EX-99.1 2 a19-10035_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

NEWS RELEASE

 

INTERNATIONAL GAME TECHNOLOGY PLC REPORTS

FIRST QUARTER 2019 RESULTS

 

·                  Revenue of $1.14 billion includes significant increase in global gaming unit shipments and continued growth in global lottery same-store revenue

 

·                  Operating income of $178 million; adjusted EBITDA of $417 million, stable at constant currency on strong Italy and North America Lottery results

 

·                  Maintaining full-year adjusted EBITDA outlook

 

·                  Cash dividend declared of $0.20 per ordinary share

 

LONDON, U.K. — May 20, 2019 — International Game Technology PLC (“IGT”) (NYSE:IGT) today reported financial results for the first quarter ended March 31, 2019. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the first quarter results; access details are provided below.

 

“Our first quarter results confirm the consistent growth profile of our global lottery business and the progress we’ve made in sales of gaming machines, where global unit shipments increased 20%,” said Marco Sala, CEO of IGT. “The results of our Italy operations are also noteworthy, with further growth in lottery and resilient machine gaming performance. As we look to the future, our focus remains on improving revenue and profits from gaming activities, innovating with new lottery games and technologies, and pursuing emerging growth opportunities.”

 

“First quarter revenue and adjusted EBITDA were stable at constant currency, thanks to important contributions from our Italy and North America Lottery segments,” said Alberto Fornaro, CFO of IGT. “Operating expenses were well controlled, our financial condition is solid, and we are maintaining our financial outlook for the year.”

 

1


 

Overview of Consolidated First Quarter 2019 Results

 

 

 

 

 

 

 

 

 

Constant

 

 

 

Quarter Ended

 

Y/Y

 

Currency

 

 

 

March 31,

 

Change

 

Change

 

(In $ millions, unless otherwise noted)

 

2019

 

2018

 

(%)

 

(%)

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

1,145

 

1,207

 

-5%

 

-1%

 

Operating income

 

178

 

197

 

-10%

 

-4%

 

Net income/(loss) per diluted share

 

$

0.20

 

$

(0.51

)

NM

 

 

 

Adjusted EBITDA

 

417

 

436

 

-4%

 

0%

 

Adjusted operating income

 

230

 

251

 

-8%

 

-4%

 

Adjusted net income per diluted share

 

$

0.12

 

$

0.15

 

-20%

 

 

 

Net debt

 

7,714

 

7,525

 

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 $1.14 billion, stable at constant currency

 

·                  20% increase in global gaming machine unit shipments

·                  Stable lottery revenue

·                  Offset by increased gaming machine taxes in Italy and lower gaming systems sales

 

Adjusted EBITDA of $417 million, stable at constant currency

 

·                  Strong Italy and North America Lottery performance

·                  Selling, general and administrative expenses and research and development costs better than the prior-year period despite higher legal costs

 

Adjusted operating income was $230 million, down 4% at constant currency

 

·                  Higher depreciation associated with upgrading the gaming installed base and lottery contract wins and extensions

 

Interest expense, net was $103 million compared to $107 million in the prior-year quarter

 

Provision for income taxes was $53 million compared to $61 million in the prior-year period

 

Net income attributable to IGT was $40 million in the quarter; adjusted net income attributable to IGT was $24 million

 

Net income per diluted share of $0.20; adjusted net income per diluted share of $0.12

 

Net debt of $7.71 billion, down from $7.76 billion at December 31, 2018

 

2


 

Operating Segment Review

 

North America Gaming & Interactive

 

Select Financial Data

 

 

 

 

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended March 31

 

Q1 ‘19

 

Q1 ‘18

 

FX

 

Period Ended March 31

 

Q1 ‘19

 

Q1 ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

239

 

243

 

-2%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

155

 

154

 

1%

 

Casino

 

22,713

 

23,183

 

-2.0%

 

Terminal

 

100

 

105

 

-5%

 

 

 

 

 

 

 

 

 

Other

 

55

 

49

 

13%

 

Machine units shipped

 

 

 

 

 

 

 

Product sales

 

84

 

89

 

-6%

 

New/expansion

 

1,482

 

1,024

 

44.7%

 

Terminal

 

63

 

50

 

28%

 

Replacement

 

2,544

 

2,692

 

-5.5%

 

Other

 

21

 

40

 

-47%

 

Total machines shipped

 

4,026

 

3,716

 

8.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

1

 

0

 

NM

 

 

 

 

 

 

 

 

 

Service revenue

 

1

 

0

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

240

 

244

 

-1%

 

 

 

 

 

 

 

 

 

Operating income

 

49

 

57

 

-20%

 

 

 

 

 

 

 

 

 

 

Revenue of $240 million, stable with the prior year at constant currency

 

·                  Gaming service revenue of $155 million, stable compared to the prior year

 

·                  Terminal service revenue reflects decline in installed base and lower average yields due to product mix

·                  Increase in other service revenue from a large, multi-year poker contract

 

·                  Product sales revenue of $84 million

 

·                  Strong 28% increase in terminal revenue at constant currency resulting from 8% increase in gaming machine units shipped at higher average selling prices

 

·                  Current quarter new/expansion units include shipments to Encore Boston Harbor

·                  Replacement units declined slightly due to fewer VLT unit shipments

 

·                  Decline in other product sales revenue driven by comparison with exceptionally high sales of systems in the prior year

 

Operating income of $49 million compared to $57 million in the prior-year quarter

 

·                  Higher depreciation related to upgrading the installed base

·                  Lower sales of high-margin systems

·                  Stable operating expenses

 

3


 

North America Lottery

 

Select Financial Data

 

 

 

 

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended March 31

 

Q1 ‘19

 

Q1 ‘18

 

FX

 

Period Ended March 31

 

Q1 ‘19

 

Q1 ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

41

 

38

 

10%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

41

 

38

 

9%

 

VLT - Government sponsored

 

14,799

 

15,101

 

-2.0%

 

Terminal

 

25

 

25

 

2%

 

 

 

 

 

 

 

 

 

Other

 

16

 

13

 

22%

 

Lottery same-store revenue growth

 

 

 

 

 

 

 

Product sales

 

0

 

0

 

0%

 

Instant ticket & draw games

 

 

 

 

 

5.2%

 

 

 

 

 

 

 

 

 

Multistate jackpots

 

 

 

 

 

-9.3%

 

Lottery

 

 

 

 

 

 

 

Total lottery same-store revenue growth

 

 

 

 

 

2.8%

 

Total revenue

 

255

 

257

 

-1%

 

 

 

 

 

 

 

 

 

Lottery services

 

241

 

241

 

0%

 

 

 

 

 

 

 

 

 

FMC

 

209

 

205

 

2%

 

 

 

 

 

 

 

 

 

Instant ticket & draw games

 

170

 

176

 

-4%

 

 

 

 

 

 

 

 

 

Other services

 

39

 

29

 

34%

 

 

 

 

 

 

 

 

 

LMA

 

32

 

36

 

-10%

 

 

 

 

 

 

 

 

 

Product sales

 

14

 

16

 

-12%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

296

 

295

 

0%

 

 

 

 

 

 

 

 

 

Operating income

 

76

 

76

 

0%

 

 

 

 

 

 

 

 

 

 

Revenue of $296 million, stable with the prior-year period

 

·                  Lottery service revenue of $241 million, in line with the prior year

 

·                  Overall same-store revenue growth driven by instant ticket and draw games; difficult comparison with elevated jackpot activity in the prior year

·                  Recovery of certain service level agreement provisions incurred previously, partially offset by lower revenue in Illinois

·                  LMA impacted by timing of pass-through revenue with no associated profit

 

·                  Lottery product sales revenue of $14 million

 

·                  Large Massachusetts retailer terminal sales in the prior year

 

·                  Gaming service revenue of $41 million

 

·                  Growth from interactive jackpot game in Canada

 

Operating income of $76 million, stable with the prior-year period

 

·                  Service level agreement recoveries and disciplined cost control offset higher profit flow-through from elevated jackpot activity in prior year

·                  Despite increased depreciation related to contract wins and extensions

 

4


 

International

 

Select Financial Data

 

 

 

 

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended March 31

 

Q1 ‘19

 

Q1 ‘18

 

FX

 

Period Ended March 31

 

Q1 ‘19

 

Q1 ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

81

 

91

 

-5%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

30

 

40

 

-15%

 

Casino

 

10,666

 

12,917

 

-17.4%

 

Terminal

 

12

 

14

 

-1%

 

VLT - Government sponsored

 

4,419

 

2,937

 

50.5%

 

Other

 

18

 

25

 

-23%

 

Total installed base units

 

15,085

 

15,854

 

-4.9%

 

Product sales

 

51

 

51

 

4%

 

 

 

 

 

 

 

 

 

Terminal

 

35

 

30

 

22%

 

Machine units shipped

 

 

 

 

 

 

 

Other

 

15

 

21

 

-22%

 

New/expansion

 

382

 

91

 

319.8%

 

 

 

 

 

 

 

 

 

Replacement

 

2,593

 

2,021

 

28.3%

 

Lottery

 

 

 

 

 

 

 

Total machines shipped

 

2,975

 

2,112

 

40.9%

 

Total revenue

 

74

 

74

 

5%

 

 

 

 

 

 

 

 

 

Lottery services

 

70

 

72

 

3%

 

Lottery same-store revenue growth

 

 

 

 

 

 

 

FMC

 

70

 

72

 

3%

 

Instant ticket & draw games

 

 

 

 

 

3.4%

 

Instant ticket & draw games

 

56

 

57

 

4%

 

Multistate jackpots

 

 

 

 

 

8.2%

 

Other services

 

14

 

15

 

-4%

 

Total lottery same-store revenue growth

 

 

 

 

 

3.7%

 

Product sales

 

4

 

3

 

76%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

17

 

19

 

-4%

 

 

 

 

 

 

 

 

 

Service revenue

 

17

 

19

 

-4%

 

 

 

 

 

 

 

 

 

Product sales

 

0

 

0

 

-31%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

172

 

184

 

-1%

 

 

 

 

 

 

 

 

 

Operating income

 

14

 

22

 

-22%

 

 

 

 

 

 

 

 

 

 

Revenue of $172 million, stable with the prior year at constant currency

 

·                  Lottery service revenue of $70 million, up 3% at constant currency

 

·                  3.7% same-store revenue growth with broad-based expansion across games and geographies

 

·                  Gaming service revenue was $30 million compared to $40 million in the prior year

 

·                  Lower interactive revenue and reduced contribution from installed base

·                  Decline in installed base year-over-year due to large conversions in the prior year, partially offset by continued expansion of Greece VLTs; sequential increase in the installed base

 

·                  Gaming product sales revenue of $51 million, up 4% at constant currency

 

·                  22% rise in terminal revenue with growth in both new/expansion and replacement units partially offset by lower ASPs

·                  Decline in other product sales revenue primarily driven by higher system sales in the prior year

 

Operating income of $14 million

 

·                  Includes $5 million settlement cost associated with lottery contract

·                  Large, high-margin system sale in the prior year

 

5


 

Italy

 

Select Financial Data

 

 

 

 

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended March 31

 

Q1 ‘19

 

Q1 ‘18

 

FX

 

Period Ended March 31

 

Q1 ‘19

 

Q1 ‘18

 

Change

 

 

 

 

 

 

 

 

 

(In € millions, except machines)

 

 

 

 

 

 

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

153

 

191

 

-13%

 

Lottery

 

 

 

 

 

 

 

Gaming services

 

153

 

190

 

-13%

 

Lotto wagers

 

2,142

 

2,034

 

5.3%

 

Terminal

 

137

 

172

 

-14%

 

10eLotto

 

1,544

 

1,451

 

6.4%

 

Other

 

16

 

18

 

-4%

 

Core

 

501

 

504

 

-0.4%

 

Product sales

 

0

 

0

 

0%

 

Late numbers

 

47

 

45

 

2.7%

 

 

 

 

 

 

 

 

 

MillionDAY

 

50

 

34

 

45.8%

 

Lottery

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

204

 

214

 

3%

 

Scratch & Win wagers

 

2,386

 

2,408

 

-0.9%

 

Lottery services

 

204

 

214

 

3%

 

 

 

 

 

 

 

 

 

FMC

 

204

 

214

 

3%

 

Italy lottery revenue growth

 

 

 

 

 

3.2%

 

Instant ticket & draw games

 

252

 

266

 

3%

 

 

 

 

 

 

 

 

 

Other services

 

(49

)

(52

)

0%

 

Gaming

 

 

 

 

 

 

 

Product sales

 

0

 

0

 

0%

 

Installed base (end of period)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VLT - Operator (B2C)

 

10,995

 

10,931

 

0.6%

 

Other

 

 

 

 

 

 

 

VLT - Supplier (B2B)

 

7,847

 

8,425

 

-6.9%

 

Total revenue

 

80

 

79

 

9%

 

AWP

 

40,746

 

51,315

 

-20.6%

 

Service revenue

 

80

 

79

 

9%

 

Total installed base

 

59,588

 

70,671

 

-15.7%

 

Product sales

 

0

 

0

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wagers

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

VLT - Operator (B2C)

 

1,503

 

1,441

 

4.3%

 

Revenue

 

437

 

483

 

-2%

 

AWP

 

939

 

955

 

-1.6%

 

Operating income

 

147

 

147

 

9%

 

Interactive wagers (gaming)

 

489

 

493

 

-0.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sports betting wagers (1)

 

274

 

246

 

11.1%

 

 

 

 

 

 

 

 

 

Sports betting payout (%) (1)

 

83.3

%

81.2

%

2.1 pp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes virtual wagers and pools & horses

 

 

 

 

 

 

Revenue of $437 million compared to $483 million, down 2% at constant currency

 

·                  Lottery service revenue of $204 million, up 3% at constant currency

 

·                  Lotto wagers up 5.3% on steady growth in 10eLotto

·                  Scratch & Win wagers reflect one fewer day of sales year-over-year; exceptional performance from the Multiplier family of games against the successful Miliardario relaunch in the prior year

 

·                  Gaming service revenue was $153 million compared to $190 million in the prior year, down 13% at constant currency

 

·                  Increased taxes on AWP and VLT machines

·                  Improved productivity of gaming machines; 21% decline in AWP units results in less than 2% reduction in wagers

 

·                  Other service revenue includes pass-through revenue related to new commercial services offer

 

Operating income up 9% at constant currency to $147 million

 

·                  High profit flow-through on growth in Lotto wagers

·                  Beneficial shift in timing of expenses

·                  Despite increased taxes on gaming machines

 

6


 

Other Developments

 

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

 

·                  Record date of June 3, 2019

·                  Payment date of June 17, 2019

 

Outlook

 

Outlook unchanged

 

·                  2019 adjusted EBITDA $1.70 - $1.76 billion

·                  Capital expenditures of $450 - $550 million

·                  Assumes a EUR/USD exchange rate of 1.15

 

Conference Call and Webcast

 

May 20, 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 2599793

·                  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 2599793

 

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.

 

7


 

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

 

8


 

International Game Technology PLC

Consolidated Statements of Operations

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

Unaudited

 

 

 

For the three months ended

 

 

 

March 31,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

Service revenue

 

991,031

 

1,046,951

 

Product sales

 

153,885

 

160,005

 

Total revenue

 

1,144,916

 

1,206,956

 

 

 

 

 

 

 

Cost of services

 

595,327

 

618,058

 

Cost of product sales

 

100,185

 

103,351

 

Selling, general and administrative

 

205,134

 

217,289

 

Research and development

 

66,118

 

71,263

 

Total operating expenses

 

966,764

 

1,009,961

 

 

 

 

 

 

 

Operating income

 

178,152

 

196,995

 

 

 

 

 

 

 

Interest expense, net

 

(103,069

)

(107,280

)

Foreign exchange gain (loss), net

 

58,602

 

(96,695

)

Other (expense) income, net

 

(498

)

2,981

 

Total non-operating expenses

 

(44,965

)

(200,994

)

 

 

 

 

 

 

Income (loss) before provision for income taxes

 

133,187

 

(3,999

)

 

 

 

 

 

 

Provision for income taxes

 

52,692

 

60,505

 

 

 

 

 

 

 

Net income (loss)

 

80,495

 

(64,504

)

 

 

 

 

 

 

Less: Net income attributable to non-controlling interests

 

40,241

 

38,642

 

 

 

 

 

 

 

Net income (loss) attributable to IGT PLC

 

40,254

 

(103,146

)

 

 

 

 

 

 

Net income (loss) attributable to IGT PLC per common share - basic

 

0.20

 

(0.51

)

Net income (loss) attributable to IGT PLC per common share - diluted

 

0.20

 

(0.51

)

 

 

 

 

 

 

Weighted-average shares - basic

 

204,300

 

203,597

 

Weighted-average shares - diluted

 

204,742

 

203,597

 

 

9


 

International Game Technology PLC

Consolidated Balance Sheets

($ thousands)

Unaudited

 

 

 

March 31,

 

December 31,

 

 

 

2019

 

2018

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

290,359

 

250,669

 

Restricted cash and cash equivalents

 

245,235

 

261,108

 

Trade and other receivables, net

 

934,219

 

949,085

 

Inventories

 

294,791

 

282,698

 

Other current assets

 

528,581

 

504,061

 

Income taxes receivable

 

35,911

 

39,075

 

Total current assets

 

2,329,096

 

2,286,696

 

Systems, equipment and other assets related to contracts, net

 

1,356,294

 

1,404,426

 

Property, plant and equipment, net

 

143,272

 

185,349

 

Operating lease right-of-use-assets

 

372,619

 

 

Goodwill

 

5,563,630

 

5,580,227

 

Intangible assets, net

 

1,995,618

 

2,044,723

 

Other non-current assets

 

2,052,822

 

2,108,964

 

Deferred income taxes

 

34,405

 

38,117

 

Total non-current assets

 

11,518,660

 

11,361,806

 

Total assets

 

13,847,756

 

13,648,502

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

1,083,965

 

1,142,371

 

Other current liabilities

 

916,564

 

816,722

 

Current portion of long-term debt

 

1,280,928

 

 

Short-term borrowings

 

67,969

 

34,822

 

Income taxes payable

 

36,717

 

8,209

 

Total current liabilities

 

3,386,143

 

2,002,124

 

Long-term debt, less current portion

 

6,655,020

 

7,977,267

 

Deferred income taxes

 

439,828

 

446,083

 

Income taxes payable

 

25,654

 

25,654

 

Operating lease liabilities

 

336,658

 

 

Other non-current liabilities

 

379,491

 

445,445

 

Total non-current liabilities

 

7,836,651

 

8,894,449

 

Total liabilities

 

11,222,794

 

10,896,573

 

Commitments and contingencies

 

 

 

 

 

Shareholders’ equity

 

2,624,962

 

2,751,929

 

Total liabilities and shareholders’ equity

 

13,847,756

 

13,648,502

 

 

10


 

International Game Technology PLC

Consolidated Statements of Cash Flows

($ thousands)

Unaudited

 

 

 

For the three months ended

 

 

 

March 31,

 

 

 

2019

 

2018

 

Cash flows from operating activities

 

 

 

 

 

Net income (loss)

 

80,495

 

(64,504

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

105,331

 

98,087

 

Amortization

 

68,084

 

68,392

 

Service revenue amortization

 

52,289

 

56,650

 

Stock-based compensation expense

 

9,590

 

14,178

 

Debt issuance cost amortization

 

5,783

 

6,099

 

Deferred income taxes

 

267

 

(22,914

)

Foreign exchange (gain) loss, net

 

(58,602

)

96,695

 

Other non-cash costs, net

 

8,192

 

5,529

 

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

 

 

 

 

 

Trade and other receivables

 

24,145

 

11,968

 

Inventories

 

(20,448

)

(11,657

)

Accounts payable

 

(27,817

)

(35,545

)

Other assets and liabilities

 

(100,695

)

(145,768

)

Net cash provided by operating activities

 

146,614

 

77,210

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Capital expenditures

 

(119,185

)

(134,661

)

Proceeds from sale of assets

 

1,888

 

2,473

 

Other

 

2,208

 

347

 

Net cash used in investing activities

 

(115,089

)

(131,841

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Proceeds from long-term debt

 

35,666

 

164,681

 

Net proceeds from short-term borrowings

 

33,201

 

44,429

 

Capital increase - non-controlling interests

 

333

 

 

Dividends paid - non-controlling interests

 

(13,439

)

(13,316

)

Net payments of financial liabilities

 

(44,662

)

(32,702

)

Principal payments on long-term debt

 

 

(625,500

)

Other

 

(2,000

)

(825

)

Net cash provided by (used in) financing activities

 

9,099

 

(463,233

)

 

 

 

 

 

 

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

 

40,624

 

(517,864

)

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

 

(16,807

)

28,707

 

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

 

535,594

 

816,273

 

 

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

 

Interest paid

 

(183,777

)

(227,356

)

Income taxes paid

 

(18,835

)

(13,691

)

 

11


 

International Game Technology PLC

Net Debt

($ thousands)

Unaudited

 

 

 

March 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)

 

27,482

 

27,519

 

6.250% Senior Secured Notes due February 2022 (1)

 

1,476,655

 

1,469,609

 

4.750% Senior Secured Notes due February 2023 (2)

 

947,070

 

964,730

 

5.350% Senior Secured Notes due October 2023 (1)

 

60,961

 

60,983

 

3.500% Senior Secured Notes due July 2024 (2)

 

556,740

 

567,179

 

6.500% Senior Secured Notes due February 2025 (1)

 

1,088,769

 

1,088,385

 

6.250% Senior Secured Notes due January 2027 (1)

 

742,843

 

742,667

 

Senior Secured Notes, long-term

 

4,900,520

 

5,858,491

 

 

 

 

 

 

 

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

 

439,920

 

413,381

 

Term Loan Facilities due January 2023 (2)

 

1,314,580

 

1,705,395

 

Long-term debt, less current portion

 

6,655,020

 

7,977,267

 

 

 

 

 

 

 

4.125% Senior Secured Notes due February 2020 (2)

 

490,198

 

 

4.750% Senior Secured Notes due March 2020 (2)

 

431,210

 

 

Term Loan Facilities due January 2023 (2)

 

359,520

 

 

Current portion of long-term debt

 

1,280,928

 

 

 

 

 

 

 

 

Short-term borrowings

 

67,969

 

34,822

 

Total debt

 

8,003,917

 

8,012,089

 

 

 

 

 

 

 

Less: Cash and cash equivalents

 

290,359

 

250,669

 

 

 

 

 

 

 

Net debt

 

7,713,558

 

7,761,420

 

 


(1) U.S. dollar-denominated debt

(2) Euro-denominated debt

 

Note: Net debt is a non-GAAP financial measure

 

12


 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)

Unaudited

 

 

 

For the three months ended

 

 

 

March 31,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

Net income (loss)

 

80,495

 

(64,504

)

Provision for income taxes

 

52,692

 

60,505

 

Non-operating expenses

 

44,965

 

200,994

 

Depreciation

 

105,331

 

98,087

 

Amortization

 

68,084

 

68,392

 

Service revenue amortization

 

52,289

 

56,650

 

Stock-based compensation expense

 

9,590

 

14,178

 

Other

 

3,227

 

1,854

 

Adjusted EBITDA

 

416,673

 

436,156

 

 

 

 

 

 

 

Cash flows from operating activities

 

146,614

 

77,210

 

Capital expenditures

 

(119,185

)

(134,661

)

Free Cash Flow

 

27,429

 

(57,451

)

 

13


 

International Game Technology PLC

Consolidated Statement of Operations

Reconciliation of Non-GAAP Financial Measures

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

Unaudited

 

 

 

Q1 2019

 

Adjustments

 

Q1 2019

 

 

 

As

 

Purchase

 

Foreign

 

 

 

As

 

 

 

Reported

 

Accounting

 

Exchange

 

Other

 

Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

1,144,916

 

(178

)

 

 

1,144,738

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

595,327

 

(18,775

)

 

 

576,552

 

Cost of product sales

 

100,185

 

(3,869

)

 

 

96,316

 

Selling, general and administrative

 

205,134

 

(26,078

)

 

(3,297

)

175,759

 

Research and development

 

66,118

 

(220

)

 

 

65,898

 

Total operating expenses

 

966,764

 

(48,942

)

 

(3,297

)

914,525

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

178,152

 

48,764

 

 

3,297

 

230,213

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(103,069

)

25

 

 

 

(103,044

)

Foreign exchange gain, net

 

58,602

 

 

(58,602

)

 

 

Other expense, net

 

(498

)

 

 

 

(498

)

Total non-operating expenses

 

(44,965

)

25

 

(58,602

)

 

(103,542

)

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

133,187

 

48,789

 

(58,602

)

3,297

 

126,671

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes (a)

 

52,692

 

11,690

 

(3,090

)

804

 

62,096

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

80,495

 

37,099

 

(55,512

)

2,493

 

64,575

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to non-controlling interests

 

40,241

 

25

 

 

 

40,266

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to IGT PLC

 

40,254

 

37,074

 

(55,512

)

2,493

 

24,309

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share - diluted

 

0.20

 

 

 

 

 

 

 

0.12

 

Weighted-average shares - diluted

 

204,742

 

 

 

 

 

 

 

204,742

 

 


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

 

14


 

International Game Technology PLC

Consolidated Statement of Operations

Reconciliation of Non-GAAP Financial Measures

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

Unaudited

 

 

 

Q1 2018

 

Adjustments

 

Q1 2018

 

 

 

As

 

Purchase

 

Foreign

 

 

 

As

 

 

 

Reported

 

Accounting

 

Exchange

 

Other

 

Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

1,206,956

 

(177

)

 

 

1,206,779

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

618,058

 

(21,155

)

 

 

596,903

 

Cost of product sales

 

103,351

 

(3,869

)

 

 

99,482

 

Selling, general and administrative

 

217,289

 

(26,849

)

 

(2,071

)

188,369

 

Research and development

 

71,263

 

(235

)

 

 

71,028

 

Total operating expenses

 

1,009,961

 

(52,108

)

 

(2,071

)

955,782

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

196,995

 

51,931

 

 

2,071

 

250,997

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(107,280

)

504

 

 

 

(106,776

)

Foreign exchange loss, net

 

(96,695

)

 

96,695

 

 

 

Other income, net

 

2,981

 

(2,185

)

 

 

796

 

Total non-operating expenses

 

(200,994

)

(1,681

)

96,695

 

 

(105,980

)

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income before provision for income taxes

 

(3,999

)

50,250

 

96,695

 

2,071

 

145,017

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes (a)

 

60,505

 

11,910

 

2,646

 

552

 

75,613

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

(64,504

)

38,340

 

94,049

 

1,519

 

69,404

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to non-controlling interests

 

38,642

 

25

 

 

 

38,667

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to IGT PLC

 

(103,146

)

38,315

 

94,049

 

1,519

 

30,737

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per common share - diluted

 

(0.51

)

 

 

 

 

 

 

0.15

 

Weighted-average shares - diluted (b)

 

203,597

 

 

 

 

 

 

 

204,171

 

 


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

 

(b) Weighted-average shares — diluted, as adjusted, include shares that were excluded from the as reported computation, due to the net loss as reported.

 

15


 

INTERNATIONAL GAME TECHNOLOGY PLC

 

Select Financial Data

 

 

 

 

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended March 31

 

Q1 ‘19

 

Q1 ‘18

 

FX

 

Period Ended March 31

 

Q1 ‘19

 

Q1 ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

515

 

563

 

-5%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

380

 

422

 

-6%

 

Casino

 

33,379

 

36,100

 

-7.5%

 

Terminal

 

275

 

317

 

-9%

 

VLT - Government sponsored (ex-Italy)

 

19,218

 

18,038

 

6.5%

 

Other

 

105

 

105

 

3%

 

VLT - Italy supplier (B2B)

 

7,847

 

8,425

 

-6.9%

 

Product sales

 

135

 

141

 

-2%

 

Total installed base units

 

60,444

 

62,563

 

-3.4%

 

Terminal

 

99

 

80

 

25%

 

Yield
(average gross revenue per unit per day)

 

$

27.19

 

$

27.72

 

-1.9%

 

Other

 

37

 

61

 

-38%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional Italian network details:

 

 

 

 

 

 

 

Lottery

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

532

 

546

 

1%

 

VLT - Operator (B2C)

 

10,995

 

10,931

 

0.6%

 

Lottery services

 

514

 

527

 

2%

 

AWP

 

40,746

 

51,315

 

-20.6%

 

FMC

 

481

 

491

 

2%

 

 

 

 

 

 

 

 

 

Instant ticket & draw games

 

478

 

500

 

1%

 

Machine units shipped

 

 

 

 

 

 

 

Other services

 

4

 

(9

)

NM

 

New/expansion

 

1,864

 

1,115

 

67.2%

 

LMA

 

32

 

36

 

-10%

 

Replacement

 

5,137

 

4,713

 

9.0%

 

Product sales

 

18

 

19

 

0%

 

Total machines shipped

 

7,001

 

5,828

 

20.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

98

 

98

 

8%

 

Global lottery same-store revenue growth

 

 

 

 

 

 

 

Service revenue

 

98

 

98

 

8%

 

Instant ticket & draw games

 

 

 

 

 

4.7%

 

Product sales

 

0

 

0

 

9%

 

Multistate jackpots

 

 

 

 

 

-7.6%

 

 

 

 

 

 

 

 

 

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

 

 

 

3.1%

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

1,145

 

1,207

 

-1%

 

Italy lottery revenue growth

 

 

 

 

 

3.2%

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment total

 

285

 

302

 

-1%

 

 

 

 

 

 

 

 

 

Purchase accounting

 

(49

)

(52

)

6%

 

 

 

 

 

 

 

 

 

Corporate support

 

(58

)

(53

)

-15%

 

 

 

 

 

 

 

 

 

Total

 

178

 

197

 

-4%

 

 

 

 

 

 

 

 

 

 

16