Market Overview

International Game Technology PLC Reports Second Quarter 2018 Results

Share:

International Game Technology PLC Reports Second Quarter 2018 Results

- Adjusted EBITDA outlook confirmed at $1,700 - $1,780 million, despite approximately $26 million of negative currency translation, on improved underlying business performance

- Net income of $161 million includes $173 million of net foreign exchange gain; Adjusted net income was $57 million

- Adjusted EBITDA of $442 million reflects robust global lottery performance and disciplined operational management

- Cash dividend declared of $0.20 per ordinary share

- Investor Day to be held August 2, 2018 in New York City

PR Newswire

LONDON, July 31, 2018 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the second quarter ended June 30, 2018. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the second quarter 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...

"The strong second quarter results reflect continued global Lottery expansion that is accentuated by disciplined expense management," said Marco Sala, CEO of IGT. "The North America Lottery and Italy segments each exceeded our expectations in the period. The North America Gaming installed base grew sequentially, and we have a compelling roster of new, for-sale video reel games coming to market in the second half. The strong start to the year gives us confidence we can achieve our 2018 strategic and financial goals."

"With better-than-expected Adjusted EBITDA growth of 10% in the first half, we are raising our full-year outlook for the underlying business," said Alberto Fornaro, CFO of IGT. "As a result, we are able to absorb the negative impact of foreign currency translation and maintain the Adjusted EBITDA range of $1,700-$1,780 million for 2018."

Overview of Consolidated Second Quarter Results


Quarter Ended
June 30,

Y/Y
Change

Constant
Currency
Change 


2018(1)

2017

(%)

(%)

(In $ millions, unless otherwise noted)





Revenue

1,202

1,220

-1%

-3%

Operating income

209

192

9%

5%

Net income/(loss) per diluted share

$0.79

($1.43)

N/M


Net debt

7,530

6,999

8%


Adjusted EBITDA

442

424

4%

1%

Adjusted operating income

264

264

0%

-3%

Adjusted net income per diluted share

$0.28

$0.15

87%



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.


(1) On January 1, 2018, IGT adopted ASU 2014-09 (Topic 606), Revenue from Contracts with Customers ("ASC 606"). This negatively impacted Revenue in the second quarter by $33 million and EBITDA and Adjusted EBITDA by $19 million. Comparative schedules summarizing the impact on the second quarter and six months ended June 30, 2018 Condensed Consolidated Statements of Operations are included later in this release.  

Consolidated revenue was $1,202 million, down 1% from the prior-year quarter

  • Flat at constant currency and scope (adjusted for the sale of Double Down Interactive LLC ("DoubleDown"))
    • Negatively impacted by $33 million due to ASC 606
    • Reflects strong lottery performance in North America and Italy

Adjusted EBITDA rose 4% to $442 million; Adjusted operating income flat to the prior year at $264 million

  • Adjusted operating income up 2% at constant currency and scope
  • Strong lottery performance more than compensates for ASC 606 impact
  • Improvements in operating expenses

Interest expense was $106 million compared to $116 million in the prior-year period 

Provision for income taxes was $52 million compared to $84 million in the prior-year period 

  • Prior year impacted by gain on the sale of DoubleDown and accrual for Mexico tax litigation

Net income attributable to IGT was $161 million in the quarter; Adjusted net income attributable to IGT was $57 million

Net income per diluted share of $0.79; Adjusted net income per diluted share of $0.28

Cash from operations was $120 million in the first half of the year and capital expenditures were $259 million

  • $366 million (gross) upfront payment for the Scratch & Win license in Italy paid during the quarter

Cash and cash equivalents were $568 million as of June 30, 2018, compared to $1,057 million as of December 31, 2017

Net debt was $7,530 million as of June 30, 2018, compared to $7,319 million as of December 31, 2017

Operating Segment Review

North America Gaming & Interactive

Select Financial Data



Constant


Key Performance Indicators



%

Period Ended June 30

Q2 '18

Q2 '17

FX


Period Ended June 30

Q2 '18

Q2 '17

Change 

Gaming


Total Revenue

254

310

-18%


Installed base (end of period)





Gaming Services

169

208

-19%


    Casino

23,351

23,649

-1.3%



Terminal 

108

122

-11%








Social (DDI)

0

43

NM


Machine units shipped






Other

61

43

41%


   New/Expansion

1,803

1,408

28.1%


Product Sales

85

102

-17%


   Replacement 

2,747

3,885

-29.3%



Terminal 

62

74

-16%


   Total machines shipped

4,550

5,293

-14.0%



Other

23

28

-19%


















Total


Revenue

254

310

-18%







Operating Income

66

76

-13%






Revenue of $254 million compared to $310 million in the prior-year quarter, which included DoubleDown

  • Decline fully attributable to the sale of DoubleDown and ASC 606 classification of jackpot expense as a contra revenue item (previously included in cost of services)
  • Gaming service revenue was $169 million compared to $208 million in the prior-year period
    • Up 10% at constant scope and adjusted for jackpot expense, primarily due to the upfront recognition of revenue from a large, multi-year poker contract
    • Installed base up 168 units sequentially
  • Product sales of $85 million, down 17% from the prior year
    • Shipped 4,550 gaming machine units in the quarter compared to 5,293 units in the prior-year period
      • New and Expansion units up from 1,408 units to 1,803 units primarily due to Ocean Resort and Hard Rock Atlantic City openings, and MGM Springfield's anticipated opening
      • Replacement unit decline impacted by large unit sales in Oregon and Washington in the prior year

Operating income of $66 million compared to $76 million in the prior-year quarter

  • Stable with prior-year period at constant scope

North America Lottery

Select Financial Data



Constant


Key Performance Indicators



%

Period Ended June 30

Q2 '18

Q2 '17

FX


Period Ended June 30

Q2 '18

Q2 '17

Change 

Gaming


Total Revenue

38

37

4%


Installed base (end of period)





Gaming Services

38

37

4%


    VLT - Government Sponsored

15,176

15,267

-0.6%



Terminal 

25

25

0%








Other

13

11

13%


Lottery same-store revenue growth





Product Sales

0

0

0%


   Instants & draw games



5.3%









   Multistate Jackpots



-4.8%

Lottery


Total Revenue

270

256

5%


   Total lottery same-store revenue growth



4.2%


Lottery Services

236

242

-2%








FM/Concessions

164

158

4%








LMA

39

55

-30%








Other Services

33

28

18%







Product Sales

34

15

131%








Terminal 

20

1

NM








Systems/Other

14

14

5%


















Total


Revenue

309

293

5%







Operating Income

80

79

1%






 Revenue up 5% to $309 million

  • Lottery service revenue down 2% to $236 million
    • Same-store revenues up 4.2% on higher instant tickets and draw-based games
    • $17 million negative impact from the timing of incentive recognition for LMA agreements under ASC 606 and lower pass-through revenue which has no associated profit
  • Lottery product sales revenue more than doubled to $34 million on higher retailer point-of-sale terminal and hardware sales

Operating income of $80 million up modestly from the prior year

  • Despite differential timing of incentives and higher depreciation
  • Driven by same-store revenue growth, product sales mix, and operating expense discipline

International

Select Financial Data



Constant


Key Performance Indicators



%

Period Ended June 30

Q2 '18

Q2 '17

FX


Period Ended June 30

Q2 '18

Q2 '17

Change 

Gaming


Total Revenue

101

117

-14%


Installed base (end of period)





Gaming Services

34

43

-19%


    Casino

13,034

11,204

16.3%



Terminal 

13

13

9%


    VLT - Government Sponsored

3,306

925

257.4%



Other

21

30

-31%


   Total installed base

16,340

12,129

34.7%


Product Sales

67

74

-10%








Terminal 

52

58

-11%


Machine units shipped






Other

15

16

-8%


   New/Expansion

732

441

66.0%









   Replacement 

2,388

3,150

-24.2%

Lottery


Total Revenue

78

75

4%


   Total machines shipped

3,120

3,591

-13.1%


Lottery Services

70

72

-3%








FM/Concessions

54

51

6%


Lottery same-store revenue growth






Other Services

16

21

-25%


   Instants & draw games



3.0%


Product Sales

8

3

185%


   Multistate Jackpots



-20.4%



Systems/Other

8

3

185%


   Total lottery same-store revenue growth



1.4%













Other


Total Revenue

19

20

-2%







Service Revenue

19

18

3%







Product Sales

1

2

-54%


















Total


Revenue

199

211

-6%







Operating Income

36

45

-21%






 Revenue down 6% to $199 million

  • Lottery service revenue of  $70 million compared to $72 million in the prior year
    • Same-store revenue growth of 1.4% driven by instant ticket and draw-based games, partially offset by significantly lower jackpot activity
    • Lower non-wager revenue compared to the prior year
  • Gaming service revenue of $34 million compared to $43 million in the prior year
    • Exit of certain legacy businesses and jackpot expense reclassification
    • Continued growth in the installed base
  • Gaming product sales revenue down 10% to $67 million
    • Lower gaming machine replacement unit shipments primarily to Latin America

Operating income down to $36 million from $45 million

  • Lower revenue and a higher margin mix of business in the prior year
  • Partially offset by lower operating expenses

Italy

Select Financial Data



Constant


Key Performance Indicators



%

Period Ended June 30

Q2 '18

Q2 '17

FX


Period Ended June 30

Q2 '18

Q2 '17

Change 

Gaming


Total Revenue

177

165

1%


(In € millions, except machines)





Gaming Services

176

165

1%


Lottery






Terminal 

160

150

1%


Lotto wagers

1,981

1,842

7.5%



Other

16

14

5%


   10eLotto

1,422

1,269

12.0%


Product Sales

0

1

NM


   Core

471

484

-2.7%









   Late Numbers

33

88

-62.4%

Lottery


Total Revenue

193

171

7%


   MillionDAY

54

-

NM


Lottery Services

193

171

7%








FM/Concessions

243

219

5%


Scratch & Win Wagers

2,237

2,183

2.4%



Other Services

(50)

(48)

0%







Product Sales

0

0

0%


Italy lottery revenue growth



6.8%













Other


Total Revenue

71

67

1%


Gaming





Service Revenue

71

67

1%


Installed base (end of period)





Product Sales

0

0

0%


   VLT - Operator (B2C)

10,991

10,907

0.8%









   VLT - Supplier (B2B)

8,251

8,819

-6.4%

Total


Revenue

441

404

3%


   AWP

43,657

59,070

-26.1%


Operating Income

131

114

8%


   Total Installed Base

62,899

78,796

-20.2%





















Wagers












   VLT - Operator (B2C)

1,407

1,370

2.7%









   AWP

885

960

-7.8%









   Interactive Wagers (Gaming)

459

413

11.1%





















Other












   Sports Betting Wagers1

244

226

8.4%









   Sports Betting Payout (%)1

82.9%

82.3%

0.6 pp





















1 Includes Virtual Wagers and Pools & Horses

 Revenue up 9% to $441 million on a reported basis; up 3% at constant currency

  • Lottery Service revenue rose 13% on a reported basis, 7% at constant currency, to $193 million
    • Lotto wagers up 7.5% to €1,981 million on double-digit growth in 10eLotto
    • MillionDAY wagers offset lower Late Numbers
    • Scratch & Win wagers up 2.4% to €2.2 billion on sustained Miliardario momentum
  • Gaming Service revenue increased to $176 million, up 1% at constant currency
    • Strong underlying game performance
    • Despite state-mandated reductions in AWP units
  • Sports betting wagers up 8.4% to €244 million
    • World Cup an important driver of wager growth
    • Payout of 82.9% modestly above the prior year

Operating income increased 15% to $131 million; up 8% at constant currency

  • Strong lottery profit flow-through
  • Disciplined cost management

Other Developments

The Company's board of directors declared a quarterly cash dividend of $0.20 per ordinary share

  • Record date of August 14, 2018
  • Payment date of August 28, 2018

Recent Capital Markets Activity

  • Issuance of €500 million 3.5% Senior Secured Notes due 2024
  • Approximately €400 million of net proceeds used to fund partial tender of €700 million 4.125% bonds due 2020 and €500 million 4.75% notes due 2020

Investor Day

IGT will host an Investor Day on August 2, 2018 in New York City

  • Primary focus of the event will be on IGT's global lottery operations
  • Please contact Investor_Relations@IGT.com to register for the event
  • A live webcast may be accessed along with accompanying slides under "News, Events & Presentations" in the Investor Relations section of IGT's website at www.IGT.com starting at 8:30 a.m. EDT. A replay of the webcast and access to the accompanying slides will be available at www.IGT.com following the live event

Outlook

  • Raising full year expectations for underlying business performance
  • Improved operating outlook mitigates an approximate $26 million negative impact from foreign currency translation
  • Maintain full year 2018 Adjusted EBITDA at $1,700-$1,780 million
    • Adjusting EUR/USD rate to 1.19 for full-year period compared to 1.22 used  in previous outlook; assumes a EUR/USD rate of 1.17 for balance of year
  • Continue to expect capital expenditures of $575-$625 million for 2018

Conference Call and Webcast

July 31, 2018, 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 3642779
  • 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 3642779

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 2018 are calculated using the same foreign exchange rates as the corresponding 2017 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 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 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, 2017 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:
Robert K. Vincent, Corporate Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
James Hurley, Investor Relations, +1 (401) 392-7190
Simone Cantagallo, +39 06 51899030; for Italian media inquiries

 

International Game Technology PLC

Condensed Consolidated Statements of Operations

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

Unaudited






 For the three months ended 


 June 30, 


2018


2017





Service revenue

1,007,067


1,023,478

Product sales

195,271


196,026

Total revenue

1,202,338


1,219,504





Cost of services

607,684


616,740

Cost of product sales

122,403


138,362

Selling, general and administrative

196,088


210,185

Research and development

63,957


80,512

Restructuring expense

3,140


11,463

Transaction income, net

(11)


(29,630)

Total operating expenses

993,261


1,027,632





Operating income

209,077


191,872





Interest income

3,351


2,460

Interest expense

(106,239)


(115,984)

Foreign exchange gain (loss), net

172,546


(220,386)

Other expense, net

(31,304)


(26,112)

Total non-operating income (expenses)

38,354


(360,022)





Income (loss) before provision for income taxes

247,431


(168,150)





Provision for income taxes

52,232


84,086





Net income (loss)

195,199


(252,236)





Less: Net income attributable to non-controlling interests

33,703


37,665





Net income (loss) attributable to IGT PLC

161,496


(289,901)









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

0.79


(1.43)

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

0.79


(1.43)





Weighted-average shares - basic

204,118


202,946

Weighted-average shares - diluted

204,516


202,946

 

International Game Technology PLC

Condensed Consolidated Statements of Operations

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

Unaudited






 For the six months ended 


 June 30, 


2018


2017





Service revenue

2,054,018


2,050,423

Product sales

355,276


321,665

Total revenue

2,409,294


2,372,088





Cost of services

1,225,742


1,241,034

Cost of product sales

225,754


252,698

Selling, general and administrative

411,306


410,709

Research and development

135,220


163,133

Restructuring expense

5,156


20,730

Transaction expense (income), net

44


(27,309)

Total operating expenses

2,003,222


2,060,995





Operating income

406,072


311,093





Interest income

6,350


5,086

Interest expense

(216,518)


(230,783)

Foreign exchange gain (loss), net

75,851


(267,223)

Other expense, net

(28,323)


(23,445)

Total non-operating expenses

(162,640)


(516,365)





Income (loss) before provision for income taxes

243,432


(205,272)





Provision for income taxes

112,737


73,756





Net income (loss)

130,695


(279,028)





Less: Net income attributable to non-controlling interests

72,345


65,663





Net income (loss) attributable to IGT PLC

58,350


(344,691)









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

0.29


(1.70)

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

0.29


(1.70)





Weighted-average shares - basic

203,859


202,714

Weighted-average shares - diluted

204,345


202,714

 

International Game Technology PLC

Condensed Consolidated Balance Sheets

($ thousands)

Unaudited






June 30,


December 31,


2018


2017

Assets




Current assets:




Cash and cash equivalents

568,197


1,057,418

Restricted cash

252,814


248,012

Trade and other receivables, net

869,851


937,854

Inventories, net

324,684


319,545

Other current assets

471,449


407,520

Income taxes receivable

49,544


94,168

  Total current assets

2,536,539


3,064,517

Systems, equipment and other assets related to contracts, net

1,391,662


1,434,194

Property, plant and equipment, net

188,549


193,723

Goodwill

5,700,992


5,723,815

Intangible assets, net

2,152,036


2,273,460

Other non-current assets

2,270,086


2,427,953

Deferred income taxes

37,810


41,546

  Total non-current assets

11,741,135


12,094,691

Total assets

14,277,674


15,159,208





Liabilities, redeemable non-controlling interests, and shareholders' equity




Current liabilities:




Accounts payable

1,131,717


1,240,753

Other current liabilities

1,217,519


1,780,875

Current portion of long-term debt

-


599,114

Short-term borrowings

28,400


-

Income taxes payable

138,770


55,935

  Total current liabilities

2,516,406


3,676,677

Long-term debt, less current portion

8,069,984


7,777,445

Deferred income taxes

471,073


491,460

Income taxes payable

55,665


55,665

Other non-current liabilities

448,273


446,113

  Total non-current liabilities

9,044,995


8,770,683

Total liabilities

11,561,401


12,447,360

Commitments and contingencies




Redeemable non-controlling interests and shareholders' equity

2,716,273


2,711,848

Total liabilities, redeemable non-controlling interests, and shareholders' equity

14,277,674


15,159,208

 

International Game Technology PLC

Condensed Consolidated Statements of Cash Flows

($ thousands)

Unaudited






 For the six months ended 



June 30 



2018


2017





Restated

Cash flows from operating activities





Net income (loss)


130,695


(279,028)

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





Depreciation 


202,448


185,906

Amortization 


136,450


218,427

Service revenue amortization


111,115


101,039

Loss on extinguishment of debt


29,584


25,725

Stock-based compensation expense


17,119


3,273

Debt issuance cost amortization


11,534


10,042

Deferred income tax provision


(9,817)


(112,404)

Foreign exchange (gain) loss, net


(75,851)


267,223

Gain on sale of Double Down Interactive LLC


-


(51,233)

Other non-cash costs, net


481


4,051

Changes in operating assets and liabilities:





Trade and other receivables


49,832


146,763

Inventories


(20,787)


1,819

Upfront Italian license fees


(366,270)


(185,368)

Accounts payable


(56,732)


(105,477)

Other assets and liabilities


(39,651)


93,166

Net cash provided by operating activities


120,150


323,924






Cash flows from investing activities





Capital expenditures


(258,967)


(370,590)

Proceeds from sale of assets


6,065


162,758

Proceeds from sale of Double Down Interactive LLC, net of cash divested


-


823,662

Other


1,458


1,679

Net cash (used in) provided by investing activities


(251,444)


617,509






Cash flows from financing activities





Principal payments on long-term debt


(1,058,753)


(671,615)

Dividends paid - non-controlling interests


(125,808)


(50,464)

Dividends paid


(81,553)


(81,162)

Return of capital - non-controlling interests


(53,600)


(35,907)

Net payments of financial liabilities


(36,586)


(28,092)

Payments in connection with the extinguishment of debt


(24,281)


(38,824)

Debt issuance costs paid


(4,047)


-

Net proceeds from short-term borrowings


28,400


-

Capital increase - non-controlling interests


134,536


127,211

Proceeds from long-term debt


863,911


-

Other


(17,696)


(19,352)

Net cash used in financing activities


(375,477)


(798,205)






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


(506,771)


143,228

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


22,352


39,995

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


1,305,430


541,316

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


821,011


724,539











Supplemental Cash Flow Information:





Interest paid


(262,886)


(245,753)

Income taxes refunded (paid)


13,313


(21,492)

 

International Game Technology PLC

Net Debt

($ thousands)













June 30,


December 31,



2018


2017











7.500% Senior Secured Notes due July 2019


146,897


148,231

4.125% Senior Secured Notes due February 2020


507,409


833,655

5.625% Senior Secured Notes due February 2020


596,715


595,767

4.750% Senior Secured Notes due March 2020


443,808


585,171

5.500% Senior Secured Notes due June 2020


125,400


125,709

6.250% Senior Secured Notes due February 2022


1,458,333


1,470,075

4.750% Senior Secured Notes due February 2023


981,330


1,008,601

5.350% Senior Secured Notes due October 2023


61,033


61,082

3.500% Senior Secured Notes due July 2024


576,923


-

6.500% Senior Secured Notes due February 2025


1,087,637


1,086,913

Senior Secured Notes, long-term


5,985,485


5,915,204






Revolving Credit Facilities due July 2021


347,708


76,880

Term Loan Facilities due January 2023


1,736,791


1,785,361

Long-term debt, less current portion


8,069,984


7,777,445






6.625% Senior Secured Notes due February 2018


-


599,114

Current portion of long-term debt 


-


599,114






Short-term borrowings


28,400


-

Total debt


8,098,384


8,376,559






Less: Cash and cash equivalents


568,197


1,057,418






Net debt


7,530,187


7,319,141


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)













For the three months ended



June 30,



2018


2017






Net income (loss)


195,199


(252,236)

Provision for income taxes


52,232


84,086

Non-operating (income) expenses


(38,354)


360,022

Depreciation 


104,361


93,985

Amortization


68,058


102,186

Service revenue amortization


54,465


51,640

Restructuring expense


3,140


11,463

Stock-based compensation expense


2,941


2,424

Transaction income, net


(11)


(29,630)

Non-cash purchase accounting (excluding D&A)


(216)


(204)

Bad debt expense


-


11

Adjusted EBITDA


441,815


423,747
















Cash flows from operating activities


42,940


30,372

Capital expenditures


(124,306)


(198,538)

Free Cash Flow


(81,366)


(168,166)

 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)













For the six months ended



June 30,



2018


2017






Net income (loss)


130,695


(279,028)

Provision for income taxes


112,737


73,756

Non-operating expenses


162,640


516,365

Depreciation 


202,448


185,906

Amortization


136,450


218,427

Service revenue amortization


111,115


101,039

Stock-based compensation expense


17,119


3,273

Restructuring expense


5,156


20,730

Transaction expense (income), net


44


(27,309)

Non-cash purchase accounting (excluding D&A)


(433)


(387)

Bad debt recovery


-


(17,862)

Adjusted EBITDA


877,971


794,910
















Cash flows from operating activities


120,150


323,924

Capital expenditures


(258,967)


(370,590)

Free Cash Flow


(138,817)


(46,666)

 

International Game Technology PLC

ASC 606 - Revenue Recognition Impact

Condensed Consolidated Statements of Operations

($ thousands, except per share data)

Unaudited










Q2 2018



Under Prior
Accounting


Revenue
Recognition
Adjustment


As Adjusted








Revenue


1,235,184


(32,846)


1,202,338

Operating expenses


(1,006,924)


13,663


(993,261)

Provision for income taxes


(54,451)


2,219


(52,232)

Net income attributable to IGT PLC


178,460


(16,964)


161,496








Net income attributable to IGT PLC per common share - basic


0.87


(0.08)


0.79

Net income attributable to IGT PLC per common share - diluted


0.87


(0.08)


0.79

















Q2 2018 YTD



Under Prior
Accounting


Revenue
Recognition
Adjustment


As Adjusted








Revenue


2,442,577


(33,283)


2,409,294

Operating expenses


(2,032,509)


29,287


(2,003,222)

Provision for income taxes


(113,064)


327


(112,737)

Net income attributable to IGT PLC


62,019


(3,669)


58,350








Net income attributable to IGT PLC per common share - basic


0.31


(0.02)


0.29

Net income attributable to IGT PLC per common share - diluted


0.31


(0.02)


0.29

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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































Adjustments





Q2 2018








Transaction


Q2 2018



As


Purchase


Foreign


Restructuring


and Refinancing


As



Reported


Accounting


Exchange


Expense


Expense, net


Adjusted














 Total revenue 


1,202,338


(182)


-


-


-


1,202,156














 Cost of services 


607,684


(21,061)


-


-


-


586,623

 Cost of product sales 


122,403


(3,912)


-


-


-


118,491

 Selling, general and administrative 


196,088


(26,736)


-


-


-


169,352

 Research and development 


63,957


(219)


-


-


-


63,738

 Restructuring expense 


3,140


-


-


(3,140)


-


-

 Transaction income, net 


(11)


-


-


-


11


-

 Total operating expenses 


993,261


(51,928)


-


(3,140)


11


938,204














 Operating income 


209,077


51,746


-


3,140


(11)


263,952














 Interest expense, net 


(102,888)


508


-


-


-


(102,380)

 Foreign exchange gain, net 


172,546


-


(172,546)


-


-


-

 Other expense, net 


(31,304)


1


-


-


29,584


(1,719)

 Total non-operating income (expenses) 


38,354


509


(172,546)


-


29,584


(104,099)














 Income before provision for income taxes 


247,431


52,255


(172,546)


3,140


29,573


159,853














 Provision for income taxes (a) 


52,232


12,345


3,683


589


-


68,849














 Net income 


195,199


39,910


(176,229)


2,551


29,573


91,004














 Less: Net income attributable to non-controlling interests 


33,703


25


-


-


-


33,728














 Net income attributable to IGT PLC 


161,496


39,885


(176,229)


2,551


29,573


57,276














 Net income per common share - diluted 


0.79










0.28

 Weighted-average shares - diluted 


204,516










204,516



























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

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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





























 Year to date 


Adjustments


 Year to date 



June 2018








Transaction


June 2018



As


Purchase


Foreign


Restructuring


and Refinancing


As



Reported


Accounting


Exchange


Expense


Expense, net


Adjusted














 Total revenue 


2,409,294


(359)


-


-


-


2,408,935














 Cost of services 


1,225,742


(42,216)


-


-


-


1,183,526

 Cost of product sales 


225,754


(7,781)


-


-


-


217,973

 Selling, general and administrative 


411,306


(53,585)


-


-


-


357,721

 Research and development 


135,220


(454)


-


-


-


134,766

 Restructuring expense 


5,156


-


-


(5,156)


-


-

 Transaction expense, net 


44


-


-


-


(44)


-

 Total operating expenses 


2,003,222


(104,036)


-


(5,156)


(44)


1,893,986














 Operating income 


406,072


103,677


-


5,156


44


514,949














 Interest expense, net 


(210,168)


1,012


-


-


-


(209,156)

 Foreign exchange gain, net 


75,851


-


(75,851)


-


-


-

 Other expense, net 


(28,323)


(2,184)


-


-


29,584


(923)

 Total non-operating expenses 


(162,640)


(1,172)


(75,851)


-


29,584


(210,079)














 Income before provision for income taxes 


243,432


102,505


(75,851)


5,156


29,628


304,870














 Provision for income taxes (a) 


112,737


24,255


6,329


1,141


-


144,462














 Net income 


130,695


78,250


(82,180)


4,015


29,628


160,408














 Less: Net income attributable to non-controlling interests 


72,345


50


-


-


-


72,395














 Net income attributable to IGT PLC 


58,350


78,200


(82,180)


4,015


29,628


88,013














 Net income per common share - diluted 


0.29










0.43

 Weighted-average shares - diluted 


204,345










204,345



























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

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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































Adjustments





Q2 2017








Transaction


Q2 2017



As


Purchase


Foreign


Restructuring


and Refinancing


As



Reported


Accounting


Exchange


Expense


Expense, net


Adjusted














 Total revenue 


1,219,504


(180)


-


-


-


1,219,324














 Cost of services 


616,740


(38,510)


-


-


-


578,230

 Cost of product sales 


138,362


(23,618)


-


-


-


114,744

 Selling, general and administrative 


210,185


(28,169)


-


-


-


182,016

 Research and development 


80,512


(210)


-


-


-


80,302

 Restructuring expense 


11,463


-


-


(11,463)


-


-

 Transaction income, net 


(29,630)


-


-


-


29,630


-

 Total operating expenses 


1,027,632


(90,507)


-


(11,463)


29,630


955,292














 Operating income 


191,872


90,327


-


11,463


(29,630)


264,032














 Interest expense, net 


(113,524)


717


-


-


-


(112,807)

 Foreign exchange loss, net 


(220,386)


-


220,386


-


-


-

 Other (expense) income, net 


(26,112)


1,617


-


-


25,725


1,230

 Total non-operating expenses 


(360,022)


2,334


220,386


-


25,725


(111,577)














 (Loss) income before provision for income taxes 


(168,150)


92,661


220,386


11,463


(3,905)


152,455














 Provision for income taxes (a) 


84,086


32,003


50,428


2,962


(85,782)


83,697














 Net (loss) income 


(252,236)


60,658


169,958


8,501


81,877


68,758














 Less: Net income attributable to non-controlling interests 


37,665


26


-


-


-


37,691














 Net (loss) income attributable to IGT PLC 


(289,901)


60,632


169,958


8,501


81,877


31,067














 Net (loss) income per common share - diluted 


(1.43)










0.15

 Weighted-average shares - diluted (b)  


202,946










203,076



























 (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.   

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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





























 Year to date 


Adjustments


 Year to date 



June 2017








Transaction


June 2017



As


Purchase


Foreign


Restructuring


and Refinancing


As



Reported


Accounting


Exchange


Expense


Expense, net


Adjusted














 Total revenue 


2,372,088


(358)


-


-


-


2,371,730














 Cost of services 


1,241,034


(80,740)


-


-


-


1,160,294

 Cost of product sales 


252,698


(53,300)


-


-


-


199,398

 Selling, general and administrative 


410,709


(63,097)


-


-


-


347,612

 Research and development 


163,133


(411)


-


-


-


162,722

 Restructuring expense 


20,730


-


-


(20,730)


-


-

 Transaction income, net 


(27,309)


-


-


-


27,309


-

 Total operating expenses 


2,060,995


(197,548)


-


(20,730)


27,309


1,870,026














 Operating income 


311,093


197,190


-


20,730


(27,309)


501,704














 Interest expense, net 


(225,697)


1,805


-


-


-


(223,892)

 Foreign exchange loss, net 


(267,223)


-


267,223


-


-


-

 Other (expense) income, net 


(23,445)


1,651


-


-


25,725


3,931

 Total non-operating expenses 


(516,365)


3,456


267,223


-


25,725


(219,961)














 (Loss) income before provision for income taxes 


(205,272)


200,646


267,223


20,730


(1,584)


281,743














 Provision for income taxes (a) 


73,756


70,232


61,096


6,134


(84,929)


126,289














 Net (loss) income 


(279,028)


130,414


206,127


14,596


83,345


155,454














 Less: Net income attributable to non-controlling interests 


65,663


51


-


-


-


65,714














 Net (loss) income attributable to IGT PLC 


(344,691)


130,363


206,127


14,596


83,345


89,740














 Net (loss) income per common share - diluted 


(1.70)










0.44

 Weighted-average shares - diluted (b) 


202,714










203,066



























 (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.   

 

INTERNATIONAL GAME TECHNOLOGY PLC
















Select Financial Data



Constant


Key Performance Indicators



%

Period Ended June 30

Q2 '18

Q2 '17

FX


Period Ended June 30

Q2 '18

Q2 '17

Change 

Gaming


Total Revenue

570

630

-11%


Installed base (end of period)





Gaming Services

418

454

-10%


   Casino

36,385

34,853

4.4%



Terminal 

307

311

-4%


   VLT - Government Sponsored (ex-Italy)

18,482

16,192

14.1%



Social (DDI)

0

43

-100%


   VLT - Italy Supplier (B2B)

8,251

8,819

-6.4%



Other

111

99

10%


   Total installed base

63,118

59,864

5.4%


Product Sales

152

177

-14%


   Yield 

$ 27.89

$ 29.64

-5.9%



Terminal 

114

132

-14%


      (average revenue per unit per day)






Other

38

45

-15%














   Additional Italian Network Details:




Lottery


Total Revenue

542

502

6%


   VLT - Operator (B2C)

10,991

10,907

0.8%


Lottery Services

499

485

1%


   AWP

43,657

59,070

-26.1%



FM/Concessions

461

427

5%








LMA

39

55

-30%


Machine units shipped






Other Services

(1)

2

-10%


   New/Expansion

2,535

1,849

37.1%


Product Sales

42

18

140%


   Replacement 

5,135

7,035

-27.0%



Terminal 

20

1

NM


   Total machines shipped

7,670

8,884

-13.7%



Systems/Other

22

16

32%














Global lottery same-store revenue growth




Other


Total Revenue

91

87

0%


   Instants & draw games



4.8%


Service Revenue

90

85

1%


   Multistate Jackpots



-7.2%


Product Sales

1

2

-54%


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


3.5%









   Italy lottery revenue growth



6.8%

Consolidated


Revenue

1,202

1,220

-3%







Operating Income:











Segment Total

313

315

-3%








Purchase Accounting

(52)

(90)

43%








Corporate Support

(52)

(33)

-57%








Total

209

192

5%






 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/international-game-technology-plc-reports-second-quarter-2018-results-300688822.html

SOURCE International Game Technology PLC

View Comments and Join the Discussion!