UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of November, 2019

 

Commission File Number 001-36906

 

INTERNATIONAL GAME TECHNOLOGY PLC

(Translation of registrant’s name into English)

 

66 Seymour Street, Second Floor

London, W1H 5BT

United Kingdom

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F x      Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

 

 


 

Third Quarter 2019 Results of International Game Technology PLC

 

On November 14, 2019, International Game Technology PLC (the “Company”) reported results for the third quarter ended September 30, 2019.

 

On November 14, 2019, the Company announced that its Board of Directors declared an interim cash dividend of $0.20 per share on its ordinary shares. The dividend is payable on December 13, 2019 to holders of record as of the close of business on November 29, 2019.

 

A copy of the news release relating to the above matters is set forth in Exhibit 99.1, which is being furnished herewith. In addition, a slide presentation relating to the results is set forth in Exhibit 99.2, which is being furnished herewith.

 

Other Matters

 

On November 12, 2019, the Company’s directors approved a renewal of the observer agreement, previously filed as Exhibit 99.1 to the Company’s Form 6-K furnished to the SEC on May 30, 2018 (the “Observer Agreement”) between De Agostini S.p.A. (De Agostini”) and the Company permitting De Agostini to appoint an observer to attend meetings of the Company’s directors. The Observer Agreement was renewed for a two-year term and Paolo Ceretti, a former director of the Company, acknowledged and agreed to his renewed appointment by De Agostini as an observer pursuant to the terms of the Observer Agreement.

 

The renewed Observer Agreement expires following the meeting of the Company’s directors at which the financial results for the third quarter of 2021 are reviewed.

 

The following exhibits are furnished herewith:

 

Exhibit
Number

 

Description

 

 

 

99.1

 

News Release “International Game Technology PLC Reports Third Quarter 2019 Results,” dated November 14, 2019

 

 

 

99.2

 

Presentation “2019 Third Quarter Results ended September 30, 2019,” dated November 14, 2019

 

2


 

EXHIBIT INDEX

 

Exhibit
Number

 

Description

 

 

 

99.1

 

News Release “International Game Technology PLC Reports Third Quarter 2019 Results,” dated November 14, 2019

 

 

 

99.2

 

Presentation “2019 Third Quarter Results ended September 30, 2019,” dated November 14, 2019

 

3


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 14, 2019

INTERNATIONAL GAME TECHNOLOGY PLC

 

 

 

 

 

 

 

By:

/s/ Pierfrancesco Boccia

 

 

Pierfrancesco Boccia

 

 

Corporate Secretary

 

4


Exhibit 99.1

 

 

NEWS RELEASE

 

INTERNATIONAL GAME TECHNOLOGY PLC REPORTS

THIRD QUARTER 2019 RESULTS

 

·                  Revenue of $1.15 billion, up 3% at constant currency on significant growth in global gaming product sales

 

·                  Operating income of $154 million; Adjusted EBITDA of $407 million

 

·                  Strong year-to-date operating cash flow of $789 million and free cash flow of $456 million

 

·                  Cash dividend declared of $0.20 per ordinary share

 

LONDON, U.K. — November 14, 2019 — International Game Technology PLC (“IGT”) (NYSE:IGT) today reported financial results for the third quarter ended September 30, 2019. Today, at 8:00 a.m. EST, management will host a conference call and webcast to present the results; access details are provided below.

 

“Our core businesses achieved significant momentum in the third quarter and year-to-date periods,” said Marco Sala, CEO of IGT. “Key performance indicators were solid in the quarter — gaming machine unit shipments increased 44%, while same-store revenue for draw games and instants rose 4%. Our leading positions are rooted in our focus on player-driven performance, which was on display at recent lottery and gaming trade shows and should sustain our momentum going forward.”

 

“IGT has generated free cash flow in excess of $450 million in the first nine months,” said Alberto Fornaro, CFO of IGT. “This confirms the inflection we expected to achieve this year. We are well positioned to achieve our 2019 strategic and financial goals.”

 

1


 

Overview of Consolidated Third Quarter 2019 Results

 

 

 

 

 

 

 

 

 

Constant

 

 

 

Quarter Ended

 

Y/Y

 

Currency

 

 

 

September 30,

 

Change

 

Change

 

(In $ millions, unless otherwise noted)

 

2019

 

2018

 

(%)

 

(%)

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

1,153

 

1,156

 

0%

 

3%

 

Operating income

 

154

 

200

 

-23%

 

-19%

 

Net income/(loss) per diluted share

 

$

0.51

 

$

0.11

 

NM

 

 

 

Adjusted EBITDA

 

407

 

443

 

-8%

 

-5%

 

Adjusted operating income

 

221

 

257

 

-14%

 

-11%

 

Adjusted net income per diluted share

 

$

0.21

 

$

0.31

 

-32%

 

 

 

Net debt

 

7,354

 

7,570

 

-3%

 

 

 

 

Note: Adjusted EBITDA, adjusted operating income, and adjusted net income per diluted share are non-GAAP financial measures. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release.

 

Consolidated revenue of $1.15 billion, up 3% at constant currency

 

·                  Sharp growth in global gaming product sales

·                  Overcame significant Finland multi-year software sale in prior-year quarter and impact of higher machine gaming taxes in Italy

 

At constant currency, operating income down 19% to $154 million; adjusted operating income down 11% to $221 million

 

·                  Non-cash write-down of pre-paid social gaming-related license

 

Adjusted EBITDA declined 5% at constant currency to $407 million

 

·                  Differential profit flow-through on revenue mix, primarily due to high-margin Finland software transaction in prior year

·                  Higher R&D and SG&A expenses, primarily due to timing

 

Interest expense, net was $103 million, down 1% from the prior-year quarter

 

Income taxes of $45 million; adjusted taxes of $51 million, down from $60 million on lower pre-tax income

 

Net income attributable to IGT was $104 million; adjusted net income attributable to IGT was $43 million, down from $64 million in the prior year

 

Net income per diluted share of $0.51; adjusted net income per diluted share of $0.21 versus $0.31 in the prior year

 

Net debt of $7.35 billion, down 5% from $7.76 billion at December 31, 2018

 

2


 

Operating Segment Review

 

North America Gaming & Interactive

 

Select Financial Data

 

 

 

 

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended September 30

 

Q3 ‘19

 

Q3 ‘18

 

FX

 

Period Ended September 30

 

Q3 ‘19

 

Q3 ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

253

 

231

 

10%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

146

 

152

 

-4%

 

Casino

 

21,071

 

23,357

 

-9.8%

 

Terminal

 

103

 

106

 

-2%

 

 

 

 

 

 

 

 

 

Other

 

43

 

46

 

-7%

 

Machine units shipped

 

 

 

 

 

 

 

Product sales

 

107

 

79

 

36%

 

New/expansion

 

791

 

843

 

-6.2%

 

Terminal

 

74

 

54

 

37%

 

Replacement

 

4,150

 

2,998

 

38.4%

 

Other

 

33

 

25

 

34%

 

Total machines shipped

 

4,941

 

3,841

 

28.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

4

 

0

 

NM

 

 

 

 

 

 

 

 

 

Service revenue

 

4

 

0

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

257

 

231

 

12%

 

 

 

 

 

 

 

 

 

Operating income

 

62

 

45

 

34%

 

 

 

 

 

 

 

 

 

 

Note: Oklahoma agreement executed in Q2’19 reduces installed base by 2,223 units; no impact to units shipped

 

Revenue of $257 million, up 11%

 

·                  Product sales revenue of $107 million, up 36% over the prior year

 

·                  Terminal product sales rose 37%

 

·                  Significant increase in replacement units driven by strength of product offering; higher average selling price

·                  Lower new/expansion activity compared to the prior year

 

·                  Other product sales up 34% on high-margin, multi-year technology license

 

·                  Gaming service revenue of $146 million, compared to $152 million in the prior- year period

 

·                  Installed base stable year-over-year and sequentially on an underlying basis; yields higher

·                  Impact of multi-year poker contracts executed in prior periods

 

·                  Other service revenue driven by contribution from sports betting

 

Operating income of $62 million, up 38% compared to the prior year

 

·                  Increased unit shipments

·                  High-margin, multi-year technology license

 

3


 

North America Lottery

 

Select Financial Data

 

 

 

 

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended September 30

 

Q3 ‘19

 

Q3 ‘18

 

FX

 

Period Ended September 30

 

Q3 ‘19

 

Q3 ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

38

 

37

 

1%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

37

 

37

 

1%

 

VLT - Government sponsored

 

14,294

 

14,965

 

-4.5%

 

Terminal

 

24

 

25

 

-4%

 

 

 

 

 

 

 

 

 

Other

 

13

 

12

 

11%

 

Lottery same-store revenue growth

 

 

 

 

 

 

 

Product sales

 

0

 

0

 

0%

 

Instant ticket & draw games

 

 

 

 

 

3.9%

 

 

 

 

 

 

 

 

 

Multistate jackpots

 

 

 

 

 

-28.2%

 

Lottery

 

 

 

 

 

 

 

Total lottery same-store revenue growth

 

 

 

 

 

0.0%

 

Total revenue

 

242

 

242

 

0%

 

 

 

 

 

 

 

 

 

Lottery services

 

215

 

225

 

-4%

 

 

 

 

 

 

 

 

 

FMC

 

193

 

200

 

-4%

 

 

 

 

 

 

 

 

 

Instant ticket & draw games

 

157

 

164

 

-4%

 

 

 

 

 

 

 

 

 

Other services

 

36

 

36

 

0%

 

 

 

 

 

 

 

 

 

LMA

 

23

 

25

 

-10%

 

 

 

 

 

 

 

 

 

Product sales

 

26

 

17

 

54%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

1

 

0

 

NM

 

 

 

 

 

 

 

 

 

Service revenue

 

1

 

0

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

281

 

279

 

1%

 

 

 

 

 

 

 

 

 

Operating income

 

51

 

60

 

-15%

 

 

 

 

 

 

 

 

 

 

Revenue of $281 million, essentially in line with the prior year

 

·                  Lottery service revenue of $215 million, compared to $225 million in the prior year

 

·                  Instant ticket & draw game same-store revenue up 3.9% driven by broad-based strength across jurisdictions

·                  Lower multistate jackpot activity

·                  Impact of Illinois contract conclusion

 

·                  Lottery product sales revenue up on strong demand for self-service vending machines

·                  Gaming service revenue stable

 

Operating income of $51 million, down from $60 million

 

·                  Impact of Illinois and lower jackpot activity (including effect on LMAs)

·                  Expenses related to Rhode Island contract extension

 

4


 

International

 

Select Financial Data

 

 

 

 

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended September 30

 

Q3 ‘19

 

Q3 ‘18

 

FX

 

Period Ended September 30

 

Q3 ‘19

 

Q3 ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

118

 

98

 

27%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

27

 

33

 

-12%

 

Casino

 

9,877

 

12,332

 

-19.9%

 

Terminal

 

11

 

13

 

-13%

 

VLT - Government sponsored

 

4,455

 

3,675

 

21.2%

 

Other

 

16

 

19

 

-11%

 

Total installed base units

 

14,332

 

16,007

 

-10.5%

 

Product sales

 

91

 

65

 

46%

 

 

 

 

 

 

 

 

 

Terminal

 

65

 

47

 

42%

 

Machine units shipped

 

 

 

 

 

 

 

Other

 

26

 

18

 

57%

 

New/expansion

 

210

 

529

 

-60.3%

 

 

 

 

 

 

 

 

 

Replacement

 

5,034

 

2,681

 

87.8%

 

Lottery

 

 

 

 

 

 

 

Total machines shipped

 

5,244

 

3,210

 

63.4%

 

Total revenue

 

79

 

100

 

-19%

 

 

 

 

 

 

 

 

 

Lottery services

 

73

 

69

 

9%

 

Lottery same-store revenue growth

 

 

 

 

 

 

 

FMC

 

73

 

69

 

9%

 

Instant ticket & draw games

 

 

 

 

 

5.0%

 

Instant ticket & draw games

 

55

 

54

 

7%

 

Multistate jackpots

 

 

 

 

 

29.3%

 

Other services

 

17

 

15

 

17%

 

Total lottery same-store revenue growth

 

 

 

 

 

6.5%

 

Product sales

 

6

 

31

 

-80%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

16

 

18

 

0%

 

 

 

 

 

 

 

 

 

Service revenue

 

16

 

17

 

2%

 

 

 

 

 

 

 

 

 

Product sales

 

0

 

0

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

213

 

216

 

3%

 

 

 

 

 

 

 

 

 

Operating income

 

30

 

56

 

-40%

 

 

 

 

 

 

 

 

 

 

Revenue of $213 million, up 3% at constant currency

 

·                  Gaming product sales revenue of $91 million, up 46% at constant currency

 

·                  Broad-based geographic demand drives significant increase in units shipped, including 1,547 Sweden VLTs

·                  Other product sales up on higher systems revenue

 

·                  Gaming service revenue was $27 million

 

·                  Year-over-year and sequential declines in the installed base due to conversions in prior periods

·                  Lower interactive performance

 

·                  Other revenue stable

·                  Lottery service revenue of $73 million, up 9% at constant currency, fueled by 6.5% same-store revenue growth

·                  Lottery product sales reflect significant Finland software sale in the prior year

 

Operating income of $30 million compared to $56 million in the prior year

 

·                  Differential profit flow-through of revenue mix (high-margin Finland software sale in prior year)

 

5


 

Italy

 

Select Financial Data

 

 

 

 

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended September 30

 

Q3 ‘19

 

Q3 ‘18

 

FX

 

Period Ended September 30

 

Q3 ‘19

 

Q3 ‘18

 

Change

 

 

 

 

 

 

 

 

 

(In € millions, except machines)

 

 

 

 

 

 

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

154

 

175

 

-7%

 

Lottery

 

 

 

 

 

 

 

Gaming services

 

154

 

175

 

-7%

 

Lotto wagers

 

1,882

 

1,913

 

-1.6%

 

Terminal

 

138

 

159

 

-8%

 

10eLotto

 

1,341

 

1,361

 

-1.5%

 

Other

 

16

 

16

 

1%

 

Core

 

477

 

434

 

10.0%

 

Product sales

 

0

 

0

 

0%

 

Late numbers

 

19

 

70

 

-72.3%

 

 

 

 

 

 

 

 

 

MillionDAY

 

44

 

47

 

-6.4%

 

Lottery

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

172

 

184

 

-1%

 

Scratch & Win wagers

 

2,197

 

2,179

 

0.8%

 

Lottery services

 

172

 

184

 

-1%

 

 

 

 

 

 

 

 

 

FMC

 

172

 

184

 

-1%

 

Italy lottery revenue growth

 

 

 

 

 

-1.1%

 

Instant ticket & draw games

 

219

 

233

 

-1%

 

 

 

 

 

 

 

 

 

Other services

 

(47

)

(49

)

1%

 

Gaming

 

 

 

 

 

 

 

Product sales

 

0

 

0

 

0%

 

Installed base (end of period)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VLT - Operator (B2C)

 

10,984

 

11,027

 

-0.4%

 

Other

 

 

 

 

 

 

 

VLT - Supplier (B2B)

 

7,514

 

8,094

 

-7.2%

 

Total revenue

 

76

 

70

 

14%

 

AWP

 

41,129

 

43,074

 

-4.5%

 

Service revenue

 

76

 

70

 

14%

 

Total installed base

 

59,627

 

62,195

 

-4.1%

 

Product sales

 

0

 

0

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wagers

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

VLT - Operator (B2C)

 

1,324

 

1,426

 

-7.1%

 

Revenue

 

402

 

430

 

-1%

 

AWP

 

877

 

879

 

-0.3%

 

Operating income

 

127

 

145

 

-7%

 

Interactive wagers (gaming)

 

492

 

447

 

10.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sports betting wagers (1)

 

227

 

225

 

0.8%

 

 

 

 

 

 

 

 

 

Sports betting payout (%) (1)

 

83.4%

 

81.1%

 

2.3 pp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes virtual wagers and pools & horses

 

 

 

 

 

 

Revenue of $402 million, relatively stable at constant currency

 

·                  Lottery service revenue of $172 million, essentially in line with the prior year at constant currency, on stable wagers

·                  Gaming service revenue of $154 million compared to $175 million in the prior year

 

·                  Increased taxes on AWPs and VLTs

 

·                  Other service revenue of $76 million, up 14% at constant currency

 

·                  Growth in commercial services

·                  Lower sports betting payout in the prior year

 

Operating income of $127 million, down 7% at constant currency

 

·                  Higher gaming machine taxes and sports betting payout

 

6


 

Other Developments

 

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

 

·                  Record date of November 29, 2019

·                  Payment date of December 13, 2019

 

Issuance of €500 million 2.375% Notes due 2028, as previously announced

 

·                  Net proceeds used to pay €320 million term loan amortization due January 2020

·                  Balance used to repay all utilizations under revolving credit facilities

 

2019 Outlook

 

·                  Adjusted EBITDA of $1.675 - $1.735 billion remains unchanged

·                  Updating capital expenditures to $450 - $500 million; previously $450 - $550 million

·                  Full-year EUR/USD exchange rate of 1.12

 

Conference Call and Webcast

 

November 14, 2019, at 8:00 a.m. EST

 

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 1869816

·                  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 1869816

 

Comparability of Results

 

All figures presented in this news release are prepared under U.S. GAAP, unless noted otherwise. Adjusted figures exclude the impact of items such as purchase accounting, impairment charges, restructuring expense, foreign exchange, and certain one-time, primarily transaction-related items. Reconciliations to the most directly comparable U.S. GAAP measures are included in the tables in this news release. Constant currency changes for 2019 are calculated using the same foreign exchange rates as the corresponding 2018 period. Management uses non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate the Company’s financial performance. Management believes these non-GAAP financial measures reflect the Company’s ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of business trends. These constant currency changes and non-GAAP financial measures should however be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with U.S. GAAP.

 

7


 

About IGT

 

IGT (NYSE:IGT) is the global leader in gaming. We enable players to experience their favorite games across all channels and regulated segments, from Gaming Machines and Lotteries to Digital and Social Gaming. Leveraging a wealth of premium content, substantial investment in innovation, in-depth customer intelligence, operational expertise and leading-edge technology, our gaming solutions anticipate the demands of consumers wherever they decide to play. We have a well-established local presence and relationships with governments and regulators in more than 100 countries around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has over 12,000 employees. For more information, please visit www.IGT.com.

 

Cautionary Statement Regarding Forward-Looking Statements

 

This news release may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning International Game Technology PLC and its consolidated subsidiaries (the “Company”) and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, dividends, results of operations, or financial condition, or otherwise, based on current beliefs of the management of the Company as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “would,” “should,” “shall”, “continue,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or the negative or other variations of them. These forward-looking statements speak only as of the date on which such statements are made and are subject to various risks and uncertainties, many of which are outside the Company’s control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance, or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) the factors and risks described in the Company’s annual report on Form 20-F for the financial year ended December 31, 2018 and other documents filed from time to time with the SEC, which are available on the SEC’s website at www.sec.gov and on the investor relations section of the Company’s website at www.IGT.com. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. You should carefully consider these factors and other risks and uncertainties that affect the Company’s business. All forward-looking statements contained in this news release are qualified in their entirety by this cautionary statement.

 

Contact:

 

Phil O’Shaughnessy, Global Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452

Francesco Luti, +39 3485475493; for Italian media inquiries

James Hurley, Investor Relations, +1 (401) 392-7190

 

8


 

International Game Technology PLC

Consolidated Statements of Operations

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

Unaudited

 

 

 

For the three months ended

 

 

 

September 30,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

Service revenue

 

921,712

 

963,265

 

Product sales

 

231,535

 

192,565

 

Total revenue

 

1,153,247

 

1,155,830

 

 

 

 

 

 

 

Cost of services

 

575,594

 

586,811

 

Cost of product sales

 

136,246

 

107,311

 

Selling, general and administrative

 

201,416

 

194,099

 

Research and development

 

68,804

 

63,277

 

Impairment

 

432

 

1,530

 

Other operating expense, net

 

16,873

 

2,774

 

Total operating expenses

 

999,365

 

955,802

 

 

 

 

 

 

 

Operating income

 

153,882

 

200,028

 

 

 

 

 

 

 

Interest expense, net

 

(102,551

)

(103,553

)

Foreign exchange gain, net

 

124,068

 

21,104

 

Other expense, net

 

(308

)

(17,244

)

Total non-operating income (expenses)

 

21,209

 

(99,693

)

 

 

 

 

 

 

Income before provision for income taxes

 

175,091

 

100,335

 

 

 

 

 

 

 

Provision for income taxes

 

44,530

 

46,327

 

 

 

 

 

 

 

Net income

 

130,561

 

54,008

 

 

 

 

 

 

 

Less: Net income attributable to non-controlling interests

 

26,998

 

31,709

 

 

 

 

 

 

 

Net income attributable to IGT PLC

 

103,563

 

22,299

 

 

 

 

 

 

 

Net income attributable to IGT PLC per common share - basic

 

0.51

 

0.11

 

Net income attributable to IGT PLC per common share - diluted

 

0.51

 

0.11

 

 

 

 

 

 

 

Weighted-average shares - basic

 

204,435

 

204,219

 

Weighted-average shares - diluted

 

204,528

 

204,344

 

 

9


 

International Game Technology PLC

Consolidated Statements of Operations

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

Unaudited

 

 

 

For the nine months ended

 

 

 

September 30,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

Service revenue

 

2,892,774

 

3,017,283

 

Product sales

 

639,642

 

547,841

 

Total revenue

 

3,532,416

 

3,565,124

 

 

 

 

 

 

 

Cost of services

 

1,765,519

 

1,812,553

 

Cost of product sales

 

397,217

 

333,065

 

Selling, general and administrative

 

616,516

 

605,405

 

Research and development

 

200,305

 

198,497

 

Impairment

 

432

 

1,530

 

Other operating (income) expense, net

 

(3,322

)

7,974

 

Total operating expenses

 

2,976,667

 

2,959,024

 

 

 

 

 

 

 

Operating income

 

555,749

 

606,100

 

 

 

 

 

 

 

Interest expense, net

 

(309,480

)

(313,721

)

Foreign exchange gain, net

 

141,609

 

96,955

 

Other income (expense), net

 

22,687

 

(45,567

)

Total non-operating expenses

 

(145,184

)

(262,333

)

 

 

 

 

 

 

Income before provision for income taxes

 

410,565

 

343,767

 

 

 

 

 

 

 

Provision for income taxes

 

160,522

 

159,064

 

 

 

 

 

 

 

Net income

 

250,043

 

184,703

 

 

 

 

 

 

 

Less: Net income attributable to non-controlling interests

 

101,370

 

104,054

 

 

 

 

 

 

 

Net income attributable to IGT PLC

 

148,673

 

80,649

 

 

 

 

 

 

 

Net income attributable to IGT PLC per common share - basic

 

0.73

 

0.40

 

Net income attributable to IGT PLC per common share - diluted

 

0.73

 

0.39

 

 

 

 

 

 

 

Weighted-average shares - basic

 

204,352

 

204,009

 

Weighted-average shares - diluted

 

204,532

 

204,375

 

 

10


 

International Game Technology PLC

Consolidated Balance Sheets

($ thousands)

Unaudited

 

 

 

September 30,

 

December 31,

 

 

 

2019

 

2018

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

542,425

 

250,669

 

Restricted cash and cash equivalents

 

221,233

 

261,108

 

Trade and other receivables, net

 

899,665

 

949,085

 

Inventories

 

253,949

 

282,698

 

Other current assets

 

471,239

 

504,061

 

Income taxes receivable

 

49,214

 

39,075

 

Total current assets

 

2,437,725

 

2,286,696

 

Systems, equipment and other assets related to contracts, net

 

1,298,394

 

1,404,426

 

Property, plant and equipment, net

 

138,708

 

185,349

 

Operating lease right-of-use-assets

 

344,146

 

 

Goodwill

 

5,535,003

 

5,580,227

 

Intangible assets, net

 

1,873,123

 

2,044,723

 

Other non-current assets

 

1,939,337

 

2,108,964

 

Deferred income taxes

 

33,819

 

38,117

 

Total non-current assets

 

11,162,530

 

11,361,806

 

Total assets

 

13,600,255

 

13,648,502

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

1,069,275

 

1,142,371

 

Other current liabilities

 

790,326

 

816,722

 

Current portion of long-term debt

 

447,678

 

 

Short-term borrowings

 

740

 

34,822

 

Income taxes payable

 

53,414

 

8,209

 

Total current liabilities

 

2,361,433

 

2,002,124

 

Long-term debt, less current portion

 

7,468,948

 

7,977,267

 

Deferred income taxes

 

440,903

 

446,083

 

Income taxes payable

 

25,654

 

25,654

 

Operating lease liabilities

 

311,673

 

 

Other non-current liabilities

 

374,601

 

445,445

 

Total non-current liabilities

 

8,621,779

 

8,894,449

 

Total liabilities

 

10,983,212

 

10,896,573

 

Commitments and contingencies

 

 

 

 

 

Shareholders’ equity

 

2,617,043

 

2,751,929

 

Total liabilities and shareholders’ equity

 

13,600,255

 

13,648,502

 

 

11


 

International Game Technology PLC

Consolidated Statements of Cash Flows

($ thousands)

Unaudited

 

 

 

For the nine months ended

 

 

 

September 30,

 

 

 

2019

 

2018

 

Cash flows from operating activities

 

 

 

 

 

Net income

 

250,043

 

184,703

 

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

 

 

 

 

 

Depreciation

 

315,291

 

312,203

 

Amortization

 

207,161

 

204,256

 

Service revenue amortization

 

154,630

 

164,952

 

Stock-based compensation expense

 

20,046

 

24,944

 

Debt issuance cost amortization

 

17,004

 

16,511

 

Loss on extinguishment of debt

 

11,964

 

49,460

 

Deferred income taxes

 

2,590

 

11,815

 

Impairment

 

432

 

1,530

 

Gain on sale of assets

 

(65,324

)

(5,568

)

Foreign exchange gain, net

 

(141,609

)

(96,955

)

Other non-cash costs, net

 

48,299

 

8,700

 

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

 

 

 

 

 

Trade and other receivables

 

16,546

 

92,823

 

Inventories

 

23,875

 

(26,682

)

Upfront Italian license fee

 

 

(366,270

)

Accounts payable

 

611

 

(123,057

)

Other assets and liabilities

 

(72,854

)

(204,053

)

Net cash provided by operating activities

 

788,705

 

249,312

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Capital expenditures

 

(332,716

)

(374,313

)

Proceeds from sale of assets

 

100,743

 

8,200

 

Other

 

6,126

 

2,064

 

Net cash used in investing activities

 

(225,847

)

(364,049

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Principal payments on long-term debt

 

(1,264,647

)

(1,658,753

)

Dividends paid - non-controlling interests

 

(135,684

)

(126,926

)

Dividends paid

 

(122,616

)

(122,394

)

Return of capital - non-controlling interests

 

(80,384

)

(64,974

)

Net (payments of) proceeds from short-term borrowings

 

(34,519

)

29,957

 

Debt issuance costs paid

 

(24,787

)

(10,199

)

Payments in connection with extinguishment of debt

 

(8,598

)

(42,148

)

Net receipts from (payments of) financial liabilities

 

753

 

(36,407

)

Capital increase - non-controlling interests

 

1,369

 

135,536

 

Proceeds from long-term debt

 

1,397,025

 

1,415,762

 

Other

 

(7,798

)

(18,051

)

Net cash used in financing activities

 

(279,886

)

(498,597

)

 

 

 

 

 

 

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

 

282,972

 

(613,334

)

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

 

(31,091

)

10,924

 

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

 

511,777

 

1,305,430

 

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

 

763,658

 

703,020

 

 

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

 

Interest paid

 

(371,847

)

(419,508

)

Income taxes paid

 

(138,009

)

(125,388

)

 

12


 

International Game Technology PLC

Net Debt

($ thousands)

Unaudited

 

 

 

September 30,

 

December 31,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

4.125% Senior Secured Notes due February 2020 (2)

 

 

499,167

 

4.750% Senior Secured Notes due March 2020 (2)

 

 

438,252

 

5.500% Senior Secured Notes due June 2020 (1)

 

 

27,519

 

6.250% Senior Secured Notes due February 2022 (1)

 

1,491,826

 

1,469,609

 

4.750% Senior Secured Notes due February 2023 (2)

 

918,800

 

964,730

 

5.350% Senior Secured Notes due October 2023 (1)

 

60,910

 

60,983

 

3.500% Senior Secured Notes due July 2024 (2)

 

540,006

 

567,179

 

6.500% Senior Secured Notes due February 2025 (1)

 

1,089,555

 

1,088,385

 

3.500% Senior Secured Notes due June 2026 (2)

 

809,246

 

 

6.250% Senior Secured Notes due January 2027 (1)

 

743,203

 

742,667

 

2.375% Senior Secured Notes due April 2028 (2)

 

539,115

 

 

Senior Secured Notes, long-term

 

6,192,661

 

5,858,491

 

 

 

 

 

 

 

Term Loan Facilities due January 2023 (2)

 

1,276,287

 

1,705,395

 

Revolving Credit Facilities due July 2024 (1) (2)

 

 

413,381

 

Long-term debt, less current portion

 

7,468,948

 

7,977,267

 

 

 

 

 

 

 

4.750% Senior Secured Notes due March 2020 (2)

 

420,273

 

 

5.500% Senior Secured Notes due June 2020 (1)

 

27,405

 

 

Current portion of long-term debt

 

447,678

 

 

 

 

 

 

 

 

Short-term borrowings

 

740

 

34,822

 

Total debt

 

7,917,366

 

8,012,089

 

 

 

 

 

 

 

Less: Cash and cash equivalents

 

542,425

 

250,669

 

Less: Debt issuance costs, net - Revolving Credit Facilities due July 2024

 

21,311

 

 

 

 

 

 

 

 

Net debt

 

7,353,630

 

7,761,420

 

 


(1) U.S. dollar-denominated debt

(2) Euro-denominated debt

 

Note: Net debt is a non-GAAP financial measure

 

13


 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)

Unaudited

 

 

 

For the three months ended

 

 

 

September 30,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

Net income

 

130,561

 

54,008

 

Provision for income taxes

 

44,530

 

46,327

 

Non-operating (income) expenses

 

(21,209

)

99,693

 

Depreciation

 

106,020

 

109,755

 

Amortization

 

69,960

 

67,806

 

Service revenue amortization

 

50,695

 

53,837

 

Stock-based compensation expense

 

7,544

 

7,825

 

Impairment

 

432

 

1,530

 

Other

 

18,543

 

2,541

 

Adjusted EBITDA

 

407,076

 

443,322

 

 

 

 

 

 

 

Cash flows from operating activities

 

196,984

 

129,162

 

Capital expenditures

 

(101,713

)

(115,346

)

Free Cash Flow

 

95,271

 

13,816

 

 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)

Unaudited

 

 

 

For the nine months ended

 

 

 

September 30,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

Net income

 

250,043

 

184,703

 

Provision for income taxes

 

160,522

 

159,064

 

Non-operating expenses

 

145,184

 

262,333

 

Depreciation

 

315,291

 

312,203

 

Amortization

 

207,161

 

204,256

 

Service revenue amortization

 

154,630

 

164,952

 

Stock-based compensation expense

 

20,046

 

24,944

 

Impairment

 

432

 

1,530

 

Other

 

24,149

 

7,308

 

Adjusted EBITDA

 

1,277,458

 

1,321,293

 

 

 

 

 

 

 

Cash flows from operating activities

 

788,705

 

249,312

 

Capital expenditures

 

(332,716

)

(374,313

)

Free Cash Flow

 

455,989

 

(125,001

)

 

14


 

International Game Technology PLC

Consolidated Statement of Operations

Reconciliation of Non-GAAP Financial Measures

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

Unaudited

 

 

 

Quarter to date

 

 

 

 

 

 

 

 

 

Quarter to date

 

 

 

September 2019

 

Adjustments

 

September 2019

 

 

 

As

 

Purchase

 

Foreign

 

 

 

Refinancing and

 

As

 

 

 

Reported

 

Accounting

 

Exchange

 

Impairment

 

Other

 

Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

1,153,247

 

(181

)

 

 

 

1,153,066

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

575,594

 

(17,947

)

 

 

 

557,647

 

Cost of product sales

 

136,246

 

(3,955

)

 

 

 

132,291

 

Selling, general and administrative

 

201,416

 

(26,788

)

 

 

 

174,628

 

Research and development

 

68,804

 

(1

)

 

 

 

68,803

 

Impairment

 

432

 

 

 

(432

)

 

 

Other operating expense (income), net

 

16,873

 

 

 

 

(18,615

)

(1,742

)

Total operating expenses

 

999,365

 

(48,691

)

 

(432

)

(18,615

)

931,627

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

153,882

 

48,510

 

 

432

 

18,615

 

221,439

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(102,551

)

25

 

 

 

 

(102,526

)

Foreign exchange gain, net

 

124,068

 

 

(124,068

)

 

 

 

Other (expense) income, net

 

(308

)

 

 

 

2,336

 

2,028

 

Total non-operating income (expenses)

 

21,209

 

25

 

(124,068

)

 

2,336

 

(100,498

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

175,091

 

48,535

 

(124,068

)

432

 

20,951

 

120,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes (a)

 

44,530

 

11,666

 

(10,993

)

 

5,368

 

50,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

130,561

 

36,869

 

(113,075

)

432

 

15,583

 

70,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to non-controlling interests

 

26,998

 

25

 

 

 

 

27,023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to IGT PLC

 

103,563

 

36,844

 

(113,075

)

432

 

15,583

 

43,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share - diluted

 

0.51

 

 

 

 

 

 

 

 

 

0.21

 

Weighted-average shares - diluted

 

204,528

 

 

 

 

 

 

 

 

 

204,528

 

 


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

 

15


 

International Game Technology PLC

Consolidated Statement of Operations

Reconciliation of Non-GAAP Financial Measures

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

Unaudited

 

 

 

Year to date

 

 

 

 

 

 

 

 

 

Year to date

 

 

 

September 2019

 

Adjustments

 

September 2019

 

 

 

As

 

Purchase

 

Foreign

 

 

 

Refinancing and

 

As

 

 

 

Reported

 

Accounting

 

Exchange

 

Impairment

 

Other

 

Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

3,532,416

 

(540

)

 

 

 

3,531,876

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

1,765,519

 

(54,491

)

 

 

 

1,711,028

 

Cost of product sales

 

397,217

 

(11,736

)

 

 

 

385,481

 

Selling, general and administrative

 

616,516

 

(79,368

)

 

 

 

537,148

 

Research and development

 

200,305

 

(293

)

 

 

 

200,012

 

Impairment

 

432

 

 

 

(432

)

 

 

Other operating income, net

 

(3,322

)

 

 

 

(24,366

)

(27,688

)

Total operating expenses

 

2,976,667

 

(145,888

)

 

(432

)

(24,366

)

2,805,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

555,749

 

145,348

 

 

432

 

24,366

 

725,895

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(309,480

)

76

 

 

 

 

(309,404

)

Foreign exchange gain, net

 

141,609

 

 

(141,609

)

 

 

 

Other income, net

 

22,687

 

 

 

 

11,964

 

34,651

 

Total non-operating expenses

 

(145,184

)

76

 

(141,609

)

 

11,964

 

(274,753

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

410,565

 

145,424

 

(141,609

)

432

 

36,330

 

451,142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes (a)

 

160,522

 

34,908

 

(10,819

)

 

6,730

 

191,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

250,043

 

110,516

 

(130,790

)

432

 

29,600

 

259,801

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to non-controlling interests

 

101,370

 

76

 

 

 

 

101,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to IGT PLC

 

148,673

 

110,440

 

(130,790

)

432

 

29,600

 

158,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share - diluted

 

0.73

 

 

 

 

 

 

 

 

 

0.77

 

Weighted-average shares - diluted

 

204,532

 

 

 

 

 

 

 

 

 

204,532

 

 


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

 

16


 

International Game Technology PLC

Consolidated Statement of Operations

Reconciliation of Non-GAAP Financial Measures

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

Unaudited

 

 

 

Quarter to date

 

 

 

 

 

 

 

 

 

Quarter to date

 

 

 

September 2018

 

Adjustments

 

September 2018

 

 

 

As

 

Purchase

 

Foreign

 

 

 

Refinancing and

 

As

 

 

 

Reported

 

Accounting

 

Exchange

 

Impairment

 

Other

 

Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

1,155,830

 

(181

)

 

 

 

1,155,649

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

586,811

 

(21,241

)

 

 

 

565,570

 

Cost of product sales

 

107,311

 

(3,954

)

 

 

 

103,357

 

Selling, general and administrative

 

194,099

 

(27,017

)

 

 

 

167,082

 

Research and development

 

63,277

 

(232

)

 

 

 

63,045

 

Impairment

 

1,530

 

 

 

(1,530

)

 

 

Other operating expense, net

 

2,774

 

 

 

 

(2,774

)

 

Total operating expenses

 

955,802

 

(52,444

)

 

(1,530

)

(2,774

)

899,054

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

200,028

 

52,263

 

 

1,530

 

2,774

 

256,595

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(103,553

)

524

 

 

 

 

(103,029

)

Foreign exchange gain, net

 

21,104

 

 

(21,104

)

 

 

 

Other (expense) income, net

 

(17,244

)

 

 

 

19,875

 

2,631

 

Total non-operating expenses

 

(99,693

)

524

 

(21,104

)

 

19,875

 

(100,398

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

100,335

 

52,787

 

(21,104

)

1,530

 

22,649

 

156,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes (a)

 

46,327

 

12,846

 

301

 

 

690

 

60,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

54,008

 

39,941

 

(21,405

)

1,530

 

21,959

 

96,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to non-controlling interests

 

31,709

 

27

 

 

 

 

31,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to IGT PLC

 

22,299

 

39,914

 

(21,405

)

1,530

 

21,959

 

64,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share - diluted

 

0.11

 

 

 

 

 

 

 

 

 

0.31

 

Weighted-average shares - diluted

 

204,344

 

 

 

 

 

 

 

 

 

204,344

 

 


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

 

17


 

International Game Technology PLC

Consolidated Statement of Operations

Reconciliation of Non-GAAP Financial Measures

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

Unaudited

 

 

 

Year to date

 

 

 

 

 

 

 

 

 

Year to date

 

 

 

September 2018

 

Adjustments

 

September 2018

 

 

 

As

 

Purchase

 

Foreign

 

 

 

Refinancing and

 

As

 

 

 

Reported

 

Accounting

 

Exchange

 

Impairment

 

Other

 

Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

3,565,124

 

(540

)

 

 

 

3,564,584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

1,812,553

 

(63,457

)

 

 

 

1,749,096

 

Cost of product sales

 

333,065

 

(11,735

)

 

 

 

321,330

 

Selling, general and administrative

 

605,405

 

(80,602

)

 

 

 

524,803

 

Research and development

 

198,497

 

(686

)

 

 

 

197,811

 

Impairment

 

1,530

 

 

 

(1,530

)

 

 

Other operating expense, net

 

7,974

 

 

 

 

(7,974

)

 

Total operating expenses

 

2,959,024

 

(156,480

)

 

(1,530

)

(7,974

)

2,793,040

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

606,100

 

155,940

 

 

1,530

 

7,974

 

771,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(313,721

)

1,536

 

 

 

 

(312,185

)

Foreign exchange gain, net

 

96,955

 

 

(96,955

)

 

 

 

Other (expense) income, net

 

(45,567

)

(2,184

)

 

 

49,459

 

1,708

 

Total non-operating expenses

 

(262,333

)

(648

)

(96,955

)

 

49,459

 

(310,477

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

343,767

 

155,292

 

(96,955

)

1,530

 

57,433

 

461,067

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes (a)

 

159,064

 

37,101

 

6,630

 

 

1,831

 

204,626

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

184,703

 

118,191

 

(103,585

)

1,530

 

55,602

 

256,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to non-controlling interests

 

104,054

 

77

 

 

 

 

104,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to IGT PLC

 

80,649

 

118,114

 

(103,585

)

1,530

 

55,602

 

152,310

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share - diluted

 

0.39

 

 

 

 

 

 

 

 

 

0.75

 

Weighted-average shares - diluted

 

204,375

 

 

 

 

 

 

 

 

 

204,375

 

 


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

 

18


 

INTERNATIONAL GAME TECHNOLOGY PLC

 

Select Financial Data

 

 

 

 

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended September 30

 

Q3 ‘19

 

Q3 ‘18

 

FX

 

Period Ended September 30

 

Q3 ‘19

 

Q3 ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

563

 

541

 

7%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

364

 

397

 

-5%

 

Casino

 

30,948

 

35,689

 

-13.3%

 

Terminal

 

276

 

303

 

-6%

 

VLT - Government sponsored (ex-Italy)

 

18,749

 

18,640

 

0.6%

 

Other

 

88

 

94

 

-4%

 

VLT - Italy supplier (B2B)

 

7,514

 

8,094

 

-7.2%

 

Product sales

 

199

 

144

 

41%

 

Total installed base units

 

57,211

 

62,423

 

-8.3%

 

Terminal

 

139

 

101

 

39%

 

Yield (average gross revenue per unit per day)

 

$

28.46

 

$

27.84

 

2.2%

 

Other

 

60

 

43

 

44%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional Italian network details:

 

 

 

 

 

 

 

Lottery

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

493

 

527

 

-4%

 

VLT - Operator (B2C)

 

10,984

 

11,027

 

-0.4%

 

Lottery services

 

460

 

479

 

-1%

 

AWP

 

41,129

 

43,074

 

-4.5%

 

FMC

 

438

 

454

 

-1%

 

 

 

 

 

 

 

 

 

Instant ticket & draw games

 

431

 

452

 

-1%

 

Machine units shipped

 

 

 

 

 

 

 

Other services

 

6

 

2

 

113%

 

New/expansion

 

1,001

 

1,372

 

-27.0%

 

LMA

 

23

 

25

 

-10%

 

Replacement

 

9,184

 

5,679

 

61.7%

 

Product sales

 

33

 

48

 

-32%

 

Total machines shipped

 

10,185

 

7,051

 

44.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

97

 

88

 

17%

 

Global lottery same-store revenue growth

 

 

 

 

 

 

 

Service revenue

 

97

 

88

 

17%

 

Instant ticket & draw games

 

 

 

 

 

4.2%

 

Product sales

 

0

 

0

 

0%

 

Multistate jackpots

 

 

 

 

 

-19.5%

 

 

 

 

 

 

 

 

 

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

 

 

 

1.7%

 

Consolidated

 

 

 

 

 

 

 

Italy lottery revenue growth

 

 

 

 

 

-1.1%

 

Revenue

 

1,153

 

1,156

 

3%

 

 

 

 

 

 

 

 

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment total

 

270

 

306

 

-9%

 

 

 

 

 

 

 

 

 

Purchase accounting

 

(49

)

(52

)

7%

 

 

 

 

 

 

 

 

 

Corporate support

 

(67

)

(54

)

-28%

 

 

 

 

 

 

 

 

 

Total

 

154

 

200

 

-19%

 

 

 

 

 

 

 

 

 

 

19


Exhibit 99.2

 

November 14, 2019 2019 Third Quarter Results Ended September 30, 2019 1

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Cautionary Statement Regarding Forward-Looking Statements This presentation may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning International Game Technology PLC and its consolidated subsidiaries (the “Company”) and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, dividends, results of operations, or financial condition, or otherwise, based on current beliefs of the management of the Company as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “would,” “should,” “shall”, “continue,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or the negative or other variations of them. These forward-looking statements speak only as of the date on which such statements are made and are subject to various risks and uncertainties, many of which are outside the Company’s control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance, or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) the factors and risks described in the Company’s annual report on Form 20-F for the financial year ended December 31, 2018 and other documents filed from time to time with the SEC, which are available on the SEC’s website at www.sec.gov and on the investor relations section of the Company’s website at www.IGT.com. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. You should carefully consider these factors and other risks and uncertainties that affect the Company’s business. All forward-looking statements contained in this presentation are qualified in their entirety by this cautionary statement. Non-GAAP Financial Measures This presentation contains non-GAAP financial measures, including adjusted EBITDA, adjusted operating income, adjusted diluted EPS, and free cash flow. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the appendix to this presentation. Comparability of Results All figures presented in this presentation 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 presentation. Constant currency changes for 2019 are calculated using the same foreign exchange rates as the corresponding 2018 period. Management uses non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate the Company’s financial performance. Management believes these non-GAAP financial measures reflect the Company’s ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of business trends. These constant currency changes and non-GAAP financial measures should however be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with U.S. GAAP. 2

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Agenda Marco Sala, CEO Strategic Update 1 Alberto Fornaro, CFO Q3’19 Results 2 Q&A 3 3

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Strategic Update 4

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Q3’19 Results Led by Gaming 5 Solid core business momentum Strong KPIs Global gaming machine unit sales up sharply YTD free cash flow marks important inflection point

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6 2% SSR growth outside Italy; Italy wagers stable Strong North American product sales reflect growing suite of self-service options GameTouch 20™ Solution for big-box, national retailers Won Lottery Product of the Year at International Gaming Awards GameTouch Draw™ Facilitates Keno expansion Inspired by sports betting solution used in Italy Lotteries Continue to Perform; Leveraging Distribution to Drive Growth

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Wins & Extensions Secure Future 7 Several North American contract wins & extensions Wins: Mississippi Extensions: Colorado, Minnesota, Kentucky, Oregon Awarded 15-year Brazil instant ticket license through 50-50 joint venture Expect to be operational in H2’20 Compelling incremental growth driver

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Strong Quarter for Global Gaming Business 8 44% increase in unit sales of gaming machines driven by strong replacement demand NA replacements up 38% International replacements up 88%; new Cobalt cabinet launched in Eastern Europe North America installed base stable, yields higher Continued rollout of Wheel of Fortune® Cash Link & WOF 4D games

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G2E Highlights Strategy of “Player-Driven Performance” 9 Core video offer showcases evolution of proven franchises Focus on multi-link progressives, a growing market segment worldwide New Peak cabinets for leased games Strong video poker showing should support continued segment leadership

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U.S. Sports Betting Solutions Gaining Momentum 10 IGT powering 35 casino-based sportsbooks in 11 states Mobile/digital active in 7 states >200 self-service terminals deployed Leading market share in NJ & PA confirms stability and scalability of offer “Sportsbook in a box” solutions featured at G2E Enables Vegas-style sportsbook experience for small and medium casinos

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Confident in Continued Progress for Global Lottery & Gaming 11 Italy budget law process still evolving Proven record of minimizing impact on P&L Italy profits have grown despite higher taxes over the last several years Working on initiatives to offset new taxes Confidence in future rooted in focus on player-driven performance Unmatched breadth and depth of product offer Positive customer feedback

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2019 Third Quarter Financial Results 12

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Q3’19 Financial Highlights Adjusted Operating Income Adjusted EBITDA Diluted EPS Note: Adjusted results remove impact of purchase price amortization, impairment charges, restructuring expense and transaction expense (see appendix for details) EUR/USD FX daily average: 1.11 in Q3’19; 1.16 in Q3’18 $ M Revenue +3% at constant currency -5% at constant currency -11% at constant currency 13

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Q3’19 North America Gaming & Interactive Highlights Revenue Key Performance Indicators Replacement units up sharply on success of new products; rising ASPs Higher intellectual property revenue from multi-year technology license Installed base stable Y/Y and sequentially on underlying basis; yields higher Operating income growth of 38% on increased unit shipments and high-margin IP revenue $ M except where noted otherwise 14 Constant Q3'18 Q3'19 % Change FX Revenue 231 257 11% 12% Operating income 45 62 38% 34% Machine Units Shipped Q3'18 Q3'19 New & expansion 843 791 Replacement 2,998 4,150 Total 3,841 4,941 Q3'18 Q4'18 Q1'19 Q2'19* Q3'19* Casino installed base (units) 23,357 23,108 22,713 21,073 21,071 *2,076 and 147 unit reductions in Q2 '19 and Q3 '19, respectively, per OK strategic agreement

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Q3’19 North America Lottery Highlights Revenue Key Performance Indicators Increased product sales across multiple states; overcomes lower Illinois revenue but at a reduced margin Solid SSR growth for instant ticket and draw games offset by lower multistate jackpot activity Operating income reflects IL, lower jackpot activity (incl. impact on LMAs), and RI contract expenses $ M except where noted otherwise 15 Constant Q3'18 Q3'19 % Change FX Revenue 279 281 0% 1% Operating income 60 51 -16% -15% Same-store revenue growth Q3'18 Q3'19 Instant ticket & draw games 4.8% 3.9% Multistate jackpots -25.9% -28.2% Total SSR growth -0.6% 0.0% Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 VLT installed base (units) 14,965 14,939 14,799 14,215 14,294

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Q3’19 International Highlights Revenue Key Performance Indicators Operating income reflects high-margin Finland transaction in the PY Solid lottery SSR growth Very sharp increase in replacement unit shipments; Sweden VLT system sale also recognized in the quarter Gaming service down on smaller installed base and lower Interactive revenue $ M except where noted otherwise 16 Constant Q3'18 Q3'19 % Change FX Revenue 216 213 -1% 3% Operating income 56 30 -46% -40% Machine Units Shipped Q3'18 Q3'19 New & expansion 529 210 Replacement 2,681 5,034 Total 3,210 5,244 Same-store revenue growth Q3'18 Q3'19 Instant ticket & draw games 3.8% 5.0% Multistate jackpots 2.7% 29.3% Total SSR growth 3.7% 6.5% Q3'18 Q4'18* Q1'19 Q2'19 Q3'19 Installed base (units) 16,007 14,905 15,085 14,475 14,332 *Nearly 1,500 unit reduction in S. Africa in Q4 '18

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Revenue Key Performance Indicators Total revenue stable at constant FX, overcoming impact of higher gaming machine taxes Total lottery wagers in line with PY Machine gaming reflects impact of increased taxes Higher commercial services revenue partially offset by sports betting payout Operating income impacted by higher taxes and sports betting payout Q3’19 Italy Highlights $ M except where noted otherwise 17 Constant Q3'18 Q3'19 % Change FX Revenue 430 402 -6% -1% Operating income 145 127 -12% -7% €M Q3'18 Q3'19 % Growth Lotto wagers 1,913 1,882 -1.6% 10eLotto 1,361 1,341 -1.5% Core 434 477 10.0% Late numbers 70 19 -72.3% MillionDAY 47 44 -6.4% S&W wagers 2,179 2,197 0.8% Gaming wagers VLT - operator (B2C) 1,426 1,324 -7.1% AWP 879 877 -0.3% Interactive 447 492 10.1% Sports betting wagers 225 227 0.8% Sports betting payout 81.1% 83.4% 2.3 pp

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Net Debt and Leverage Profile $ M except where noted otherwise 18 ~$200 million in debt reduction at constant currency Leverage of 4.34x compared to 4.47x at December 31, 2018 7,761 (1,277) 369 138 (19) 333 123 215 (77) 7,566 (212) 7,354 12/31/18 @ 1.15 Adjusted EBITDA Interest Exp. - Net Income Taxes Other Cash from Ops. CapEx Dividends Paid Minorities Other (Net) Before FX FX 9/30/19 @ 1.09 Net Debt/LTM EBITDA 4.47x 4.34x

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Debt Maturity Schedule Q3’19 capital markets activity: Issued €500 million 2.375% Notes due 2028 ~ €320 million of net proceeds used to pay January 2020 term loan amortization Balance used to repay all revolving credit facility borrowings Liquidity exceeds debt maturities through 2022: ~ $1.7 billion in capacity under revolving credit facilities ~ $550 million in unrestricted cash Accelerating cash flow generation 19 450 348 1,848 1,575 544 1,100 817 750 544 1,731 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Debt Maturity Profile at September 30, 2019 Undrawn RCF Debt

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Cash Flow Statement $ M except where noted otherwise $789 million in operating cash flow $456 million of free cash flow $215 million of minority distributions Heavily concentrated in the first half of the year Accelerated return of capital to Lotto JV partners $123 million returned to shareholders $101 million in proceeds from sale of assets 20 YTD Cash Flow 9/30/2019 Net Cash Flows from Operating Activities 789 CapEx (333) Free Cash Flow 456 Debt Proceeds/(Repayment), Net 98 Other - Net (271) Other Investing/Financing Activities (173) Net Cash Flow 283 Effect of Exchange Rates/Other (31) Net Change in Cash and Restricted Cash 252 Cash and Restricted Cash at End of the Period 764

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FY’19 Outlook 2019 Adjusted EBITDA of $1.675 - $1.735 billion Updating CapEx to $450 - $500 million; previously $450 - $550 million Assumes full-year EUR/USD rate of 1.12 21

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Q & A 22

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Appendix 23

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Q3’19 Income Statement (As Reported) $ M except where noted otherwise 24 Income Statement Q3'19 Q3'18 % Change Service revenue 922 963 -4% Product sales 231 193 20% Total Revenue 1,153 1,156 0% Adjusted EBITDA 407 443 -8% Operating Income 154 200 -23% Interest expense, net (103) (104) Foreign exchange 124 21 Other - (17) Financial Charges, Net 21 (100) Income Before Tax 175 100 Net Income (Loss) 131 54 Net Income (Loss) - Owners 104 22 Diluted EPS 0.51 0.11

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Q3’19 Reconciliation of Non-GAAP Measures 25 Quarter to date Quarter to date September 2019 Adjustments September 2019 As Purchase Foreign Refinancing and As Reported Accounting Exchange Impairment Other Adjusted Total revenue 1,153,247 (181) - - - 1,153,066 Cost of services 575,594 (17,947) - - - 557,647 Cost of product sales 136,246 (3,955) - - - 132,291 Selling, general and administrative 201,416 (26,788) - - - 174,628 Research and development 68,804 (1) - - - 68,803 Impairment 432 - - (432) - - Other operating expense (income), net 16,873 - - - (18,615) (1,742) Total operating expenses 999,365 (48,691) - (432) (18,615) 931,627 Operating income 153,882 48,510 - 432 18,615 221,439 Interest expense, net (102,551) 25 - - - (102,526) Foreign exchange gain, net 124,068 - (124,068) - - - Other (expense) income, net (308) - - - 2,336 2,028 Total non-operating income (expenses) 21,209 25 (124,068) - 2,336 (100,498) Income before provision for income taxes 175,091 48,535 (124,068) 432 20,951 120,941 Provision for income taxes (a) 44,530 11,666 (10,993) - 5,368 50,571 Net income 130,561 36,869 (113,075) 432 15,583 70,370 Less: Net income attributable to non-controlling interests 26,998 25 - - - 27,023 Net income attributable to IGT PLC 103,563 36,844 (113,075) 432 15,583 43,347 Net income per common share - diluted 0.51 0.21 Weighted-average shares - diluted 204,528 204,528 (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 Consolidated Statement of Operations Reconciliation of Non-GAAP Financial Measures ($ and shares in thousands, except per share amounts) Unaudited

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Q3’19 Reconciliation of Non-GAAP Measures $ M except where noted otherwise 26 As Reported Q3'19 Q3'18 Net income (loss) 131 54 Provision for/(Benefit from) income taxes 44 46 Non-operating (income) expenses (21) 99 Depreciation 106 110 Amortization 70 68 Service revenue amortization 51 54 Stock-based compensation expense 7 8 Impairment loss - 1 Other 19 3 Adjusted EBITDA 407 443

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