EX-99.1 2 tm2026395d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

NEWS RELEASE

 

 

INTERNATIONAL GAME TECHNOLOGY PLC REPORTS

SECOND QUARTER 2020 RESULTS

 

·Results highlight value of diverse business portfolio, global reach, resilience of lottery, and swift response to unprecedented conditions

 

·Liquidity and net debt improved on positive cash flow performance; generated $168 million in cash from operating activities and $107 million in free cash flow during the second quarter

 

·Net loss of $280 million; adjusted net loss of $121 million

 

·Delivered $168 million in adjusted EBITDA with important contribution from strict cost discipline

 

·On track to achieve $500 million in 2020 cost reduction/avoidance; identified over $200 million in longer-term, structural and discretionary cost savings

 

 

LONDON – August 4, 2020 – International Game Technology PLC (“IGT”) (NYSE:IGT) today reported financial results for the second quarter ended June 30, 2020. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the results; access details are provided below.

 

“Our second quarter results reflect the intense impact of global lockdowns caused by the pandemic,” said Marco Sala, CEO of IGT. “That said, thanks to strong North America Lottery performance and our swift adoption of cost-saving and avoidance measures, we delivered better cash flow than we expected back in May. Our resilience is a direct consequence of the diversity of our global portfolio of products and solutions. The improving trends we are currently seeing are encouraging, but we remain prudent with our planning. Our new organizational structure enhances our readiness to adapt to changes in market conditions.”

 

“Cash generation and liquidity remain our top financial priority,” said Max Chiara, CFO of IGT. “The proactive efficiency initiatives and focused capital markets activity we executed in the quarter have us tracking ahead of plan on all key measures and we expect to deliver positive free cash flow this fiscal year. We have the resources we need to navigate the impact COVID-19 is having on our business and we are making important, strategic decisions to enhance our operational flexibility. This includes over $200 million in structural and discretionary cost savings compared to pre-pandemic levels.”

 

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Overview of Consolidated Second Quarter 2020 Results

 

  Quarter Ended
June 30,		   Y/Y
Change		 Constant
Currency
Change 
  2020 2019   (%) (%)
           
(In $ millions, unless otherwise noted)          
Revenue       637     1,234   -48% -48%
Operating (loss)/income        (94)       224   NM  
Net (loss)/income per diluted share ($1.37) $0.02   NM  
Adjusted EBITDA       168        454   -63% -63%
Adjusted net (loss)/income per diluted share ($0.59) $0.44   NM  
Net debt    7,289     7,637   -5%  
           

 

Note: Adjusted EBITDA and adjusted net (loss)/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.

 

Second quarter 2020 results reflect the impact of global COVID-19 restrictions. Revenue was down across all business segments and all primary revenue streams except for digital activities, where revenue increased 35%. Progressive easing of restrictions during the quarter and cost-saving initiatives helped mitigate impact.

 

Financial highlights:

 

Consolidated revenue of $637 million, down 48% from the prior year

·Global gaming revenue declined 72%, driven by the closure of casinos and gaming halls, fewer unit shipments, and lower systems and software sales compared to the prior year
·Global lottery revenue down 26% on reduced traffic to points of sale and temporary game shutdowns in Italy
·Gaming and lottery trends improved each month as venues re-opened and restrictions eased

 

Operating loss of $94 million, down from income of $224 million in the prior year

·Lower profit contribution from reduced business volumes
·Includes $43 million in restructuring expense
·Oklahoma strategic transaction and high-margin poker and systems sales embedded in the prior year
·Accelerating benefit from actions taken to reduce costs

 

Net interest expense of $96 million compared to $104 million in the prior year

·Capital market transactions drive lower cost of debt

 

Benefit from income taxes of $11 million, compared to a provision of $63 million, driven by lower pre-tax income

 

Net loss attributable to IGT was $280 million; adjusted net loss attributable to IGT of $121 million versus adjusted net income of $91 million in the prior year

 

2

 

 

·Reflects operating loss and higher foreign exchange and debt extinguishment losses in the current year

 

Net loss per diluted share of $1.37; adjusted net loss per diluted share of $0.59 compared to adjusted net income of $0.44 in the prior year

 

Adjusted EBITDA of $168 million compared to $454 million in the prior-year period

 

Net debt of $7.29 billion improved $93 million from $7.38 billion at December 31, 2019; Net debt to LTM adjusted EBITDA of 5.52x, up from 4.31x at December 31, 2019, primarily due to lower EBITDA in the first half of 2020

 

Cash and Liquidity Update

·Preserving cash and liquidity is the top financial priority
·At June 30, 2020, liquidity totalled $2.3 billion, comprised of $1.3 billion in unrestricted cash and $1.0 billion available under revolving credit facilities

 

Other Developments

·In an effort to accelerate the Company’s response to market conditions, over $200 million has been identified in structural cost savings compared to pre-pandemic levels. These savings are mostly expected in 2021 and to come from:
oEliminating duplicative functions and streamlining back-office activities
oOptimizing the global investment in technology to focus on value-accretive know-how
oRationalizing R&D based on disciplined risk/return priorities
oOptimizing our supply chain for maximum cost efficiency

 

·Issuance of $750 million 5.25% Notes due 2029, as previously announced
o$500 million of net proceeds used to fund a partial tender of 6.25% Notes due 2022
oLowest USD-denominated coupon ever issued by the Company
oLongest duration issuance since 2015

 

Conference Call and Webcast

 

August 4, 2020, 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: +1 844 842 7999
·Outside the US/Canada toll-free number: +1 612 979 9887
·Conference ID/confirmation code: 4889985
·A telephone replay of the call will be available for one week
oUS/Canada replay number: +1 855 859 2056
oOutside the US/Canada replay number: +1 404 537 3406
oID/Confirmation code: 4889985

 

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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 2020 are calculated using the same foreign exchange rates as the corresponding 2019 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 deliver entertaining and responsible gaming experiences for players across all channels and regulated segments, from Gaming Machines and Lotteries to Sports Betting and Digital. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, our solutions deliver unrivalled gaming experiences that engage players and drive growth. 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 approximately 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 uncertainty of the duration, extent, and

 

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effects of the COVID-19 pandemic and the response of 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, 2019 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 news release 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 or International Game Technology PLC, as applicable. All forward-looking statements contained in this news release 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.

 

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

 

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Second Quarter Operating Segment Review

 

North America Gaming & Interactive

 

Select Financial Data     As Constant   Key Performance Indicators     %
3 Month Period Ended June 30th Q2 '20 Q2 '19 Reported FX   3 Month Period Ended June 30th Q2 '20 Q2 '19 Change 
Gaming   Total revenue 92 268 -66% -66%   Installed base units (end of period)       
  Gaming services 47 165 -72% -72%       Casino    18,410    21,073 -12.6%
    Terminal  22 106 -79% -79%       Casino - L/T lease (1)          930             -     
    Other 25 59 -58% -58%      Total Installed base units    19,340    21,073 -8.2%
  Product sales 45 104 -56% -56%   (1) Yield calculations should exclude these units due to     
    Terminal  40 73 -45% -45%         accounting treatment as sales-type leases      
    Other 5 30 -84% -84%          
                  Machine units shipped      
Other   Total revenue 4 6 -30% -30%      New/expansion       1,382          438 215.5%
  Service revenue 4 6 -35% -35%      Replacement        1,344       4,223 -68.2%
  Product revenue 0 0 0% 0%      Total machines shipped       2,726       4,661 -41.5%
                         
Total   Revenue 96 274 -65% -65%          
  Operating (Loss)/Income (20) 85 NM NM          

 

Revenue of $96 million, down from $274 million in the prior-year period

·Gaming service revenue of $47 million
oCasino closures impact terminal revenue
oDrop in other revenue reflects multi-year poker license in the prior year
·Gaming product sales revenue of $45 million
oNew/expansion shipments driven by 977 historical horse racing units
oShipped 1,344 replacement units
oSystems revenue down from high level in the prior year

 

Operating loss of $20 million compared to operating income of $85 million in the prior year

·Impact of casino closures
·Oklahoma strategic transaction and high-margin poker and systems sales in the prior year
·Partly offset by benefit from cost-saving initiatives

 

6

 

 

North America Lottery

 

Select Financial Data     As Constant   Key Performance Indicators     %
3 Month Period Ended June 30th Q2 '20 Q2 '19 Reported FX   3 Month Period Ended June 30th Q2 '20 Q2 '19 Change 
Gaming   Total revenue 20 37 -47% -46%   Installed base units (end of period)      
  Gaming services 19 37 -48% -47%       VLT - Government sponsored    13,559    14,215 -4.6%
    Terminal  1 25 -94% -94%          
    Other 18 12 45% 48%   Lottery same-store revenue growth      
  Product sales 1 1 17% 17%      Instant ticket & draw games     10.5%
                     Multistate jackpots     -28.0%
Lottery   Total revenue 254 270 -6% -6%      Total lottery same-store revenue growth     6.2%
  Lottery services 234 238 -2% -2%          
    FMC 214 202 6% 6%          
      Instant ticket & draw games 184 168 9% 9%          
      Other services 29 34 -13% -13%          
    LMA 20 36 -43% -43%          
  Product sales 19 32 -40% -40%          
                         
Other   Total revenue 0 1 -87% -87%          
  Service revenue 0 1 -87% -87%          
                         
Total   Revenue 273 309 -12% -11%          
  Operating income 75 78 -4% -3%          

 

Revenue of $273 million, down from $309 million in the prior-year period

·Lottery service revenue of $234 million, down 2%
oStrong double-digit same-store revenue growth for instant ticket & draw games nearly offsets impact of mobility restrictions and lower jackpot activity
oLMA revenue reflects reduced play levels in NJ and lower pass-through revenue
·Gaming service revenue impacted by closure of VLT venues, partly offset by growth in Canada iGaming
·Product sales revenue reflects lower systems revenue

 

Operating income of $75 million compared to $78 million in the prior year

·Same-store revenue growth and cost-saving initiatives mostly offset lower gaming and LMA contributions

 

7

 

 

International

 

Select Financial Data     As Constant   Key Performance Indicators     %
3 Month Period Ended June 30th Q2 '20 Q2 '19 Reported FX   3 Month Period Ended June 30th Q2 '20 Q2 '19 Change 
Gaming   Total revenue 21 142 -85% -85%   Installed base units (end of period)      
  Gaming services 12 28 -57% -56%       Casino       9,724    10,039 -3.1%
    Terminal  1 12 -95% -94%       VLT - Government sponsored       5,110       4,436 15.2%
    Other 11 16 -28% -25%      Total installed base units    14,834    14,475 2.5%
  Product sales 9 114 -92% -92%          
    Terminal  4 82 -95% -95%   Machine units shipped      
    Other 6 33 -83% -83%      New/expansion            61          700 -91.3%
                     Replacement           208       5,863 -96.5%
Lottery   Total revenue 55 70 -22% -19%      Total machines shipped          269       6,563 -95.9%
  Lottery services 52 67 -22% -19%          
    FMC 52 67 -22% -19%   Lottery same-store revenue growth      
      Instant ticket & draw games 34 53 -35% -33%      Instant ticket & draw games     -28.2%
      Other services 18 14 27% 34%      Multistate jackpots     -7.8%
  Product sales 2 3 -22% -21%      Total lottery same-store revenue growth     -27.1%
                         
Other   Total revenue 7 17 -55% -48%          
  Service revenue 7 16 -55% -48%          
  Product sales 0 0 -65% -64%          
                         
Total   Revenue 84 229 -64% -62%          
  Operating (Loss)/Income (20) 30 NM NM          

 

Revenue of $84 million, down from $229 million in the prior-year period

·Lottery service revenue of $52 million
oSame-store revenue growth impacted by mobility restrictions and shutdown of games in certain markets; trends progressively improving as restrictions ease
·Gaming product sales of $9 million
oFewer unit shipments, primarily in Latin America, impact terminal revenue; VLT shipments to Sweden in prior year
oOther product sales reflect Italy AWP upgrades in the prior year
·Gaming service revenue lower on casino closures; installed base stable

 

Operating loss of $20 million compared to operating income of $30 million in the prior year

·Impact of lower unit volume and revenue mix
·Partly offset by benefit from cost-saving initiatives

 

8

 

 

Italy

 

Select Financial Data     As Constant   Key Performance Indicators     %
3 Month Period Ended June 30th Q2 '20 Q2 '19 Reported FX   3 Month Period Ended June 30th Q2 '20 Q2 '19 Change 
Gaming   Total revenue 33 153 -78% -78%   (In € millions, except machines)      
  Gaming services 33 153 -78% -78%   Lottery      
    Terminal  12 136 -91% -91%   Lotto wagers          914       2,064 -55.7%
    Other 21 17 25% 27%      10eLotto          610       1,507 -59.5%
  Product sales 0 0 -98% -98%      Core          256          479 -46.5%
                     Late numbers            21            31 -32.4%
Lottery   Total revenue 86 190 -55% -55%      MillionDAY            26            47 -43.6%
  Lottery services 86 190 -55% -55%          
    FMC 86 190 -55% -55%   Scratch & Win wagers       1,649       2,257 -27.0%
      Instant ticket & draw games 133 238 -44% -44%          
      Other services (47) (48) -1% 0%   Italy lottery revenue growth     -54.8%
  Product sales 0 0 0% 0%          
                  Gaming      
Other   Total revenue 66 79 -17% -15%   Installed base (end of period)      
  Service revenue 66 79 -17% -15%      VLT - Operator (B2C) 10,844 10,929 -0.8%
  Product sales 0 0 0% 0%      VLT - Supplier (B2B) 7,253 7,524 -3.6%
                     AWP 37,138 40,268 -7.8%
Total   Revenue 184 422 -56% -56%      Total installed base 55,235 58,721 -5.9%
  Operating (Loss)/Income (7) 133 NM NM          
                  Wagers      
                     VLT - Operator (B2C)          150       1,427 -89.5%
                     AWP            83          916 -90.9%
                     Interactive wagers (gaming)          729          508 43.7%
                         
                  Other      
                     Sports betting wagers (1)            79          252 -68.5%
                     Sports betting payout (%) (1) 88.1% 82.2% 5.9 pp
                         
                  (1) Includes virtual wagers and pools & horses      

 

Revenue of $184 million, down from $422 million in the prior-year period

·Lottery service revenue reflects timing of game reopening and points of sale restrictions; trends improve each month in the quarter
·Gaming service revenue reflects closure of gaming halls
·Interactive wagers rise 44%
·Commercial services revenue higher, more than offset by lower sports betting activity

 

Operating loss of $7 million compared to operating income of $133 million in the prior year

·Impact of COVID-19 restrictions
·Partly offset by benefit from cost-saving initiatives

 

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International Game Technology PLC

Consolidated Statements of Operations

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

Unaudited

 

   For the three months ended 
   June 30, 
   2020   2019 
         
Service revenue   560,338    980,031 
Product sales   77,146    254,222 
Total revenue   637,484    1,234,253 
           
Cost of services   416,660    594,598 
Cost of product sales   67,207    160,786 
Selling, general and administrative   171,950    213,263 
Research and development   31,335    65,383 
Restructuring expense   43,429    2,412 
Other operating expense (income), net   1,009    (25,904)
Total operating expenses   731,590    1,010,538 
           
Operating (loss) income   (94,106)   223,715 
           
Interest expense, net   (95,599)   (103,860)
Foreign exchange loss, net   (74,384)   (41,061)
Other (expense) income, net   (29,374)   23,493 
Total non-operating expenses   (199,357)   (121,428)
           
(Loss) income before (benefit from) provision for income taxes   (293,463)   102,287 
           
(Benefit from) provision for income taxes   (11,321)   63,300 
           
Net (loss) income   (282,142)   38,987 
           
Less: Net (loss) income attributable to non-controlling interests   (2,526)   34,131 
           
Net (loss) income attributable to IGT PLC   (279,616)   4,856 
           
           
Net (loss) income attributable to IGT PLC per common share - basic   (1.37)   0.02 
Net (loss) income attributable to IGT PLC per common share - diluted   (1.37)   0.02 
           
Weighted-average shares - basic   204,748    204,407 
Weighted-average shares - diluted   204,748    204,412 

 

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International Game Technology PLC

Consolidated Statements of Operations

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

Unaudited

 

   For the six months ended 
   June 30, 
   2020   2019 
         
Service revenue   1,343,639    1,971,062 
Product sales   234,040    408,107 
Total revenue   1,577,679    2,379,169 
           
Cost of services   938,487    1,189,925 
Cost of product sales   158,306    260,971 
Selling, general and administrative   335,543    415,100 
Research and development   92,072    131,501 
Restructuring expense   47,053    5,701 
Goodwill impairment (1)   296,000    - 
Other operating expense (income), net   1,603    (25,896)
Total operating expenses   1,869,064    1,977,302 
           
Operating (loss) income   (291,385)   401,867 
           
Interest expense, net   (196,261)   (206,929)
Foreign exchange (loss) gain, net   (4,024)   17,541 
Other (expense) income, net   (32,760)   22,995 
Total non-operating expenses   (233,045)   (166,393)
           
(Loss) income before (benefit from) provision for income taxes   (524,430)   235,474 
           
(Benefit from) provision for income taxes   (8,189)   115,992 
           
Net (loss) income   (516,241)   119,482 
           
Less: Net income attributable to non-controlling interests   11,663    74,372 
           
Net (loss) income attributable to IGT PLC   (527,904)   45,110 
           
           
Net (loss) income attributable to IGT PLC per common share - basic   (2.58)   0.22 
Net (loss) income attributable to IGT PLC per common share - diluted   (2.58)   0.22 
           
Weighted-average shares - basic   204,591    204,309 
Weighted-average shares - diluted   204,591    204,532 

 

(1) Reduces the carrying value of the International and North America Gaming & Interactive segments by $193 million and $103 million, respectively

 

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International Game Technology PLC

Consolidated Balance Sheets

($ thousands)

Unaudited

 

   June 30,   December 31, 
   2020   2019 
Assets          
Current assets:          
Cash and cash equivalents   1,346,741    662,934 
Restricted cash and cash equivalents   183,021    231,317 
Trade and other receivables, net   860,351    1,006,127 
Inventories   173,022    161,790 
Other current assets   574,549    571,869 
Total current assets   3,137,684    2,634,037 
Systems, equipment and other assets related to contracts, net   1,214,903    1,307,940 
Property, plant and equipment, net   139,634    146,055 
Operating lease right-of-use-assets   336,561    341,538 
Goodwill   5,150,931    5,451,494 
Intangible assets, net   1,722,325    1,836,002 
Other non-current assets   1,791,246    1,927,524 
Total non-current assets   10,355,600    11,010,553 
Total assets   13,493,284    13,644,590 
           
Liabilities and shareholders' equity          
Current liabilities:          
Accounts payable   1,103,975    1,120,922 
Current portion of long-term debt   358,336    462,155 
Short-term borrowings   79,291    3,193 
Other current liabilities   939,440    882,081 
Total current liabilities   2,481,042    2,468,351 
Long-term debt, less current portion   8,198,124    7,600,169 
Deferred income taxes   331,919    366,822 
Operating lease liabilities   309,556    310,721 
Other non-current liabilities   378,515    413,549 
Total non-current liabilities   9,218,114    8,691,261 
Total liabilities   11,699,156    11,159,612 
Commitments and contingencies          
Shareholders' equity   1,794,128    2,484,978 
Total liabilities and shareholders' equity   13,493,284    13,644,590 

 

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International Game Technology PLC

Consolidated Statements of Cash Flows

($ thousands)

Unaudited

 

   For the six months ended 
   June 30, 
   2020   2019 
Cash flows from operating activities          
Net (loss) income   (516,241)   119,482 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:          
Goodwill impairment   296,000    - 
Depreciation   198,248    209,271 
Amortization   135,957    137,201 
Amortization of upfront license fees   101,347    103,935 
Loss on extinguishment of debt   28,277    9,628 
Debt issuance cost amortization   10,297    11,523 
Foreign exchange loss (gain), net   4,024    (17,541)
Loss (gain) on sale of assets   66    (63,239)
Stock-based compensation   (11,806)   12,502 
Deferred income taxes   (36,705)   6,515 
Other non-cash items, net   2,504    31,392 
Changes in operating assets and liabilities, excluding the effects of acquisitions:          
Trade and other receivables   139,578    49,059 
Inventories   (5,978)   802 
Accounts payable   (5,662)   (57,317)
Other assets and liabilities   (14,807)   38,508 
Net cash provided by operating activities   325,099    591,721 
           
Cash flows from investing activities          
Capital expenditures   (160,179)   (231,003)
Proceeds from sale of assets   5,185    65,429 
Other   10,897    2,545 
Net cash used in investing activities   (144,097)   (163,029)
           
Cash flows from financing activities          
Proceeds from long-term debt   1,475,071    846,975 
Net proceeds from short-term borrowings   74,927    19,573 
Net receipts from (payments of) financial liabilities   36,468    (11,395)
Debt issuance costs paid   (19,616)   (5,934)
Payments in connection with extinguishment of debt   (25,000)   (8,598)
Dividends paid   (40,887)   (81,729)
Principal payments on long-term debt   (959,275)   (833,129)
Capital increase - non-controlling interests   2,030    1,075 
Return of capital - non-controlling interests   -    (70,399)
Dividends paid - non-controlling interests   (91,376)   (129,394)
Other   (6,058)   (6,733)
Net cash provided by (used in) financing activities   446,284    (279,688)
           
Net increase in cash and cash equivalents and restricted cash and cash equivalents   627,286    149,004 
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents   8,225    (3,748)
Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period   894,251    511,777 
Cash and cash equivalents and restricted cash and cash equivalents at the end of the period   1,529,762    657,033 
           
           
Supplemental Cash Flow Information:          
Interest paid   (230,864)   (211,591)
Income taxes paid   (17,795)   (49,777)

 

13

 

 

International Game Technology PLC

Net Debt

($ thousands)

Unaudited

 

   June 30,   December 31, 
   2020   2019 
         
6.250% Senior Secured Notes due February 2022 (1)   1,005,593    1,491,328 
4.750% Senior Secured Notes due February 2023 (2)   946,301    948,382 
5.350% Senior Secured Notes due October 2023 (1)   60,836    60,885 
3.500% Senior Secured Notes due July 2024 (2)   555,981    557,331 
6.500% Senior Secured Notes due February 2025 (1)   1,090,786    1,089,959 
3.500% Senior Secured Notes due June 2026 (2)   832,943    835,105 
6.250% Senior Secured Notes due January 2027 (1)   743,765    743,387 
2.375% Senior Secured Notes due April 2028 (2)   554,908    556,403 
5.250% Senior Secured Notes due January 2029 (1)   742,827    - 
Senior Secured Notes, long-term   6,533,940    6,282,780 
           
Term Loan Facilities due January 2023 (2)   950,265    1,317,389 
Revolving Credit Facilities due July 2024 (1) (2)   713,919    - 
Long-term debt, less current portion   8,198,124    7,600,169 
           
4.750% Senior Secured Notes due March 2020 (2)   -    434,789 
5.500% Senior Secured Notes due June 2020 (1)   -    27,366 
Term Loan Facilities due January 2023 (2)   358,336    - 
Current portion of long-term debt   358,336    462,155 
           
Short-term borrowings   79,291    3,193 
Total debt   8,635,751    8,065,517 
           
Less: Cash and cash equivalents   1,346,741    662,934 
Less: Debt issuance costs, net - Revolving Credit Facilities due July 2024   -    20,464 
           
Net debt   7,289,010    7,382,119 

 

(1) U.S. dollar-denominated debt

(2) Euro-denominated debt

Note: Net debt is a non-GAAP financial measure

 

14

 

 

International Game Technology PLC

Reconciliations of Non-GAAP Financial Measures

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

Unaudited

 

   For the three months ended 
   June 30, 
   2020   2019 
         
Net (loss) income   (282,142)   38,987 
(Benefit from) provision for income taxes   (11,321)   63,300 
Interest expense, net   95,599    103,860 
Foreign exchange loss, net   74,384    41,061 
Other non-operating expense (income), net   29,374    (23,493)
Operating (loss) income   (94,106)   223,715 
Depreciation   100,228    103,940 
Amortization - purchase accounting   42,080    47,514 
Amortization - non-purchase accounting (1)   74,602    73,249 
Restructuring expense   43,429    2,412 
Stock-based compensation   1,162    2,912 
Other (2)   1,011    (33)
Adjusted EBITDA   168,406    453,709 
           
           
Cash flows from operating activities   167,831    445,107 
Capital expenditures   (60,481)   (111,818)
Free Cash Flow   107,350    333,289 
           
           
Net (loss) income attributable to IGT PLC   (279,616)   4,856 
Foreign exchange loss, net   74,384    41,061 
Depreciation and amortization - purchase accounting   42,391    48,146 
Restructuring expense   43,429    2,412 
Loss on extinguishment of debt   23,260    9,628 
Other (2)   1,011    (33)
Income tax impact on adjustments (3)   (26,339)   (15,374)
Adjusted net (loss) income attributable to IGT PLC   (121,480)   90,696 
Weighted-average shares - diluted   204,748    204,412 
Adjusted weighted-average shares - diluted (4)   204,748    204,412 
Net (loss) income attributable to IGT PLC per common share - diluted   (1.37)   0.02 
Adjusted net (loss) income attributable to IGT PLC per common share - diluted   (0.59)   0.44 

 

(1) Includes amortization of upfront license fees
(2) Primarily includes transaction-related costs
(3) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated
(4) Adjusted weighted-average shares – diluted includes shares that were excluded from the GAAP computation, due to the net loss as reported

 

15

 

 

International Game Technology PLC

Reconciliations of Non-GAAP Financial Measures

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

Unaudited

 

   For the six months ended 
   June 30, 
   2020   2019 
         
Net (loss) income   (516,241)   119,482 
(Benefit from) provision for income taxes   (8,189)   115,992 
Interest expense, net   196,261    206,929 
Foreign exchange loss (gain), net   4,024    (17,541)
Other non-operating expense (income), net   32,760    (22,995)
Operating (loss) income   (291,385)   401,867 
Goodwill impairment   296,000    - 
Depreciation   198,248    209,271 
Amortization - purchase accounting   88,750    95,718 
Amortization - non-purchase accounting (1)   148,554    145,418 
Restructuring expense   47,053    5,701 
Stock-based compensation   (11,806)   12,502 
Other (2)   1,505    (95)
Adjusted EBITDA   476,919    870,382 
           
           
Cash flows from operating activities   325,099    591,721 
Capital expenditures   (160,179)   (231,003)
Free Cash Flow   164,920    360,718 
           
           
Net (loss) income attributable to IGT PLC   (527,904)   45,110 
Foreign exchange loss (gain), net   4,024    (17,541)
Goodwill impairment   296,000    - 
Depreciation and amortization - purchase accounting   89,373    96,982 
Restructuring expense   47,053    5,701 
Loss on extinguishment of debt   23,260    9,628 
Other (2)   1,505    (95)
Income tax impact on adjustments (3)   (38,263)   (24,778)
Adjusted net (loss) income attributable to IGT PLC   (104,952)   115,007 
Weighted-average shares - diluted   204,591    204,532 
Adjusted weighted-average shares - diluted (4)   204,591    204,532 
Net (loss) income attributable to IGT PLC per common share - diluted   (2.58)   0.22 
Adjusted net (loss) income attributable to IGT PLC per common share - diluted   (0.51)   0.56 

 

(1) Includes amortization of upfront license fees
(2) Primarily includes transaction-related costs
(3) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated
(4) Adjusted weighted-average shares – diluted includes shares that were excluded from the GAAP computation, due to the net loss as reported

 

16

 

 

INTERNATIONAL GAME TECHNOLOGY PLC

Select Financial Data     As Constant   Key Performance Indicators     %
3 Month Period Ended June 30th Q2 '20 Q2 '19 Reported FX   3 Month Period Ended June 30th Q2 '20 Q2 '19 Change 
Gaming   Total revenue 166 601 -72% -72%   Installed base units (end of period)      
  Gaming services 111 382 -71% -71%      Casino    28,134    31,112 -9.6%
    Terminal  37 279 -87% -87%      Casino - L/T lease (1)          930             -    NM
    Other 75 103 -28% -27%      VLT - Government sponsored (ex-Italy)    18,669    18,651 0.1%
  Product sales 55 219 -75% -75%      VLT - Italy supplier (B2B)       7,253       7,524 -3.6%
    Terminal  44 155 -72% -72%       Total installed base units    54,986    57,287 -4.0%
    Other 11 64 -82% -82%      Yield (average gross revenue per unit per day)  $     5.41  $  27.96 -80.7%
                  (1) Yield calculations should exclude these units due to     
Lottery   Total revenue 394 531 -26% -25%         accounting treatment as sales-type leases      
  Lottery services 372 495 -25% -24%          
    FMC 352 460 -23% -23%      Additional Italian network details:      
      Instant ticket & draw games 352 460 -24% -23%      VLT - Operator (B2C)    10,844    10,929 -0.8%
      Other services 0 0 0% 0%      AWP    37,138    40,268 -7.8%
    LMA 20 36 -43% -43%          
  Product sales 22 35 -39% -38%   Machine units shipped      
                     New/expansion       1,443       1,138 26.8%
Other   Total revenue 77 102 -25% -22%      Replacement        1,552    10,086 -84.6%
  Service revenue 77 102 -25% -23%      Total machines shipped       2,995    11,224 -73.3%
  Product sales 0 0 186% 186%          
                  Global lottery same-store revenue growth      
Consolidated   Revenue 637 1,234 -48% -48%      Instant ticket & draw games     0.9%
  Operating (Loss)/Income:              Multistate jackpots     -25.5%
    Segment total 29 327 -91% -91%      Total lottery same-store revenue growth (ex-Italy)   -1.7%
    Purchase accounting (42) (48) -12% -12%      Italy lottery revenue growth     -54.8%
    Corporate support (80) (55) -46% -47%          
    Total (94) 224 NM NM          

 

17