International Game Technology PLC Reports Third Quarter 2015 Results

-- Adjusted EBITDA of $414 million and adjusted earnings per share of $0.41; GAAP earnings per share of $0.04

-- Resilient profitability reflects diversity of business, disciplined operational management and synergy benefits

-- Free cash flow was $132 million in the third quarter

-- The Company is confident in reaching the top half of its full year 2015 adjusted EBITDA outlook

12 Nov, 2015, 06:45 ET from International Game Technology PLC

LONDON, Nov. 12, 2015 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE: IGT) today reported financial results for the third quarter and nine months ended September 30, 2015.

"We are pleased to report third quarter profitability in line with our expectations in this year of transformation," said Marco Sala, CEO of IGT. "In our global lottery operations, we delivered another resilient set of results and we are encouraged by our new game performance. As expected, product sales moderated from the second quarter's high level. We are focused on driving growth through innovation. Our recent showcases at the leading gaming and lottery trade shows demonstrated that commitment and the power of combining our compelling content and leading-edge technology to cement our industry leadership."

"Our third quarter results reflect the diversity of our business and disciplined operational management," said Alberto Fornaro, CFO of IGT. "Our synergy plans remain on track, free cash flow generation was strong, net debt was reduced, and our financial condition remains solid. We planned our first year as a combined company prudently; based on our year-to-date results and current top-line visibility, we are confident in reaching the top half of our 2015 adjusted EBITDA outlook."   

 

Summary of Consolidated Third Quarter Financial Results

Reported

Pro forma

Constant

Quarter Ended September 30,

2015

2014

Change

2015

2014

Change

Currency

(%)

(%)

Change (%)

(In US $ millions, unless otherwise noted)

Revenue

1,215

938

30%

1,215

1,474

-18%

-10%

Adjusted EBITDA

414

342

21%

414

541

-23%

-17%

Adjusted Operating Income

258

204

26%

258

348

-26%

-19%

Operating Income

130

184

-29%

130

306

-58%

-50%

Net income per diluted share

0.04

0.44

NM

0.04

 NA 

Adjusted net income per diluted share

0.41

0.54

NM

0.41

 NA 

Net debt

8,196

2,948

NM

8,196

 NA 

 Note: Pro forma is defined as the combined results of GTECH and legacy IGT for period prior to the second quarter of 2015. Adjusted operating income, 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. 

Comparability of Results

All figures presented in this news release are prepared under U.S. GAAP, unless noted otherwise.

As a result of the combination of GTECH S.p.A. ("GTECH") and International Game Technology ("legacy IGT"), which was completed on April 7, 2015, a number of items affect the comparability of reported results.  Reported financial information for the third quarter of 2015 includes the results of operations of IGT for the entire period, while reported financial information for the third quarter of 2014 includes only GTECH operations. Reported financial information for the first nine months of 2015 includes IGT for the second and third quarters and only GTECH operations in the first quarter, while the reported nine month 2014 figures are for GTECH only. Pro forma figures represent the combined results of both companies in 2014 and in the first nine months of 2015. 

Adjusted figures exclude the impact of purchase price amortization, restructuring expense, and certain one-time, primarily transaction-related items.  Reconciliations to the most directly comparable GAAP measures are included in the tables in this news release.

Reported 2015 results were adversely affected by the strengthening of the U.S. dollar compared to the euro; the daily average U.S. dollar to euro foreign exchange rate was 1.11 in the third quarter of 2015 compared to 1.33 in the third quarter of 2014. Constant currency changes for 2015 are calculated using the same foreign exchange rates as the corresponding 2014 period.

The Company has harmonized the methodology used to calculate pro forma, adjusted EBITDA in the first calendar quarter of 2015 by adding back certain legacy IGT items that had not been previously included. This has resulted in a $30 million increase to pro forma, adjusted EBITDA in the first quarter of 2015, which is also included in the Company's revised, full year 2015 outlook.   

Management believes that referring to certain pro forma, constant currency, or adjusted measures is a more useful way to evaluate the Company's underlying performance.

Overview of Consolidated Third Quarter Results

Reported consolidated revenue grew 30% to $1.22 billion from $938 million in the third quarter of 2014, reflecting GTECH's acquisition of legacy IGT. On a pro forma, constant currency basis, consolidated revenue declined 10%. Resilience in global lottery operations was more than offset by an expected decrease in gaming product sales, largely due to significant Oregon VLT and casino conversion sales in the third quarter of 2014, in addition to the variability in the timing of new casino openings. During the quarter, the Company sold 6,622 gaming machines worldwide and global lottery same-store revenue, excluding Italy, increased 6%.

On a reported basis, adjusted EBITDA of $414 million was 21% above the third quarter of 2014.  On a pro forma, constant currency basis, adjusted EBITDA was 17% below the prior-year period, primarily due to sales dynamics in the quarter, which were partially offset by lower operating expenses. 

Reported operating income was $130 million compared to $184 million in the third quarter of 2014. On a pro forma, constant currency basis, adjusted operating income was 19% below the year-earlier period, as higher lottery profits were more than offset by lower gaming profits.

Interest expense was $122 million compared to $75 million in the prior-year period due to increased debt incurred to finance the legacy IGT acquisition.

Net income attributable to IGT was $7 million in the third quarter of 2015. On an adjusted basis, net income was $82 million. The Company reported net income per diluted share of $0.04 and earned $0.41 per diluted share on an adjusted basis.

Cash from operations was $471 million in the first nine months of the year, inclusive of higher interest costs and approximately $150 million in one-time, transaction-related costs. Capital expenditures were $289 million in the year-to-date period.

Cash and cash equivalents were $552 million as of September 30, 2015, compared to $573 million as of September 30, 2014.

At September 30, 2015, consolidated shareholders' equity totaled $3.52 billion and net debt was $8.20 billion.

Operating Segment Review

North America Gaming & Interactive    Revenue for the North America Gaming & Interactive segment was $341 million compared to $37 million in the third quarter of 2014. On a pro forma basis, North America Gaming & Interactive revenue was 19% below the prior year as relative stability in recurring service revenues was more than offset by an expected contraction in product sales on difficult comparisons with large VLT sales and intellectual property revenue in the third quarter of 2014.

Service revenue was $267 million compared to $15 million in the prior-year period. On a pro forma basis, service revenue declined 2% as a result of a lower installed base that was mostly compensated for by improved wide area progressive yields, 6% growth at DoubleDown, and favorable mix. Product sales were $73 million compared to $22 million in the third quarter of 2014. On a pro forma basis, product sales were 50% below the prior year, as anticipated. The Company sold 3,326 machines compared to 6,541 units in the third quarter of 2014, which included 1,864 Oregon VLT units and shipments related to stronger new casino openings. Year-to-date, total replacement unit sales were up 4% while new and expansion units were down, reflecting the cadence of new casino openings and VLT programs. Product sales were also affected by an expected decrease in intellectual property licensing revenue. 

Operating income for North America Gaming & Interactive was $85 million compared to $2 million in the third quarter of 2014. On a pro forma basis, North America Gaming & Interactive operating income declined 42% as a result of lower product sales and overall revenue mix as well as further investment in research and development.

North America Lottery Revenue for the North America Lottery segment was $253 million in the quarter, 6% higher than the prior year on a reported basis but 2% lower on a pro forma basis. The Company entered into a revised termination agreement with the Illinois Lottery during the third quarter. Excluding the Illinois termination settlement, pro forma revenue for the North America Lottery segment rose 2%.

Service revenue increased 9% on a reported basis and was in line with the prior year on a pro forma basis, reflecting the net impact of 8% same-store revenue growth and the Illinois termination payment. Strong instant ticket sales and local draw-based game performance were the primary drivers of same-store revenue growth during the quarter. New contracts in Canada and Colorado also contributed to service revenue growth. Product sales of $11 million in the quarter were below the third quarter of 2014, reflecting the natural variability of the business, which included strong instant ticket printing and vending machine sales in the prior year period.

Operating income for North America Lottery was $50 million compared to $20 million in the third quarter of 2014. On a pro forma basis, operating income for North America Lottery rose 66% on strong same-store revenue growth and operational leverage, and despite the $5 million net impact of the Illinois settlement, which also impacted adjusted EBITDA.

International International revenue was $211 million compared to $138 million in the third quarter of 2014 on a reported basis. On a pro forma, constant currency basis, International revenue was 12% below the prior year, the net result of stable lottery performance and lower gaming product sales due to challenging comparisons with large conversion and systems sales in the prior-year period.

International lottery same-store revenue was up approximately 2% on continued, broad-based strength in instant tickets and sustained jackpot growth in Eastern Europe that was partially offset by weaker trends in Latin America. Lottery product sales were in line with the prior-year period on a pro forma, constant currency basis.

International gaming service revenue was modestly below the third quarter of 2014 on a pro forma, constant currency basis due to a contraction in the installed base, principally as a result of the conversion of leased units in Mexico over the last year. The Company sold a total of 3,296 gaming machines internationally during the third quarter. Revenue from gaming product sales was below the prior year, partly due to large conversion and systems sales in the comparable 2014 period.   

International operating income was $37 million, 28% greater than the third quarter of 2014. On a pro forma basis, International operating income was down, primarily reflecting lower gaming product sales.

Italy Revenue in the Italy segment was $414 million compared to $525 million the third quarter of 2014, primarily due to the weakening of the euro against the U.S. dollar. Excluding currency translation, Italian revenue was down 8%, as relative stability in most core activities was offset by the anticipated impact of gaming machine taxes and a six percentage point increase in sports betting payout.

Total Lotto wagers in the quarter were €1.68 billion compared to €1.75 billion last year, as a result of significantly lower late number activity. 10eLotto performance was especially strong during the quarter, supported by the continued success of Numero ORO. Instant-ticket wagers were €2.11 billion versus €2.18 billion last year, an improvement in the year-to-date trend related to several new product introductions.

Machine gaming revenue declined in constant currency due to higher taxes associated with the 2015 Stability Law. Excluding the Stability Law impact, machine gaming revenue was in line with the prior-year period in constant currency, as improved machine productivity and mix continue to offset lower AWP units.

Operating income for Italy was $131 million compared to $192 million in the third quarter of 2014, primarily due to unfavorable currency impacts and a gain on the sale of the Company's Italian sports and events ticketing business in the prior-year period. On a constant perimeter and currency basis, Italian operating income was affected by the higher sports betting payout and Stability Law.

Outlook

Including the $30 million reclassification of certain legacy IGT items in the first quarter of 2015, the Company is updating its outlook for pro forma, adjusted EBITDA in 2015 to $1.605-$1.705 billion from the prior range of $1.575-$1.675 billion.

Capital expenditures for the year are now estimated at $400-$450 million compared to a prior expectation of $450-$500 million. This does not include any upfront capital related to the Italian Lotto concession renewal, which will not be required this year.

Conference Call and Webcast

Today, at 8:00 a.m. EST / 1:00 p.m. GMT / 2:00 p.m. CET, management will host a conference call to present the third quarter 2015 results. Listeners may access a live webcast of the conference call along with accompanying slides under "News, Events and Presentations" on IGT's Investor Relations website at www.IGT.com. A replay of the webcast will be available on the website following the live event. To listen by telephone, the dial in number is +44 (0) 20 3427 1905 for participants in the United Kingdom and +1-718-354-1152 for listeners outside the United Kingdom. The conference ID/confirmation code is 2592426. A telephone replay of the call will be available for one week at +44 (0) 20 3427 0598 or +1-347-366-9565 using the conference ID/confirmation code 2592426.

About IGT IGT (NYSE: IGT) is the global leader in gaming. We enable players to experience their favorite games across all channels and regulated segments, from Gaming Machines and Lotteries to Interactive and Social Gaming. Leveraging a wealth of premium content, substantial investment in innovation, in-depth customer intelligence, operational expertise and leading-edge technology, our gaming solutions anticipate the demands of consumers wherever they decide to play. We have a well-established local presence and relationships with governments and regulators in more than 100 countries around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has approximately 13,000 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 IGT 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 IGT 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 are subject to various risks and uncertainties, many of which are outside IGT'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 the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) risks that the businesses of International Game Technology and GTECH S.p.A. will not be integrated successfully, or that the combined companies will not realize estimated cost savings, synergies, growth or other anticipated benefits or that such benefits may take longer to realize than expected; risk that the Company will be unable to pay future dividends to shareholders or that the amount of such dividends may be less than anticipated; risks relating to unanticipated costs of integration of the two companies; reductions in customer spending; a slowdown in customer payments and changes in customer demand for products and services; unanticipated changes relating to competitive factors in the industries in which the company operates; ability to hire and retain key personnel; the potential impact of the consummation of the business combination on relationships with third parties, including customers, employees and competitors; ability to attract new customers and retain existing customers in the manner anticipated; reliance on and integration of information technology systems; changes in legislation or governmental regulations affecting the company; international, national or local economic, social or political conditions that could adversely affect the company or its customers; conditions in the credit markets; risks associated with assumptions the company makes in connection with its critical accounting estimates and legal proceedings; and the company's international operations, which are subject to the risks of currency fluctuations and foreign exchange controls. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect IGT's business, including those described in IGT's annual report on Form 20-F for the financial year ended December 31, 2014 and other documents filed from time to time with the Securities and Exchange Commission (the "SEC"), which are available on the SEC website at www.sec.gov and on the investor relations section of IGT's website at www.IGT.com. Except as required under applicable law, IGT does not assume any obligation to update the forward-looking statements. Nothing in this news release is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per IGT share for the current or any future financial years will necessarily match or exceed the historical published earnings per IGT share, 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 IGT, or persons acting on its behalf, are expressly qualified in their entirety by this cautionary statement.

Contact: Robert K. Vincent, Corporate Communications, (401) 392-7452 James Hurley, Investor Relations, (401) 392-7190 Simone Cantagallo, (+39) 06 51899030; for Italian media inquiries

International Game Technology PLC and Subsidiaries

Consolidated Income Statements

 For the three months ended 

 September 30,

2015

2014

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

 Unaudited

Service revenue

1,057,449

876,074

Product sales

157,864

61,843

Total revenue

1,215,313

937,917

Cost of services

633,371

580,845

Cost of sales

127,980

38,285

Selling, general and administrative

224,487

105,270

Research and development

85,864

29,686

Restructuring expense

11,271

5,246

Transaction expense (income), net

2,301

(5,265)

1,085,274

754,067

Operating income

130,039

183,850

Interest income

4,797

847

Equity income, net

192

363

Other income

1,326

3,208

Other expense

(2,025)

(2,475)

Foreign exchange gain (loss), net

9,847

(2,942)

Interest expense

(121,844)

(75,345)

(107,707)

(76,344)

Income before income tax expense

22,332

107,506

Income tax expense

13,366

33,573

Net income

8,966

73,933

Less: Net income (loss) attributable to non-controlling interests

1,833

(2,231)

Net income attributable to IGT

7,133

76,164

Net income attributable to IGT per ordinary share - basic

0.04

0.44

Net income attributable to IGT per ordinary share - diluted

0.04

0.44

Weighted-average shares - basic

199,480

173,560

Weighted-average shares - diluted

200,825

174,307

 

 

International Game Technology PLC and Subsidiaries

Consolidated Income Statements

 For the nine months ended 

 September 30,

2015

2014

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

 Unaudited

Service revenue

2,917,231

2,703,722

Product sales

455,435

216,784

Total revenue

3,372,666

2,920,506

Cost of services

1,791,581

1,787,568

Cost of sales

340,322

131,869

Selling, general and administrative

552,253

305,748

Research and development

192,849

81,087

Restructuring expense

41,570

13,518

Impairment loss

-

1,802

Transaction expense (income), net

45,695

(1,859)

2,964,270

2,319,733

Operating income

408,396

600,773

Interest income

12,916

3,105

Equity income (loss), net

207

(2,421)

Other income

4,280

4,398

Other expense

(140,540)

(9,053)

Foreign exchange loss, net

(85,493)

(5,383)

Interest expense

(333,762)

(186,925)

(542,392)

(196,279)

Income (loss) before income tax expense

(133,996)

404,494

Income tax expense

13,820

154,554

Net income (loss)

(147,816)

249,940

Less: Net income attributable to non-controlling interests

10,114

13,163

Net income (loss) attributable to IGT

(157,930)

236,777

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

(0.83)

1.36

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

(0.83)

1.36

Weighted-average shares - basic

189,884

174,024

Weighted-average shares - diluted

189,884

174,647

 

 

International Game Technology PLC and Subsidiaries

Condensed Consolidated Balance Sheets

 September 30, 

 December 31, 

2015

2014

($ thousands)

 Unaudited

ASSETS

Cash and cash equivalents

551,915

317,106

Restricted cash

159,891

108,115

Trade and other receivables

929,939

919,606

Inventories

307,460

184,593

Other current assets

408,915

223,703

Income taxes receivable

87,615

6,628

Deferred income taxes

158,438

49,877

Total current assets

2,604,173

1,809,628

Systems, equipment and other assets related to contracts, net

1,162,208

1,086,426

Property, plant and equipment, net

311,161

123,571

Goodwill

7,043,671

4,143,064

Intangible and other assets, net

4,611,117

1,500,836

Deferred income taxes

86,045

14,581

Total non-current assets

13,214,202

6,868,478

TOTAL ASSETS

15,818,375

8,678,106

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Accounts payable

972,768

1,241,042

Other current liabilities

845,211

862,357

Current portion of long-term debt

165

849,600

Short-term borrowings

111

10,800

Income taxes payable

99,192

20,892

Total current liabilities

1,917,447

2,984,691

Long-term debt, less current portion

8,747,737

2,099,071

Deferred income taxes

1,175,609

252,493

Other non-current liabilities

457,923

200,417

Total non-current liabilities

10,381,269

2,551,981

TOTAL LIABILITIES

12,298,716

5,536,672

COMMITMENTS AND CONTINGENCIES

-

-

SHAREHOLDERS' EQUITY

3,519,659

3,141,434

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

15,818,375

8,678,106

 

 

International Game Technology PLC and Subsidiaries

Consolidated Statements of Cash Flows

 For the nine months ended 

 September 30,

2015

2014

($ thousands)

 Unaudited

Cash flows from operating activities

Net income (loss)

(147,816)

249,940

Adjustments for:

Amortization

286,264

109,950

Depreciation

259,676

243,283

Non-cash foreign exchange loss, net

88,308

5,760

Service revenue amortization

81,178

96,332

Make-whole paid in connection with the early extinguishment of debt

73,806

-

Write-off of bridge facility costs

50,892

-

Stock compensation

32,732

4,492

Debt issuance cost amortization

30,708

24,891

Other non-cash items

7,544

10,984

Provisions

5,733

(1,108)

Impairment loss

-

1,802

Cash foreign exchange gain, net

(2,815)

(377)

Cash flows before changes in operating assets and liabilities

766,210

745,949

Changes in operating assets and liabilities:

Inventories

(29,275)

(3,599)

Trade and other receivables

122,739

123,101

Accounts payable

(102,170)

(121,271)

Other assets and liabilities

(286,510)

(39,226)

Net cash flows from operating activities

470,994

704,954

Cash flows from investing activities

Acquisition of IGT, net of cash acquired

(3,241,415)

-

Capital expenditures

(288,743)

(240,682)

Proceeds from sale of assets

23,610

2,313

Jackpot annuity investments, net

25,947

-

Other

(127)

-

Net cash flows used in investing activities

(3,480,728)

(238,369)

Cash flows from financing activities

Proceeds from issuance of long-term debt

6,584,801

-

Proceeds from interest rate swaps

67,773

-

Treasury shares purchased

-

(44,008)

Acquisition of non-controlling interest

-

(97,015)

Dividends paid - non-controlling interest

(28,842)

(45,190)

Payments in connection with note consents

(29,022)

-

Return of capital - non-controlling interest

(30,568)

(68,189)

Payments on bridge facility

(51,409)

-

Payments in connection with the early extinguishment of debt

(79,526)

-

Debt issuance costs paid

(81,100)

-

Dividends paid

(169,438)

(177,608)

Payments to withdrawing shareholders

(407,759)

-

Principal payments on long-term debt

(2,492,354)

-

Other

(11,942)

(12,685)

Net cash flows provided by (used in) financing activities

3,270,614

(444,695)

Net increase in cash and cash equivalents

260,880

21,890

Effect of exchange rate changes on cash

(26,071)

(26,566)

Cash and cash equivalents at the beginning of the period

317,106

578,008

Cash and cash equivalents at the end of the period

551,915

573,332

 

 

International Game Technology PLC and Subsidiaries

Net Debt

September 30,

December 31,

($ thousands)

2015

2014

Long-term debt, less current portion

Senior Notes

4,866,438

-

Revolving Facilities

1,135,285

876,505

Term Loan

892,019

-

Notes due February 2018

548,253

590,557

Notes due March 2020

534,498

575,270

Notes due June 2019

531,961

-

Notes due June 2020

126,963

-

Notes due October 2023

61,335

-

Capital Securities

50,863

54,975

Other

122

1,764

8,747,737

2,099,071

Current portion of long-term debt

165

849,600

Short-term borrowings

111

10,800

Total debt

8,748,013

2,959,471

Cash and cash equivalents

551,915

317,106

Net debt

8,196,098

2,642,365

 

 

International Game Technology PLC and Subsidiaries

Operating Metrics and Reconciliations

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

For the three months ended

September 30,

Change

2015

2014

$

%

Revenue

1,215,313

937,917

277,396

29.6

Adjusted EBITDA

413,803

342,349

71,454

20.9

Operating income

130,039

183,850

(53,811)

(29.3)

Adjusted Operating income

257,808

204,285

53,523

26.2

Net income attributable to IGT

7,133

76,164

(69,031)

(90.6)

Adjusted Net income attributable to IGT

82,477

93,438

(10,961)

(11.7)

Net income attributable to IGT per ordinary share - diluted

0.04

0.44

(0.40)

(90.9)

Adjusted Net income attributable to IGT per ordinary share - diluted

0.41

0.54

(0.13)

(24.1)

Weighted average shares - diluted

200,825

174,307

26,518

15.2

Reconciliations of Non-GAAP Financial Measures

For the three months ended

September 30,

Change

2015

2014

$

%

Operating income

130,039

183,850

(53,811)

(29.3)

Depreciation

95,133

84,111

11,022

13.1

Amortization

134,132

37,305

96,827

259.6

Transaction expense (income), net (1)

2,301

(5,265)

7,566

143.7

Service revenue amortization

27,298

31,163

(3,865)

(12.4)

Non-cash purchase accounting (excluding D&A)

1,867

-

1,867

-

Restructuring expense

11,271

5,246

6,025

114.8

Stock compensation

11,762

5,939

5,823

98.0

Adjusted EBITDA

413,803

342,349

71,454

20.9

Operating income

130,039

183,850

(53,811)

(29.3)

Purchase accounting

114,197

20,454

93,743

458.3

Transaction expense (income), net (1)

2,301

(5,265)

7,566

143.7

Restructuring expense

11,271

5,246

6,025

114.8

Adjusted Operating income

257,808

204,285

53,523

26.2

Net income attributable to IGT

7,133

76,164

(69,031)

(90.6)

Purchase accounting

113,624

19,798

93,826

473.9

Foreign exchange loss (gain)

(9,847)

2,942

(12,789)

(434.7)

Transaction expense (income), net (1)

2,301

(5,265)

7,566

143.7

Restructuring expense

11,271

5,246

6,025

114.8

Income tax benefit

(42,005)

(5,447)

(36,558)

>500.0 

Adjusted Net income attributable to IGT

82,477

93,438

(10,961)

(11.7)

Adjusted Net income attributable to IGT per ordinary share - diluted

0.41

0.54

(0.13)

(24.1)

(1) Transaction expense (income), net is composed of transaction costs on significant business combinations and significant gains and losses incurred on disposals of group entities or businesses. These items are only incidentally related to our ordinary activities, are not expected to occur frequently and hinder comparability of our period-over-period performance. We believe separate identification allows users of the financial statements to take them into appropriate consideration when analyzing our performance.

 

 

International Game Technology PLC and Subsidiaries

Operating Metrics and Reconciliations

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

For the nine months ended

September 30,

Change

2015

2014

$

%

Revenue

3,372,666

2,920,506

452,160

15.5

Adjusted EBITDA

1,161,889

1,068,291

93,598

8.8

Operating income

408,396

600,773

(192,377)

(32.0)

Adjusted Operating income

737,702

670,734

66,968

10.0

Net income (loss) attributable to IGT

(157,930)

236,777

(394,707)

(166.7)

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

(0.83)

1.36

(2.19)

(161.0)

Weighted average shares - diluted

189,884

174,647

15,237

8.7

Reconciliations of Non-GAAP Financial Measures

For the nine months ended

September 30,

Change

2015

2014

$

%

Operating income

408,396

600,773

(192,377)

(32.0)

Depreciation

259,676

243,283

16,393

6.7

Amortization

286,264

109,950

176,314

160.4

Service revenue amortization

81,178

96,332

(15,154)

(15.7)

Transaction expense (income), net (1)

45,695

(1,859)

47,554

>500.0 

Restructuring expense

41,570

13,518

28,052

207.5

Non-cash purchase accounting (excluding D&A)

21,245

-

21,245

-

Stock compensation

17,865

4,492

13,373

297.7

Impairment loss

-

1,802

(1,802)

(100.0)

Adjusted EBITDA

1,161,889

1,068,291

93,598

8.8

Operating income

408,396

600,773

(192,377)

(32.0)

Purchase accounting

242,041

58,302

183,739

315.2

Transaction expense (income), net (1)

45,695

(1,859)

47,554

>500.0 

Restructuring expense

41,570

13,518

28,052

207.5

Adjusted Operating income

737,702

670,734

66,968

10.0

Cash flows from operating activities

470,994

704,954

(233,960)

(33.2)

Capital expenditures

(288,743)

(240,682)

(48,061)

(20.0)

Free Cash Flow

182,251

464,272

(282,021)

(60.7)

(1) Transaction expense (income), net is composed of transaction costs on significant business combinations and significant gains and losses incurred on disposals of group entities or businesses. These items are only incidentally related to our ordinary activities, are not expected to occur frequently and hinder comparability of our period-over-period performance. We believe separate identification allows users of the financial statements to take them into appropriate consideration when analyzing our performance.

 

 

International Game Technology PLC and Subsidiaries

Segment Information

($ in thousands)

For the three months ended September 30,

2015

2014

2015

2014

Segments

Revenue

Operating income

North America Gaming & Interactive

340,704

37,035

85,043

2,158

North America Lottery

252,933

237,632

50,137

19,582

International

210,706

138,395

36,913

28,795

Italy

413,695

524,672

131,038

192,248

1,218,038

937,734

303,131

242,783

Corporate support

-

-

(58,894)

(38,481)

Purchase accounting

(2,725)

183

(114,198)

(20,452)

1,215,313

937,917

130,039

183,850

For the nine months ended September 30,

2015

2014

2015

2014

Segments

Revenue

Operating income

North America Gaming & Interactive

724,122

87,531

187,854

(7,556)

North America Lottery

776,489

715,717

140,107

57,072

International

588,441

438,529

110,350

95,623

Italy

1,297,988

1,678,189

422,524

598,566

3,387,040

2,919,966

860,835

743,705

Corporate support

-

-

(210,398)

(84,633)

Purchase accounting

(14,374)

540

(242,041)

(58,299)

3,372,666

2,920,506

408,396

600,773

 

 

International Game Technology PLC Segment Performance

Pro Forma Revenue Detail

($ millions)

 As Reported

 Legacy IGT

2014

2015

2014

2015

 Q1

 Q2

 Q3

 Q4

 FY

 Q1

 Q2 

 Q3

 Q1

 Q2

 Q3

 Q4

 FY

 Q1

North America Gaming & Interactive

Service Revenue

8

9

15

13

46

13

237

267

263

255

257

261

1,036

245

Product Sales

14

19

22

32

87

17

116

73

131

99

126

82

437

66

Revenue

22

28

37

45

133

30

353

341

393

354

383

343

1,473

311

OI

(6)

(4)

2

8

0

7

96

85

111

121

144

95

471

41

North America Lottery

Service Revenue

238

187

222

217

865

241

253

242

20

20

20

20

81

19

Product Sales

23

29

15

7

75

12

17

11

0

0

0

0

0

0

Revenue

261

217

238

224

940

253

270

253

20

20

20

20

81

19

OI

43

(6)

20

17

74

43

47

50

10

11

11

12

44

12

International

Service Revenue

119

114

115

127

474

103

137

136

45

42

42

38

167

37

Product Sales

33

34

24

66

157

28

110

75

54

51

92

50

247

33

Revenue

152

148

138

192

631

131

247

211

99

93

134

87

413

69

OI

36

30

29

60

156

27

47

37

5

18

40

8

70

0

Italy

Service Revenue

601

551

524

509

2,185

452

431

413

0

0

0

0

0

0

Product Sales

1

1

1

1

3

1

1

0

0

0

0

0

0

0

Revenue

601

552

525

510

2,188

453

432

414

0

0

0

0

0

0

OI

213

193

192

113

712

150

141

131

(6)

(5)

(4)

(5)

(19)

(5)

Purchase Accounting

Service Revenue

0

0

0

0

0

0

(8)

(1)

0

0

0

0

0

0

Product Sales

0

0

0

0

0

0

(4)

(1)

0

0

0

0

0

0

Revenue

0

0

0

0

0

0

(12)

(2)

0

0

0

0

0

0

OI

(18)

(20)

(20)

(20)

(78)

(17)

(111)

(114)

(6)

(6)

(11)

(7)

(31)

(7)

Corporate

OI

(23)

(23)

(38)

(67)

(151)

(47)

(104)

(59)

(42)

(29)

(57)

(39)

(167)

(47)

IGT PLC

Service Revenue

966

861

876

866

3,569

809

1,050

1,057

328

317

319

319

1,284

301

Product Sales

71

84

62

106

322

58

240

158

185

150

218

131

684

99

Revenue

1,037

945

938

972

3,892

867

1,290

1,215

513

468

537

451

1,968

399

OI

246

171

184

112

712

163

116

130

72

110

123

63

368

(7)

 Pro Forma

YtY Variance

2014

2015

Actual FX

Constant FX

 Q1

 Q2

 Q3

 Q4

 FY

 Q1

 Q2 

 Q3 

Q3

Q3 YTD

Q3

Q3 YTD

North America Gaming & Interactive

Service Revenue

271

264

272

275

1,082

257

237

267

-1.6%

-5.6%

-0.9%

-5.1%

Product Sales

145

118

148

113

524

83

116

73

-50.4%

-33.6%

-48.7%

-31.6%

Revenue

416

383

420

388

1,606

341

353

341

-18.8%

-15.0%

-17.7%

-14.1%

OI

105

117

146

103

471

47

96

85

-41.8%

-37.9%

North America Lottery

Service Revenue

259

208

242

237

946

261

253

242

0.0%

6.7%

0.4%

7.2%

Product Sales

23

29

15

7

75

12

17

11

-30.5%

-41.8%

-28.5%

-40.4%

Revenue

282

237

258

245

1,021

273

270

253

-1.8%

2.5%

-1.3%

3.1%

OI

54

5

30

29

118

55

47

50

65.5%

70.8%

-

International

Service Revenue

164

155

157

164

640

140

137

136

-13.5%

-13.5%

0.0%

-1.1%

Product Sales

88

85

115

115

404

61

110

75

-35.0%

-14.7%

-27.1%

-3.8%

Revenue

251

241

272

279

1,044

200

247

211

-22.6%

-13.9%

-11.5%

-2.1%

OI

41

48

69

68

226

27

47

37

-46.7%

-30.2%

Italy

Service Revenue

601

551

524

509

2,185

452

431

413

-21.1%

-22.6%

-7.6%

-6.1%

Product Sales

1

1

1

1

3

1

1

0

-69.2%

-40.1%

-63.3%

-28.0%

Revenue

601

552

525

510

2,188

453

432

414

-21.2%

-22.7%

-7.6%

-6.1%

OI

208

188

188

108

692

145

141

131

-30.4%

-28.5%

Purchase Accounting

Service Revenue

0

0

0

0

0

0

(8)

(1)

-

-

-

-

Product Sales

0

0

0

0

0

0

(4)

(1)

-

-

-

-

Revenue

0

0

0

0

0

0

(12)

(2)

-

-

-

-

OI

(24)

(26)

(32)

(27)

(109)

(24)

(111)

(114)

257.8%

205.3%

Corporate

OI

(65)

(52)

(96)

(106)

(319)

(95)

(104)

(59)

-38.5%

21.2%

IGT PLC

Service Revenue

1,294

1,179

1,195

1,185

4,853

1,110

1,050

1,057

-11.5%

-12.3%

-3.7%

-3.0%

Product Sales

256

234

279

237

1,006

158

240

158

-43.5%

-27.9%

-39.2%

-22.7%

Revenue

1,550

1,413

1,474

1,422

5,860

1,267

1,290

1,215

-17.6%

-15.0%

-10.5%

-6.4%

OI

318

280

306

175

1,080

156

116

130

-57.6%

-55.6%

 

 

International Game Technology PLC and Subsidiaries

Consolidated Pro Forma Income Statements & Reconciliations

($ millions)

 As Reported

 Legacy IGT

 Pro Forma

2014

2015

2014

2015

2014

2015

 Q1

 Q2

 Q3

 Q4

 FY

 Q1

 Q2 

 Q3 

 Q1

 Q2

 Q3

 Q4

 FY

 Q1

 Q1

 Q2

 Q3

 Q4

 FY

 Q1

 Q2 

 Q3

Service revenue

966

862

876

866

3,570

809

1,050

1,057

328

317

319

319

1,284

301

1,294

1,179

1,195

1,186

4,853

1,110

1,050

1,057

Product sales

71

84

62

106

322

58

240

158

185

150

218

131

684

99

256

234

279

237

1,006

157

240

158

Total revenue

1,037

945

938

972

3,892

867

1,290

1,215

513

468

537

451

1,968

399

1,550

1,413

1,474

1,422

5,860

1,267

1,290

1,215

Cost of services

617

589

581

617

2,404

526

632

633

126

117

117

122

482

116

743

707

698

738

2,886

642

632

633

Cost of sales

42

52

38

59

190

35

177

128

90

63

91

71

315

63

132

115

129

130

506

99

177

128

Selling, general and administrative

102

99

105

110

416

96

232

225

140

117

125

116

498

138

242

216

230

226

913

234

232

225

Research and development

26

25

30

27

108

22

85

86

63

58

57

63

241

63

90

83

86

90

350

85

85

86

Restructuring expense

4

4

5

10

23

14

16

11

0

0

0

0

0

0

4

4

5

10

23

14

16

11

Impairment loss

0

2

0

1

3

0

0

0

22

2

15

1

40

7

22

4

15

2

43

7

0

0

Transaction expense (income), net1

0

3

(5)

37

35

11

32

2

0

0

10

14

24

19

0

3

5

51

59

30

32

2

791

775

754

860

3,180

704

1,175

1,085

441

358

414

387

1,600

406

1,232

1,133

1,168

1,247

4,780

1,111

1,175

1,085

Operating income

246

171

184

112

712

163

116

130

72

110

123

63

368

(7)

318

280

306

175

1,080

156

116

130

Reconciliations of  Non-US GAAP Financial Measures

 As Reported

 Legacy IGT

 Pro Forma

2014

2015

2014

2015

2014

2015

 Q1

 Q2

 Q3

 Q4

 FY

 Q1

 Q2 

 Q3

 Q1

 Q2

 Q3

 Q4

 FY

 Q1

 Q1

 Q2

 Q3

 Q4

 FY

 Q1

 Q2 

 Q3

Operating income

246

171

184

112

712

163

116

130

72

110

123

63

368

(7)

318

280

306

175

1,080

156

116

130

Purchase Accounting

18

20

20

20

78

17

111

114

6

6

11

7

31

7

24

26

32

27

109

24

111

114

Transaction Expense, net

0

3

(5)

37

35

11

32

2

0

0

10

14

24

19

0

3

5

51

59

30

32

2

Restructuring

4

4

5

10

23

14

16

11

0

0

0

0

0

0

4

4

5

10

23

14

16

11

Adjusted Operating Income

268

198

204

179

849

205

275

258

78

116

144

85

422

19

346

314

348

263

1,272

224

275

258

Operating income

246

171

184

112

712

163

116

130

72

110

123

63

368

(7)

318

280

306

175

1,080

156

116

130

Depreciation

83

76

84

80

324

72

93

95

34

32

30

28

123

28

116

108

114

108

447

99

93

95

Amortization

35

37

37

39

149

33

119

134

14

14

14

10

51

10

49

51

51

49

200

43

119

134

Transaction expense (income), net1

0

3

(5)

37

35

11

32

2

0

0

10

14

24

19

0

3

5

51

59

30

32

2

Service revenue amortization

33

33

31

30

126

27

27

27

0

0

0

0

0

0

33

33

31

30

126

27

27

27

Non-cash purchase price (excluding D&A)

0

(0)

0

0

0

0

19

2

0

0

0

0

0

0

0

(0)

0

0

0

0

19

2

Restructuring expense

4

4

5

10

23

14

16

11

0

0

0

0

0

0

4

4

5

10

23

14

16

11

Stock compensation

2

(4)

6

12

16

1

5

12

8

7

9

9

32

6

10

3

15

21

48

7

5

12

Impairment loss

0

2

0

1

3

0

0

0

22

2

15

1

40

7

22

4

15

2

43

7

0

0

Other

(1)

2

32

0

0

(1)

2

0

32

0

0

Adjusted EBITDA

403

323

342

321

1,389

321

427

414

148

164

199

127

638

93

551

487

541

448

2,027

415

427

414

1 Transaction expense (income), net is composed of transaction costs on significant business combinations and significant gains and losses incurred on disposals of group entities or businesses. These items are only incidentally related to our ordinary activities, are not expected to occur frequently and hinder comparability of our period-over-period performance. We believe separate identification allows users of the financial statements to take them into appropriate consideration when analyzing our performance.

 

Key Performance Indicators (KPIs)

Consolidated Key Performance Indicators (KPIs)

Third Quarter

Nine Months 

Periods Ended September 30

2015

2014

% change 

2015

2014

% change 

Installed base (end of period)

   Casino

34,755

39,102

-11.1%

34,755

39,102

-11.1%

   VLT - Government Sponsored (ex-Italy)

15,932

16,637

-4.2%

15,932

16,637

-4.2%

   VLT - Italy Supplier (B2B)

8,439

8,378

0.7%

8,439

8,378

0.7%

   Total installed base

59,126

64,117

-7.8%

59,126

64,117

-7.8%

   Yield (average revenue per unit per day - $0.00)

33.95

36.33

-6.6%

34.11

35.64

-4.3%

   Additional Italian Network Details:

   VLT - Operator (B2C)

10,955

10,859

0.9%

10,955

10,859

0.9%

   AWP

60,262

68,249

-11.7%

60,262

68,249

-11.7%

Machine units shipped

   New/Expansion

1,399

2,643

-47.1%

4,181

8,502

-50.8%

   Replacement 

5,223

10,058

-48.1%

19,416

23,439

-17.2%

   Total machines shipped

6,622

12,701

-47.9%

23,597

31,941

-26.1%

Global lottery same-store revenue growth

   Instants & draw games

6.7%

6.2%

   Multistate Jackpots

2.6%

3.5%

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

6.2%

5.9%

   Italy lottery revenue growth

-3.9%

1.4%

North America KPIs

Third Quarter

Nine Months 

Periods Ended September 30

2015

2014

% change 

2015

2014

% change 

Installed base (end of period)

40,919

44,941

-8.9%

40,919

44,941

-8.9%

Machine units shipped

   New/Expansion

895

2,053

-56.4%

2,198

6,766

-67.5%

   Replacement 

2,431

4,488

-45.8%

12,587

12,046

4.5%

   Total machines shipped

3,326

6,541

-49.2%

14,785

18,812

-21.4%

DoubleDown 

   Revenue ($ Thousands)

79,748

75,090

6.2%

233,401

215,666

8.2%

   Mobile penetration

50%

36%

38.9%

46%

34%

34.5%

   DAU (Daily Active Users)

1,852

1,816

2.0%

1,873

1,808

3.6%

   MAU (Monthy Active Users)1

4,536

5,717

-20.7%

4,564

5,970

-23.6%

   Bookings per DAU ($0.00)1

$      0.48

$      0.46

3.4%

$      0.47

$      0.44

5.9%

Lottery same-store revenue growth

   Instants & draw games

8.5%

7.5%

   Multistate Jackpots

3.8%

3.8%

   Total lottery same-store revenue growth

8.0%

7.0%

1As a single application with multiple games, active users equal unique users

International KPIs

Third Quarter

Nine Months 

Periods Ended September 30

2015

2014

% change 

2015

2014

% change 

Installed base (end of period)

9,768

10,798

-9.5%

9,768

10,798

-9.5%

Machine units shipped

   New/Expansion

504

590

-14.6%

1,983

1,736

14.2%

   Replacement 

2,792

5,570

-49.9%

6,829

11,393

-40.1%

   Total machines shipped

3,296

6,160

-46.5%

8,812

13,129

-32.9%

Lottery same-store revenue growth

   Instants & draw games

1.9%

2.8%

   Multistate Jackpots

-3.7%

1.9%

   Total lottery same-store revenue growth

1.6%

2.7%

Italy KPIs

Third Quarter

Nine Months 

Periods Ended September 30

2015

2014

% change 

2015

2014

% change 

(In € millions, except machines)

Lottery

Lotto wagers

1,677

1,754

-4.4%

5,222

4,883

6.9%

   10eLotto

1,009

963

4.8%

3,140

2,608

20.4%

   Core

605

610

-0.9%

1,809

1,910

-5.3%

   Late Numbers

63

181

-65.4%

273

365

-25.4%

Scratch & Win Wagers

2,108

2,176

-3.2%

6,625

6,967

-4.9%

Italy lottery revenue growth

-3.9%

1.4%

Gaming

Installed base (end of period)

   VLT - Operator (B2C)

10,955

10,859

0.9%

10,955

10,859

0.9%

   VLT - Supplier (B2B)

8,439

8,378

0.7%

8,439

8,378

0.7%

   AWP

60,262

68,249

-11.7%

60,262

68,249

-11.7%

Wagers

   VLT - Operator (B2C)

1,314

1,306

0.7%

3,993

4,170

-4.2%

   AWP

1,026

1,085

-5.4%

3,229

3,328

-3.0%

   Interactive Wagers (Gaming)

378

423

-10.6%

1,258

1,340

-6.1%

Other

   Sports Betting Wagers1

167

173

-3.6%

628

643

-2.3%

   Sports Betting Payout (%)1

81.9%

76.2%

5.7 pp

83.4%

77.8%

5.6 pp

1Includes Virtual Wagers and Pools & Horses

 

Logo - http://photos.prnewswire.com/prnh/20150406/196736LOGO

SOURCE International Game Technology PLC



RELATED LINKS

http://www.IGT.com