

   Total lottery same-store revenue growth

   

0.0%

 

Lottery services

215

225

-4%

         
   

FMC

193

200

-4%

         
   

  Instant ticket & draw games

157

164

-4%

         
   

  Other services

36

36

0%

         
   

LMA

23

25

-10%

         
 

Product sales

26

17

54%

         
                       

Other

 

Total revenue

1

0

NM

         
 

Service revenue

1

0

NM

         
                       

Total

 

Revenue

281

279

1%

         
 

Operating income

51

60

-15%

         

Revenue of $281 million, essentially in line with the prior year

  • Lottery service revenue of $215 million, compared to $225 million in the prior year
    • Instant ticket & draw game same-store revenue up 3.9% driven by broad-based strength across jurisdictions
    • Lower multistate jackpot activity
    • Impact of Illinois contract conclusion
  • Lottery product sales revenue up on strong demand for self-service vending machines
  • Gaming service revenue stable

Operating income of $51 million, down from $60 million

  • Impact of Illinois and lower jackpot activity (including effect on LMAs)
  • Expenses related to Rhode Island contract extension

International

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended September 30

Q3 '19

Q3 '18

FX

 

Period Ended September 30

Q3 '19

Q3 '18

Change 

Gaming

 

Total revenue

118

98

27%

 

Installed base units (end of period)

     
 

Gaming services

27

33

-12%

 

    Casino

9,877

12,332

-19.9%

   

Terminal 

11

13

-13%

 

    VLT - Government sponsored

4,455

3,675

21.2%

   

Other

16

19

-11%

 

   Total installed base units

14,332

16,007

-10.5%

 

Product sales

91

65

46%

         
   

Terminal 

65

47

42%

 

Machine units shipped

     
   

Other

26

18

57%

 

   New/expansion

210

529

-60.3%

               

   Replacement 

5,034

2,681

87.8%

Lottery

 

Total revenue

79

100

-19%

 

   Total machines shipped

5,244

3,210

63.4%

 

Lottery services

73

69

9%

         
   

FMC

73

69

9%

 

Lottery same-store revenue growth

     
   

  Instant ticket & draw games

55

54

7%

 

   Instant ticket & draw games

   

5.0%

   

  Other services

17

15

17%

 

   Multistate jackpots

   

29.3%

 

Product sales

6

31

-80%

 

   Total lottery same-store revenue growth

   

6.5%

                       

Other

 

Total revenue

16

18

0%

         
 

Service revenue

16

17

2%

         
 

Product sales

0

0

0%

         
                       

Total

 

Revenue

213

216

3%

         
 

Operating income

30

56

-40%

         

Revenue of $213 million, up 3% at constant currency

  • Gaming product sales revenue of $91 million, up 46% at constant currency
    • Broad-based geographic demand drives significant increase in units shipped, including 1,547 Sweden VLTs
    • Other product sales up on higher systems revenue
  • Gaming service revenue was $27 million
    • Year-over-year and sequential declines in the installed base due to conversions in prior periods
    • Lower interactive performance
  • Other revenue stable
  • Lottery service revenue of $73 million, up 9% at constant currency, fueled by 6.5% same-store revenue growth
  • Lottery product sales reflect significant Finland software sale in the prior year

Operating income of $30 million compared to $56 million in the prior year

  • Differential profit flow-through of revenue mix (high-margin Finland software sale in prior year)

Italy

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended September 30

Q3 '19

Q3 '18

FX

 

Period Ended September 30

Q3 '19

Q3 '18

Change 

Gaming

 

Total revenue

154

175

-7%

 

(In € millions, except machines)

     
 

Gaming services

154

175

-7%

 

Lottery

     
   

Terminal 

138

159

-8%

 

Lotto wagers

1,882

1,913

-1.6%

   

Other

16

16

1%

 

   10eLotto

1,341

1,361

-1.5%

 

Product sales

0

0

0%

 

   Core

477

434

10.0%

               

   Late numbers

19

70

-72.3%

Lottery

 

Total revenue

172

184

-1%

 

   MillionDAY

44

47

-6.4%

 

Lottery services

172

184

-1%

         
   

FMC

172

184

-1%

 

Scratch & Win wagers

2,197

2,179

0.8%

   

  Instant ticket & draw games

219

233

-1%

         
   

  Other services

(47)

(49)

1%

 

Italy lottery revenue growth

   

-1.1%

 

Product sales

0

0

0%

         
               

Gaming

     

Other

 

Total revenue

76

70

14%

 

Installed base (end of period)

     
 

Service revenue

76

70

14%

 

   VLT - Operator (B2C)

10,984

11,027

-0.4%

 

Product sales

0

0

0%

 

   VLT - Supplier (B2B)

7,514

8,094

-7.2%

               

   AWP

41,129

43,074

-4.5%

Total

 

Revenue

402

430

-1%

 

   Total installed base

59,627

62,195

-4.1%

 

Operating income

127

145

-7%

         
               

Wagers

     
               

   VLT - Operator (B2C)

1,324

1,426

-7.1%

               

   AWP

877

879

-0.3%

               

   Interactive wagers (gaming)

492

447

10.1%

                       
               

Other

     
               

   Sports betting wagers (1)

227

225

0.8%

               

   Sports betting payout (%) (1)

83.4%

81.1%

2.3 pp

                       
               

(1) Includes virtual wagers and pools & horses

Revenue of $402 million, relatively stable at constant currency

  • Lottery service revenue of $172 million, essentially in line with the prior year at constant currency, on stable wagers
  • Gaming service revenue of $154 million compared to $175 million in the prior year
    • Increased taxes on AWPs and VLTs
  • Other service revenue of $76 million, up 14% at constant currency
    • Growth in commercial services
    • Lower sports betting payout in the prior year

Operating income of $127 million, down 7% at constant currency

  • Higher gaming machine taxes and sports betting payout

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

  • Record date of November 29, 2019
  • Payment date of December 13, 2019

Issuance of €500 million 2.375% Notes due 2028, as previously announced

  • Net proceeds used to pay €320 million term loan amortization due January 2020
  • Balance used to repay all utilizations under revolving credit facilities

2019 Outlook

  • Adjusted EBITDA of $1.675 - $1.735 billion remains unchanged
  • Updating capital expenditures to $450 - $500 million; previously $450 - $550 million
  • Full-year EUR/USD exchange rate of 1.12

Conference Call and Webcast

November 14, 2019, 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 1869816
  • 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 1869816

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 

 

 September 30, 

 

2019

 

2018

       

Service revenue

921,712

 

963,265

Product sales

231,535

 

192,565

Total revenue

1,153,247

 

1,155,830

       

Cost of services

575,594

 

586,811

Cost of product sales

136,246

 

107,311

Selling, general and administrative

201,416

 

194,099

Research and development

68,804

 

63,277

Impairment

432

 

1,530

Other operating expense, net

16,873

 

2,774

Total operating expenses

999,365

 

955,802

       

Operating income

153,882

 

200,028

       

Interest expense, net

(102,551)

 

(103,553)

Foreign exchange gain, net

124,068

 

21,104

Other expense, net

(308)

 

(17,244)

Total non-operating income (expenses)

21,209

 

(99,693)

       

Income before provision for income taxes

175,091

 

100,335

       

Provision for income taxes

44,530

 

46,327

       

Net income

130,561

 

54,008

       

Less: Net income attributable to non-controlling interests

26,998

 

31,709

       

Net income attributable to IGT PLC

103,563

 

22,299

       
       

Net income attributable to IGT PLC per common share - basic

0.51

 

0.11

Net income attributable to IGT PLC per common share - diluted

0.51

 

0.11

       

Weighted-average shares - basic

204,435

 

204,219

Weighted-average shares - diluted

204,528

 

204,344

 

International Game Technology PLC

Consolidated Statements of Operations

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

Unaudited

       
 

 For the nine months ended 

 

 September 30, 

 

2019

 

2018

       

Service revenue

2,892,774

 

3,017,283

Product sales

639,642

 

547,841

Total revenue

3,532,416

 

3,565,124

       

Cost of services

1,765,519

 

1,812,553

Cost of product sales

397,217

 

333,065

Selling, general and administrative

616,516

 

605,405

Research and development

200,305

 

198,497

Impairment

432

 

1,530

Other operating (income) expense, net

(3,322)

 

7,974

Total operating expenses

2,976,667

 

2,959,024

       

Operating income

555,749

 

606,100

       

Interest expense, net

(309,480)

 

(313,721)

Foreign exchange gain, net

141,609

 

96,955

Other income (expense), net

22,687

 

(45,567)

Total non-operating expenses

(145,184)

 

(262,333)

       

Income before provision for income taxes

410,565

 

343,767

       

Provision for income taxes

160,522

 

159,064

       

Net income

250,043

 

184,703

       

Less: Net income attributable to non-controlling interests

101,370

 

104,054

       

Net income attributable to IGT PLC

148,673

 

80,649

       
       

Net income attributable to IGT PLC per common share - basic

0.73

 

0.40

Net income attributable to IGT PLC per common share - diluted

0.73

 

0.39

       

Weighted-average shares - basic

204,352

 

204,009

Weighted-average shares - diluted

204,532

 

204,375

 

International Game Technology PLC

Consolidated Balance Sheets

($ thousands)

Unaudited

       
 

September 30,

 

December 31,

 

2019

 

2018

Assets

     

Current assets:

     

Cash and cash equivalents

542,425

 

250,669

Restricted cash and cash equivalents

221,233

 

261,108

Trade and other receivables, net

899,665

 

949,085

Inventories

253,949

 

282,698

Other current assets

471,239

 

504,061

Income taxes receivable

49,214

 

39,075

Total current assets

2,437,725

 

2,286,696

Systems, equipment and other assets related to contracts, net

1,298,394

 

1,404,426

Property, plant and equipment, net

138,708

 

185,349

Operating lease right-of-use-assets

344,146

 

-

Goodwill

5,535,003

 

5,580,227

Intangible assets, net

1,873,123

 

2,044,723

Other non-current assets

1,939,337

 

2,108,964

Deferred income taxes

33,819

 

38,117

Total non-current assets

11,162,530

 

11,361,806

Total assets

13,600,255

 

13,648,502

       

Liabilities and shareholders' equity

     

Current liabilities:

     

Accounts payable

1,069,275

 

1,142,371

Other current liabilities

790,326

 

816,722

Current portion of long-term debt

447,678

 

-

Short-term borrowings

740

 

34,822

Income taxes payable

53,414

 

8,209

Total current liabilities

2,361,433

 

2,002,124

Long-term debt, less current portion

7,468,948

 

7,977,267

Deferred income taxes

440,903

 

446,083

Income taxes payable

25,654

 

25,654

Operating lease liabilities

311,673

 

-

Other non-current liabilities

374,601

 

445,445

Total non-current liabilities

8,621,779

 

8,894,449

Total liabilities

10,983,212

 

10,896,573

Commitments and contingencies

     

Shareholders' equity

2,617,043

 

2,751,929

Total liabilities and shareholders' equity

13,600,255

 

13,648,502

 

International Game Technology PLC

Consolidated Statements of Cash Flows

($ thousands)

Unaudited

   
 

 For the nine months ended 

 

 September 30, 

 

2019

 

2018

Cash flows from operating activities

     

Net income

250,043

 

184,703

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

     

Depreciation 

315,291

 

312,203

Amortization 

207,161

 

204,256

Service revenue amortization

154,630

 

164,952

Stock-based compensation expense

20,046

 

24,944

Debt issuance cost amortization

17,004

 

16,511

Loss on extinguishment of debt

11,964

 

49,460

Deferred income taxes

2,590

 

11,815

Impairment

432

 

1,530

Gain on sale of assets

(65,324)

 

(5,568)

Foreign exchange gain, net

(141,609)

 

(96,955)

Other non-cash costs, net

48,299

 

8,700

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

     

Trade and other receivables

16,546

 

92,823

Inventories

23,875

 

(26,682)

Upfront Italian license fee

-

 

(366,270)

Accounts payable

611

 

(123,057)

Other assets and liabilities

(72,854)

 

(204,053)

Net cash provided by operating activities

788,705

 

249,312

       

Cash flows from investing activities

     

Capital expenditures

(332,716)

 

(374,313)

Proceeds from sale of assets

100,743

 

8,200

Other

6,126

 

2,064

Net cash used in investing activities

(225,847)

 

(364,049)

       

Cash flows from financing activities

     

Principal payments on long-term debt

(1,264,647)

 

(1,658,753)

Dividends paid - non-controlling interests

(135,684)

 

(126,926)

Dividends paid

(122,616)

 

(122,394)

Return of capital - non-controlling interests

(80,384)

 

(64,974)

Net (payments of) proceeds from short-term borrowings

(34,519)

 

29,957

Debt issuance costs paid

(24,787)

 

(10,199)

Payments in connection with extinguishment of debt

(8,598)

 

(42,148)

Net receipts from (payments of) financial liabilities

753

 

(36,407)

Capital increase - non-controlling interests

1,369

 

135,536

Proceeds from long-term debt

1,397,025

 

1,415,762

Other

(7,798)

 

(18,051)

Net cash used in financing activities

(279,886)

 

(498,597)

       

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

282,972

 

(613,334)

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

(31,091)

 

10,924

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

763,658

 

703,020

       
       

Supplemental Cash Flow Information:

     

Interest paid

(371,847)

 

(419,508)

Income taxes paid

(138,009)

 

(125,388)

 

International Game Technology PLC

Net Debt

($ thousands)

Unaudited

       
 

September 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)

1,491,826

 

1,469,609

4.750% Senior Secured Notes due February 2023 (2)

918,800

 

964,730

5.350% Senior Secured Notes due October 2023(1)

60,910

 

60,983

3.500% Senior Secured Notes due July 2024 (2)

540,006

 

567,179

6.500% Senior Secured Notes due February 2025 (1)

1,089,555

 

1,088,385

3.500% Senior Secured Notes due June 2026 (2)

809,246

 

-

6.250% Senior Secured Notes due January 2027(1)

743,203

 

742,667

2.375% Senior Secured Notes due April 2028 (2)

539,115

 

-

Senior Secured Notes, long-term

6,192,661

 

5,858,491

       

Term Loan Facilities due January 2023 (2)

1,276,287

 

1,705,395

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

-

 

413,381

Long-term debt, less current portion

7,468,948

 

7,977,267

       

4.750% Senior Secured Notes due March 2020 (2)

420,273

 

-

5.500% Senior Secured Notes due June 2020 (1)

27,405

 

-

Current portion of long-term debt 

447,678

 

-

       

Short-term borrowings

740

 

34,822

Total debt

7,917,366

 

8,012,089

       

Less: Cash and cash equivalents

542,425

 

250,669

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

21,311

 

-

       

Net debt

7,353,630

 

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

 

September 30,

 

2019

 

2018

       

Net income

130,561

 

54,008

Provision for income taxes

44,530

 

46,327

Non-operating (income) expenses

(21,209)

 

99,693

Depreciation 

106,020

 

109,755

Amortization

69,960

 

67,806

Service revenue amortization

50,695

 

53,837

Stock-based compensation expense

7,544

 

7,825

Impairment

432

 

1,530

Other

18,543

 

2,541

Adjusted EBITDA

407,076

 

443,322

       
       
       

Cash flows from operating activities

196,984

 

129,162

Capital expenditures

(101,713)

 

(115,346)

Free Cash Flow

95,271

 

13,816

 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)

Unaudited

       
       
 

For the nine months ended

 

September 30,

 

2019

 

2018

       

Net income

250,043

 

184,703

Provision for income taxes

160,522

 

159,064

Non-operating expenses

145,184

 

262,333

Depreciation 

315,291

 

312,203

Amortization

207,161

 

204,256

Service revenue amortization

154,630

 

164,952

Stock-based compensation expense

20,046

 

24,944

Impairment

432

 

1,530

Other

24,149

 

7,308

Adjusted EBITDA

1,277,458

 

1,321,293

       
       
       

Cash flows from operating activities

788,705

 

249,312

Capital expenditures

(332,716)

 

(374,313)

Free Cash Flow

455,989

 

(125,001)

 

 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

 

September 2019

 

Adjustments

 

September 2019

 

As

 

Purchase

 

Foreign

     

Refinancing and

 

As

 

Reported

 

Accounting

 

Exchange

 

Impairment

 

Other

 

Adjusted

                       

 Total revenue 

1,153,247

 

(181)

 

-

 

-

 

-

 

1,153,066

                       

 Cost of services 

575,594

 

(17,947)

 

-

 

-

 

-

 

557,647

 Cost of product sales 

136,246

 

(3,955)

 

-

 

-

 

-

 

132,291

 Selling, general and administrative 

201,416

 

(26,788)

 

-

 

-

 

-

 

174,628

 Research and development 

68,804

 

(1)

 

-

 

-

 

-

 

68,803

 Impairment 

432

 

-

 

-

 

(432)

 

-

 

-

 Other operating expense (income), net 

16,873

 

-

 

-

 

-

 

(18,615)

 

(1,742)

 Total operating expenses 

999,365

 

(48,691)

 

-

 

(432)

 

(18,615)

 

931,627

                       

 Operating income 

153,882

 

48,510

 

-

 

432

 

18,615

 

221,439

                       

 Interest expense, net 

(102,551)

 

25

 

-

 

-

 

-

 

(102,526)

 Foreign exchange gain, net 

124,068

 

-

 

(124,068)

 

-

 

-

 

-

 Other (expense) income, net 

(308)

 

-

 

-

 

-

 

2,336

 

2,028

 Total non-operating income (expenses) 

21,209

 

25

 

(124,068)

 

-

 

2,336

 

(100,498)

                       

 Income before provision for income taxes 

175,091

 

48,535

 

(124,068)

 

432

 

20,951

 

120,941

                       

 Provision for income taxes (a) 

44,530

 

11,666

 

(10,993)

 

-

 

5,368

 

50,571

                       

 Net income 

130,561

 

36,869

 

(113,075)

 

432

 

15,583

 

70,370

                       

 Less: Net income attributable to non-controlling interests 

26,998

 

25

 

-

 

-

 

-

 

27,023

                       

 Net income attributable to IGT PLC 

103,563

 

36,844

 

(113,075)

 

432

 

15,583

 

43,347

                       

 Net income per common share - diluted 

0.51

                 

0.21

 Weighted-average shares - diluted 

204,528

                 

204,528

                       
 

 (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

 

September 2019

 

Adjustments

 

September 2019

 

As

 

Purchase

 

Foreign

     

Refinancing and

 

As

 

Reported

 

Accounting

 

Exchange

 

Impairment

 

Other

 

Adjusted

                       

 Total revenue 

3,532,416

 

(540)

 

-

 

-

 

-

 

3,531,876

                       

 Cost of services 

1,765,519

 

(54,491)

 

-

 

-

 

-

 

1,711,028

 Cost of product sales 

397,217

 

(11,736)

 

-

 

-

 

-

 

385,481

 Selling, general and administrative 

616,516

 

(79,368)

 

-

 

-

 

-

 

537,148

 Research and development 

200,305

 

(293)

 

-

 

-

 

-

 

200,012

 Impairment 

432

 

-

 

-

 

(432)

 

-

 

-

 Other operating income, net 

(3,322)

 

-

 

-

 

-

 

(24,366)

 

(27,688)

 Total operating expenses 

2,976,667

 

(145,888)

 

-

 

(432)

 

(24,366)

 

2,805,981

                       

 Operating income 

555,749

 

145,348

 

-

 

432

 

24,366

 

725,895

                       

 Interest expense, net 

(309,480)

 

76

 

-

 

-

 

-

 

(309,404)

 Foreign exchange gain, net 

141,609

 

-

 

(141,609)

 

-

 

-

 

-

 Other income, net 

22,687

 

-

 

-

 

-

 

11,964

 

34,651

 Total non-operating expenses 

(145,184)

 

76

 

(141,609)

 

-

 

11,964

 

(274,753)

                       

 Income before provision for income taxes 

410,565

 

145,424

 

(141,609)

 

432

 

36,330

 

451,142

                       

 Provision for income taxes (a) 

160,522

 

34,908

 

(10,819)

 

-

 

6,730

 

191,341

                       

 Net income 

250,043

 

110,516

 

(130,790)

 

432

 

29,600

 

259,801

                       

 Less: Net income attributable to non-controlling interests 

101,370

 

76

 

-

 

-

 

-

 

101,446

                       

 Net income attributable to IGT PLC 

148,673

 

110,440

 

(130,790)

 

432

 

29,600

 

158,355

                       

 Net income per common share - diluted 

0.73

                 

0.77

 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

 

September 2018

 

Adjustments

 

September 2018

 

As

 

Purchase

 

Foreign

     

Refinancing and

 

As

 

Reported

 

Accounting

 

Exchange

 

Impairment

 

Other

 

Adjusted

                       

 Total revenue 

1,155,830

 

(181)

 

-

 

-

 

-

 

1,155,649

                       

 Cost of services 

586,811

 

(21,241)

 

-

 

-

 

-

 

565,570

 Cost of product sales 

107,311

 

(3,954)

 

-

 

-

 

-

 

103,357

 Selling, general and administrative 

194,099

 

(27,017)

 

-

 

-

 

-

 

167,082

 Research and development 

63,277

 

(232)

 

-

 

-

 

-

 

63,045

 Impairment 

1,530

 

-

 

-

 

(1,530)

 

-

 

-

 Other operating expense, net 

2,774

 

-

 

-

 

-

 

(2,774)

 

-

 Total operating expenses 

955,802

 

(52,444)

 

-

 

(1,530)

 

(2,774)

 

899,054

                       

 Operating income 

200,028

 

52,263

 

-

 

1,530

 

2,774

 

256,595

                       

 Interest expense, net 

(103,553)

 

524

 

-

 

-

 

-

 

(103,029)

 Foreign exchange gain, net 

21,104

 

-

 

(21,104)

 

-

 

-

 

-

 Other (expense) income, net 

(17,244)

 

-

 

-

 

-

 

19,875

 

2,631

 Total non-operating expenses 

(99,693)

 

524

 

(21,104)

 

-

 

19,875

 

(100,398)

                       

 Income before provision for income taxes 

100,335

 

52,787

 

(21,104)

 

1,530

 

22,649

 

156,197

                       

 Provision for income taxes (a) 

46,327

 

12,846

 

301

 

-

 

690

 

60,164

                       

 Net income 

54,008

 

39,941

 

(21,405)

 

1,530

 

21,959

 

96,033

                       

 Less: Net income attributable to non-controlling interests 

31,709

 

27

 

-

 

-

 

-

 

31,736

                       

 Net income attributable to IGT PLC 

22,299

 

39,914

 

(21,405)

 

1,530

 

21,959

 

64,297

                       

 Net income per common share - diluted 

0.11

                 

0.31

 Weighted-average shares - diluted 

204,344

                 

204,344

                       
 

 (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

 

September 2018

 

Adjustments

 

September 2018

 

As

 

Purchase

 

Foreign

     

Refinancing and

 

As

 

Reported

 

Accounting

 

Exchange

 

Impairment

 

Other

 

Adjusted

                       

 Total revenue 

3,565,124

 

(540)

 

-

 

-

 

-

 

3,564,584

                       

 Cost of services 

1,812,553

 

(63,457)

 

-

 

-

 

-

 

1,749,096

 Cost of product sales 

333,065

 

(11,735)

 

-

 

-

 

-

 

321,330

 Selling, general and administrative 

605,405

 

(80,602)

 

-

 

-

 

-

 

524,803

 Research and development 

198,497

 

(686)

 

-

 

-

 

-

 

197,811

 Impairment 

1,530

 

-

 

-

 

(1,530)

 

-

 

-

 Other operating expense, net 

7,974

 

-

 

-

 

-

 

(7,974)

 

-

 Total operating expenses 

2,959,024

 

(156,480)

 

-

 

(1,530)

 

(7,974)

 

2,793,040

                       

 Operating income 

606,100

 

155,940

 

-

 

1,530

 

7,974

 

771,544

                       

 Interest expense, net 

(313,721)

 

1,536

 

-

 

-

 

-

 

(312,185)

 Foreign exchange gain, net 

96,955

 

-

 

(96,955)

 

-

 

-

 

-

 Other (expense) income, net 

(45,567)

 

(2,184)

 

-

 

-

 

49,459

 

1,708

 Total non-operating expenses 

(262,333)

 

(648)

 

(96,955)

 

-

 

49,459

 

(310,477)

                       

 Income before provision for income taxes 

343,767

 

155,292

 

(96,955)

 

1,530

 

57,433

 

461,067

                       

 Provision for income taxes (a) 

159,064

 

37,101

 

6,630

 

-

 

1,831

 

204,626

                       

 Net income 

184,703

 

118,191

 

(103,585)

 

1,530

 

55,602

 

256,441