EX-99.1 2 igtq222earningspressrele.htm EX-99.1 igtq222earningspressrele
NEWS RELEASE INTERNATIONAL GAME TECHNOLOGY PLC REPORTS SECOND QUARTER 2022 RESULTS • Revenue of $1.02 billion, down 2% as reported and up 3% at constant currency, led by 23% growth in Global Gaming • Operating income of $228 million; operating income margin of 22% at high end of outlook on substantial increase in Global Gaming profitability and resilience in Global Lottery margin • Adjusted EBITDA of $409 million, in line with prior year's record level at constant currency as Global Gaming performance offsets Lottery discrete benefits in the prior year; 40% adjusted EBITDA margin remains among the highest in Company history • Recognized a non-operating expense of $150 million representing the probable loss associated with legal proceedings related to Double Down Interactive LLC and its social gaming business sold in 2017 • Diluted EPS from continuing operations of $(0.02); Adjusted diluted EPS from continuing operations of $0.57, up 78% from the prior year • Compelling shareholder returns with $135 million deployed for cash dividends and share repurchases year-to-date • Tightening full-year 2022 revenue outlook to reflect currency movements and perimeter impact from previously announced divestiture; reconfirming operating income margin outlook as fundamentals remain strong LONDON – August 2, 2022 – International Game Technology PLC (“IGT”) (NYSE:IGT) today reported financial results for the second quarter ended June 30, 2022. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the results; access details are provided below. "Strong customer and player demand for IGT's products and solutions drove some of our strongest profit results ever in the second quarter and first half of the year," said Vince Sadusky, CEO of IGT. "Our business profile is supported by significant recurring revenue streams backed by long-term contracts and resilient end markets, providing a solid foundation on which to grow. We are laser focused on executing our strategic objectives and creating compelling value for our stakeholders." "Our first half results set us firmly on the path to achieving our 2022 financial targets," said Max Chiara, CFO of IGT. "Rigor on costs and incremental revenue opportunities allow us to maintain our full-year operating income margin outlook despite unfavorable currency movements and macroeconomic challenges. At the same time, we are returning significant capital to shareholders via dividends and share repurchases." 1 Exhibit 99.1


 
Overview of Consolidated Second Quarter 2022 Results Quarter Ended Y/Y Change (%) Constant Currency Change (%) All amounts from continuing operations June 30, 2022 2021 ($ in millions) GAAP Financials: Revenue Global Lottery 648 725 (11)% (4)% Global Gaming 330 274 21% 23% Digital & Betting 43 42 1% 4% Total revenue 1,021 1,041 (2)% 3% Operating income (loss) Global Lottery 230 300 (23)% (16)% Global Gaming 57 1 NM NM Digital & Betting 8 9 (11)% (10)% Corporate support expense (29) (26) (11)% (26)% Other(1) (39) (40) 3% 2% Total operating income 228 244 (7)% 1% Operating income margin 22% 23% Net cash provided by operating activities 196 249 (21)% Cash and cash equivalents 673 639 5% Earnings per share - diluted $(0.02) $(0.48) 96% Non-GAAP Financial Measures: Adjusted EBITDA Global Lottery 330 414 (20)% (13)% Global Gaming 87 35 145% 150% Digital & Betting 12 13 (7)% (6)% Corporate support expense (20) (21) 4% (14)% Total Adjusted EBITDA 409 442 (7)% (1)% Adjusted EBITDA margin 40% 42% Adjusted earnings per share - diluted $0.57 $0.32 78% Free cash flow 117 176 (34)% Net debt 5,722 6,312 (9)% (1) Primarily includes purchase price amortization Note: Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release 2


 
Key Highlights: • Recently completed acquisition of iSoftBet, a leading iGaming content provider and third-party aggregator, greatly expanding the Company's proprietary content library and providing a world- class game aggregation platform • Won "Lottery Supplier of the Year" at 2022 SBC Awards North America in July • Introduced high-performing Money Mania wide area progressive game to commercial gaming jurisdictions following a successful launch in tribal casinos • Signed agreement with NUSTAR Resort & Casino to deploy IGT ADVANTAGE™ casino management system and a variety of leading games and cabinets • Announced expanded sports betting partnership with SuperBook® Sports to Tennessee, the fourth state where IGT's PlaySports platform is powering the SuperBook Sports mobile betting app • Awarded a gold medal sustainability rating from EcoVadis, a leading sustainability rating agency • Recently released 2021 Sustainability Report which outlines the Company's demonstrated environmental, social, and governance (ESG) performance Financial Highlights: Consolidated revenue of $1.02 billion, down 2% as reported, or up 3% at constant currency, from $1.04 billion in the prior year • Global Lottery revenue of $648 million compared to $725 million in the prior-year period, which included $70 million in prior-year benefits primarily from the closure of gaming halls in Italy • Global Gaming revenue increases 21%, or 23% at constant currency, to $330 million, driven by strong U.S. & Canada replacement unit demand, higher average selling prices, and increased installed base yields • Digital & Betting revenue of $43 million, stable with the prior year, as iCasino growth in the U.S. is partially offset by softness in other markets; North America sports betting market gross gaming revenue impacted by lower hold levels Operating income of $228 million, down 7% as reported, or up 1% at constant currency, from $244 million in the prior-year period • Global Lottery operating income down, primarily due to about $60 million related to prior-year benefits referenced above • Global Gaming rises on higher revenue and profit flow through, partially offset by increased supply chain costs • Digital & Betting operating income of $8 million was relatively stable with the prior year Adjusted EBITDA of $409 million matches prior year's record level at constant currency; Adjusted EBITDA margin of 40% remains among the highest in Company history Net interest expense of $75 million compared to $91 million in the prior year, driven by lower average debt balances and interest rates During the second quarter, the Company recognized a pre-tax non-operating expense of $150 million ($114 million after tax) representing the probable loss associated with ongoing litigation (Benson v. Double Down Interactive LLC, No. 2:18-cv-00525 (W.D. Wash.)) and associated claims related to Double Down Interactive LLC and its social gaming business sold in 2017 by International Game Technology, a wholly-owned subsidiary of the Company Income tax benefit of $11 million compared to a provision of $32 million in the prior year, primarily driven by recognition of the non-operating expense mentioned above and foreign exchange losses in the prior year with no tax benefit 3


 
Income from continuing operations of $34 million versus a loss from continuing operations of $39 million in the prior-year period, driven by income tax benefit, gains in foreign exchange, and lower debt retirement costs Net loss attributable to IGT PLC of $4 million compared to net income of $306 million in the prior year due to gain on sale and income from discontinued operations in the prior-year period Net loss from continuing operations attributable to IGT PLC per diluted share of $0.02 compared to a net loss from continuing operations attributable to IGT per diluted share of $0.48 in the prior year, on higher net income; adjusted net income per diluted share increased 78% to $0.57 Net debt of $5.7 billion compared to $5.9 billion at December 31, 2021; Net debt leverage of 3.5x was stable compared to December 31, 2021 Cash and Liquidity Update • Total liquidity of $2.1 billion as of June 30, 2022; $0.7 billion in unrestricted cash and $1.5 billion in additional borrowing capacity • Executed amendment and extension of revolving credit facilities in July 2022 ◦ Increased liquidity by $150 million to $1.83 billion and rebalanced EUR/USD mix to match operational exposure ◦ Extended maturities to July 2027 ◦ Lowered interest margin and added ESG provision to allow for further potential reductions ◦ Raised annual permitted restricted payments basket from $300 million to $400 million at current credit rating; potential to increase to $550 million Other Developments The Company's Board of Directors declared a quarterly cash dividend of $0.20 per common share • Ex-dividend date of August 15, 2022 • Record date of August 16, 2022 • Payment date of August 30, 2022 Repurchased 750,000 shares for $15 million in the second quarter at an average price of $20.48 per share; 2.2 million shares repurchased for $54 million on a year-to-date basis at an average price of $24.89 per share The Company expects to close on the sale of its Italian proximity payments/commercial services business in mid-to-late September Tightening Full-year Revenue Outlook for Currency Rates and Business Disposition; Introducing Third Quarter 2022 Outlook Full Year • Revenue of $4.1 billion - $4.2 billion ◦ Lowered high end of range by $100 million ◦ Reflecting changes in currency rates and impact from sale of Italian proximity payments/ commercial services business in Q3'22 • Operating income margin of 20% - 22% remains unchanged • Cash from operations of $850 - $950 million ◦ Lowered high end of range by $50 million ◦ Primarily driven by a working capital investment in higher inventory levels to proactively manage supply chain disruptions • Capital expenditures of approximately $350 million, lowered by $50 million to adjust for updated timing of spending • Free cash flow outlook remains unchanged 4


 
Third Quarter • Revenue of approximately $1.0 billion - $1.1 billion • Operating income margin of 18% - 20% includes approximately 150 - 200 basis point impact from project-related expenses Outlook assumptions • EUR/USD exchange rate of 1.00 in the second half of 2022 • Impact from sale of Italian proximity payments/commercial services business in mid-to-late September 2022 • Operating income margin includes approximately 150 - 200 basis point impact from project-related and restructuring expenses expected in the second half of 2022 Earnings Conference Call and Webcast August 2, 2022, at 8:00 a.m. EDT To register to participate in the conference call, or to listen to the live audio webcast, please visit the "Events Calendar" on IGT’s Investor Relations website at www.IGT.com. A replay will be available on the website following the live event. 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 2022 are calculated using the same foreign exchange rates as the corresponding 2021 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. Amounts reported in millions are computed based on amounts in thousands. Certain amounts in columns and rows within tables may not foot due to rounding. Percentages and earnings per share amounts presented are calculated from the underlying unrounded amounts. About IGT IGT (NYSE:IGT) is a global leader in gaming. We deliver entertaining and responsible gaming experiences for players across all channels and regulated segments, from Lotteries and Gaming Machines 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 unrivaled 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 10,500 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,” 5


 
“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, 2021 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 of 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. 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, net, foreign exchange gain (loss), net, other non-operating expenses (e.g., DDI / Benson Matter provision, gains/losses on extinguishment and modifications of debt, etc.), net, 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. Management believes that Adjusted EBITDA is useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance. Adjusted EPS represents diluted earnings per share from continuing operations (a GAAP measure), excluding the effects of foreign exchange, impairments, amortization from purchase accounting, discrete tax items, and other significant non-recurring adjustments that are not reflective of on-going operational activities (e.g., DDI / Benson Matter provision, gains/losses on extinguishment and modifications of debt, etc.). Adjusted EPS is calculated using our diluted weighted-average number of shares outstanding, including the impact of any potentially dilutive common stock equivalents that are anti-dilutive to GAAP net income (loss) per share but dilutive to Adjusted EPS. Management believes that Adjusted EPS is 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 6


 
equivalents, including cash and cash equivalents held for sale. Cash and cash equivalents, including cash and cash equivalents classified as held for sale, 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. Management believes that Net debt leverage is a useful measure to assess IGT's 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 or constant FX is a non-GAAP financial measure that expresses the current financial data using the prior-year/period exchange rate (i.e., the month end 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. 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 06 5189 9184; for Italian media inquiries James Hurley, Investor Relations, +1 (401) 392-7190 7


 
Select Performance and KPI data: ($ in millions, unless otherwise noted) Sequential Constant Change as Q2'22 Q2'21 Y/Y Change Currency Reported GLOBAL LOTTERY (%) Change (%)(1) Q1'22 (%) Revenue Service Operating and facilities management contracts 581 675 (14)% (8)% 599 (3)% Upfront license fee amortization (46) (53) 13% —% (49) 5% Operating and facilities management contracts, net 535 623 (14)% (8)% 551 (3)% Other 85 79 7% 22% 84 1% Total service revenue 621 702 (12)% (5)% 635 (2)% Product sales 27 23 19% 27% 45 (39)% Total revenue 648 725 (11)% (4)% 680 (5)% Operating income 230 300 (23)% (16)% 252 (9)% Adjusted EBITDA(1) 330 414 (20)% (13)% 356 (7)% Global same-store sales growth (%) Instant ticket & draw games (8.6%) 34.9% (6.7%) Multi-jurisdiction jackpots 10.8% 28.8% (40.0%) Total (7.4%) 34.5% (10.3%) North America & Rest of world same-store sales growth (%) Instant ticket & draw games (5.6%) 20.5% (3.9%) Multi-jurisdiction jackpots 10.8% 28.8% (40.0%) Total (4.2%) 21.1% (9.0%) Italy same-store sales growth (%) Instant ticket & draw games (17.5%) 115.2% (14.5%) (1) Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein 8


 
Sequential Constant Change as Q2'22 Q2'21 Y/Y Change Currency Reported GLOBAL GAMING (%) Change (%)(1) Q1'22 (%) Revenue Service Terminal 123 108 14% 15% 108 14% Systems, software, and other 56 48 16% 18% 58 (3)% Total service revenue 179 156 14% 16% 165 8% Product sales Terminal 108 86 25% 28% 104 3% Other 44 31 39% 43% 55 (21)% Total product sales revenue 151 118 29% 32% 160 (5)% Total revenue 330 274 21% 23% 325 2% Operating income 57 1 NM NM 52 10% Adjusted EBITDA(1) 87 35 145% 150% 81 7% Installed base units Casino 46,765 47,964 (2)% 47,237 Casino - L/T lease(2) 1,133 1,136 —% 1,142 Total installed base units 47,898 49,100 (2)% 48,379 Installed base units (by geography) US & Canada 32,270 33,820 (5)% 32,772 Rest of world 15,628 15,280 2% 15,607 Total installed base units 47,898 49,100 (2)% 48,379 Yields (by geography)(3), in absolute $ US & Canada $42.64 $38.41 11% $39.05 Rest of world $6.20 $4.03 54% $5.77 Total yields $30.55 $27.49 11% $28.19 Global machine units sold New/expansion 818 1,167 (30)% 328 Replacement 6,378 5,168 23% 6,848 Total machine units sold 7,196 6,335 14% 7,176 US & Canada machine units sold New/expansion 469 643 (27)% 18 Replacement 4,580 3,485 31% 5,299 Total machine units sold 5,049 4,128 22% 5,317 (1) Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein (2) Excluded from yield calculations due to treatment as sales-type leases (3) Excludes Casino L/T lease units due to treatment as sales-type leases; comparability on a Y/Y basis hindered due to lower active units in the prior year 9


 
Sequential Constant Change as Q2'22 Q2'21 Y/Y Change Currency Reported GLOBAL GAMING (Continued) (%) Change (%)(1) Q1'22 (%) Rest of world machine units sold New/expansion 349 524 (33)% 310 Replacement 1,798 1,683 7% 1,549 Total machine units sold 2,147 2,207 (3)% 1,859 Average Selling Price (ASP), in absolute $ US & Canada $15,200 $13,900 9% $14,800 Rest of world $13,400 $12,700 6% $12,300 Total ASP $14,600 $13,400 9% $14,200 10


 
Sequential Constant Change as Q2'22 Q2'21 Y/Y Change Currency Reported DIGITAL & BETTING (%) Change (%)(1) Q1'22 (%) Revenue Service 43 43 —% 3% 47 (9)% Product sales — (0) NA NA 0 (55)% Total revenue 43 42 1% 4% 47 (9)% Operating income 8 9 (11)% (10)% 13 (38)% Adjusted EBITDA(1) 12 13 (7)% (6)% 17 (28)% CONSOLIDATED Revenue (by geography) US & Canada 585 561 4% 5% 598 (2)% Italy 288 353 (18)% (7)% 298 (3)% Rest of world 148 127 16% 26% 155 (5)% Total revenue 1,021 1,041 (2)% 3% 1,051 (3)% (1) Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein 11


 
International Game Technology PLC Consolidated Statements of Operations ($ in millions and shares in thousands, except per share amounts) Unaudited For the three months ended For the six months ended June 30, June 30, 2022 2021 2022 2021 Service revenue 842 901 1,688 1,802 Product sales 179 140 384 254 Total revenue 1,021 1,041 2,072 2,055 Cost of services 420 438 848 880 Cost of product sales 117 88 239 160 Selling, general and administrative 195 207 388 393 Research and development 60 61 117 116 Other operating expense 1 1 1 1 Total operating expenses 793 796 1,592 1,551 Operating income 228 244 480 504 Interest expense, net 75 91 151 185 Foreign exchange (gain) loss, net (19) 90 (22) (55) Other non-operating expense, net 150 70 147 94 Total non-operating expenses 205 251 276 224 Income (loss) from continuing operations before (benefit from) provision for income taxes 22 (7) 204 280 (Benefit from) provision for income taxes (11) 32 53 181 Income (loss) from continuing operations 34 (39) 151 100 Income from discontinued operations, net of tax — 13 — 24 Gain on sale of discontinued operations, net of tax — 391 — 391 Income from discontinued operations — 404 — 415 Net income 34 365 151 514 Less: Net income attributable to non-controlling interests from continuing operations 38 60 76 119 Less: Net loss attributable to non-controlling interests from discontinued operations — — — (2) Net (loss) income attributable to IGT PLC (4) 306 75 397 Net (loss) income from continuing operations attributable to IGT PLC per common share - basic (0.02) (0.48) 0.37 (0.09) Net (loss) income from continuing operations attributable to IGT PLC per common share - diluted (0.02) (0.48) 0.37 (0.09) Net (loss) income attributable to IGT PLC per common share - basic (0.02) 1.49 0.37 1.94 Net (loss) income attributable to IGT PLC per common share - diluted (0.02) 1.49 0.37 1.94 Weighted-average shares - basic 202,696 205,096 203,217 204,977 Weighted-average shares - diluted 202,696 205,096 204,613 204,977 12


 
International Game Technology PLC Consolidated Balance Sheets ($ in millions) Unaudited June 30, December 31, 2022 2021 Assets Current assets: Cash and cash equivalents 673 591 Restricted cash and cash equivalents 70 218 Trade and other receivables, net 602 903 Inventories 235 183 Other current assets 614 589 Assets held for sale 647 4 Total current assets 2,841 2,487 Systems, equipment and other assets related to contracts, net 882 937 Property, plant and equipment, net 118 119 Operating lease right-of-use assets 257 283 Goodwill 4,318 4,656 Intangible assets, net 1,316 1,413 Other non-current assets 1,247 1,429 Total non-current assets 8,139 8,836 Total assets 10,979 11,322 Liabilities and shareholders' equity Current liabilities: Accounts payable 594 1,035 Short term borrowings — 52 Other current liabilities 953 828 Liabilities held for sale 269 — Total current liabilities 1,816 1,914 Long-term debt, less current portion 6,453 6,477 Deferred income taxes 330 368 Operating lease liabilities 242 269 Other non-current liabilities 310 323 Total non-current liabilities 7,336 7,437 Total liabilities 9,152 9,351 Commitments and contingencies IGT PLC’s shareholders’ equity 1,323 1,282 Non-controlling interests 504 689 Shareholders’ equity 1,827 1,971 Total liabilities and shareholders’ equity 10,979 11,322 13


 
International Game Technology PLC Consolidated Statements of Cash Flows ($ in millions) Unaudited For the three months ended For the six months ended June 30, June 30, 2022 2021 2022 2021 Cash flows from operating activities Net income 34 365 151 514 Less: Income from discontinued operations, net of tax — 404 — 415 Adjustments to reconcile net income from continuing operations to net cash provided by operating activities from continuing operations: DDI / Benson Matter provision 150 — 150 — Depreciation 74 83 148 165 Amortization of upfront license fees 48 55 100 110 Amortization 46 50 94 100 Stock-based compensation 12 7 22 11 Debt issuance cost amortization 4 5 8 11 Loss on extinguishment of debt — 67 — 91 Deferred income taxes (40) (18) (31) 82 Foreign exchange (gain) loss, net (19) 90 (22) (55) Other non-cash items, net (2) 4 (10) 5 Changes in operating assets and liabilities, excluding the effects of dispositions: Trade and other receivables 102 (48) 67 (134) Inventories (28) 1 (53) 5 Accounts payable (154) (91) (136) 24 Other assets and liabilities (31) 81 (102) (14) Net cash provided by operating activities from continuing operations 196 249 385 500 Net cash provided by (used in) operating activities from discontinued operations — 5 — (31) Net cash provided by operating activities 196 254 385 469 Cash flows from investing activities Capital expenditures (79) (73) (153) (121) Proceeds from sale of assets 2 5 13 11 Other — 2 — 1 Net cash used in investing activities from continuing operations (78) (66) (139) (108) Net cash provided by investing activities from discontinued operations — 743 — 734 Net cash (used in) provided by investing activities (78) 677 (139) 626 Cash flows from financing activities Net (repayments of) proceeds from short-term borrowings (40) 4 (52) 3 Net (repayments of) receipts from financial liabilities (6) (6) 36 3 Principal payments on long-term debt — (1,035) — (2,422) Payments in connection with the extinguishment of debt — (63) — (85) Payments of debt issuance costs — (1) — (7) Proceeds from long-term debt — — — 750 Net proceeds from Revolving Credit Facilities 212 84 245 516 Repurchases of common stock (15) — (54) — Dividends paid (41) — (81) — Dividends paid - non-controlling interests (76) (20) (173) (89) Return of capital - non-controlling interests (39) (51) (49) (61) Capital increase - non-controlling interests 3 1 3 11 Other (3) (5) (10) (10) Net cash used in financing activities (4) (1,091) (134) (1,392) Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents 115 (160) 111 (297) Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents (49) 23 (62) (13) Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period 791 956 808 1,129 Cash and cash equivalents and restricted cash and cash equivalents at the end of the period 858 819 858 819 Less: Cash and cash equivalents included within assets held for sale 58 — 58 — Less: Restricted cash and cash equivalents included within assets held for sale 57 — 57 — Cash and cash equivalents and restricted cash and cash equivalents at the end of the period of continuing operations 743 819 743 819 Supplemental Cash Flow Information Interest paid 43 53 150 219 Income taxes paid 71 35 78 39 14


 
International Game Technology PLC Net Debt ($ in millions) Unaudited June 30, December 31, 2022 2021 5.350% Senior Secured U.S. Dollar Notes due October 2023 61 61 3.500% Senior Secured Euro Notes due July 2024 517 564 6.500% Senior Secured U.S. Dollar Notes due February 2025 1,094 1,093 4.125% Senior Secured U.S. Dollar Notes due April 2026 744 744 3.500% Senior Secured Euro Notes due June 2026 775 844 6.250% Senior Secured U.S. Dollar Notes due January 2027 745 745 2.375% Senior Secured Euro Notes due April 2028 516 562 5.250% Senior Secured U.S. Dollar Notes due January 2029 744 744 Senior Secured Notes 5,197 5,357 Euro Term Loan Facilities due January 2027 1,029 1,121 Euro Revolving Credit Facility B due July 2024 109 — U.S. Dollar Revolving Credit Facility A due July 2024 118 — Long-term debt, less current portion 6,453 6,477 Short-term borrowings — 52 Total debt 6,453 6,529 Less: Cash and cash equivalents 673 591 Less: Cash and cash equivalents included within assets held for sale 58 — Less: Debt issuance costs, net - Revolving Credit Facilities due July 2024 — 17 Net debt 5,722 5,922 Note: Net debt is a non-GAAP financial measure 15


 
International Game Technology PLC Reconciliation of Non-GAAP Financial Measures ($ in millions, except per share amounts) Unaudited For the three months ended June 30, 2022 Business Global Global Digital & Segment Corporate Total IGT Lottery Gaming Betting Total and Other PLC Income from continuing operations 34 Benefit from income taxes (11) Interest expense, net 75 Foreign exchange gain, net (19) Other non-operating expense, net 150 Operating income (loss) 230 57 8 295 (68) 228 Depreciation 43 27 4 74 — 74 Amortization - service revenue (1) 48 — — 48 — 48 Amortization - non-purchase accounting 6 1 — 7 1 8 Amortization - purchase accounting — — — — 39 39 Stock-based compensation 2 1 — 4 8 12 Other — — — — 1 1 Adjusted EBITDA 330 87 12 429 (20) 409 Cash flows from operating activities - continuing operations 196 Capital expenditures (79) Free Cash Flow 117 Pre-Tax Impact Tax Impact (2)(3) Net Impact Reported EPS from continuing operations attributable to IGT PLC - diluted (0.02) Adjustments: Foreign exchange gain, net (0.09) 0.04 (0.14) Amortization - purchase accounting 0.19 0.05 0.14 Discrete tax items — (0.02) 0.02 DDI / Benson Matter provision 0.74 0.18 0.56 Net adjustments 0.59 Adjusted EPS from continuing operations attributable to IGT PLC - diluted (4) 0.57 (1) Includes amortization of upfront license fees (2) Calculated based on nature of item, including any realizable deductions, and statutory tax rate in effect for the relevant jurisdiction (3) The reported effective tax rate was (50.8)%. Adjusted for the above items, the effective tax rate was 20.3% (4) Adjusted EPS was calculated using weighted average shares outstanding of 204.1 million, which includes the dilutive impact of share-based payment awards 16


 
International Game Technology PLC Reconciliation of Non-GAAP Financial Measures ($ in millions, except per share amounts) Unaudited For the three months ended June 30, 2021 Business Global Global Digital & Segment Corporate Total IGT Lottery Gaming Betting Total and Other 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 1 9 310 (66) 244 Depreciation 49 31 4 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 — — — — 1 1 Adjusted EBITDA 414 35 13 463 (21) 442 Cash flows from operating activities - continuing operations 249 Capital expenditures (73) Free Cash Flow 176 Pre-Tax Impact Tax Impact (2) (3) Net Impact Reported EPS from continuing operations attributable to IGT PLC - diluted (0.48) Adjustments: Foreign exchange loss, net 0.44 0.03 0.40 Amortization - purchase accounting 0.19 0.05 0.15 Loss on extinguishment and modifications of debt, net 0.32 — 0.32 Discrete tax items — 0.08 (0.08) Other (non-recurring adjustments) 0.01 — 0.01 Net adjustments 0.80 Adjusted EPS from continuing operations attributable to IGT PLC - diluted (4) 0.32 (1) Includes amortization of upfront license fees (2) Calculated based on nature of item, including any realizable deductions, and statutory tax rate in effect for the relevant jurisdiction (3) The reported effective tax rate was (492.1)%. Adjusted for the above items, the effective tax rate was 34.3% (4) Adjusted EPS was calculated using weighted average shares outstanding of 206.8 million, which includes the dilutive impact of share-based payment awards 17


 
International Game Technology PLC Reconciliation of Non-GAAP Financial Measures ($ in millions, except per share amounts) Unaudited For the six months ended June 30, 2022 Business Global Global Digital & Segment Corporate Total Lottery Gaming Betting Total and Other IGT PLC Income from continuing operations 151 Provision for income taxes 53 Interest expense, net 151 Foreign exchange gain, net (22) Other non-operating expense, net 147 Operating income (loss) 482 108 21 612 (132) 480 Depreciation 87 54 8 148 (1) 148 Amortization - service revenue (1) 100 — — 100 — 100 Amortization - non-purchase accounting 13 3 — 16 1 17 Amortization - purchase accounting — — — — 77 77 Stock-based compensation 5 3 — 8 14 22 Other — — — — 1 1 Adjusted EBITDA 686 168 29 883 (41) 842 Cash flows from operating activities - continuing operations 385 Capital expenditures (153) Free Cash Flow 232 Pre-Tax Impact Tax Impact (2) (3) Net Impact Reported EPS from continuing operations attributable to IGT PLC - diluted 0.37 Adjustments: Foreign exchange gain, net (0.11) 0.08 (0.19) Amortization - purchase accounting 0.37 0.09 0.28 Discrete tax items — (0.15) 0.15 DDI / Benson Matter provision 0.73 0.18 0.56 Net adjustments 0.80 Adjusted EPS from continuing operations attributable to IGT PLC - diluted (4) 1.17 (1) Includes amortization of upfront license fees (2) Calculated based on nature of item, including any realizable deductions, and statutory tax rate in effect for the relevant jurisdiction (3) The reported effective tax rate was 26.0%. Adjusted for the above items, the effective tax rate was 22.8% (4) Adjusted EPS was calculated using weighted average shares outstanding of 204.6 million, which includes the dilutive impact of share-based payment awards 18


 
International Game Technology PLC Reconciliation of Non-GAAP Financial Measures ($ in millions, except per share amounts) Unaudited For the six months ended June 30, 2021 Business Global Global Digital & Segment Corporate Total Lottery Gaming Betting Total and Other 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 (25) 16 628 (124) 504 Depreciation 96 63 7 166 (1) 165 Amortization - service revenue (1) 110 — — 110 — 110 Amortization - non-purchase accounting 17 2 — 19 2 21 Amortization - purchase accounting — — — — 79 79 Stock-based compensation 2 2 — 5 6 11 Other — — — — 1 1 Adjusted EBITDA 862 44 24 929 (37) 892 Cash flows from operating activities - continuing operations 500 Capital expenditures (121) Free Cash Flow 380 Pre-Tax Impact Tax Impact (2) (3) Net Impact Reported EPS from continuing operations attributable to IGT PLC - diluted (0.09) Adjustments: Foreign exchange gain, net (0.27) 0.02 (0.29) Amortization - purchase accounting 0.38 0.09 0.29 Loss on extinguishment and modifications of debt, net 0.42 — 0.42 Discrete tax items — (0.33) 0.33 Other (non-recurring adjustments) 0.01 — 0.01 Net adjustments 0.74 Adjusted EPS from continuing operations attributable to IGT PLC - diluted (4) 0.65 (1) Includes amortization of upfront license fees (2) Calculated based on nature of item, including any realizable deductions, and statutory tax rate in effect for the relevant jurisdiction (3) The reported effective tax rate was 64.4%. Adjusted for the above items, the effective tax rate was 35.2% (4) Adjusted EPS was calculated using weighted average shares outstanding of 206.6 million, which includes the dilutive impact of share-based payment awards 19