EX-99.2 3 q221earningsslidedeck.htm EX-99.2 q221earningsslidedeck
1 International Game Technology PLC 2021 Second Quarter Results Period ended June 30, 2021 August 3, 2021


 
Cautionary Statement Regarding Forward-Looking Statements This presentation 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 uncertainty of the duration, extent and effects of the COVID-19 pandemic and the response to governments, including government-mandated property closures and travel restrictions, and other third parties on the Company's business, results of operations, cash flows, liquidity and development prospects and the factors and risks described in the Company’s annual report on Form 20-F for the financial year ended December 31, 2020 and other documents filed from time to time with the SEC, which are available on the SEC’s website at www.sec.gov and on the investor relations section of the Company’s website at www.IGT.com. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. You should carefully consider these factors and other risks and uncertainties that affect the Company’s business. Nothing in this presentation is intended, or is to be construed, as a profit forecast or to be interpreted to mean that the financial performance of International Game Technology PLC for the current or any future financial years will necessarily match or exceed the historical published financial performance of International Game Technology PLC, as applicable. All forward-looking statements contained in this presentation are qualified in their entirety by this cautionary statement. All subsequent written or oral forward- looking statements attributable to International Game Technology PLC, or persons acting on its behalf, are expressly qualified in their entirety by this cautionary statement. Comparability of Results All figures presented in this release are prepared under U.S. GAAP, unless otherwise noted. Non-GAAP Financial Measures Management supplements the reporting of financial information, determined under GAAP, with certain non-GAAP financial information. Management believes the non-GAAP information presented provides investors with additional useful information, but it is not intended to nor should it be considered in isolation or as a substitute for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. The Company encourages investors to review its financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Adjusted EBITDA represents net income (loss) from continuing operations (a GAAP measure) before income taxes, interest expense, foreign exchange gain (loss), other non-operating expenses, depreciation, impairment losses, amortization (service revenue, purchase accounting and non-purchase accounting), restructuring expenses, stock-based compensation, litigation expense (income), and certain other non-recurring items. Other non-recurring items are infrequent in nature and are not reflective of ongoing operational activities. For the business segments, Adjusted EBITDA represents segment operating income (loss) before depreciation, amortization (service revenue, purchase accounting and non-purchase accounting), restructuring expenses, stock-based compensation, litigation expense (income) and certain other non-recurring items. Adjusted EBITDA – discontinued operations represents income from discontinued operations (a GAAP measure) before income taxes, interest expense, depreciation and amortization, and gain on sale of discontinued operations. Adjusted EBITDA – combined represents Total Adjusted EBITDA plus EBITDA – discontinued operations. Management believes that the non-GAAP measures just mentioned are useful in providing period-to-period comparisons of the results of the Company’s ongoing operational performance. Net debt is a non-GAAP financial measure that represents debt (a GAAP measure, calculated as long-term obligations plus short-term borrowings) minus capitalized debt issuance costs and cash and cash and equivalents. Cash and cash equivalents are subtracted from the GAAP measure because they could be used to reduce the Company’s debt obligations. Management believes that net debt is a useful measure to monitor leverage and evaluate the balance sheet. Net debt leverage is a non-GAAP financial measure that represents the ratio of Net debt as of a particular balance sheet date to Adjusted EBITDA for the last twelve months (“LTM”) prior to such date. Prior to the disposal of the Italian B2C gaming businesses in the second quarter of 2021, management calculated the Net debt leverage ratio as the ratio of Net debt as of a particular balance sheet date to the LTM of Adjusted EBITDA – combined prior to such date. Management believes that Net debt leverage is a useful measure to assess our financial strength and ability to incur incremental indebtedness when making key investment decisions. Free cash flow is a non-GAAP financial measure that represents cash flow from operations (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing IGT’s ability to fund its activities, including debt service and distribution of earnings to shareholders. Constant currency is a non-GAAP financial measure that expresses the current financial data using the prior-year/period exchange rate (i.e., the exchange rates used in preparing the financial statements for the prior year). Management believes that constant currency is a useful measure to compare period-to-period results without regard to the impact of fluctuating foreign currency exchange rates. A reconciliation of the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this release. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures. 2


 
Business Update 3 Business Update


 
Impressive Q2'21 Results Confirm Vitality of Portfolio Revenue up over 70% on outstanding Global Lottery performance, progressive recovery in land-based Global Gaming, and significant growth in Digital & Betting activities Structural cost reductions tracking ahead of plan Once again, among highest Adjusted EBITDA(1) in Company history ($ and margin(2)); generated $380M of free cash flow in H1'21, a record level for a first half period Publication of 14th annual Sustainability Report highlights improved ESG performance; diversity and inclusion efforts recognized for their scope and impact Raising outlook for 2021; now expect to exceed 2019 levels for key financial metrics this year 4 Digital & Betting revenue up 41% +35% Lottery SSS Growth Active U.S. units and yields up sequentially $442M in Adjusted EBITDA(1) (42% margin (2)) Note: All amounts presented represent continuing operations (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details (2) Margin defined as Adjusted EBITDA divided by revenue


 
Innovation Driving Stronger Global Lottery Growth Profile 5 Global Same-Store Sales (Y/Y) 4% 6% 2% (5)% (7)% (9)% 9% 8% 32% 35% Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 35% SSS growth and a 24% increase over Q2’19 on broad-based gains across games and regions ◦ 21% growth in North America & Rest of World ◦ 115% increase in Italy, helped by closure of gaming halls & betting shops ◦ Growing acceptance of iLottery Consistent, multi-year industry growth fueled by game innovation, improved retail penetration, and sales execution Expect mid-single digit H2'21 global SSS growth; up low-double digits versus H2'19 levels, at upper end of historical rate ◦ Research confirms an expanding player base with intention to increase play over pre- COVID levels ◦ Return to more normal growth rate applied to higher levels of consumption


 
Global Gaming Recovery Progressing Nicely 6 Global markets mostly open, some restrictions still in place outside the U.S. Recurring revenue recovering swiftly; sequential improvement in U.S. active units and installed base yields Improved unit sales both Y/Y and sequentially Growing adoption of IGT's best-in-class cashless solutions (Resort Wallet™, IGTPay™), most recently with Agua Caliente Casinos Won "Casino Supplier of the Year" in 2021 Global Gaming Awards London Expect continued, progressive improvement throughout year


 
Sports Betting Spotlight on Digital & Betting: Building on Leadership Positions Leveraging deep and proven land-based portfolio Success developing digitally native games that are among the strongest performing ever (Cash Eruption) Working with third parties to complement our proprietary IP Deploying next-generation platform, starting with Georgia in Q3 Expanding portfolio of innovative and high-performing e-instants: VIP Gold Grand, Triple Platinum, Ruby 7, Sfida al Campionato, Invasioni Spaziali PlaySports platform powering ~50 U.S. sportsbooks, including Resorts World Las Vegas’s retail sportsbook and statewide mobile betting app 40+ leads in pipeline for turnkey solution 7 iGaming iLottery


 
Strong Player Demand, Disciplined Execution Drive Improved Outlook 8 Top-line momentum supported by attractive long-term Lottery industry trends, Global Gaming recovery, and high-growth Digital & Betting activities Substantial cost savings already achieved, increasing profit margin and cash flow outlook Significantly reduced debt and leverage returns to pre-COVID levels; expect positive trends to continue Unwavering commitment to sustainability, building on our important progress ◦ Selected for 2020 Bloomberg Gender-Equality Index ◦ Awarded responsible gaming certification from Global Gambling Guidance Group; first gaming supplier to achieve accreditation for land-based and digital operations ◦ Lakeland, Florida printing facility recognized as winner of the Sustainability Program in the 2021 FTA Sustainability Excellence Awards


 
9 Financial Results


 
10 Quarter Ended Year-To-Date All amounts from continuing operations, unless otherwise noted June 30, June 30, 2021 2020 2021 2020 GAAP Financials: Revenue 1,041 600 74% 2,055 1,414 45% Operating income (loss) 244 (72) NA 504 (290) NA Net income (loss)(1) 365 (282) NA 514 (516) NA Net income (loss) attributable to IGT PLC per common share(1) $1.49 $(1.37) NA $1.94 $(2.58) NA Net cash provided by operating activities 249 127 95% 500 153 227% Non-GAAP Financial Measures: Adjusted EBITDA(2) 442 164 170% 892 425 110% Free cash flow(2) 176 73 140% 380 13 NM Significant Profit Growth in Q2'21 and YTD Periods Note: $ in millions, except where noted otherwise (1) includes results of discontinued operations, net of tax (2) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details


 
(72) 244 Q2'20 Q2'21 164 442 Q2'20 Q2'21 11 Note: $ in millions; EUR/USD FX daily average: 1.20 in Q2'21, 1.10 in Q2'20; all amounts presented reflect continuing operations (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details Revenue Adjusted EBITDA(1)Operating (Loss) Income Q2'21 Financial Highlights: Impressive Operating Leverage on Robust Revenue Growth 600 1,041 Q2'20 Q2'21 127 249 73 176 Q2'20 Q2'21 Cash Flow ☐ Cash From Operations ☐ Free Cash Flow(1) All key financial measures up significantly Y/Y ~2/3 of OPtiMa $200M+ structural cost savings target achieved YTD ◦ Product simplification and margin improvement initiatives ~70% complete ◦ Operational excellence initiative ~30% complete; incremental benefits tied to ramp in production volumes 74% 170%


 
460 228 2 1 691 34 725 Q2'20 Lottery Service Other Service Product Sales Excluding FX FX Q2'21 Q2'21 Global Lottery Highlights: Strong Player Demand Drives Near-Record Results and Profit Growth 12 Q2'21 Q2'20 Y/Y % change as reported Y/Y % change at constant FX Q2'19(1) % change as reported Revenue 725 460 58% 50% 586 24% Operating income 300 107 180% 163% 183 64% Adjusted EBITDA(2) 414 221 87% 76% 289 43% Global SSS growth Y/Y % change at constant FX % change at constant FX vs Q2'19 Instants & Draw Games 34.9% 26.5% Multi-jurisdiction jackpots 28.8% (2.4)% Total 34.5% 24.1% Note: $ in millions; all amounts presented reflect continuing operations except where noted otherwise (1) As previously disclosed, does not reflect impact of discontinued operations (2) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details Italy SSS growth Y/Y % change at constant FX % change at constant FX vs Q2'19 Instants & Draw Games 115.2% 28.5% Revenue North America & Rest of world SSS growth Y/Y % change at constant FX % change at constant FX vs Q2'19 Instants & Draw Games 20.5% 25.8% Multi-jurisdiction jackpots 28.8% (2.4)% Total 21.1% 22.9% Significant increase in lottery service over one and two-year periods ◦ 35% global SSS growth; sharp increase in all main geographies ◦ Italy SSS more than double ◦ 24% higher than Q2'19 Operating income more than doubles ◦ High flow-through of SSS growth and positive geographic mix ◦ Disciplined cost management 57% Adjusted EBITDA margin; second highest quarterly level in segment history


 
Q2'21 Global Gaming Highlights: Continued Recovery Drives Return to Profitability 13 Service revenue more than doubles; on path to achieve Q4'19 levels in Q4'21 Progressive quarterly increase in machine units sold since Q2'20 Digital & Betting(1) revenue up over 40% Profitability measures significantly higher ◦ Increased operating leverage as business scales ◦ Disciplined cost management and benefits from OPtiMa cost saving initiatives Sequential growth in revenue, profit, and margins ◦ Higher number of active units and yields ◦ 44% increase in machine units sold Machine Units Sold Q2'21 Q2'20 Q1'21 New & expansion 1,167 1,443 884 Replacement 5,168 1,538 3,521 Total 6,335 2,981 4,405 Average selling price $13,400 $14,600 $13,800 Note: $ in millions, except where noted otherwise; all amounts presented reflect continuing operations (1) Reported Digital & Betting revenue reflects activity across the Company’s business portfolio and includes iLottery (2) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details (3) Excludes L/T lease units treated as sales-type leases; comparability on a Y/Y basis hindered due to fewer active units Installed Base (units) Q2'21 Q2'20 Q1'21 US & Canada 33,820 34,800 34,138 Rest of world 15,280 14,834 15,227 Total 49,100 49,634 49,365 Yields(3) $27.49 $6.21 $22.93 Revenue 140 82 29 40 18 309 7 316 Q2'20 Terminal Service Other Service Terminal Product Sales Other Product Sales Excluding FX FX Q2'21 Results from continuing operations Q2'21 Q2'20 Y/Y % change as reported Y/Y % change at constant FX Q1'21 Sequential % change as reported Revenue 316 140 126% 120% 266 19% Operating income (loss) 10 -111 NA NA -19 NA Adjusted EBITDA(1) 49 -36 NA NA 19 158%


 
127 (54) 73 Strong Cash Generation Continues; Net Debt Leverage Improves to 4.3x 14 Generated $500M in cash from operating activities and $380M in free cash flow YTD Net debt lower by over $1.0 billion, as reported, $866M excluding foreign currency impact ◦ Strong YTD financial results including solid cash flow generation; 56% cash conversion rate(4) ◦ $748M in net cash proceeds from sale of Italy gaming businesses Net debt leverage improves to 4.3x, reaching pre-pandemic level six months ahead of target Note: $ in millions, except where noted otherwise; all amounts presented represent continuing operations (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details (2) Non-GAAP measure; calculation predates Italy asset sales therefore based on LTM Adjusted EBITDA - Combined; see disclaimer on page 2 and schedule in Appendix for further details (3) Non-GAAP measure; see disclaimer on page 2 and schedule in Appendix for further details (4) Cash conversion defined as Cash from Operations divided by Adjusted EBITDA 7,319 7,069 6,312 249 (73) 176 Cash from Operations CapEx Free Cash Flow (1) Q4'20 Q2'21Q1'21 Net debt leverage 6.4x(2) 5.4x(2) 4.3x (3) 153 (140) 13 500 (121) 380 Free Cash Flow (1)CapEx Cash from Operations QTD YTD Cash from Operations CapEx Free Cash Flow (1) Cash from Operations CapEx Free Cash Flow (1) Q2'20 Q2'21 Q2'20 Q2'21 Net Debt


 
Significantly Improved Balance Sheet with Lower Debt and Longer Maturities; No Significant Debt Maturity Until 2024 15 Euro Notes 35% Note: $ in millions, except where noted otherwise Total liquidity of $1.9B at quarter end; $639M in unrestricted cash and $1.3B in additional borrowing capacity Net proceeds from Italy asset sale used to fund redemption of 4.750% Euro bonds due 2023 Term Loan refinancing generates additional liquidity, extends maturities, and lowers interest costs


 
Outstanding YTD Operating Results; Improved Financial Condition 16 Sustained Global Lottery performance drives near-record results; progressive recovery in Global Gaming results in sequential and Y/Y growth in revenue, profit, and margins OPtiMa program ahead of schedule; ~2/3 of $200M+ structural cost savings target achieved YTD, boosting operating margins Generated $500 million in cash from continuing operations and a record-level $380 million in free cash flow from continuing operations during the first half of the year Net debt reduced by ~$1.0B YTD as reported; net debt leverage improves to 4.3x(1), returning to pre- pandemic level six months ahead of target Substantial liquidity with no material near-term debt maturities (1) Net debt leverage defined as Net Debt divided by LTM Adjusted EBITDA from continuing operations


 
Company's H2'21 outlook for revenue and operating income from continuing operations is ~$2 billion and ~$300 million, respectively, meaningfully higher Y/Y ◦ Global Lottery returns to more normal growth rates applied to higher levels of consumption; Q3-to-date SSS up double digits versus 2019 ◦ Global Gaming progressive recovery continues H2'21 vs H1'21 perspective: ◦ Revenue and operating income lower versus H1'21 on normalization of lottery growth trends ◦ Cash from operations below H1'21 levels ◦ CapEx of ~$175 million, sequentially accelerating to support growth; FY CapEx remains below 2019 levels ◦ Depreciation and amortization stable versus H1'21 Does not factor in any impact from additional COVID-19 restrictions 17 H2'21 Outlook


 
18 Q&A


 
19 Appendix


 
$ in millions except otherwise noted (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details Q2'21 Select Performance and KPI Data 20 GLOBAL LOTTERY Q2'21 Q2'20 Y/Y Change (%) Constant Currency Change (%) (1) Q1'21 Sequential Change as Reported (%) Revenue Service Operating and facilities management contracts 675 416 62 % 55 % 695 (3) % Upfront license fee amortization (53) (48) (9) % — % (52) (1) % Operating and facilities management contracts, net 623 367 70 % 62 % 643 (3) % Other 79 70 12 % 4 % 83 (4) % Total service revenue 702 438 60 % 53 % 725 (3) % Product sales 23 22 6 % 3 % 23 (1) % Total revenue 725 460 58 % 50 % 749 (3) % Operating income 300 107 180 % 163 % 337 (11) % Adjusted EBITDA(1) 414 221 87 % 76 % 447 (7) % Q2'21 Constant Currency Change (%) (1) Q2'20 Constant Currency Change (%) (1) Q1'21 Constant Currency Change (%) (1) Global same-store sales growth (%) Instant ticket & draw games 34.9 % (7.1) % 27.4 % Multi-jurisdiction jackpots 28.8 % (24.2) % 94.7 % Total 34.5 % (8.5) % 32.4 % North America & Rest of world same-store sales growth (%) Instant ticket & draw games 20.5 % 3.5 % 20.9 % Multi-jurisdiction jackpots 28.8 % (24.2) % 94.7 % Total 21.1 % 0.6 % 27.8 % Italy same-store sales growth (%) Instant ticket & draw games 115.2 % (40.5) % 52.2 %


 
$ in millions except otherwise noted (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details (2) Excluded from yield calculations due to treatment as sales-type leases Q2'21 Select Performance and KPI Data 21 GLOBAL GAMING Q2'21 Q2'20 Y/Y Change (%) Constant Currency Change (%) (1) Q1'21 Sequential Change as Reported (%) Revenue Service Terminal 108 25 325 % 323 % 90 20 % Systems, software, and other 91 59 54 % 50 % 86 6 % Total service revenue 199 84 136 % 132 % 175 13 % Product sales Terminal 86 44 97 % 91 % 62 40 % Other 31 12 160 % 147 % 29 7 % Total product sales revenue 117 56 110 % 103 % 91 29 % Total revenue 316 140 126 % 120 % 266 19 % Operating income (loss) 10 (111) NA NA (19) NA Adjusted EBITDA(1) 49 (36) NA NA 19 158 % Installed base units Casino 47,964 48,704 (2) % 48,230 Casino - L/T lease (2) 1,136 930 22 % 1,135 Total installed base units 49,100 49,634 (1) % 49,365 Installed base units (by geography) US & Canada 33,820 34,800 (3) % 34,138 Rest of world 15,280 14,834 3 % 15,227 Total installed base units 49,100 49,634 (1) % 49,365


 
$ in millions except otherwise noted (1) Excludes Casino L/T lease units due to treatment as sales-type leases; comparability on a Y/Y basis hindered due to fewer active units Q2'21 Select Performance and KPI Data 22 GLOBAL GAMING (Continued) Q2'21 Q2'20 Y/Y Change (%) Q1'21 Yields (by geography)(1), in absolute $ US & Canada $38.41 $8.69 342 % $32.27 Rest of world $4.03 $0.49 NM $2.58 Total yields $27.49 $6.21 343 % $22.93 Global machine units sold New/expansion 1,167 1,443 (19) % 884 Replacement 5,168 1,538 236 % 3,521 Total machine units sold 6,335 2,981 113 % 4,405 US & Canada machine units sold New/expansion 643 1,382 (53) % 620 Replacement 3,485 1,330 162 % 2,276 Total machine units sold 4,128 2,712 52 % 2,896 Rest of world machine units sold New/expansion 524 61 NM 264 Replacement 1,683 208 NM 1,245 Total machine units sold 2,207 269 NM 1,509 Average Selling Price (ASP), in absolute $ US & Canada $13,900 $14,700 (5) % $13,900 Rest of world $12,700 $14,000 (9) % $13,700 Total ASP $13,400 $14,600 (8) % $13,800 Gaming Systems Revenue 39 23 66 % 30


 
$ in millions except otherwise noted (1) Non-GAAP measure; see disclaimer on page 2 (2) Included within consolidated revenue Q2'21 Select Performance and KPI Data 23 CONSOLIDATED Q2'21 Q2'20 Y/Y Change (%) Constant Currency Change (%) (1) Q1'21 Sequential Change as Reported (%) Revenue (by geography) US & Canada 561 369 52 % 51 % 542 4 % Italy 353 146 141 % 122 % 348 1 % Rest of world 127 84 51 % 40 % 124 2 % Total revenue 1,041 600 74 % 67 % 1,015 3 % Digital & Betting Revenue (2) 61 44 41 % 34 % 58 5 %


 
$ in millions except per share amounts (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details Q2'21 Summarized Income Statement 24 Q2'21 Q2'20 Y/Y Change (%) Service revenue 901 522 73 % Product sales 140 78 81 % Total revenue 1,041 600 74 % Total operating expenses 796 672 19 % Operating income (loss) 244 (72) NA Interest expense, net 91 96 Foreign exchange loss, net 90 74 Other expense, net 70 28 Total non-operating expenses 251 198 Loss from continuing operations before provision for (benefit from) income taxes (7) (271) Provision for (benefit from) income taxes 32 (3) Loss from continuing operations (39) (268) Income (loss) from discontinued operations, net of tax 13 (15) Gain on sale of discontinued operations, net of tax 391 — Net income (loss) 365 (282) Net income (loss) attributable to IGT PLC per common share - basic $1.49 $(1.37)


 
Summarized Cash Flow Statement 25 For the three months ended For the six months ended June 30, March 31, June 30, 2021 2020 2021 2021 2020 Net Cash Flows Provided by Operating Activities 249 127 251 500 153 CapEx (73) (54) (48) (121) (140) Free Cash Flow(1) 176 73 204 380 13 Cash Flow Provided by Discontinued Operations 748 34 (46) 702 152 Debt (Repayment)/Proceeds, Net (947) (75) (206) (1,153) 591 Other - Net (137) (139) (89) (226) (128) Other Investing/Financing Activities (336) (180) (341) (677) 614 Net Cash Flow (160) (106) (137) (297) 627 Effect of Exchange Rates/Other 23 18 (36) (13) 8 Net Change in Cash and Restricted Cash (137) (88) (173) (310) 636 $ in millions except per share amounts; all amounts presented reflect continuing operations unless otherwise noted (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details


 
26 For the three months ended June 30, 2021 Global Lottery Global Gaming Business Segment Total Corporate and Other Total IGT PLC Loss from continuing operations (39) Provision for income taxes 32 Interest expense, net 91 Foreign exchange loss, net 90 Other non-operating expense, net 70 Operating income (loss) 300 10 310 (66) 244 Depreciation 49 35 83 — 83 Amortization - service revenue (1) 55 — 55 — 55 Amortization - non-purchase accounting 9 1 10 1 11 Amortization - purchase accounting — — — 39 39 Stock-based compensation 2 2 3 4 7 Other (2) — — — 1 1 Adjusted EBITDA 414 49 463 (21) 442 Income from discontinued operations 404 Gain on sale of discontinued operations (396) Provision for income taxes — Interest expense, net — Depreciation — Amortization — Adjusted EBITDA - discontinued 9 Adjusted EBITDA - combined 451 Cash flows from operating activities - 249 Capital expenditures (73) Free Cash Flow 176 $ in millions; all amounts presented reflect continuing operations (1) Includes amortization of upfront license fees (2) Primarily includes transaction-related costs For the three months ended June 30, 2020 Global Lottery Global Gaming Business Segment Total Corporate and Other Total IGT PLC Loss from continuing operations (268) Benefit from income taxes (3) Interest expense, net 96 Foreign exchange loss, net 74 Other non-operating expense, net 28 Operating income (loss) 107 (111) (4) (69) (72) Goodwill impairment 50 37 87 — 88 Depreciation 51 — 51 — 51 Amortization - service revenue (1) 7 2 9 1 10 Amortization - non-purchase accounting — — — 42 42 Amortization - purchase accounting 5 35 40 3 43 Restructuring — — — 1 1 Stock-based compensation — — — 1 1 Other (2) — — — 1 1 Adjusted EBITDA 221 (36) 184 (20) 164 Loss from discontinued operations (15) Benefit from income taxes (8) Interest expense, net — Depreciation 12 Amortization 14 Adjusted EBITDA - discontinued 4 Adjusted EBITDA - combined 167 Cash flows from operating activities - 127 Capital expenditures (54) Free Cash Flow 73 Reconciliations of Non-GAAP Measures


 
Reconciliations of Non-GAAP Measures 27 For the six months ended June 30, 2021Global Lottery Global Gaming Business Segment Total Corporate and Other Total IGT PLC Income from continuing operations 100 Provision for income taxes 181 Interest expense, net 185 Foreign exchange gain, net (55) Other non-operating expense, net 94 Operating income (loss) 637 (9) 628 (124) 504 Depreciation 96 70 166 (1) 165 Amortization - service revenue (1) 110 — 110 — 110 Amortization - non-purchase accounting 17 3 19 2 21 Amortization - purchase accounting — — — 79 79 Restructuring (1) 1 — — — Stock-based compensation 2 3 5 6 11 Other (2) — — — 1 1 Adjusted EBITDA 862 67 929 (37) 892 Income from discontinued operations 415 Gain on sale of discontinued operations (396) Provision for income taxes 4 Interest expense, net — Depreciation — Amortization — Adjusted EBITDA - discontinued 23 Adjusted EBITDA - combined 915 Cash flows from operating activities - 500 Capital expenditures (121) Free Cash Flow 380 $ in millions; all amounts presented reflect continuing operations (1) Includes amortization of upfront license fees (2) Primarily includes transaction-related costs For the six months ended June 30, 2020Global Lottery Global Gaming Segment Total Corporate and Other Total IGT PLC Loss from continuing operations (515) Benefit from income taxes (4) Interest expense, net 196 Foreign exchange loss, net 4 Other non-operating expense, net 29 Operating income (loss) 251 (117) 135 (425) (290) Goodwill impairment — — — 296 296 Depreciation 96 77 173 1 173 Amortization - service revenue (1) 101 — 101 — 101 Amortization - non-purchase accounting 14 3 17 2 19 Amortization - purchase accounting — — — 89 89 Restructuring 5 36 41 6 47 Stock-based compensation (4) (5) (9) (3) (12) Other (2) — — — 2 2 Adjusted EBITDA 464 (6) 458 (33) 425 Loss from discontinued operations (1) Benefit from income taxes (4) Interest expense, net — Depreciation 25 Amortization 28 Adjusted EBITDA - discontinued 48 Adjusted EBITDA - combined 473 Cash flows from operating activities - 153 Capital expenditures (140) Free Cash Flow 13


 
Summary of Adjusted EBITDA and Leverage From Continuing Operations and Including Discontinued Operations 28 $ in millions; all amounts presented reflect continuing operations unless otherwise noted (1) Adjusted EBITDA was $164 million, $261 million, and $365 million for the quarters ended June 30, 2020, March 31, 2020, and December 31, 2019, respectively. (2) Adjusted EBITDA from discontinued operations was $4 million, $44 million, and $69 million for the quarters ended June 30, 2020, March 31, 2020, and December 31, 2019, respectively. Q3'20 Q4'20 Q1'21 Q2'21 Adjusted EBITDA 287 295 450 442 Adjusted EBITDA - discontinued operations 65 26 14 9 Adjusted EBITDA - combined 352 321 464 451 LTM Adjusted EBITDA (1) 1,078 1,008 1,196 1,474 LTM Adjusted EBITDA - combined (1)(2) 1,260 1,146 1,305 1,588 Net debt 7,243 7,319 7,069 6,312 Net debt leverage LTM Adjusted EBITDA (3) 4.3x LTM Adjusted EBITDA - combined (4) 5.7x 6.4x 5.4x 4.0x