International Game Technology PLC Reports Second Quarter 2015 Results

- Adjusted EBITDA of $427 million and adjusted earnings per share of $0.35; GAAP earnings per share of ($0.59)

- Pro forma adjusted EBITDA of $1.575 -$1.675 billion expected in fiscal 2015

- Initiates quarterly cash dividend of $0.20 per ordinary share

Aug 11, 2015, 07:01 ET from International Game Technology PLC

LONDON, Aug. 11, 2015 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE: IGT) today reported financial results for the second quarter and six months ended June 30, 2015. This is IGT's inaugural earnings announcement since the combination of GTECH S.p.A. ("GTECH") and International Game Technology ("legacy IGT") was completed on April 7, 2015.

In a separate news release issued today, the Company's Board of Directors initiated a quarterly cash dividend of $0.20 per ordinary share. The first cash dividend is payable on September 10, 2015 to shareholders of record as of the close of business on August 26, 2015.

"We are pleased to report for the first time as a single Company," said Marco Sala, CEO of IGT. "As anticipated, our second quarter results reflect the stable growth characteristics of our global lottery operations and a meaningful sequential improvement in our gaming operations.  We have accomplished a lot in the past four months, notably organizing ourselves under a single leadership team and consolidating our manufacturing footprint. There is much more ahead of us.  In this year of transformation, we will continue to focus on integration to provide a solid foundation for future growth and value creation."

"The second quarter is a major milestone for our Company, as we present our first set of financials in dollars, under U.S. GAAP," said Alberto Fornaro, CFO of IGT. "Our adjusted operating income improved from the prior year's level on a pro forma, constant currency basis and our financial condition remains strong. We will continue to operate with our customary, disciplined cost management and are confident in achieving our synergy targets according to plans."

Summary of Consolidated Second Quarter Financial Results

Second Quarter - Reported

Second Quarter - Pro forma

Constant

Periods Ended June 30,

2015

2014

Change

2015

2014

Change

Currency

(%)

(%)

Change (%)

(In US $ millions, unless otherwise noted)

Revenue

1,290

945

36%

1,290

1,413

-9%

1%

Adjusted EBITDA

427

323

32%

427

487

-12%

0%

Adjusted Operating Income

275

198

39%

275

310

-11%

3%

Operating Income

116

171

-32%

116

280

-59%

-43%

Net income per diluted share

(0.59)

0.32

NM

(0.59)

 NA 

Adjusted net income per diluted share

0.35

0.42

-17%

0.35

 NA 

Net debt

8,384

2,642

NM

8,384

 NA 

Note: Pro forma is defined as the Company's results assuming the acquisition of legacy IGT as of January 1, 2014 and excluding the impacts of purchase accounting. 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 merger, a number of items affect the comparability of reported results.  Reported financial information for the second quarter of 2015 includes the results of operations of GTECH for the entire period and those of legacy IGT from the date of the acquisition. Reported financial information for the second quarter of 2014 includes only GTECH operations.  Pro forma figures represent the combined results of both companies in 2014. 

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 impacted 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 second quarter of 2015 compared to 1.37 in the second quarter of 2014. Constant currency changes for 2015 are calculated using the same foreign exchange rates as the corresponding 2014 period.

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.

As previously announced, the Company is organized into four customer-facing segments:

  • North America Gaming & Interactive includes sales to commercial customers in the U.S. and Canada, and has global responsibility for the product development, manufacturing, marketing and delivery of all Company gaming offerings, including DoubleDown Casino™ online social gaming, as well as interactive and sports betting.
  • North America Lottery focuses on World Lottery Association (WLA) customers in the U.S. and Canada, and has global responsibility for the product development, marketing, and delivery of all Company lottery offerings.
  • International is responsible for all business conducted outside of North America and Italy across the Company's entire product portfolio, with specialized and separate sales and operations groups supported by North America Lottery and North America Gaming & Interactive as appropriate.
  • Italy is responsible for all business conducted in Italy across the Company's entire product portfolio.  Product development, marketing, manufacturing and servicing are supported by North America Lottery and North America Gaming & Interactive as appropriate.

Overview of Consolidated Second Quarter Results

Reported consolidated revenue grew 36% to $1.29 billion from $945 million in the second quarter of 2014, reflecting GTECH's acquisition of legacy IGT. On a pro forma, constant currency basis, consolidated revenue increased 1%, reflecting double-digit increases in the North American Lottery and International segments, partially offset by single-digit declines in the Italy and North America Gaming & Interactive segments. During the quarter, the Company sold 10,147 gaming machines worldwide and global lottery same-store revenue excluding Italy increased 7%.

On a reported basis, adjusted EBITDA of $427 million was 32% above the second quarter of 2014.  On a pro forma, constant currency basis, EBITDA was in line with the prior year period. Higher global lottery profits were offset by lower gaming profits.

Reported operating income was $116 million, compared to $171 million in the second quarter of 2014. On a pro forma, constant currency basis, adjusted operating income increased 3% despite higher investment in research and development for both gaming and lottery.

Interest expense was $122 million compared to $56 million last year due to increased debt incurred to finance the legacy IGT acquisition.

Net loss attributable to IGT was $117 million in the second quarter of 2015. On an adjusted basis, net income was $70 million. The Company reported a net loss per diluted share of $0.59, but earned $0.35 per diluted share on an adjusted basis.

Cash from operations was $217 million in the first half of the year despite approximately $150 million in one-time, transaction-related costs, and capital expenditures were $167 million.

Cash and cash equivalents increased to $557 million as of June 30, 2015, compared to $503 million as of June 30, 2014.

At June 30, 2015, consolidated shareholders' equity totaled $3.56 billion and net debt was $8.38 billion.

Operating Segment Review

North America Gaming & Interactive  North America Gaming & Interactive revenue was $353 million compared to $28 million in the second quarter of 2014. On a pro forma basis, North America Gaming & Interactive revenue declined 8% as higher machine sales and social gaming revenue were offset by lower participation revenue and non-machine sales.  Due to the acquisition, there were four fewer days in the second quarter of 2015 for legacy IGT operations compared to the prior-year period.  Excluding the impact of the four fewer days, total pro forma revenue declined 5%.

Total service revenue was $237 million compared to $9 million in the prior-year period. On a pro forma basis, service revenue declined 10% as a result of a lower installed base, partially mitigated by improved game performance. Excluding the impact of the four fewer days in the quarter for legacy IGT operations, pro forma service revenue declined 6%.  Product sales were $116 million compared to $19 million in the second quarter of 2014. On a pro forma, constant currency basis, product sales were in line with the prior year, reflecting the sale of 6,218 units, supported by strong demand for new cabinets during the quarter. The increase in machine sales was partially offset by an expected decrease in intellectual property revenue. 

North America Lottery Revenue for the North America Lottery segment was $270 million in the quarter, 24% higher than the prior year on a reported basis and 14% greater on a pro forma basis. The growth in revenue primarily reflects the impact of penalties recognized in the prior-year period. Excluding prior-year penalties, pro forma revenue for the North America Lottery segment declined 3%.

Service revenue increased 35% on a reported basis and 22% on a pro forma basis, reflecting 6% same-store revenue growth supported by strong instant ticket sales and local draw-based game performance. New contracts also contributed to service revenue growth.  Product sales of $17 million in the quarter were below the second quarter of 2014, reflecting large, one-time sales in the prior-year period.

International International revenue was $247 million, 67% higher than the prior year on a reported basis. On a pro forma, constant currency basis, international revenue rose 17%, reflecting strong product sales for lottery terminals and gaming machines.

International lottery same-store revenue was up approximately 8% on continued, broad-based strength in instant tickets and robust jackpot growth in Eastern Europe.  Lottery product sales increased significantly on large South African terminal and system sales.

International gaming service revenue nearly tripled on a reported basis but declined 1% on a pro forma, constant currency basis, reflecting a contraction in the installed base, mostly due to conversion of leased units in Mexico over the last year. Gaming product sales increased significantly, supported by 3,929 unit sales across Latin America, Europe and South Africa. 

Italy Revenue in Italy was $432 million, 22% below the second quarter of 2014, principally due to the weakening of the euro against the U.S. dollar. Excluding the impact of currency translation, Italian revenue was down 4% from the prior-year period, as strong growth in Lotto was offset by the anticipated impact of higher taxes on gaming machines.

Total Lotto wagers in the quarter were up 11% to €1.73 billion compared to €1.56 billion last year, driven by strong performance in 10eLotto and Numero ORO. Instant-ticket wagers declined 4% to €2.22 billion versus €2.32 billion last year, primarily due to the timing of new product introductions.

Machine gaming revenue declined 8% in constant currency, reflecting the higher taxes associated with the 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 offset a decline in the number of units.

Outlook

The Company expects to realize $230 million in cost synergies by April 2018, and is expected to achieve two-thirds of targeted savings on an annualized basis by April 2016.

The Company expects pro forma adjusted EBITDA of $1.575 -$1.675 billion in Fiscal Year 2015. Capital expenditures for the year are estimated at $450-$500 million, which does not include €350 million (approximately $385 million at current exchange rates) of upfront capital if the Company is successful in renewing the Italian Lotto concession.

Conference Call and Webcast

Today, at 8:00 a.m. EDT / 1:00 p.m. BST / 2:00 p.m. CEST, management will host a conference call to present the second quarter 2015 results. Listeners may access a live webcast of the conference call along with accompanying slides under "News and Presentations" on IGT's Investor Relations website at www.merger.igt.com/investors. 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 1903 for participants in the United Kingdom and +1-212-444-0895 for listeners outside the United Kingdom. The conference ID/confirmation code is 2521829. 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 2521829.

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 more than 13,000 employees. For more information, please visit www.merger.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 such 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 legacy IGT and GTECH 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; risks that the Company may not obtain its anticipated financial results in one or more future periods; 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; the resolution of pending and potential future legal regulatory or tax proceedings and investigations; 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 the company's business, including those described in IGT's annual report on Form 20-F for the fiscal year ended December 31, 2014 and other documents filed from time to time with the Securities and Exchange Commission (the "SEC"). Except as required under applicable law, the company does not assume any obligation to update these 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, +1-401-392-7452 James Hurley, Investor Relations, +1-401-392-7190 Simone Cantagallo, +39 06 51899 030; for Italian media inquiries

 

International Game Technology PLC and Subsidiaries

Consolidated Income Statements

 For the three months ended  

 June 30, 

2015

2014

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

 Unaudited 

Service revenue

1,050,489

861,555

Product sales

239,591

83,763

Total revenue

1,290,080

945,318

Cost of services

632,655

589,558

Cost of sales

177,244

51,685

Selling, general and administrative

232,586

99,184

Research and development

83,933

24,810

Restructuring expense

15,818

4,193

Impairment loss

-

1,802

Transaction expense, net

32,344

3,406

1,174,580

774,638

Operating income

115,500

170,680

Interest income

7,506

1,169

Equity income (loss), net

243

(2,878)

Other income

2,340

498

Other expense

(1,563)

(3,523)

Foreign exchange loss, net

(102,344)

(867)

Interest expense

(122,418)

(55,922)

(216,236)

(61,523)

Income (loss) before income tax expense

(100,736)

109,157

Income tax expense 

11,599

47,355

Net income (loss)

(112,335)

61,802

Less: Net income attributable to non-controlling interests

4,555

6,628

Net income (loss) attributable to IGT

(116,890)

55,174

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

(0.59)

0.32

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

(0.59)

0.32

Weighted-average shares - basic

197,149

174,393

Weighted-average shares - diluted

197,149

174,964

 

International Game Technology PLC and Subsidiaries

Consolidated Income Statements

 For the six months ended  

 June 30, 

2015

2014

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

 Unaudited 

Service revenue

1,859,782

1,827,648

Product sales

297,571

154,941

Total revenue

2,157,353

1,982,589

Cost of services

1,158,770

1,207,033

Cost of sales

212,342

93,584

Selling, general and administrative

328,037

200,774

Research and development

106,154

50,973

Restructuring expense

30,299

8,094

Impairment loss

-

1,802

Transaction expense, net

43,394

3,406

1,878,996

1,565,666

Operating income

278,357

416,923

Interest income

8,119

2,258

Equity income (loss), net

15

(2,784)

Other income

2,954

1,190

Other expense

(138,515)

(6,578)

Foreign exchange loss, net

(95,340)

(2,441)

Interest expense

(211,918)

(111,580)

(434,685)

(119,935)

Income (loss) before income tax expense

(156,328)

296,988

Income tax expense 

454

120,981

Net income (loss)

(156,782)

176,007

Less: Net income attributable to non-controlling interests

8,281

15,394

Net income (loss) attributable to IGT

(165,063)

160,613

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

(0.89)

0.92

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

(0.89)

0.92

Weighted-average shares - basic

185,007

174,260

Weighted-average shares - diluted

185,007

174,713

 

International Game Technology PLC and Subsidiaries

Condensed Consolidated Balance Sheets

 June 30,  

 December 31,  

2015

2014

($ thousands)

 Unaudited 

ASSETS

Cash and cash equivalents

557,093

317,106

Restricted cash

152,254

108,115

Trade and other receivables

1,050,491

919,606

Inventories

288,720

184,593

Other current assets

439,702

223,703

Income taxes receivable

79,174

6,628

Deferred income taxes

153,259

49,877

Total current assets

2,720,693

1,809,628

Systems, equipment and other assets related to contracts, net

1,169,361

1,086,426

Property, plant and equipment, net

319,048

123,571

Goodwill

7,027,810

4,143,064

Intangible and other assets, net

4,880,332

1,500,836

Deferred income taxes

86,045

14,581

Total non-current assets

13,482,596

6,868,478

TOTAL ASSETS

16,203,289

8,678,106

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Accounts payable

1,044,018

1,241,042

Other current liabilities

864,459

862,357

Current portion of long-term debt

1,556

849,600

Short-term borrowings

-

10,800

Income taxes payable

94,124

20,892

Total current liabilities

2,004,157

2,984,691

Long-term debt, less current portion

8,939,402

2,099,071

Deferred income taxes

1,207,109

252,493

Other non-current liabilities

492,372

200,417

Total non-current liabilities

10,638,883

2,551,981

TOTAL LIABILITIES

12,643,040

5,536,672

COMMITMENTS AND CONTINGENCIES

-

-

SHAREHOLDERS' EQUITY

3,560,249

3,141,434

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

16,203,289

8,678,106

 

International Game Technology PLC and Subsidiaries

Condensed Consolidated Statements of Cash Flows

 For the six months ended  

 June 30, 

2015

2014

($ thousands)

 Unaudited 

Cash flows from operating activities

217,085

481,117

Cash flows from investing activities

Acquisition of IGT, net of cash acquired

(3,241,415)

-

Capital expenditures

(167,092)

(167,188)

Other investing activities

22,461

661

Net cash flows used in investing activities

(3,386,046)

(166,527)

Cash flows from financing activities

Proceeds from issuance of long-term debt

6,599,368

-

Net repayments of short-term borrowings

(4,623)

(1,122)

Dividends paid - non-controlling interest

(27,205)

(44,705)

Payments in connection with note consents

(29,022)

-

Return of capital - non-controlling interest

(30,281)

(58,110)

Payments on bridge facility

(51,409)

-

Net payments on financial liabilities

(54,493)

-

Debt issuance costs paid

(78,878)

-

Payments in connection with the early extinguishment of debt

(79,526)

-

Dividends paid 

(129,524)

(177,608)

Payments to withdrawing shareholders

(407,759)

-

Principal payments on long-term debt

(2,300,504)

-

Acquisition of non-controlling interest

-

(99,726)

Other

28,936

(2,780)

Net cash flows provided by (used in) financing activities

3,435,080

(384,051)

Net increase (decrease) in cash and cash equivalents

266,119

(69,461)

Effect of exchange rate changes on cash

(26,132)

(5,147)

Cash and cash equivalents at the beginning of the period

317,106

578,008

Cash and cash equivalents at the end of the period

557,093

503,400

 

International Game Technology PLC and Subsidiaries

Net Debt

June 30,

December 31,

($ thousands)

2015

2014

Long-term debt, less current portion

Senior Notes

4,867,658

-

Revolving Facilities

1,337,982

876,505

Term Loan

890,402

-

Notes due February 2018

546,633

590,557

Notes due March 2020

532,788

575,270

Notes due June 2019

526,720

-

Notes due June 2020

124,933

-

Notes due October 2023

61,369

-

Capital Securities

50,754

54,975

Other

163

1,764

8,939,402

2,099,071

Current portion of long-term debt 

1,556

849,600

Short-term borrowings

-

10,800

Total debt

8,940,958

2,959,471

Cash and cash equivalents

557,093

317,106

Net debt

8,383,865

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

June 30,

Change

2015

2014

$

%

Revenue

1,290,080

945,318

344,762

36.5

Adjusted EBITDA

426,633

322,763

103,870

32.2

Operating income

115,500

170,680

(55,180)

(32.3)

Adjusted Operating income

274,886

198,192

76,694

38.7

Net income (loss) attributable to IGT

(116,890)

55,174

(172,064)

(311.9)

Adjusted Net income attributable to IGT

70,454

73,500

(3,046)

(4.1)

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

(0.59)

0.32

(0.91)

(284.4)

Adjusted Net income attributable to IGT per ordinary share - diluted

0.35

0.42

(0.07)

(16.7)

Weighted average shares - diluted

197,149

174,964

22,185

12.7

Adjusted weighted average shares - diluted

198,851

174,964

23,887

13.7

Reconciliations of Non-GAAP Financial Measures

For the three months ended

June 30,

Change

2015

2014

$

%

Operating income

115,500

170,680

(55,180)

(32.3)

Depreciation 

92,687

76,414

16,273

21.3

Amortization

118,762

37,337

81,425

218.1

Transaction expense, net (1)

32,344

3,406

28,938

>500.0  

Service revenue amortization

27,035

32,595

(5,560)

(17.1)

Non-cash purchase accounting (excluding D&A)

19,378

-

19,378

-

Restructuring expense

15,818

4,193

11,625

277.2

Stock compensation

5,109

(3,664)

8,773

239.4

Impairment loss

-

1,802

(1,802)

(100.0)

Adjusted EBITDA

426,633

322,763

103,870

32.2

Operating income

115,500

170,680

(55,180)

(32.3)

Purchase accounting

111,224

19,913

91,311

458.5

Transaction expense, net (1)

32,344

3,406

28,938

>500.0  

Restructuring expense

15,818

4,193

11,625

277.2

Adjusted Operating income

274,886

198,192

76,694

38.7

Net income (loss) attributable to IGT

(116,890)

55,174

(172,064)

(311.9)

Purchase accounting

117,681

19,495

98,186

>500.0  

Foreign exchange loss

102,344

867

101,477

>500.0  

Transaction expense, net (1)

32,344

3,406

28,938

>500.0  

Restructuring expense

15,818

4,193

11,625

277.2

Income tax benefit

(80,843)

(9,635)

(71,208)

>500.0  

Adjusted Net income attributable to IGT

70,454

73,500

(3,046)

(4.1)

Weighted average shares - diluted

197,149

174,964

22,185

12.7

Dilutive shares

1,702

-

1,702

-

Adjusted weighted average shares - diluted (2)

198,851

174,964

23,887

13.7

Adjusted Net income attributable to IGT per ordinary share - diluted

0.35

0.42

(0.07)

(16.7)

(1) Transaction expense, 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.

(2) Includes dilutive shares that are excluded from the diluted earnings per share computation as the impact would be anti-dilutive due to the loss incurred during the second quarter of 2015.

 

International Game Technology PLC and Subsidiaries

Operating Metrics and Reconciliations

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

For the six months ended

June 30,

Change

2015

2014

$

%

Revenue

2,157,353

1,982,589

174,764

8.8

Adjusted EBITDA

748,086

725,765

22,321

3.1

Operating income

278,357

416,923

(138,566)

(33.2)

Adjusted Operating income

479,894

466,271

13,623

2.9

Net income (loss) attributable to IGT

(165,063)

160,613

(325,676)

(202.8)

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

(0.89)

0.92

(1.81)

(196.7)

Weighted average shares - diluted

185,007

174,713

10,294

5.9

Reconciliations of Non-GAAP Financial Measures

For the six months ended

June 30,

Change

2015

2014

$

%

Operating income

278,357

416,923

(138,566)

(33.2)

Depreciation 

164,543

159,173

5,370

3.4

Amortization

152,132

72,645

79,487

109.4

Service revenue amortization

53,880

65,169

(11,289)

(17.3)

Transaction expense, net (1)

43,394

3,406

39,988

>500.0  

Restructuring expense

30,299

8,094

22,205

274.3

Non-cash purchase accounting (excluding D&A)

19,378

-

19,378

-

Stock compensation

6,103

(1,447)

7,550

>500.0  

Impairment loss

-

1,802

(1,802)

(100.0)

Adjusted EBITDA

748,086

725,765

22,321

3.1

Operating income

278,357

416,923

(138,566)

(33.2)

Purchase accounting

127,844

37,848

89,996

237.8

Transaction expense, net (1)

43,394

3,406

39,988

>500.0  

Restructuring expense

30,299

8,094

22,205

274.3

Adjusted Operating income

479,894

466,271

13,623

2.9

Cash flows from operating activities

217,085

481,117

(264,032)

(54.9)

Capital expenditures

(167,092)

(167,188)

96

0.1

Free Cash Flow

49,993

313,929

(263,936)

(84.1)

(1) Transaction expense, 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 Segment Performance

Pro Forma Revenue Detail

($ millions)

 As Reported 

 Legacy IGT 

2014

2015

2014

2015

 Q1 

 Q2 

 Q3 

 Q4 

 FY 

 Q1 

 Q2  

 Q1 

 Q2 

 Q3 

 Q4 

 FY 

 Q1 

North America Gaming & Interactive

22

28

37

45

133

30

353

393

354

383

343

1,473

311

Service Revenue

8

9

15

13

46

13

237

263

255

257

261

1,036

245

Product Sales

14

19

22

32

87

17

116

131

99

126

82

437

66

NA Lottery

261

217

238

224

940

253

270

20

20

20

20

81

19

Service Revenue

238

187

222

217

865

241

253

20

20

20

20

81

19

Product Sales

23

29

15

7

75

12

17

-

-

-

-

-

-

International

152

148

138

192

631

131

247

99

93

134

87

413

69

Service Revenue

119

114

115

127

474

103

137

45

42

42

38

167

37

Product Sales

33

34

24

66

157

28

110

54

51

92

50

247

33

Italy

601

552

525

510

2,188

453

432

-

-

-

-

-

-

Service Revenue

601

551

524

509

2,185

452

431

-

-

-

-

-

-

Product Sales

1

1

1

1

3

1

1

-

-

-

-

-

-

Purchase Accounting

-

-

-

-

-

-

-12

-

-

-

-

-

-

Service Revenue

-

-

-

-

-

-

-8

-

-

-

-

-

-

Product Sales

-

-

-

-

-

-

-4

-

-

-

-

-

-

Revenue Total

1,037

945

938

972

3,892

867

1,290

513

468

537

451

1,968

399

Service Revenue

966

861

876

866

3,569

809

1,050

328

317

319

319

1,284

301

Product Sales

71

84

62

106

322

58

240

185

150

217

131

684

99

 Pro Forma 

YtY Variance

2014

2015

Actual FX

Constant FX

 Q1 

 Q2 

 Q3 

 Q4 

 FY 

 Q1 

 Q2  

Q2

Q2 YTD

Q2

Q2 YTD

North America Gaming & Interactive

416

383

420

388

1,606

341

353

-7.7%

-13.0%

-6.8%

-12.1%

Service Revenue

271

264

272

275

1,082

257

237

-10.3%

-7.6%

-10.0%

-7.3%

Product Sales

145

118

148

113

524

83

116

-2.0%

-24.2%

0.3%

-22.0%

North America Lottery

282

237

258

245

1,021

273

270

14.0%

4.7%

14.6%

5.2%

Service Revenue

259

208

242

237

946

261

253

22.0%

10.3%

22.6%

10.7%

Product Sales

23

29

15

7

75

12

17

-42.5%

-45.1%

-41.3%

-43.8%

International

251

241

272

279

1,044

200

247

2.5%

-9.2%

17.1%

3.3%

Service Revenue

164

155

157

164

640

140

137

-12.2%

-13.5%

0.6%

-1.3%

Product Sales

88

85

115

115

404

61

110

29.2%

-1.1%

47.2%

11.8%

Italy

601

552

525

510

2,188

453

432

-21.8%

-23.3%

-3.7%

-5.4%

Service Revenue

601

551

524

509

2,185

452

431

-21.8%

-23.3%

-3.7%

-5.4%

Product Sales

1

1

1

1

3

1

1

-33.3%

-24.8%

-19.9%

-9.4%

Purchase Accounting

-

-

-

-

-

-

(12)

-

-

-

-

Service Revenue

-

-

-

-

-

-

(8)

-

-

-

-

Product Sales

-

-

-

-

-

-

(4)

-

-

-

-

Revenue Total

1,550

1,413

1,474

1,422

5,860

1,267

1,290

-8.7%

-13.7%

1.2%

-4.3%

Service Revenue

1,294

1,179

1,195

1,185

4,853

1,110

1,050

-10.9%

-12.6%

-0.6%

-2.6%

Product Sales

256

234

279

237

1,006

157

240

2.4%

-19.1%

10.3%

-13.2%

 

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  

 Q1 

 Q2 

 Q3 

 Q4 

 FY 

 Q1 

 Q1 

 Q2 

 Q3 

 Q4 

 FY 

 Q1 

 Q2  

Service revenue

966

862

876

866

3,570

809

1,050

328

317

319

319

1,284

301

1,294

1,179

1,195

1,186

4,853

1,110

1,050

Product sales

71

84

62

106

322

58

240

185

150

218

131

684

99

256

234

279

237

1,006

157

240

Total revenue

1,037

945

938

972

3,892

867

1,290

513

468

537

451

1,968

399

1,550

1,413

1,474

1,422

5,860

1,267

1,290

Cost of services

617

590

581

617

2,405

526

633

126

117

117

122

482

116

743

707

698

738

2,887

642

633

Cost of sales

42

52

38

59

190

35

177

92

66

93

71

322

63

134

118

131

130

512

99

177

Selling, general and administrative

102

99

105

110

416

95

233

137

113

122

115

488

138

238

213

228

225

903

233

233

Research and development

26

25

30

27

108

22

84

64

59

57

64

245

64

90

84

87

91

352

86

84

Restructuring expense

4

4

5

10

23

14

16

-

-

-

-

-

-

4

4

5

10

23

14

16

Impairment loss

-

2

-

1

3

-

-

22

2

15

1

40

7

22

4

15

2

43

7

-

Unusual expense

-

3

-5

37

35

11

32

-

-

10

14

24

19

-

3

5

51

59

30

32

791

775

754

860

3,180

704

1,175

441

358

414

387

1,600

406

1,232

1,133

1,168

1,247

4,780

1,111

1,175

Operating income

246

171

184

112

712

163

116

72

110

123

63

368

-7

318

280

306

175

1,080

156

116

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  

 Q1 

 Q2 

 Q3 

 Q4 

 FY 

 Q1 

 Q1 

 Q2 

 Q3 

 Q4 

 FY 

 Q1 

 Q2  

Operating income

246

171

184

112

712

163

116

72

110

123

63

368

-7

318

280

306

175

1,080

156

116

Purchase Accounting

18

20

20

20

78

17

111

2

3

8

5

18

5

20

22

28

25

96

22

111

Transaction Expense, net

-

3

-5

37

35

11

32

-

-

10

14

24

19

-

3

5

51

59

30

32

Restructuring

4

4

5

10

23

14

16

-

-

-

-

-

-

4

4

5

10

23

14

16

Adjusted Operating Income

268

198

204

179

849

205

275

74

112

141

82

410

17

343

310

345

261

1,259

222

275

Operating income

246

171

184

112

712

163

116

72

110

123

63

368

-7

318

280

306

175

1,080

156

116

Depreciation 

83

76

84

80

324

72

93

34

32

30

28

123

28

116

108

114

108

447

99

93

Amortization

35

37

37

39

149

33

119

14

14

14

10

51

10

49

51

51

49

200

43

119

Transaction Expense, net

-

3

-5

37

35

11

32

-

-

10

14

24

19

-

3

5

51

59

30

32

Other Svc Revenue Amort

33

33

31

30

126

27

27

-

-

-

-

-

-

33

33

31

30

126

27

27

Non-cash purchase price

-

-

-

-

-

-

19

-

-

-

-

-

-

-

-

-

-

-

-

19

Restructuring costs

4

4

5

10

23

14

16

-

-

-

-

-

-

4

4

5

10

23

14

16

Stock compensation

2

-4

6

12

16

1

5

8

7

9

9

32

6

10

3

15

21

48

7

5

Impairment loss

-

2

-

1

3

-

-

22

2

15

1

40

7

22

4

15

2

43

7

-

Adjusted EBITDA

403

323

342

321

1,389

321

427

148

164

200

125

638

62

551

487

542

446

2,027

383

427

 

Key Performance Indicators (KPIs)

Consolidated Key Performance Indicators (KPIs)

Second Quarter

Six Months 

Periods Ended June 30

2015

2014

% change 

2015

2014

% change 

Installed base (end of period)

   Casino

35,332

41,437

-14.7%

35,332

41,437

-14.7%

   VLT - Government Sponsored (ex-Italy)

16,515

16,733

-1.3%

16,515

16,733

-1.3%

   VLT - Italy Supplier (B2B)

8,465

8,202

3.2%

8,465

8,202

3.2%

   Total installed base

60,312

66,372

-9.1%

60,312

66,372

-9.1%

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

34.52

34.51

0.0%

34.17

35.17

-2.8%

   Additional Italian Network Details:

   VLT - Operator (B2C)

10,988

10,894

0.9%

10,988

10,894

0.9%

   AWP

62,156

69,726

-10.9%

62,156

69,726

-10.9%

Machine units shipped

   New/Expansion

2,187

2,494

-12.3%

2,782

5,859

-52.5%

   Replacement 

7,960

6,907

15.2%

14,193

13,381

6.1%

   Total machines shipped

10,147

9,401

7.9%

16,975

19,240

-11.8%

Global lottery same-store revenue growth

   Instants & draw games

8.0%

6.5%

   Multistate Jackpots

-2.5%

3.4%

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

6.9%

6.1%

   Italy lottery revenue growth

3.6%

4.2%

North America KPIs

Second Quarter

Six Months 

Periods Ended June 30

2015

2014

% change 

2015

2014

% change 

Installed base (end of period)

41,781

45,673

-8.5%

41,781

45,673

-8.5%

Machine units shipped

   New/Expansion

974

2,047

-52.4%

1,303

4,713

-72.4%

   Replacement 

5,244

3,169

65.5%

10,156

7,558

34.4%

   Total machines shipped

6,218

5,216

19.2%

11,459

12,271

-6.6%

DoubleDown 

   Revenue ($ Thousands)

73,010

71,751

1.8%

153,653

140,576

9.3%

   Mobile penetration

47%

34%

38.8%

44%

33%

33.4%

   DAU (Daily Active Users)

1,839

1,833

0.4%

1,884

1,804

4.4%

   MAU (Monthy Active Users)1

4,421

5,975

-26.0%

4,578

6,096

-24.9%

   Bookings per DAU ($0.00)1

$   0.45

$   0.43

5.1%

$     0.46

$     0.43

7.0%

Lottery same-store revenue growth

   Instants & draw games

7.6%

6.9%

   Multistate Jackpots

-2.6%

3.8%

   Total lottery same-store revenue growth

6.4%

6.5%

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

International KPIs

Second Quarter

Six Months 

Periods Ended June 30

2015

2014

% change 

2015

2014

% change 

Installed base (end of period)

10,066

12,497

-19.5%

10,066

12,497

-19.5%

Machine units shipped

   New/Expansion

1,213

447

171.4%

1,479

1,146

29.1%

   Replacement 

2,716

3,738

-27.3%

4,037

5,823

-30.7%

   Total machines shipped

3,929

4,185

-6.1%

5,516

6,969

-20.8%

Lottery same-store revenue growth

   Instants & draw games

9.0%

5.3%

   Multistate Jackpots

-2.0%

1.4%

   Total lottery same-store revenue growth

8.1%

5.0%

Italy KPIs

Second Quarter

Six Months 

Periods Ended June 30

2015

2014

% change 

2015

2014

% change 

(In € millions, except machines)

Lottery

Lotto wagers

1,728

1,560

10.7%

3,545

3,129

13.3%

   10eLotto

1,056

822

28.5%

2,130

1,645

29.5%

   Core

566

613

-7.7%

1,204

1,299

-7.3%

   Late Numbers

106

125

-15.5%

210

184

14.0%

Scratch & Win Wagers

2,215

2,315

-4.3%

4,517

4,790

-5.7%

Italy lottery revenue growth

3.6%

4.2%

Gaming

Installed base (end of period)

   VLT - Operator (B2C)

10,988

10,894

0.9%

10,988

10,894

0.9%

   VLT - Supplier (B2B)

8,465

8,202

3.2%

8,465

8,202

3.2%

   AWP

62,156

69,726

-10.9%

62,156

69,726

-10.9%

Other

   Interactive Wagers (Gaming)

414

444

-6.7%

880

917

-4.0%

   Sports Betting Wagers1

205

218

-6.2%

461

470

-1.8%

   Sports Betting Payout (%)1

82.9%

82.4%

0.5 pp

83.9%

78.4%

5.5 pp

1Includes Virtual Wagers and Pools & Horses

 

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

 

SOURCE International Game Technology PLC



RELATED LINKS

http://www.merger.igt.com