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 March, 2020

 

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

 

 

 


 

Fourth Quarter and Full Year 2019 Results of International Game Technology PLC

 

On March 3, 2020, International Game Technology PLC (the “Company”) reported results for the fourth quarter and full year ended December 31, 2019.

 

A copy of the news release relating to the above matter 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.

 

The Company’s Annual Report on Form 20-F for the year ended December 31, 2019 with the U.S. Securities and Exchange Commission will be filed on March 3, 2020.

 

The following exhibits are furnished herewith:

 

Exhibit
Number

 

Description

 

 

 

99.1

 

News Release “International Game Technology PLC Reports Fourth Quarter and Full Year 2019 Results,” dated March 3, 2020

99.2

 

Presentation “2019 Fourth Quarter and Full Year Results ended December 31, 2019,” dated March 3, 2020

 

2


 

EXHIBIT INDEX

 

Exhibit
Number

 

Description

 

 

 

99.1

 

News Release “International Game Technology PLC Reports Fourth Quarter and Full Year 2019 Results,” dated March 3, 2020

99.2

 

Presentation “2019 Fourth Quarter and Full Year Results ended December 31, 2019,” dated March 3, 2020

 

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: March 3, 2020

 

INTERNATIONAL GAME TECHNOLOGY PLC

 

 

 

 

 

 

 

 

 

 

By:

/s/ Pierfrancesco Boccia

 

 

 

Pierfrancesco Boccia

 

 

 

Corporate Secretary

 

4


Exhibit 99.1

 

 

NEWS RELEASE

 

INTERNATIONAL GAME TECHNOLOGY PLC REPORTS

FOURTH QUARTER AND FULL YEAR 2019 RESULTS

 

·                  Achieved record global gaming product sales in 2019

 

·                  Full-year net loss of $19 million includes $99 million non-cash goodwill impairment charge

 

·                  2019 Adjusted EBITDA of $1.71 billion, in top half of outlook

 

·                  Fourth quarter net loss of $168 million reflects non-cash FX losses and impairment charge; Adjusted EBITDA of $436 million driven by higher profits from North America Gaming and International segments

 

·                  $1.09 billion in operating cash flow for 2019; free cash flow of $651 million

 

LONDON, U.K. — March 3, 2020 — International Game Technology PLC (“IGT”) (NYSE:IGT) today reported financial results for the fourth quarter and full year ended December 31, 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.

 

“We achieved the high end of our profit and cash flow expectations for 2019, led by strong results for our North America Gaming and Italy segments,” said Marco Sala, CEO of IGT. “In the full year, we grew global gaming product sales by more than 20% thanks to higher unit shipments and the success of our new games. Global lottery same-store revenue also rose. We are closely monitoring the impact of the Coronavirus outbreak. Apart from this, solid operational performance across products and regions should support continued momentum in 2020.”

 

“2019 marked an important inflection in cash flows for IGT,” said Timothy Rishton, Interim CFO of IGT. “Having generated $1.1 billion in cash from operations, we invested in the business, paid down debt, and returned capital to shareholders. We enter 2020 in strong financial condition.”

 

1


 

Overview of Consolidated Fourth Quarter and Full Year 2019 Results

 

 

 

 

 

 

 

 

 

Constant

 

 

 

Quarter Ended

 

Y/Y

 

Currency

 

 

 

December 31,

 

Change

 

Change

 

(In $ millions, unless otherwise noted)

 

2019

 

2018

 

(%)

 

(%)

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

1,253

 

1,266

 

-1%

 

0%

 

Operating income

 

81

 

41

 

99%

 

112%

 

Net income/(loss) per diluted share

 

$

(0.82

)

$

(0.50

)

-64%

 

 

 

Adjusted EBITDA

 

436

 

416

 

5%

 

6%

 

Adjusted net income per diluted share

 

$

0.31

 

$

0.24

 

29%

 

 

 

Net debt

 

7,382

 

7,761

 

-5%

 

 

 

 

 

 

 

 

 

 

 

 

Constant

 

 

 

Year Ended

 

Y/Y

 

Currency

 

 

 

December 31,

 

Change

 

Change

 

(In $ millions, unless otherwise noted)

 

2019

 

2018

 

(%)

 

(%)

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

4,786

 

4,831

 

-1%

 

2%

 

Operating income

 

637

 

647

 

-2%

 

3%

 

Net income/(loss) per diluted share

 

$

(0.09

)

$

(0.10

)

11%

 

 

 

Adjusted EBITDA

 

1,713

 

1,737

 

-1%

 

2%

 

Adjusted net income per diluted share

 

$

1.08

 

$

0.99

 

10%

 

 

 

 

Note: Adjusted EBITDA 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.

 

Overview of Consolidated Fourth Quarter 2019 Results

 

Consolidated revenue of $1.25 billion, down 1% from the prior year as reported, in line at constant currency

 

·                  Strong growth in global gaming and North America lottery product sales

·                  Higher sports betting contribution from Italy and North America

·                  Lower service revenues from reduced North American multistate jackpot activity and impact of Italy gaming machine taxes

 

Operating income of $81 million, up from $41 million in the prior year

 

·                  Reduced goodwill impairment

·                  Beneficial product sales mix

·                  Lower bad debt expense

 

Adjusted EBITDA of $436 million, up 5% from the prior year period as reported, up 6% at

 

2


 

constant currency

 

·                  Higher profit contributions from North America Gaming & Interactive, International, and Italy segments

·                  North America Lottery impacted by lower jackpot activity

 

Interest expense, net was $101 million, down 3% from the prior-year quarter

 

Income taxes of $13 million, down from $30 million on lower pre-tax income

 

Net loss attributable to IGT was $168 million; adjusted net income attributable to IGT of $63 million, up from $48 million in the prior year

 

·                  Net loss includes non-cash, non-deductible goodwill impairment charge of $99 million, reducing the carrying value of the International segment, in addition to $102 million of non-cash foreign exchange losses

·                  Adjusted net income increase driven by higher operating income

 

Net loss per diluted share of $0.82; adjusted net income per diluted share of $0.31 versus $0.24 in the prior year

 

Net debt of $7.38 billion, an improvement of 5% from $7.76 billion at December 31, 2018

 

Overview of Consolidated Full Year 2019 Results

 

Consolidated revenue was $4.79 billion, down 1% from 2018 as reported, up 2% at constant currency

 

·                  Significant growth in global gaming product sales, sports betting, and Italy commercial services

·                  Global service revenue impacted by higher gaming machine taxes in Italy, Illinois lottery contract conclusion, and exceptional North American jackpot activity in the prior year

 

Operating income of $637 million, down 2% from the prior year as reported, up 3% at constant currency

 

·                  Reduced goodwill impairment

 

Adjusted EBITDA of $1.71 billion, down 1% as reported, up 2% at constant currency

 

·                  Strong profit growth from North America Gaming & Interactive and Italy at constant currency

 

Interest expense, net was $410 million, down from $417 million in the prior year

 

Income taxes of $173 million, down from $189 million on lower pre-tax income

 

Net loss attributable to IGT was $19 million; adjusted net income attributable to IGT of $221 million, up from $201 million in the prior year

 

3


 

·                  Net loss includes non-cash, non-deductible goodwill impairment charge of $99 million, reducing the carrying value of the International segment

·                  Adjusted net income increase driven by reduced interest expense and lower income taxes

 

Net loss per diluted share of $0.09; adjusted net income per diluted share of $1.08 versus $0.99 in the prior year

 

Capital expenditures of $442 million compared to $533 million in the prior year

 

Cash from operations totals $1.1 billion, up significantly from $30 million in the prior year, which included $878 million in Italy upfront license fees

 

Cash and cash equivalents were $663 million as of December 31, 2019, compared to $251 million as of December 31, 2018

 

4


 

Fourth Quarter Operating Segment Review

 

North America Gaming & Interactive

 

Select Financial Data

 

 

 

 

 

As

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended December 31

 

Q4 ‘19

 

Q4 ‘18

 

Reported

 

FX

 

Period Ended December 31

 

Q4 ‘19

 

Q4 ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

282

 

273

 

3%

 

3%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

139

 

147

 

-6%

 

-6%

 

Casino

 

20,493

 

23,108

 

-11.3%

 

Terminal

 

98

 

101

 

-3%

 

-3%

 

 

 

 

 

 

 

 

 

Other

 

41

 

46

 

-11%

 

-11%

 

Machine units shipped

 

 

 

 

 

 

 

Product sales

 

143

 

126

 

13%

 

13%

 

New/expansion

 

1,405

 

247

 

468.8%

 

Terminal

 

111

 

96

 

16%

 

16%

 

Replacement

 

5,986

 

6,485

 

-7.7%

 

Other

 

32

 

30

 

5%

 

5%

 

Total machines shipped

 

7,391

 

6,732

 

9.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

18

 

2

 

NM

 

NM

 

 

 

 

 

 

 

 

 

Service revenue

 

4

 

2

 

140%

 

140%

 

 

 

 

 

 

 

 

 

Product revenue

 

14

 

0

 

NM

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

300

 

275

 

9%

 

9%

 

 

 

 

 

 

 

 

 

Operating income

 

68

 

51

 

33%

 

32%

 

 

 

 

 

 

 

 

 

 

Revenue up 9% to $300 million

 

·                  Gaming product sales revenue of $143 million, up 13% over the prior year

 

·                  Strong 16% increase in terminal revenue resulting from 10% increase in gaming machine units shipped and higher average selling prices

·                  Increase in other product sales from higher software and systems revenue

 

·                  Gaming service revenue of $139 million, compared to $147 million in the prior-year period

 

·                  Installed base reflects removals in Oklahoma; yields higher

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

 

·                  Other product revenue driven by software license

 

Operating income of $68 million, up 33% over the prior year

 

·                  Strong terminal, software, and systems sales

 

5


 

North America Lottery

 

Select Financial Data

 

 

 

 

 

As

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended December 31

 

Q4 ‘19

 

Q4 ‘18

 

Reported

 

FX

 

Period Ended December 31

 

Q4 ‘19

 

Q4 ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

37

 

40

 

-9%

 

-9%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

37

 

40

 

-9%

 

-9%

 

VLT - Government sponsored

 

13,553

 

14,939

 

-9.3%

 

Terminal

 

23

 

25

 

-5%

 

-5%

 

 

 

 

 

 

 

 

 

Other

 

13

 

16

 

-14%

 

-15%

 

Lottery same-store revenue growth

 

 

 

 

 

 

 

Product sales

 

0

 

0

 

0%

 

0%

 

Instant ticket & draw games

 

 

 

 

 

3.8%

 

 

 

 

 

 

 

 

 

 

 

Multistate jackpots

 

 

 

 

 

-62.8%

 

Lottery

 

 

 

 

 

 

 

 

 

Total lottery same-store revenue growth

 

 

 

 

 

-11.1%

 

Total revenue

 

240

 

268

 

-10%

 

-10%

 

 

 

 

 

 

 

 

 

Lottery services

 

222

 

255

 

-13%

 

-13%

 

 

 

 

 

 

 

 

 

FMC

 

204

 

226

 

-10%

 

-10%

 

 

 

 

 

 

 

 

 

Instant ticket & draw games

 

168

 

193

 

-13%

 

-13%

 

 

 

 

 

 

 

 

 

Other services

 

37

 

33

 

10%

 

10%

 

 

 

 

 

 

 

 

 

LMA

 

17

 

29

 

-41%

 

-41%

 

 

 

 

 

 

 

 

 

Product sales

 

19

 

13

 

46%

 

46%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

2

 

0

 

NM

 

NM

 

 

 

 

 

 

 

 

 

Service revenue

 

2

 

0

 

NM

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

279

 

309

 

-9%

 

-9%

 

 

 

 

 

 

 

 

 

Operating income

 

51

 

79

 

-35%

 

-35%

 

 

 

 

 

 

 

 

 

 

Revenue of $279 million compared to $309 million in the prior-year period

 

·                  Lottery service revenue of $222 million, compared to $255 million in the prior year

 

·                  Instant ticket & draw game same-store revenue up 4%; overall same-store revenue growth impacted by significant multistate jackpot activity in the prior year and very low activity in the current year

·                  Impact of Illinois contract conclusion

 

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

 

Operating income of $51 million, compared to $79 million in the prior year

 

·                  Principally due to lower jackpot activity

·                  Continued growth in lottery service despite conclusion of Illinois contract

 

6


 

International

 

Select Financial Data

 

 

 

 

 

As

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended December 31

 

Q4 ‘19

 

Q4 ‘18

 

Reported

 

FX

 

Period Ended December 31

 

Q4 ‘19

 

Q4 ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

131

 

127

 

3%

 

6%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

27

 

34

 

-20%

 

-18%

 

Casino

 

9,709

 

10,636

 

-8.7%

 

Terminal

 

10

 

13

 

-20%

 

-16%

 

VLT - Government sponsored

 

5,148

 

4,269

 

20.6%

 

Other

 

16

 

21

 

-20%

 

-19%

 

Total installed base units

 

14,857

 

14,905

 

-0.3%

 

Product sales

 

105

 

94

 

12%

 

14%

 

 

 

 

 

 

 

 

 

Terminal

 

77

 

64

 

21%

 

24%

 

Machine units shipped

 

 

 

 

 

 

 

Other

 

27

 

30

 

-9%

 

-7%

 

New/expansion

 

406

 

528

 

-23.1%

 

 

 

 

 

 

 

 

 

 

 

Replacement

 

5,818

 

4,730

 

23.0%

 

Lottery

 

 

 

 

 

 

 

 

 

Total machines shipped

 

6,224

 

5,258

 

18.4%

 

Total revenue

 

80

 

76

 

5%

 

6%

 

 

 

 

 

 

 

 

 

Lottery services

 

75

 

72

 

5%

 

6%

 

 

 

 

 

 

 

 

 

FMC

 

75

 

72

 

5%

 

6%

 

Lottery same-store revenue growth

 

 

 

 

 

 

 

Instant ticket & draw games

 

58

 

56

 

3%

 

3%

 

Instant ticket & draw games

 

 

 

 

 

5.6%

 

Other services

 

18

 

16

 

11%

 

16%

 

Multistate jackpots

 

 

 

 

 

12.9%

 

Product sales

 

5

 

4

 

8%

 

10%

 

Total lottery same-store revenue growth

 

 

 

 

 

6.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

15

 

18

 

-17%

 

-14%

 

 

 

 

 

 

 

 

 

Service revenue

 

14

 

17

 

-17%

 

-14%

 

 

 

 

 

 

 

 

 

Product sales

 

0

 

0

 

0%

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

226

 

221

 

2%

 

4%

 

 

 

 

 

 

 

 

 

Operating income

 

53

 

28

 

87%

 

98%

 

 

 

 

 

 

 

 

 

 

Revenue of $226 million, up 2% from the prior-year period as reported, up 4% at constant currency

 

·                  Gaming product sales revenue of $105 million, up 12% as reported, up 14% at constant currency

 

·                  Significant increase in replacement units shipped, including 1,628 Sweden VLTs; lower new/expansion activity

 

·                  Gaming service revenue was $27 million

 

·                  Year-over-year decline in the installed base due to conversions in prior periods

·                  Lower interactive revenue

 

·                  Lottery service revenue of $75 million, up 5% as reported, up 6% at constant currency

 

·                  6% overall same-store revenue growth on broad-based European strength

 

Operating income of $53 million, up significantly compared to $28 million in the prior year

 

·                  Improved gaming machine mix

·                  Lower bad debt expense

 

7


 

Italy

 

Select Financial Data

 

 

 

 

 

As

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended December 31

 

Q4 ‘19

 

Q4 ‘18

 

Reported

 

FX

 

Period Ended December 31

 

Q4 ‘19

 

Q4 ‘18

 

Change

 

 

 

 

 

 

 

 

 

 

 

(In € millions, except machines)

 

 

 

 

 

 

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

171

 

192

 

-11%

 

-9%

 

Lottery

 

 

 

 

 

 

 

Gaming services

 

171

 

191

 

-11%

 

-9%

 

Lotto wagers

 

2,062

 

2,089

 

-1.3%

 

Terminal

 

154

 

174

 

-11%

 

-9%

 

10eLotto

 

1,468

 

1,495

 

-1.8%

 

Other

 

17

 

18

 

-5%

 

-3%

 

Core

 

483

 

468

 

3.3%

 

Product sales

 

0

 

0

 

0%

 

0%

 

Late numbers

 

65

 

78

 

-16.5%

 

 

 

 

 

 

 

 

 

 

 

MillionDAY

 

46

 

49

 

-7.2%

 

Lottery

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

194

 

202

 

-4%

 

-2%

 

Scratch & Win wagers

 

2,354

 

2,383

 

-1.2%

 

Lottery services

 

194

 

202

 

-4%

 

-2%

 

 

 

 

 

 

 

 

 

FMC

 

194

 

202

 

-4%

 

-2%

 

Italy lottery revenue growth

 

 

 

 

 

-2.1%

 

Instant ticket & draw games

 

240

 

248

 

-3%

 

-1%

 

 

 

 

 

 

 

 

 

Other services

 

(46

)

(46

)

0%

 

2%

 

Gaming

 

 

 

 

 

 

 

Product sales

 

0

 

0

 

0%

 

0%

 

Installed base (end of period)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VLT - Operator (B2C)

 

11,020

 

10,991

 

0.3%

 

Other

 

 

 

 

 

 

 

 

 

VLT - Supplier (B2B)

 

7,501

 

8,058

 

-6.9%

 

Total revenue

 

83

 

68

 

22%

 

25%

 

AWP

 

40,892

 

42,928

 

-4.7%

 

Service revenue

 

83

 

68

 

22%

 

25%

 

Total installed base

 

59,413

 

61,977

 

-4.1%

 

Product sales

 

0

 

0

 

0%

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wagers

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

VLT - Operator (B2C)

 

1,414

 

1,564

 

-9.5%

 

Revenue

 

448

 

462

 

-3%

 

-1%

 

AWP

 

958

 

997

 

-3.9%

 

Operating income

 

113

 

118

 

-4%

 

-2%

 

Interactive wagers (gaming)

 

577

 

492

 

17.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sports betting wagers (1)

 

298

 

273

 

9.1%

 

 

 

 

 

 

 

 

 

 

 

Sports betting payout (%) (1)

 

83.3%

 

84.2%

 

-0.9 pp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes virtual wagers and pools & horses

 

 

 

 

 

 

 

 

Revenue of $448 million, down 3% from the prior-year period as reported, in line at constant currency

 

·                  Lottery service revenue of $194 million, down 4% as reported, down 2% at constant currency, on slightly lower wagers

·                  Gaming service revenue of $171 million compared to $191 million in the prior year on impact of higher taxes on AWPs and VLTs

·                  Other service revenue of $83 million, up 22% as reported, up 25% at constant currency

 

·                  Increased sports betting wagers and lower payout versus the prior year

·                  Growth in commercial services

 

Operating income of $113 million, down 4% as reported, down 2% at constant currency

 

·                  Strong sports betting contribution nearly offsets impact of higher taxes

 

8


 

Other Developments

 

·                  The Company will file its 2019 Annual Report on Form 20-F with the United States Securities and Exchange Commission (SEC) today

 

·                  Report will be available in the Investor Relations section of the Company’s website at www.IGT.com and on the SEC’s website, www.SEC.com

 

2020 Outlook

 

·                  Operating income of $740 - $790 million

·                  Depreciation and amortization of $870 - $880 million

·                  Capital expenditures of $400 - $500 million

·                  Full-year EUR/USD exchange rate of 1.10

·                  Outlook does not factor any potential COVID-19 impact

 

Conference Call and Webcast

 

March 3, 2020, 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 1978149

·                  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 1978149

 

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.

 

9


 

About IGT

 

IGT (NYSE:IGT) is the global leader in gaming. We deliver entertaining and responsible gaming experiences for players across all channels and regulated segments, from Gaming Machines and Lotteries to Sports Betting and Digital. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, our solutions deliver unrivalled gaming experiences that engage players and drive growth. We have a well-established local presence and relationships with governments and regulators in more than 100 countries around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has approximately 12,000 employees. For more information, please visit www.IGT.com.

 

Cautionary Statement Regarding Forward-Looking Statements

 

This news release may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning International Game Technology PLC and its consolidated subsidiaries (the “Company”) and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, dividends, results of operations, or financial condition, or otherwise, based on current beliefs of the management of the Company as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “would,” “should,” “shall”, “continue,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or the negative or other variations of them. These forward-looking statements speak only as of the date on which such statements are made and are subject to various risks and uncertainties, many of which are outside the Company’s control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance, or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) the 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. Nothing in this news release is intended, or is to be construed, as a profit forecast or to be interpreted to mean that the financial performance of International Game Technology PLC for the current or any future financial years will necessarily match or exceed the historical published financial performance or International Game Technology PLC, as applicable. All forward-looking statements contained in this news release are qualified in their entirety by this cautionary statement. All subsequent written or oral forward-looking statements attributable to International Game Technology PLC, or persons acting on its behalf, are expressly qualified in their entirety by this cautionary statement.

 

10


 

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

 

11


 

International Game Technology PLC

Consolidated Statements of Operations

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

Unaudited

 

 

 

For the three months ended

 

 

 

December 31,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

Service revenue

 

967,972

 

1,029,031

 

Product sales

 

285,418

 

237,101

 

Total revenue

 

1,253,390

 

1,266,132

 

 

 

 

 

 

 

Cost of services

 

614,836

 

638,105

 

Cost of product sales

 

156,076

 

157,965

 

Selling, general and administrative

 

229,531

 

238,654

 

Research and development

 

65,936

 

64,782

 

Goodwill impairment

 

99,000

 

118,000

 

Other operating expense, net

 

6,632

 

7,735

 

Total operating expenses

 

1,172,011

 

1,225,241

 

 

 

 

 

 

 

Operating income

 

81,379

 

40,891

 

 

 

 

 

 

 

Interest expense, net

 

(100,649

)

(103,666

)

Foreign exchange (loss) gain, net

 

(101,770

)

32,096

 

Other expense, net

 

(4,758

)

(9,040

)

Total non-operating expenses

 

(207,177

)

(80,610

)

 

 

 

 

 

 

Loss before provision for income taxes

 

(125,798

)

(39,719

)

 

 

 

 

 

 

Provision for income taxes

 

12,587

 

30,337

 

 

 

 

 

 

 

Net loss

 

(138,385

)

(70,056

)

 

 

 

 

 

 

Less: Net income attributable to non-controlling interests

 

29,313

 

31,943

 

 

 

 

 

 

 

Net loss attributable to IGT PLC

 

(167,698

)

(101,999

)

 

 

 

 

 

 

Net loss attributable to IGT PLC per common share - basic

 

(0.82

)

(0.50

)

Net loss attributable to IGT PLC per common share - diluted

 

(0.82

)

(0.50

)

 

 

 

 

 

 

Weighted-average shares - basic

 

204,435

 

204,307

 

Weighted-average shares - diluted

 

204,435

 

204,307

 

 

12


 

International Game Technology PLC

Consolidated Statements of Operations

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

Unaudited

 

 

 

For the year ended

 

 

 

December 31,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

Service revenue

 

3,860,746

 

4,046,314

 

Product sales

 

925,060

 

784,942

 

Total revenue

 

4,785,806

 

4,831,256

 

 

 

 

 

 

 

Cost of services

 

2,380,355

 

2,450,658

 

Cost of product sales

 

553,293

 

491,030

 

Selling, general and administrative

 

846,047

 

844,059

 

Research and development

 

266,241

 

263,279

 

Goodwill impairment

 

99,000

 

118,000

 

Other operating expense, net

 

3,742

 

17,239

 

Total operating expenses

 

4,148,678

 

4,184,265

 

 

 

 

 

 

 

Operating income

 

637,128

 

646,991

 

 

 

 

 

 

 

Interest expense, net

 

(410,129

)

(417,387

)

Foreign exchange gain, net

 

39,839

 

129,051

 

Other income (expense), net

 

17,929

 

(54,607

)

Total non-operating expenses

 

(352,361

)

(342,943

)

 

 

 

 

 

 

Income before provision for income taxes

 

284,767

 

304,048

 

 

 

 

 

 

 

Provision for income taxes

 

173,109

 

189,401

 

 

 

 

 

 

 

Net income

 

111,658

 

114,647

 

 

 

 

 

 

 

Less: Net income attributable to non-controlling interests

 

130,683

 

135,997

 

 

 

 

 

 

 

Net loss attributable to IGT PLC

 

(19,025

)

(21,350

)

 

 

 

 

 

 

Net loss attributable to IGT PLC per common share - basic

 

(0.09

)

(0.10

)

Net loss attributable to IGT PLC per common share - diluted

 

(0.09

)

(0.10

)

 

 

 

 

 

 

Weighted-average shares - basic

 

204,373

 

204,083

 

Weighted-average shares - diluted

 

204,373

 

204,083

 

 

13


 

International Game Technology PLC

Consolidated Balance Sheets

($ thousands)

Unaudited

 

 

 

December 31,

 

December 31,

 

 

 

2019

 

2018

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

662,934

 

250,669

 

Restricted cash and cash equivalents

 

231,317

 

261,108

 

Trade and other receivables, net

 

1,006,127

 

949,085

 

Inventories

 

161,790

 

282,698

 

Other current assets

 

571,869

 

543,136

 

Total current assets

 

2,634,037

 

2,286,696

 

Systems, equipment and other assets related to contracts, net

 

1,307,940

 

1,404,426

 

Property, plant and equipment, net

 

146,055

 

185,349

 

Operating lease right-of-use-assets

 

341,538

 

 

Goodwill

 

5,451,494

 

5,580,227

 

Intangible assets, net

 

1,836,002

 

2,044,723

 

Other non-current assets

 

1,927,524

 

2,147,081

 

Total non-current assets

 

11,010,553

 

11,361,806

 

Total assets

 

13,644,590

 

13,648,502

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

1,120,922

 

1,142,371

 

Current portion of long-term debt

 

462,155

 

 

Short-term borrowings

 

3,193

 

34,822

 

Other current liabilities

 

882,081

 

824,931

 

Total current liabilities

 

2,468,351

 

2,002,124

 

Long-term debt, less current portion

 

7,600,169

 

7,977,267

 

Deferred income taxes

 

366,822

 

446,083

 

Operating lease liabilities

 

310,721

 

 

Other non-current liabilities

 

413,549

 

471,099

 

Total non-current liabilities

 

8,691,261

 

8,894,449

 

Total liabilities

 

11,159,612

 

10,896,573

 

Commitments and contingencies

 

 

 

 

 

Shareholders’ equity

 

2,484,978

 

2,751,929

 

Total liabilities and shareholders’ equity

 

13,644,590

 

13,648,502

 

 

14


 

International Game Technology PLC

Consolidated Statements of Cash Flows

($ thousands)

Unaudited

 

 

 

For the year ended

 

 

 

December 31,

 

 

 

2019

 

2018

 

Cash flows from operating activities

 

 

 

 

 

Net income

 

111,658

 

114,647

 

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

 

 

 

 

 

Depreciation

 

434,264

 

432,899

 

Amortization

 

279,193

 

272,561

 

Amortization of upfront license fees

 

205,739

 

217,341

 

Goodwill impairment

 

99,000

 

118,000

 

Stock-based compensation expense

 

26,514

 

33,086

 

Debt issuance cost amortization

 

22,436

 

22,042

 

Loss on extinguishment of debt

 

11,964

 

54,423

 

Foreign exchange gain, net

 

(39,839

)

(129,051

)

Gain on sale of assets

 

(64,714

)

(318

)

Deferred income taxes

 

(68,293

)

(34,494

)

Other non-cash costs, net

 

23,091

 

32,275

 

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

 

 

 

 

 

Trade and other receivables

 

(58,213

)

(54,356

)

Inventories

 

84,472

 

12,556

 

Upfront license fees

 

 

(878,055

)

Accounts payable

 

7,180

 

(51,990

)

Other assets and liabilities

 

18,683

 

(131,940

)

Net cash provided by operating activities

 

1,093,135

 

29,626

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Capital expenditures

 

(442,084

)

(533,052

)

Proceeds from sale of assets

 

124,043

 

19,243

 

Other

 

5,851

 

2,272

 

Net cash used in investing activities

 

(312,190

)

(511,537

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Principal payments on long-term debt

 

(1,264,647

)

(1,899,888

)

Dividends paid

 

(163,503

)

(163,236

)

Net (payments of) receipts from financial liabilities

 

(34,324

)

7,123

 

Net (payments of) proceeds from short-term borrowings

 

(32,067

)

34,822

 

Debt issuance costs paid

 

(25,930

)

(17,033

)

Payments in connection with extinguishment of debt

 

(8,689

)

(49,976

)

Proceeds from long-term debt

 

1,397,025

 

1,687,761

 

Dividends paid - non-controlling interests

 

(136,655

)

(126,926

)

Return of capital - non-controlling interests

 

(98,788

)

(85,121

)

Capital increase - non-controlling interests

 

1,499

 

321,584

 

Other

 

(10,195

)

(20,655

)

Net cash used in financing activities

 

(376,274

)

(311,545

)

 

 

 

 

 

 

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

 

404,671

 

(793,456

)

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

 

(22,197

)

(197

)

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

 

894,251

 

511,777

 

 

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

 

Interest paid

 

(400,022

)

(445,698

)

Income taxes paid

 

(235,385

)

(239,831

)

 

15


 

International Game Technology PLC

Net Debt

($ thousands)

Unaudited

 

 

 

December 31,

 

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)

 

1,491,328

 

1,469,609

 

4.750% Senior Secured Notes due February 2023 (2)

 

948,382

 

964,730

 

5.350% Senior Secured Notes due October 2023 (1)

 

60,885

 

60,983

 

3.500% Senior Secured Notes due July 2024 (2)

 

557,331

 

567,179

 

6.500% Senior Secured Notes due February 2025 (1)

 

1,089,959

 

1,088,385

 

3.500% Senior Secured Notes due June 2026 (2)

 

835,105

 

 

6.250% Senior Secured Notes due January 2027 (1)

 

743,387

 

742,667

 

2.375% Senior Secured Notes due April 2028 (2)

 

556,403

 

 

Senior Secured Notes, long-term

 

6,282,780

 

5,858,491

 

 

 

 

 

 

 

Term Loan Facilities due January 2023 (2)

 

1,317,389

 

1,705,395

 

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

 

 

413,381

 

Long-term debt, less current portion

 

7,600,169

 

7,977,267

 

 

 

 

 

 

 

4.750% Senior Secured Notes due March 2020 (2)

 

434,789

 

 

5.500% Senior Secured Notes due June 2020 (1)

 

27,366

 

 

Current portion of long-term debt

 

462,155

 

 

 

 

 

 

 

 

Short-term borrowings

 

3,193

 

34,822

 

Total debt

 

8,065,517

 

8,012,089

 

 

 

 

 

 

 

Less: Cash and cash equivalents

 

662,934

 

250,669

 

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

 

20,464

 

 

 

 

 

 

 

 

Net debt

 

7,382,119

 

7,761,420

 

 


(1) U.S. dollar-denominated debt

(2) Euro-denominated debt

 

Note: Net debt is a non-GAAP financial measure

 

16


 

International Game Technology PLC

Reconciliations of Non-GAAP Financial Measures

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

Unaudited

 

 

 

For the three months ended

 

 

 

December 31,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

Net loss

 

(138,385

)

(70,056

)

Provision for income taxes

 

12,587

 

30,337

 

Interest expense, net

 

100,649

 

103,666

 

Foreign exchange loss (gain), net

 

101,770

 

(32,096

)

Other non-operating expense, net

 

4,758

 

9,040

 

Operating income

 

81,379

 

40,891

 

Goodwill impairment

 

99,000

 

118,000

 

Depreciation

 

118,973

 

120,696

 

Amortization - purchase accounting

 

47,958

 

49,772

 

Amortization - non-purchase accounting (a)

 

75,183

 

70,922

 

Stock-based compensation expense

 

6,468

 

8,142

 

Other (b)

 

6,566

 

7,534

 

Adjusted EBITDA

 

435,527

 

415,957

 

 

 

 

 

 

 

Cash flows from operating activities

 

304,430

 

(219,686

)

Capital expenditures

 

(109,368

)

(158,739

)

Free Cash Flow

 

195,062

 

(378,425

)

 

 

 

 

 

 

Net loss attributable to IGT PLC

 

(167,698

)

(101,999

)

Foreign exchange loss (gain), net

 

101,770

 

(32,096

)

Goodwill impairment

 

99,000

 

118,000

 

Depreciation and amortization - purchase accounting

 

48,591

 

51,774

 

Refinancing costs

 

 

5,004

 

Other (b)

 

6,566

 

7,534

 

Income tax impact on adjustments (c)

 

(25,668

)

183

 

Adjusted net income attributable to IGT PLC

 

62,561

 

48,400

 

Weighted-average shares - diluted

 

204,435

 

204,307

 

Adjusted weighted-average shares - diluted (d)

 

204,631

 

204,328

 

Net loss attributable to IGT PLC per common share - diluted

 

(0.82

)

(0.50

)

Adjusted net income attributable to IGT PLC per common share - diluted

 

0.31

 

0.24

 

 


(a) Includes amortization of upfront license fees.

(b) Includes non-goodwill impairment charges, restructuring expense, and transaction-related costs.

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

(d) Adjusted weighted-average shares — diluted includes shares that were excluded from the GAAP computation, due to the net loss as reported.

 

17


 

International Game Technology PLC

Reconciliations of Non-GAAP Financial Measures

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

Unaudited

 

 

 

For the year ended

 

 

 

December 31,

 

 

 

2019

 

2018

 

Net income

 

111,658

 

114,647

 

Provision for income taxes

 

173,109

 

189,401

 

Interest expense, net

 

410,129

 

417,387

 

Foreign exchange gain, net

 

(39,839

)

(129,051

)

Other non-operating (income) expense, net

 

(17,929

)

54,607

 

Operating income

 

637,128

 

646,991

 

Goodwill impairment

 

99,000

 

118,000

 

Depreciation

 

434,264

 

432,899

 

Amortization - purchase accounting

 

191,624

 

200,095

 

Amortization - non-purchase accounting (a)

 

293,308

 

289,807

 

Stock-based compensation expense

 

26,514

 

33,086

 

Other (b)

 

31,147

 

16,372

 

Adjusted EBITDA

 

1,712,985

 

1,737,250

 

 

 

 

 

 

 

Cash flows from operating activities

 

1,093,135

 

29,626

 

Capital expenditures

 

(442,084

)

(533,052

)

Free Cash Flow

 

651,051

 

(503,426

)

 

 

 

 

 

 

Net loss attributable to IGT PLC

 

(19,025

)

(21,350

)

Foreign exchange gain, net

 

(39,839

)

(129,051

)

Goodwill impairment

 

99,000

 

118,000

 

Depreciation and amortization - purchase accounting

 

194,153

 

208,367

 

Refinancing costs

 

11,964

 

54,463

 

Other (b)

 

31,147

 

16,372

 

Income tax impact on adjustments (c)

 

(56,487

)

(45,379

)

Adjusted net income attributable to IGT PLC

 

220,913

 

201,422

 

Weighted-average shares - diluted

 

204,373

 

204,083

 

Adjusted weighted-average shares - diluted (d)

 

204,557

 

204,363

 

Net loss attributable to IGT PLC per common share - diluted

 

(0.09

)

(0.10

)

Adjusted net income attributable to IGT PLC per common share - diluted

 

1.08

 

0.99

 

 


(a) Includes amortization of upfront license fees.

(b) Includes non-goodwill impairment charges, restructuring expense, and transaction-related costs.

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

(d) Adjusted weighted-average shares — diluted includes shares that were excluded from the GAAP computation, due to the net loss as reported.

 

18


 

INTERNATIONAL GAME TECHNOLOGY PLC

 

Select Financial Data

 

 

 

 

 

As

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended December 31

 

Q4 ‘19

 

Q4 ‘18

 

Reported

 

FX

 

Period Ended December 31

 

Q4 ‘19

 

Q4 ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

622

 

632

 

-2%

 

-1%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

374

 

413

 

-9%

 

-8%

 

Casino

 

30,202

 

33,744

 

-10.5%

 

Terminal

 

286

 

312

 

-9%

 

-7%

 

VLT - Government sponsored (ex-Italy)

 

18,701

 

19,208

 

-2.6%

 

Other

 

88

 

100

 

-12%

 

-12%

 

VLT - Italy supplier (B2B)

 

7,501

 

8,058

 

-6.9%

 

Product sales

 

248

 

220

 

13%

 

14%

 

Total installed base units

 

56,404

 

61,010

 

-7.5%

 

Terminal

 

188

 

159

 

18%

 

19%

 

Yield (average gross revenue per unit per day)

 

$

27.62

 

$

26.90

 

2.7%

 

Other

 

60

 

60

 

-1%

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional Italian network details:

 

 

 

 

 

 

 

Lottery

 

 

 

 

 

 

 

 

 

VLT - Operator (B2C)

 

11,020

 

10,991

 

0.3%

 

Total revenue

 

514

 

547

 

-6%

 

-5%

 

AWP

 

40,892

 

42,928

 

-4.7%

 

Lottery services

 

491

 

530

 

-7%

 

-6%

 

 

 

 

 

 

 

 

 

FMC

 

474

 

500

 

-5%

 

-4%

 

Machine units shipped

 

 

 

 

 

 

 

Instant ticket & draw games

 

465

 

497

 

-6%

 

-5%

 

New/expansion

 

1,811

 

775

 

133.7%

 

Other services

 

8

 

3

 

161%

 

177%

 

Replacement

 

11,804

 

11,215

 

5.3%

 

LMA

 

17

 

29

 

-41%

 

-41%

 

Total machines shipped

 

13,615

 

11,990

 

13.6%

 

Product sales

 

23

 

17

 

36%

 

37%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Global lottery same-store revenue growth

 

 

 

 

 

 

 

Total revenue

 

118

 

87

 

35%

 

38%

 

Instant ticket & draw games

 

 

 

 

 

4.3%

 

Service revenue

 

103

 

87

 

19%

 

22%

 

Multistate jackpots

 

 

 

 

 

-56.6%

 

Product sales

 

14

 

0

 

NM

 

NM

 

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

 

 

 

 

 

-7.1%

 

 

 

 

 

 

 

 

 

 

 

Italy lottery revenue growth

 

 

 

 

 

-2.1%

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

1,253

 

1,266

 

-1%

 

0%

 

 

 

 

 

 

 

 

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment total

 

286

 

277

 

3%

 

5%

 

 

 

 

 

 

 

 

 

Purchase accounting

 

(148

)

(170

)

-13%

 

13%

 

 

 

 

 

 

 

 

 

Corporate support

 

(57

)

(67

)

-15%

 

14%

 

 

 

 

 

 

 

 

 

Total

 

81

 

41

 

99%

 

112%

 

 

 

 

 

 

 

 

 

 

Full Year Comparisons by Segment:

 

NORTH AMERICA GAMING & INTERACTIVE

 

Select Financial Data

 

 

 

 

 

As

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended December 31

 

FY ‘19

 

FY ‘18

 

Reported

 

FX

 

Period Ended December 31

 

FY ‘19

 

FY ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

1,042

 

1,001

 

4%

 

4%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

605

 

622

 

-3%

 

-3%

 

Casino

 

20,493

 

23,108

 

-11.3%

 

Terminal

 

407

 

420

 

-3%

 

-3%

 

 

 

 

 

 

 

 

 

Other

 

198

 

202

 

-2%

 

-2%

 

Machine units shipped

 

 

 

 

 

 

 

Product sales

 

437

 

379

 

15%

 

15%

 

New/expansion

 

4,116

 

3,917

 

5.1%

 

Terminal

 

321

 

262

 

23%

 

23%

 

Replacement

 

16,903

 

14,922

 

13.3%

 

Other

 

116

 

117

 

-1%

 

-1%

 

Total machines shipped

 

21,019

 

18,839

 

11.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

28

 

2

 

NM

 

NM

 

 

 

 

 

 

 

 

 

Service revenue

 

14

 

2

 

NM

 

NM

 

 

 

 

 

 

 

 

 

Product revenue

 

14

 

0

 

0%

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

1,071

 

1,003

 

7%

 

7%

 

 

 

 

 

 

 

 

 

Operating income

 

264

 

219

 

21%

 

18%

 

 

 

 

 

 

 

 

 

 

19


 

NORTH AMERICA LOTTERY

 

Select Financial Data

 

 

 

 

 

As

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended December 31

 

FY ‘19

 

FY ‘18

 

Reported

 

FX

 

Period Ended December 31

 

FY ‘19

 

FY ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

153

 

154

 

0%

 

0%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

152

 

153

 

-1%

 

-1%

 

VLT - Government sponsored

 

13,553

 

14,939

 

-9.3%

 

Terminal

 

97

 

100

 

-3%

 

-3%

 

 

 

 

 

 

 

 

 

Other

 

54

 

54

 

2%

 

2%

 

Lottery same-store revenue growth

 

 

 

 

 

 

 

Product sales

 

2

 

0

 

NM

 

NM

 

Instant ticket & draw games

 

 

 

 

 

4.6%

 

 

 

 

 

 

 

 

 

 

 

Multistate jackpots

 

 

 

 

 

-29.3%

 

Lottery

 

 

 

 

 

 

 

 

 

Total lottery same-store revenue growth

 

 

 

 

 

-0.6%

 

Total revenue

 

1,007

 

1,038

 

-3%

 

-3%

 

 

 

 

 

 

 

 

 

Lottery services

 

915

 

958

 

-4%

 

-4%

 

 

 

 

 

 

 

 

 

FMC

 

807

 

829

 

-3%

 

-3%

 

 

 

 

 

 

 

 

 

Instant ticket & draw games

 

663

 

697

 

-5%

 

-5%

 

 

 

 

 

 

 

 

 

Other services

 

145

 

131

 

10%

 

10%

 

 

 

 

 

 

 

 

 

LMA

 

108

 

129

 

-16%

 

-16%

 

 

 

 

 

 

 

 

 

Product sales

 

91

 

80

 

14%

 

15%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

5

 

0

 

NM

 

NM

 

 

 

 

 

 

 

 

 

Service revenue

 

5

 

0

 

NM

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

1,165

 

1,192

 

-2%

 

-2%

 

 

 

 

 

 

 

 

 

Operating income

 

256

 

297

 

-14%

 

-13%

 

 

 

 

 

 

 

 

 

 

INTERNATIONAL

 

Select Financial Data

 

 

 

 

 

As

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended December 31

 

FY ‘19

 

FY ‘18

 

Reported

 

FX

 

Period Ended December 31

 

FY ‘19

 

FY ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

473

 

417

 

14%

 

18%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

112

 

140

 

-20%

 

-14%

 

Casino

 

9,709

 

10,636

 

-8.7%

 

Terminal

 

46

 

54

 

-15%

 

-7%

 

VLT - Government sponsored

 

5,148

 

4,269

 

20.6%

 

Other

 

66

 

86

 

-23%

 

-19%

 

Total installed base units

 

14,857

 

14,905

 

-0.3%

 

Product sales

 

361

 

277

 

30%

 

35%

 

 

 

 

 

 

 

 

 

Terminal

 

259

 

193

 

34%

 

38%

 

Machine units shipped

 

 

 

 

 

 

 

Other

 

102

 

84

 

22%

 

27%

 

New/expansion

 

1,698

 

1,880

 

-9.7%

 

 

 

 

 

 

 

 

 

 

 

Replacement

 

19,308

 

11,820

 

63.4%

 

Lottery

 

 

 

 

 

 

 

 

 

Total machines shipped

 

21,006

 

13,700

 

53.3%

 

Total revenue

 

303

 

329

 

-8%

 

-5%

 

 

 

 

 

 

 

 

 

Lottery services

 

284

 

283

 

1%

 

4%

 

Lottery same-store revenue growth

 

 

 

 

 

 

 

FMC

 

284

 

283

 

1%

 

4%

 

Instant ticket & draw games

 

 

 

 

 

4.1%

 

Instant ticket & draw games

 

222

 

222

 

0%

 

4%

 

Multistate jackpots

 

 

 

 

 

18.4%

 

Other services

 

63

 

61

 

2%

 

5%

 

Total lottery same-store revenue growth

 

 

 

 

 

4.9%

 

Product sales

 

19

 

46

 

-60%

 

-58%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

64

 

74

 

-13%

 

-7%

 

 

 

 

 

 

 

 

 

Service revenue

 

64

 

73

 

-12%

 

-5%

 

 

 

 

 

 

 

 

 

Product sales

 

0

 

2

 

NM

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

840

 

820

 

2%

 

7%

 

 

 

 

 

 

 

 

 

Operating income

 

127

 

142

 

-11%

 

-3%

 

 

 

 

 

 

 

 

 

 

20


 

ITALY

 

Select Financial Data

 

 

 

 

 

As

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended December 31

 

FY ‘19

 

FY ‘18

 

Reported

 

FX

 

Period Ended December 31

 

FY ‘19

 

FY ‘18

 

Change

 

 

 

 

 

 

 

 

 

 

 

(In €millions, except machines)

 

 

 

 

 

 

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

633

 

734

 

-14%

 

-9%

 

Lottery

 

 

 

 

 

 

 

Gaming services

 

632

 

733

 

-14%

 

-9%

 

Lotto wagers

 

8,149

 

8,017

 

1.7%

 

Terminal

 

566

 

665

 

-15%

 

-10%

 

10eLotto

 

5,860

 

5,728

 

2.3%

 

Other

 

65

 

68

 

-4%

 

1%

 

Core

 

1,941

 

1,877

 

3.4%

 

Product sales

 

1

 

1

 

6%

 

9%

 

Late numbers

 

163

 

227

 

-28.3%

 

 

 

 

 

 

 

 

 

 

 

MillionDAY

 

187

 

185

 

0.8%

 

Lottery

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

760

 

793

 

-4%

 

1%

 

Scratch & Win wagers

 

9,194

 

9,207

 

-0.1%

 

Lottery services

 

760

 

793

 

-4%

 

1%

 

 

 

 

 

 

 

 

 

FMC

 

760

 

793

 

-4%

 

1%

 

Italy lottery revenue growth

 

 

 

 

 

0.9%

 

Instant ticket & draw games

 

949

 

991

 

-4%

 

1%

 

 

 

 

 

 

 

 

 

Other services

 

(189

)

(198

)

-4%

 

1%

 

Gaming

 

 

 

 

 

 

 

Product sales

 

0

 

0

 

0%

 

0%

 

Installed base (end of period)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VLT - Operator (B2C)

 

11,020

 

10,991

 

0.3%

 

Other

 

 

 

 

 

 

 

 

 

VLT - Supplier (B2B)

 

7,501

 

8,058

 

-6.9%

 

Total revenue

 

316

 

288

 

10%

 

16%

 

AWP

 

40,892

 

42,928

 

-4.7%

 

Service revenue

 

316

 

288

 

10%

 

16%

 

Total installed base

 

59,413

 

61,977

 

-4.1%

 

Product sales

 

0

 

0

 

0%

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wagers

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

VLT - Operator (B2C)

 

5,669

 

5,838

 

-2.9%

 

Revenue

 

1,709

 

1,815

 

-6%

 

-1%

 

AWP

 

3,690

 

3,717

 

-0.7%

 

Operating income

 

521

 

541

 

-4%

 

2%

 

Interactive wagers (gaming)

 

2,066

 

1,890

 

9.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sports betting wagers (1)

 

1,050

 

988

 

6.2%

 

 

 

 

 

 

 

 

 

 

 

Sports betting payout (%) (1)

 

83.1%

 

82.4%

 

0.7 pp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes virtual wagers and pools & horses

 

 

 

 

 

 

INTERNATIONAL GAME TECHNOLOGY PLC

 

Select Financial Data

 

 

 

 

 

As

 

Constant

 

Key Performance Indicators

 

 

 

 

 

%

 

Period Ended December 31

 

FY ‘19

 

FY ‘18

 

Reported

 

FX

 

Period Ended December 31

 

FY ‘19

 

FY ‘18

 

Change

 

Gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

2,301

 

2,306

 

0%

 

2%

 

Installed base units (end of period)

 

 

 

 

 

 

 

Gaming services

 

1,500

 

1,649

 

-9%

 

-6%

 

Casino

 

30,202

 

33,744

 

-10.5%

 

Terminal

 

1,116

 

1,239

 

-10%

 

-7%

 

VLT - Government sponsored (ex-Italy)

 

18,701

 

19,208

 

-2.6%

 

Other

 

385

 

410

 

-6%

 

-4%

 

VLT - Italy supplier (B2B)

 

7,501

 

8,058

 

-6.9%

 

Product sales

 

801

 

657

 

22%

 

24%

 

Total installed base units

 

56,404

 

61,010

 

-7.5%

 

Terminal

 

581

 

455

 

28%

 

29%

 

Yield (average gross revenue per unit per day)

 

$

28.08

 

$

27.72

 

1.3%

 

Other

 

220

 

202

 

9%

 

11%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional Italian network details:

 

 

 

 

 

 

 

Lottery

 

 

 

 

 

 

 

 

 

VLT - Operator (B2C)

 

11,020

 

10,991

 

0.3%

 

Total revenue

 

2,070

 

2,161

 

-4%

 

-2%

 

AWP

 

40,892

 

42,928

 

-4.7%

 

Lottery services

 

1,960

 

2,034

 

-4%

 

-1%

 

 

 

 

 

 

 

 

 

FMC

 

1,852

 

1,905

 

-3%

 

0%

 

Machine units shipped

 

 

 

 

 

 

 

Instant ticket & draw games

 

1,834

 

1,910

 

-4%

 

-1%

 

New/expansion

 

5,814

 

5,797

 

0.3%

 

Other services

 

18

 

(4

)

NM

 

NM

 

Replacement

 

36,211

 

26,742

 

35.4%

 

LMA

 

108

 

129

 

-16%

 

-16%

 

Total machines shipped

 

42,025

 

32,539

 

29.2%

 

Product sales

 

110

 

127

 

-13%

 

-12%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global lottery same-store revenue growth

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Instant ticket & draw games

 

 

 

 

 

4.5%

 

Total revenue

 

415

 

364

 

14%

 

20%

 

Multistate jackpots

 

 

 

 

 

-23.9%

 

Service revenue

 

400

 

363

 

10%

 

16%

 

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

 

 

 

 

 

0.8%

 

Product sales

 

15

 

2

 

NM

 

NM

 

Italy lottery revenue growth

 

 

 

 

 

0.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

4,786

 

4,831

 

-1%

 

2%

 

 

 

 

 

 

 

 

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment total

 

1,168

 

1,199

 

-3%

 

1%

 

 

 

 

 

 

 

 

 

Purchase accounting

 

(293

)

(325

)

-10%

 

10%

 

 

 

 

 

 

 

 

 

Corporate support

 

(238

)

(226

)

5%

 

-8%

 

 

 

 

 

 

 

 

 

Total

 

637

 

647

 

-2%

 

3%

 

 

 

 

 

 

 

 

 

 

21


Exhibit 99.2

 

March 3, 2020 2019 Fourth Quarter and Full Year Results Ended December 31, 2019 1

 

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. 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 This presentation contains non-GAAP financial measures, including adjusted EBITDA, 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. Trademark Language The trademarks and/or service marks used herein are either trademarks or registered trademarks of IGT, its affiliates or its licensors. 2

 

Agenda Marco Sala, CEO Strategic Update 1 Timothy Rishton, Interim CFO Q4’19 and FY’19 Results 2 Q&A 3 3

 

Strategic Update 4

 

FY’19: Strong Finish to Year; Significant Improvement in Cash Flows 5 Full-year profit in top half of outlook Strong NAGI and Italy results Overcame >$130 million in headwinds Important inflection in cash flows $1.1 billion in cash from operations $651 million in free cash flow Excellent gaming product sales growth; unit shipments up 29% Continued Lottery expansion worldwide

 

FY’19: Gaming Momentum Fueled by Top-Performing Titles 6 Double-digit replacement unit growth; +13% in North America, +63% International North American installed base stable net of Oklahoma; yields up on game performance Won international awards for “Slot Provider of the Year” and “Best Slot Game” Eight Advantage system installations in North America; replaced incumbent in six Italy gaming machine wager trends impacted by higher taxes

 

FY’19: Sustained Growth for Global Lotteries 7 Instants and draw games SSR up 4.5% outside Italy 6th consecutive year of >mid-single digit growth FL, MI, TX, and UK among best performers Italy wagers up on 10eLotto and core wager growth; Scratch & Win wagers in line New games and distribution strategies support future growth Successful launch of MS Lottery; Brazil instant ticket launch planned for H2’20 This image cannot currently be displayed.

 

FY’20: Strengthening Global Leadership Across Verticals 8 Leading provider of retail and online solutions for North American Sports Betting market Operating profit expansion planned for FY’20 Expect to fully offset new Italy taxes, weaker VLT wager trends Lower LMA incentives planned for H1’20 due to light North America multistate jackpot activity Does not factor any potential COVID-19 impact Cash flows to remain strong Well positioned to build on leading positions across regulated gaming

 

2019 Fourth Quarter and Full Year Results 9

 

FY’19 Financial Highlights Operating Income Diluted EPS/ Adj. 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: 1.12 in 2019; 1.18 in 2018 $ M Revenue -1% (+2% at constant FX) 10 -2% (+3% at constant FX) Adjusted EBITDA -1% (+2% at constant FX)

 

Q4’19 Financial Highlights Operating Income Diluted EPS/ Adj. 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 Q4’19; 1.14 in Q4’18 $ M Revenue -1% (Flat at constant FX) 11 +99% (+112% at constant FX) Adjusted EBITDA +5% (+6% at constant FX)

 

Q4’19 North America Gaming & Interactive Highlights Revenue Key Performance Indicators Sharp increase in new & expansion units (Emerald Queen); rising ASPs Higher software and systems revenue Service revenue reflects poker site licenses executed in prior periods Yields rise on strong performance; Installed base down on OK removals Operating income up on strong product sales $ M except where noted otherwise 12 % Change % Change at Q4'18 Q4'19 as Reported Constant FX Revenue 275 300 9% 9% Operating income 51 68 33% 32% Machine Units Shipped Q4'18 Q4'19 New & expansion 247 1,405 Replacement 6,485 5,986 Total 6,732 7,391 Q4'18 Q1'19 Q2'19* Q3'19* Q4'19 Casino installed base (units) 23,108 22,713 21,073 21,071 20,493 *2,076 and 147 unit reductions in Q2 '19 and Q3 '19, respectively, per OK strategic agreement

 

Q4’19 North America Lottery Highlights Revenue Key Performance Indicators Solid growth in lottery ex-jackpot activity; Lower jackpot activity impacts service and LMA Product sales up on increased GameTouch™ machine sales and instant ticket printing Operating income reflects lower jackpot activity $ M except where noted otherwise 13 % Change % Change at Q4'18 Q4'19 as Reported Constant FX Revenue 309 279 -9% -9% Operating income 79 51 -35% -35% Same-store revenue growth Q4'18 Q4'19 Instant ticket & draw games 5.0% 3.8% Multistate jackpots 143.1% -62.8% Total SSR growth 21.3% -11.1% Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 VLT installed base (units) 14,939 14,799 14,215 14,294 13,553

 

Q4’19 International Highlights Revenue Key Performance Indicators Strong gaming machine replacement unit sales 6% lottery SSR growth on broad-based European strength Gaming service reflects conversions in prior periods and lower Interactive revenue Operating income up on gaming machine mix and lower bad debt $ M except where noted otherwise 14 % Change % Change at Q4'18 Q4'19 as Reported Constant FX Revenue 221 226 2% 4% Operating income 28 53 87% 98% Machine Units Shipped Q4'18 Q4'19 New & expansion 528 406 Replacement 4,730 5,818 Total 5,258 6,224 Same-store revenue growth Q4'18 Q4'19 Instant ticket & draw games 4.1% 5.6% Multistate jackpots 8.6% 12.9% Total SSR growth 4.4% 6.1% Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Installed base (units) 14,905 15,085 14,475 14,332 14,857

 

Revenue Key Performance Indicators Strong sports betting and commercial services revenue offsets impact of higher gaming machine taxes Lottery wagers slightly below PY Gaming wagers impacted by reduction in return to player Operating income reflects sports betting strength, nearly offsetting higher taxes Q4’19 Italy Highlights $ M except where noted otherwise 15 -4 % Change % Change at Q4'18 Q4'19 as Reported Constant FX Revenue 462 448 -3% -1% Operating income 118 113 -4% -2% €M Q4'18 Q4'19 % Growth Lotto wagers 2,089 2,062 -1.3% 10eLotto 1,495 1,468 -1.8% Core 468 483 3.3% Late numbers 78 65 -16.5% MillionDAY 49 46 -7.2% S&W wagers 2,383 2,354 -1.2% Gaming wagers VLT - operator (B2C) 1,564 1,414 -9.5% AWP 997 958 -3.9% Interactive 492 577 17.2% Sports betting wagers 273 298 9.1% Sports betting payout 84.2% 83.3% -0.9 pp

 

Net Debt and Leverage Profile $ M except where noted otherwise 16 ~$380 million in debt reduction as reported; over $300 million at constant currency Leverage of 4.31x compared to 4.47x at December 31, 2018 Refinanced over $1.3 billion in 2019 extending maturities, lowering interest costs, and de-risking exposure to capital markets Net Debt/LTM EBITDA 4.47x 4.31x 7,761 (1,713) 395 235 (10) 442 164 234 (56) 7,452 (70) 7,382 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 12/31/19 @ 1.12

 

Cash Flow Statement $ M except where noted otherwise $1,093 million in operating cash flow $651 million of free cash flow $234 million of minority distributions Accelerated return of capital to Lotto JV partners $164 million returned to shareholders $75 million in proceeds from sale of non-core assets 17 YTD Cash Flow 12/31/2019 Net Cash Flows from Operating Activities 1,093 CapEx (442) Free Cash Flow 651 Debt Proceeds/(Repayment), Net 100 Other - Net (346) Other Investing/Financing Activities (246) Net Cash Flow 405 Effect of Exchange Rates/Other (22) Net Change in Cash and Restricted Cash 383 Cash and Restricted Cash at End of the Period 894

 

FY’20 Outlook Operating income of $740 - $790 million Depreciation and amortization of $870 - $880 million CapEx of $400 - $500 million Assumes full-year EUR/USD rate of 1.10 Does not factor any potential COVID-19 impact 18

 

Q & A 19

 

Appendix 20

 

Q4’19 Income Statement (As Reported) $ M except where noted otherwise 21 Income Statement Q4'19 Q4'18 % Change Service revenue 968 1,029 -6% Product sales 285 237 20% Total Revenue 1,253 1,266 -1% Adjusted EBITDA 436 416 5% Operating Income 81 41 99% Interest expense, net (101) (104) Foreign exchange (102) 32 Other (5) (9) Financial Charges, Net (208) (81) Income(Loss) Before Tax (126) (40) Net Income (Loss) (138) (70) Net Income (Loss) - Owners (168) (102) Diluted EPS (0.82) (0.50)

 

Q4’19 Reconciliation of Non-GAAP Measures $ M except where noted otherwise 22 As Reported Q4'19 Q4'18 Net income (loss) (138) (70) Provision for income taxes 12 30 Interest expense, net 101 104 Foreign exchange loss (gain), net 102 (32) Other non-operating expense, net 4 9 Operating income 81 41 Goodwill impairment 99 118 Depreciation 119 121 Amortization - purchase accounting 48 49 Amortization - non-purchase accounting (a) 75 71 Stock-based compensation expense 7 8 Other (b) 7 8 Adjusted EBITDA 436 416 Cash flows from operating activities 304 (219) Capital expenditures (109) (159) Free Cash Flow 195 (378) (a) Includes amortization of upfront license fees (b) Includes non-goodwill impairment charges, restructuring expense, and transaction-related costs

 

FY’19 Income Statement (As Reported) $ M except where noted otherwise 23 Income Statement FY '19 FY '18 % Change Service revenue 3,861 4,046 -5% Product sales 925 785 18% Total Revenue 4,786 4,831 -1% Adjusted EBITDA 1,713 1,737 -1% Operating Income 637 647 -2% Interest expense, net (410) (417) Foreign exchange 40 129 Other 18 (55) Financial Charges, Net (352) (343) Income Before Tax 285 304 Net Income (Loss) 112 115 Net Income (Loss) - Owners (19) (21) Diluted EPS (0.09) (0.10)

 

FY’19 Reconciliation of Non-GAAP Measures $ M except where noted otherwise 24 As Reported FY '19 FY '18 Net income (loss) 112 115 Provision for income taxes 173 189 Interest expense, net 410 417 Foreign exchange loss (gain), net (40) (129) Other non-operating expense, net (18) 55 Operating income 637 647 Goodwill impairment 99 118 Depreciation 434 433 Amortization - purchase accounting 192 200 Amortization - non-purchase accounting (a) 293 290 Stock-based compensation expense 27 33 Other (b) 31 16 Adjusted EBITDA 1,713 1,737 Cash flows from operating activities 1,093 30 Capital expenditures (442) (533) Free Cash Flow 651 (503) (a) Includes amortization of upfront license fees (b) Includes non-goodwill impairment charges, restructuring expense, and transaction-related costs