International Game Technology PLC Reports Third Quarter 2019 Results
- Revenue of $1.15 billion, up 3% at constant currency on significant growth in global gaming product sales
- Operating income of $154 million; Adjusted EBITDA of $407 million
- Strong year-to-date operating cash flow of $789 million and free cash flow of $456 million
- Cash dividend declared of $0.20 per ordinary share
LONDON, Nov. 14, 2019 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the third quarter ended September 30, 2019. Today, at 8:00 a.m. EST, management will host a conference call and webcast to present the results; access details are provided below.
"Our core businesses achieved significant momentum in the third quarter and year-to-date periods," said Marco Sala, CEO of IGT. "Key performance indicators were solid in the quarter – gaming machine unit shipments increased 44%, while same-store revenue for draw games and instants rose 4%. Our leading positions are rooted in our focus on player-driven performance, which was on display at recent lottery and gaming trade shows and should sustain our momentum going forward."
"IGT has generated free cash flow in excess of $450 million in the first nine months," said Alberto Fornaro, CFO of IGT. "This confirms the inflection we expected to achieve this year. We are well positioned to achieve our 2019 strategic and financial goals."
Overview of Consolidated Third Quarter 2019 Results
Constant | ||||
Quarter Ended | Y/Y | Currency | ||
September 30, | Change | Change | ||
2019 | 2018 | (%) | (%) | |
(In $ millions, unless otherwise noted) | ||||
Revenue | 1,153 | 1,156 | 0% | 3% |
Operating income | 154 | 200 | -23% | -19% |
Net income/(loss) per diluted share | $0.51 | $0.11 | NM | |
Adjusted EBITDA | 407 | 443 | - 8% | -5% |
Adjusted operating income | 221 | 257 | -14% | -11% |
Adjusted net income per diluted share | $0.21 | $0.31 | -32% | |
Net debt | 7,354 | 7,570 | -3% | |
Note: Adjusted EBITDA, adjusted operating income, and adjusted net income per diluted share are non-GAAP financial measures. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release. |
Consolidated revenue of $1.15 billion, up 3% at constant currency
- Sharp growth in global gaming product sales
- Overcame significant Finland multi-year software sale in prior-year quarter and impact of higher machine gaming taxes in Italy
At constant currency, operating income down 19% to $154 million; adjusted operating income down 11% to $221 million
- Non-cash write-down of pre-paid social gaming-related license
Adjusted EBITDA declined 5% at constant currency to $407 million
- Differential profit flow-through on revenue mix, primarily due to high-margin Finland software transaction in prior year
- Higher R&D and SG&A expenses, primarily due to timing
Interest expense, net was $103 million, down 1% from the prior-year quarter
Income taxes of $45 million; adjusted taxes of $51 million, down from $60 million on lower pre-tax income
Net income attributable to IGT was $104 million; adjusted net income attributable to IGT was $43 million, down from $64 million in the prior year
Net income per diluted share of $0.51; adjusted net income per diluted share of $0.21 versus $0.31 in the prior year
Net debt of $7.35 billion, down 5% from $7.76 billion at December 31, 2018
Operating Segment Review
North America Gaming & Interactive
Select Financial Data | Constant | Key Performance Indicators | % | ||||||||
Period Ended September 30 | Q3 '19 | Q3 '18 | FX | Period Ended September 30 | Q3 '19 | Q3 '18 | Change | ||||
Gaming | Total revenue | 253 | 231 | 10% | Installed base units (end of period) | ||||||
Gaming services | 146 | 152 | -4% | Casino | 21,071 | 23,357 | -9.8% | ||||
Terminal | 103 | 106 | -2% | ||||||||
Other | 43 | 46 | -7% | Machine units shipped | |||||||
Product sales | 107 | 79 | 36% | New/expansion | 791 | 843 | -6.2% | ||||
Terminal | 74 | 54 | 37% | Replacement | 4,150 | 2,998 | 38.4% | ||||
Other | 33 | 25 | 34% | Total machines shipped | 4,941 | 3,841 | 28.6% | ||||
Other | Total revenue | 4 | 0 | NM | |||||||
Service revenue | 4 | 0 | NM | ||||||||
Note: Oklahoma agreement executed in Q2'19 reduces installed base by 2,223 units; no impact to units shipped | |||||||||||
Total | Revenue | 257 | 231 | 12% | |||||||
Operating income | 62 | 45 | 34% | ||||||||
Revenue of $257 million, up 11%
- Product sales revenue of $107 million, up 36% over the prior year
- Terminal product sales rose 37%
- Significant increase in replacement units driven by strength of product offering; higher average selling price
- Lower new/expansion activity compared to the prior year
- Other product sales up 34% on high-margin, multi-year technology license
- Gaming service revenue of $146 million, compared to $152 million in the prior-year period
- Installed base stable year-over-year and sequentially on an underlying basis; yields higher
- Impact of multi-year poker contracts executed in prior periods
- Other service revenue driven by contribution from sports betting
Operating income of $62 million, up 38% compared to the prior year
- Increased unit shipments
- High-margin, multi-year technology license
North America Lottery
Select Financial Data | Constant | Key Performance Indicators | % | ||||||||
Period Ended September 30 | Q3 '19 | Q3 '18 | FX | Period Ended September 30 | Q3 '19 | Q3 '18 | Change | ||||
Gaming | Total revenue | 38 | 37 | 1% | Installed base units (end of period) | ||||||
Gaming services | 37 | 37 | 1% | VLT - Government sponsored | 14,294 | 14,965 | -4.5% | ||||
Terminal | 24 | 25 | -4% | ||||||||
Other | 13 | 12 | 11% | Lottery same-store revenue growth | |||||||
Product sales | 0 | 0 | 0% | Instant ticket & draw games | 3.9% | ||||||
Multistate jackpots | -28.2% | ||||||||||
Lottery | Total revenue | 242 | 242 | 0% | Total lottery same-store revenue growth | 0.0% | |||||
Lottery services | 215 | 225 | -4% | ||||||||
FMC | 193 | 200 | -4% | ||||||||
Instant ticket & draw games | 157 | 164 | -4% | ||||||||
Other services | 36 | 36 | 0% | ||||||||
LMA | 23 | 25 | -10% | ||||||||
Product sales | 26 | 17 | 54% | ||||||||
Other | Total revenue | 1 | 0 | NM | |||||||
Service revenue | 1 | 0 | NM | ||||||||
Total | Revenue | 281 | 279 | 1% | |||||||
Operating income | 51 | 60 | -15% | ||||||||
Revenue of $281 million, essentially in line with the prior year
- Lottery service revenue of $215 million, compared to $225 million in the prior year
- Instant ticket & draw game same-store revenue up 3.9% driven by broad-based strength across jurisdictions
- Lower multistate jackpot activity
- Impact of Illinois contract conclusion
- Lottery product sales revenue up on strong demand for self-service vending machines
- Gaming service revenue stable
Operating income of $51 million, down from $60 million
- Impact of Illinois and lower jackpot activity (including effect on LMAs)
- Expenses related to Rhode Island contract extension
International
Select Financial Data | Constant | Key Performance Indicators | % | ||||||||
Period Ended September 30 | Q3 '19 | Q3 '18 | FX | Period Ended September 30 | Q3 '19 | Q3 '18 | Change | ||||
Gaming | Total revenue | 118 | 98 | 27% | Installed base units (end of period) | ||||||
Gaming services | 27 | 33 | -12% | Casino | 9,877 | 12,332 | -19.9% | ||||
Terminal | 11 | 13 | -13% | VLT - Government sponsored | 4,455 | 3,675 | 21.2% | ||||
Other | 16 | 19 | -11% | Total installed base units | 14,332 | 16,007 | -10.5% | ||||
Product sales | 91 | 65 | 46% | ||||||||
Terminal | 65 | 47 | 42% | Machine units shipped | |||||||
Other | 26 | 18 | 57% | New/expansion | 210 | 529 | -60.3% | ||||
Replacement | 5,034 | 2,681 | 87.8% | ||||||||
Lottery | Total revenue | 79 | 100 | -19% | Total machines shipped | 5,244 | 3,210 | 63.4% | |||
Lottery services | 73 | 69 | 9% | ||||||||
FMC | 73 | 69 | 9% | Lottery same-store revenue growth | |||||||
Instant ticket & draw games | 55 | 54 | 7% | Instant ticket & draw games | 5.0% | ||||||
Other services | 17 | 15 | 17% | Multistate jackpots | 29.3% | ||||||
Product sales | 6 | 31 | -80% | Total lottery same-store revenue growth | 6.5% | ||||||
Other | Total revenue | 16 | 18 | 0% | |||||||
Service revenue | 16 | 17 | 2% | ||||||||
Product sales | 0 | 0 | 0% | ||||||||
Total | Revenue | 213 | 216 | 3% | |||||||
Operating income | 30 | 56 | -40% | ||||||||
Revenue of $213 million, up 3% at constant currency
- Gaming product sales revenue of $91 million, up 46% at constant currency
- Broad-based geographic demand drives significant increase in units shipped, including 1,547 Sweden VLTs
- Other product sales up on higher systems revenue
- Gaming service revenue was $27 million
- Year-over-year and sequential declines in the installed base due to conversions in prior periods
- Lower interactive performance
- Other revenue stable
- Lottery service revenue of $73 million, up 9% at constant currency, fueled by 6.5% same-store revenue growth
- Lottery product sales reflect significant Finland software sale in the prior year
Operating income of $30 million compared to $56 million in the prior year
- Differential profit flow-through of revenue mix (high-margin Finland software sale in prior year)
Italy
Select Financial Data | Constant | Key Performance Indicators | % | ||||||||
Period Ended September 30 | Q3 '19 | Q3 '18 | FX | Period Ended September 30 | Q3 '19 | Q3 '18 | Change | ||||
Gaming | Total revenue | 154 | 175 | -7% | (In € millions, except machines) | ||||||
Gaming services | 154 | 175 | -7% | Lottery | |||||||
Terminal | 138 | 159 | -8% | Lotto wagers | 1,882 | 1,913 | -1.6% | ||||
Other | 16 | 16 | 1% | 10eLotto | 1,341 | 1,361 | -1.5% | ||||
Product sales | 0 | 0 | 0% | Core | 477 | 434 | 10.0% | ||||
Late numbers | 19 | 70 | -72.3% | ||||||||
Lottery | Total revenue | 172 | 184 | -1% | MillionDAY | 44 | 47 | -6.4% | |||
Lottery services | 172 | 184 | -1% | ||||||||
FMC | 172 | 184 | -1% | Scratch & Win wagers | 2,197 | 2,179 | 0.8% | ||||
Instant ticket & draw games | 219 | 233 | -1% | ||||||||
Other services | (47) | (49) | 1% | Italy lottery revenue growth | -1.1% | ||||||
Product sales | 0 | 0 | 0% | ||||||||
Gaming | |||||||||||
Other | Total revenue | 76 | 70 | 14% | Installed base (end of period) | ||||||
Service revenue | 76 | 70 | 14% | VLT - Operator (B2C) | 10,984 | 11,027 | -0.4% | ||||
Product sales | 0 | 0 | 0% | VLT - Supplier (B2B) | 7,514 | 8,094 | -7.2% | ||||
AWP | 41,129 | 43,074 | -4.5% | ||||||||
Total | Revenue | 402 | 430 | -1% | Total installed base | 59,627 | 62,195 | -4.1% | |||
Operating income | 127 | 145 | -7% | ||||||||
Wagers | |||||||||||
VLT - Operator (B2C) | 1,324 | 1,426 | -7.1% | ||||||||
AWP | 877 | 879 | -0.3% | ||||||||
Interactive wagers (gaming) | 492 | 447 | 10.1% | ||||||||
Other | |||||||||||
Sports betting wagers (1) | 227 | 225 | 0.8% | ||||||||
Sports betting payout (%) (1) | 83.4% | 81.1% | 2.3 pp | ||||||||
(1) Includes virtual wagers and pools & horses | |||||||||||
Revenue of $402 million, relatively stable at constant currency
- Lottery service revenue of $172 million, essentially in line with the prior year at constant currency, on stable wagers
- Gaming service revenue of $154 million compared to $175 million in the prior year
- Increased taxes on AWPs and VLTs
- Other service revenue of $76 million, up 14% at constant currency
- Growth in commercial services
- Lower sports betting payout in the prior year
Operating income of $127 million, down 7% at constant currency
- Higher gaming machine taxes and sports betting payout
Other Developments
The Company's Board of Directors declared a quarterly cash dividend of $0.20 per ordinary share
- Record date of November 29, 2019
- Payment date of December 13, 2019
Issuance of €500 million 2.375% Notes due 2028, as previously announced
- Net proceeds used to pay €320 million term loan amortization due January 2020
- Balance used to repay all utilizations under revolving credit facilities
2019 Outlook
- Adjusted EBITDA of $1.675 - $1.735 billion remains unchanged
- Updating capital expenditures to $450 - $500 million; previously $450 - $550 million
- Full-year EUR/USD exchange rate of 1.12
Conference Call and Webcast
November 14, 2019, at 8:00 a.m. EST
Live webcast available under "News, Events & Presentations" on IGT's Investor Relations website at www.IGT.com; replay available on the website following the live event
Dial-In Numbers
- US/Canada toll-free dial-in number is +1 844 842 7999
- Outside the US/Canada toll-free number is +1 612 979 9887
- Conference ID/confirmation code is 1869816
- A telephone replay of the call will be available for one week
- US/Canada replay number is +1 855 859 2056
- Outside the US/Canada replay number is +1 404 537 3406
- ID/Confirmation code is 1869816
Comparability of Results
All figures presented in this news release are prepared under U.S. GAAP, unless noted otherwise. Adjusted figures exclude the impact of items such as purchase accounting, impairment charges, restructuring expense, foreign exchange, and certain one-time, primarily transaction-related items. Reconciliations to the most directly comparable U.S. GAAP measures are included in the tables in this news release. Constant currency changes for 2019 are calculated using the same foreign exchange rates as the corresponding 2018 period. Management uses non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate the Company's financial performance. Management believes these non-GAAP financial measures reflect the Company's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of business trends. These constant currency changes and non-GAAP financial measures should however be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with U.S. GAAP.
About IGT
IGT (NYSE:IGT) is the global leader in gaming. We enable players to experience their favorite games across all channels and regulated segments, from Gaming Machines and Lotteries to Digital and Social Gaming. Leveraging a wealth of premium content, substantial investment in innovation, in-depth customer intelligence, operational expertise and leading-edge technology, our gaming solutions anticipate the demands of consumers wherever they decide to play. We have a well-established local presence and relationships with governments and regulators in more than 100 countries around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has over 12,000 employees. For more information, please visit www.IGT.com.
Cautionary Statement Regarding Forward-Looking Statements
This news release may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning International Game Technology PLC and its consolidated subsidiaries (the "Company") and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, dividends, results of operations, or financial condition, or otherwise, based on current beliefs of the management of the Company as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as "aim," "anticipate," "believe," "plan," "could," "would," "should," "shall", "continue," "estimate," "expect," "forecast," "future," "guidance," "intend," "may," "will," "possible," "potential," "predict," "project" or the negative or other variations of them. These forward-looking statements speak only as of the date on which such statements are made and are subject to various risks and uncertainties, many of which are outside the Company's control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance, or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) the factors and risks described in the Company's annual report on Form 20-F for the financial year ended December 31, 2018 and other documents filed from time to time with the SEC, which are available on the SEC's website at www.sec.gov and on the investor relations section of the Company's website at www.IGT.com. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. You should carefully consider these factors and other risks and uncertainties that affect the Company's business. All forward-looking statements contained in this news release are qualified in their entirety by this cautionary statement.
Contact:
Phil O'Shaughnessy, Global Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
Francesco Luti, +39 3485475493; for Italian media inquiries
James Hurley, Investor Relations, +1 (401) 392-7190
International Game Technology PLC | |||
Consolidated Statements of Operations | |||
($ and shares in thousands, except per share amounts) | |||
Unaudited | |||
For the three months ended | |||
September 30, | |||
2019 | 2018 | ||
Service revenue | 921,712 | 963,265 | |
Product sales | 231,535 | 192,565 | |
Total revenue | 1,153,247 | 1,155,830 | |
Cost of services | 575,594 | 586,811 | |
Cost of product sales | 136,246 | 107,311 | |
Selling, general and administrative | 201,416 | 194,099 | |
Research and development | 68,804 | 63,277 | |
Impairment | 432 | 1,530 | |
Other operating expense, net | 16,873 | 2,774 | |
Total operating expenses | 999,365 | 955,802 | |
Operating income | 153,882 | 200,028 | |
Interest expense, net | (102,551) | (103,553) | |
Foreign exchange gain, net | 124,068 | 21,104 | |
Other expense, net | (308) | (17,244) | |
Total non-operating income (expenses) | 21,209 | (99,693) | |
Income before provision for income taxes | 175,091 | 100,335 | |
Provision for income taxes | 44,530 | 46,327 | |
Net income | 130,561 | 54,008 | |
Less: Net income attributable to non-controlling interests | 26,998 | 31,709 | |
Net income attributable to IGT PLC | 103,563 | 22,299 | |
Net income attributable to IGT PLC per common share - basic | 0.51 | 0.11 | |
Net income attributable to IGT PLC per common share - diluted | 0.51 | 0.11 | |
Weighted-average shares - basic | 204,435 | 204,219 | |
Weighted-average shares - diluted | 204,528 | 204,344 | |
International Game Technology PLC | |||
Consolidated Statements of Operations | |||
($ and shares in thousands, except per share amounts) | |||
Unaudited | |||
For the nine months ended | |||
September 30, | |||
2019 | 2018 | ||
Service revenue | 2,892,774 | 3,017,283 | |
Product sales | 639,642 | 547,841 | |
Total revenue | 3,532,416 | 3,565,124 | |
Cost of services | 1,765,519 | 1,812,553 | |
Cost of product sales | 397,217 | 333,065 | |
Selling, general and administrative | 616,516 | 605,405 | |
Research and development | 200,305 | 198,497 | |
Impairment | 432 | 1,530 | |
Other operating (income) expense, net | (3,322) | 7,974 | |
Total operating expenses | 2,976,667 | 2,959,024 | |
Operating income | 555,749 | 606,100 | |
Interest expense, net | (309,480) | (313,721) | |
Foreign exchange gain, net | 141,609 | 96,955 | |
Other income (expense), net | 22,687 | (45,567) | |
Total non-operating expenses | (145,184) | (262,333) | |
Income before provision for income taxes | 410,565 | 343,767 | |
Provision for income taxes | 160,522 | 159,064 | |
Net income | 250,043 | 184,703 | |
Less: Net income attributable to non-controlling interests | 101,370 | 104,054 | |
Net income attributable to IGT PLC | 148,673 | 80,649 | |
Net income attributable to IGT PLC per common share - basic | 0.73 | 0.40 | |
Net income attributable to IGT PLC per common share - diluted | 0.73 | 0.39 | |
Weighted-average shares - basic | 204,352 | 204,009 | |
Weighted-average shares - diluted | 204,532 | 204,375 | |
International Game Technology PLC | |||
Consolidated Balance Sheets | |||
($ thousands) | |||
Unaudited | |||
September 30, | December 31, | ||
2019 | 2018 | ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | 542,425 | 250,669 | |
Restricted cash and cash equivalents | 221,233 | 261,108 | |
Trade and other receivables, net | 899,665 | 949,085 | |
Inventories | 253,949 | 282,698 | |
Other current assets | 471,239 | 504,061 | |
Income taxes receivable | 49,214 | 39,075 | |
Total current assets | 2,437,725 | 2,286,696 | |
Systems, equipment and other assets related to contracts, net | 1,298,394 | 1,404,426 | |
Property, plant and equipment, net | 138,708 | 185,349 | |
Operating lease right-of-use-assets | 344,146 | - | |
Goodwill | 5,535,003 | 5,580,227 | |
Intangible assets, net | 1,873,123 | 2,044,723 | |
Other non-current assets | 1,939,337 | 2,108,964 | |
Deferred income taxes | 33,819 | 38,117 | |
Total non-current assets | 11,162,530 | 11,361,806 | |
Total assets | 13,600,255 | 13,648,502 | |
Liabilities and shareholders' equity | |||
Current liabilities: | |||
Accounts payable | 1,069,275 | 1,142,371 | |
Other current liabilities | 790,326 | 816,722 | |
Current portion of long-term debt | 447,678 | - | |
Short-term borrowings | 740 | 34,822 | |
Income taxes payable | 53,414 | 8,209 | |
Total current liabilities | 2,361,433 | 2,002,124 | |
Long-term debt, less current portion | 7,468,948 | 7,977,267 | |
Deferred income taxes | 440,903 | 446,083 | |
Income taxes payable | 25,654 | 25,654 | |
Operating lease liabilities | 311,673 | - | |
Other non-current liabilities | 374,601 | 445,445 | |
Total non-current liabilities | 8,621,779 | 8,894,449 | |
Total liabilities | 10,983,212 | 10,896,573 | |
Commitments and contingencies | |||
Shareholders' equity | 2,617,043 | 2,751,929 | |
Total liabilities and shareholders' equity | 13,600,255 | 13,648,502 | |
International Game Technology PLC | |||
Consolidated Statements of Cash Flows | |||
($ thousands) | |||
Unaudited | |||
For the nine months ended | |||
September 30, | |||
2019 | 2018 | ||
Cash flows from operating activities | |||
Net income | 250,043 | 184,703 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 315,291 | 312,203 | |
Amortization | 207,161 | 204,256 | |
Service revenue amortization | 154,630 | 164,952 | |
Stock-based compensation expense | 20,046 | 24,944 | |
Debt issuance cost amortization | 17,004 | 16,511 | |
Loss on extinguishment of debt | 11,964 | 49,460 | |
Deferred income taxes | 2,590 | 11,815 | |
Impairment | 432 | 1,530 | |
Gain on sale of assets | (65,324) | (5,568) | |
Foreign exchange gain, net | (141,609) | (96,955) | |
Other non-cash costs, net | 48,299 | 8,700 | |
Changes in operating assets and liabilities, excluding the effects of acquisitions: | |||
Trade and other receivables | 16,546 | 92,823 | |
Inventories | 23,875 | (26,682) | |
Upfront Italian license fee | - | (366,270) | |
Accounts payable | 611 | (123,057) | |
Other assets and liabilities | (72,854) | (204,053) | |
Net cash provided by operating activities | 788,705 | 249,312 | |
Cash flows from investing activities | |||
Capital expenditures | (332,716) | (374,313) | |
Proceeds from sale of assets | 100,743 | 8,200 | |
Other | 6,126 | 2,064 | |
Net cash used in investing activities | (225,847) | (364,049) | |
Cash flows from financing activities | |||
Principal payments on long-term debt | (1,264,647) | (1,658,753) | |
Dividends paid - non-controlling interests | (135,684) | (126,926) | |
Dividends paid | (122,616) | (122,394) | |
Return of capital - non-controlling interests | (80,384) | (64,974) | |
Net (payments of) proceeds from short-term borrowings | (34,519) | 29,957 | |
Debt issuance costs paid | (24,787) | (10,199) | |
Payments in connection with extinguishment of debt | (8,598) | (42,148) | |
Net receipts from (payments of) financial liabilities | 753 | (36,407) | |
Capital increase - non-controlling interests | 1,369 | 135,536 | |
Proceeds from long-term debt | 1,397,025 | 1,415,762 | |
Other | (7,798) | (18,051) | |
Net cash used in financing activities | (279,886) | (498,597) | |
Net increase (decrease) in cash and cash equivalents, and restricted cash | 282,972 | (613,334) | |
Effect of exchange rate changes on cash and cash equivalents, and restricted cash | (31,091) | 10,924 | |
Cash and cash equivalents, and restricted cash at the beginning of the period | 511,777 | 1,305,430 | |
Cash and cash equivalents, and restricted cash at the end of the period | 763,658 | 703,020 | |
Supplemental Cash Flow Information: | |||
Interest paid | (371,847) | (419,508) | |
Income taxes paid | (138,009) | (125,388) | |
International Game Technology PLC | |||
Net Debt | |||
($ thousands) | |||
Unaudited | |||
September 30, | December 31, | ||
2019 | 2018 | ||
4.125% Senior Secured Notes due February 2020(2) | - | 499,167 | |
4.750% Senior Secured Notes due March 2020 (2) | - | 438,252 | |
5.500% Senior Secured Notes due June 2020 (1) | - | 27,519 | |
6.250% Senior Secured Notes due February 2022 (1) | 1,491,826 | 1,469,609 | |
4.750% Senior Secured Notes due February 2023 (2) | 918,800 | 964,730 | |
5.350% Senior Secured Notes due October 2023(1) | 60,910 | 60,983 | |
3.500% Senior Secured Notes due July 2024 (2) | 540,006 | 567,179 | |
6.500% Senior Secured Notes due February 2025 (1) | 1,089,555 | 1,088,385 | |
3.500% Senior Secured Notes due June 2026 (2) | 809,246 | - | |
6.250% Senior Secured Notes due January 2027(1) | 743,203 | 742,667 | |
2.375% Senior Secured Notes due April 2028 (2) | 539,115 | - | |
Senior Secured Notes, long-term | 6,192,661 | 5,858,491 | |
Term Loan Facilities due January 2023 (2) | 1,276,287 | 1,705,395 | |
Revolving Credit Facilities due July 2024 (1) (2) | - | 413,381 | |
Long-term debt, less current portion | 7,468,948 | 7,977,267 | |
4.750% Senior Secured Notes due March 2020 (2) | 420,273 | - | |
5.500% Senior Secured Notes due June 2020 (1) | 27,405 | - | |
Current portion of long-term debt | 447,678 | - | |
Short-term borrowings | 740 | 34,822 | |
Total debt | 7,917,366 | 8,012,089 | |
Less: Cash and cash equivalents | 542,425 | 250,669 | |
Less: Debt issuance costs, net - Revolving Credit Facilities due July 2024 | 21,311 | - | |
Net debt | 7,353,630 | 7,761,420 | |
(1) U.S. dollar-denominated debt | |||
(2) Euro-denominated debt | |||
Note: Net debt is a non-GAAP financial measure | |||
International Game Technology PLC | |||
Adjusted EBITDA and Free Cash Flow | |||
Reconciliations of Non-GAAP Financial Measures | |||
($ thousands) | |||
Unaudited | |||
For the three months ended | |||
September 30, | |||
2019 | 2018 | ||
Net income | 130,561 | 54,008 | |
Provision for income taxes | 44,530 | 46,327 | |
Non-operating (income) expenses | (21,209) | 99,693 | |
Depreciation | 106,020 | 109,755 | |
Amortization | 69,960 | 67,806 | |
Service revenue amortization | 50,695 | 53,837 | |
Stock-based compensation expense | 7,544 | 7,825 | |
Impairment | 432 | 1,530 | |
Other | 18,543 | 2,541 | |
Adjusted EBITDA | 407,076 | 443,322 | |
Cash flows from operating activities | 196,984 | 129,162 | |
Capital expenditures | (101,713) | (115,346) | |
Free Cash Flow | 95,271 | 13,816 | |
International Game Technology PLC | |||
Adjusted EBITDA and Free Cash Flow | |||
Reconciliations of Non-GAAP Financial Measures | |||
($ thousands) | |||
Unaudited | |||
For the nine months ended | |||
September 30, | |||
2019 | 2018 | ||
Net income | 250,043 | 184,703 | |
Provision for income taxes | 160,522 | 159,064 | |
Non-operating expenses | 145,184 | 262,333 | |
Depreciation | 315,291 | 312,203 | |
Amortization | 207,161 | 204,256 | |
Service revenue amortization | 154,630 | 164,952 | |
Stock-based compensation expense | 20,046 | 24,944 | |
Impairment | 432 | 1,530 | |
Other | 24,149 | 7,308 | |
Adjusted EBITDA | 1,277,458 | 1,321,293 | |
Cash flows from operating activities | 788,705 | 249,312 | |
Capital expenditures | (332,716) | (374,313) | |
Free Cash Flow | 455,989 | (125,001) | |
International Game Technology PLC | |||||||||||
Consolidated Statement of Operations | |||||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||||
($ and shares in thousands, except per share amounts) | |||||||||||
Unaudited | |||||||||||
Quarter to date | Quarter to date | ||||||||||
September 2019 | Adjustments | September 2019 | |||||||||
As | Purchase | Foreign | Refinancing and | As | |||||||
Reported | Accounting | Exchange | Impairment | Other | Adjusted | ||||||
Total revenue | 1,153,247 | (181) | - | - | - | 1,153,066 | |||||
Cost of services | 575,594 | (17,947) | - | - | - | 557,647 | |||||
Cost of product sales | 136,246 | (3,955) | - | - | - | 132,291 | |||||
Selling, general and administrative | 201,416 | (26,788) | - | - | - | 174,628 | |||||
Research and development | 68,804 | (1) | - | - | - | 68,803 | |||||
Impairment | 432 | - | - | (432) | - | - | |||||
Other operating expense (income), net | 16,873 | - | - | - | (18,615) | (1,742) | |||||
Total operating expenses | 999,365 | (48,691) | - | (432) | (18,615) | 931,627 | |||||
Operating income | 153,882 | 48,510 | - | 432 | 18,615 | 221,439 | |||||
Interest expense, net | (102,551) | 25 | - | - | - | (102,526) | |||||
Foreign exchange gain, net | 124,068 | - | (124,068) | - | - | - | |||||
Other (expense) income, net | (308) | - | - | - | 2,336 | 2,028 | |||||
Total non-operating income (expenses) | 21,209 | 25 | (124,068) | - | 2,336 | (100,498) | |||||
Income before provision for income taxes | 175,091 | 48,535 | (124,068) | 432 | 20,951 | 120,941 | |||||
Provision for income taxes (a) | 44,530 | 11,666 | (10,993) | - | 5,368 | 50,571 | |||||
Net income | 130,561 | 36,869 | (113,075) | 432 | 15,583 | 70,370 | |||||
Less: Net income attributable to non-controlling interests | 26,998 | 25 | - | - | - | 27,023 | |||||
Net income attributable to IGT PLC | 103,563 | 36,844 | (113,075) | 432 | 15,583 | 43,347 | |||||
Net income per common share - diluted | 0.51 | 0.21 | |||||||||
Weighted-average shares - diluted | 204,528 | 204,528 | |||||||||
(a) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. |
International Game Technology PLC | |||||||||||
Consolidated Statement of Operations | |||||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||||
($ and shares in thousands, except per share amounts) | |||||||||||
Unaudited | |||||||||||
Year to date | Year to date | ||||||||||
September 2019 | Adjustments | September 2019 | |||||||||
As | Purchase | Foreign | Refinancing and | As | |||||||
Reported | Accounting | Exchange | Impairment | Other | Adjusted | ||||||
Total revenue | 3,532,416 | (540) | - | - | - | 3,531,876 | |||||
Cost of services | 1,765,519 | (54,491) | - | - | - | 1,711,028 | |||||
Cost of product sales | 397,217 | (11,736) | - | - | - | 385,481 | |||||
Selling, general and administrative | 616,516 | (79,368) | - | - | - | 537,148 | |||||
Research and development | 200,305 | (293) | - | - | - | 200,012 | |||||
Impairment | 432 | - | - | (432) | - | - | |||||
Other operating income, net | (3,322) | - | - | - | (24,366) | (27,688) | |||||
Total operating expenses | 2,976,667 | (145,888) | - | (432) | (24,366) | 2,805,981 | |||||
Operating income | 555,749 | 145,348 | - | 432 | 24,366 | 725,895 | |||||
Interest expense, net | (309,480) | 76 | - | - | - | (309,404) | |||||
Foreign exchange gain, net | 141,609 | - | (141,609) | - | - | - | |||||
Other income, net | 22,687 | - | - | - | 11,964 | 34,651 | |||||
Total non-operating expenses | (145,184) | 76 | (141,609) | - | 11,964 | (274,753) | |||||
Income before provision for income taxes | 410,565 | 145,424 | (141,609) | 432 | 36,330 | 451,142 | |||||
Provision for income taxes (a) | 160,522 | 34,908 | (10,819) | - | 6,730 | 191,341 | |||||
Net income | 250,043 | 110,516 | (130,790) | 432 | 29,600 | 259,801 | |||||
Less: Net income attributable to non-controlling interests | 101,370 | 76 | - | - | - | 101,446 | |||||
Net income attributable to IGT PLC | 148,673 | 110,440 | (130,790) | 432 | 29,600 | 158,355 | |||||
Net income per common share - diluted | 0.73 | 0.77 | |||||||||
Weighted-average shares - diluted | 204,532 | 204,532 | |||||||||
(a) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. |
International Game Technology PLC | |||||||||||
Consolidated Statement of Operations | |||||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||||
($ and shares in thousands, except per share amounts) | |||||||||||
Unaudited | |||||||||||
Quarter to date | Quarter to date | ||||||||||
September 2018 | Adjustments | September 2018 | |||||||||
As | Purchase | Foreign | Refinancing and | As | |||||||
Reported | Accounting | Exchange | Impairment | Other | Adjusted | ||||||
Total revenue | 1,155,830 | (181) | - | - | - | 1,155,649 | |||||
Cost of services | 586,811 | (21,241) | - | - | - | 565,570 | |||||
Cost of product sales | 107,311 | (3,954) | - | - | - | 103,357 | |||||
Selling, general and administrative | 194,099 | (27,017) | - | - | - | 167,082 | |||||
Research and development | 63,277 | (232) | - | - | - | 63,045 | |||||
Impairment | 1,530 | - | - | (1,530) | - | - | |||||
Other operating expense, net | 2,774 | - | - | - | (2,774) | - | |||||
Total operating expenses | 955,802 | (52,444) | - | (1,530) | (2,774) | 899,054 | |||||
Operating income | 200,028 | 52,263 | - | 1,530 | 2,774 | 256,595 | |||||
Interest expense, net | (103,553) | 524 | - | - | - | (103,029) | |||||
Foreign exchange gain, net | 21,104 | - | (21,104) | - | - | - | |||||
Other (expense) income, net | (17,244) | - | - | - | 19,875 | 2,631 | |||||
Total non-operating expenses | (99,693) | 524 | (21,104) | - | 19,875 | (100,398) | |||||
Income before provision for income taxes | 100,335 | 52,787 | (21,104) | 1,530 | 22,649 | 156,197 | |||||
Provision for income taxes (a) | 46,327 | 12,846 | 301 | - | 690 | 60,164 | |||||
Net income | 54,008 | 39,941 | (21,405) | 1,530 | 21,959 | 96,033 | |||||
Less: Net income attributable to non-controlling interests | 31,709 | 27 | - | - | - | 31,736 | |||||
Net income attributable to IGT PLC | 22,299 | 39,914 | (21,405) | 1,530 | 21,959 | 64,297 | |||||
Net income per common share - diluted | 0.11 | 0.31 | |||||||||
Weighted-average shares - diluted | 204,344 | 204,344 | |||||||||
(a) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. |
International Game Technology PLC | |||||||||||
Consolidated Statement of Operations | |||||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||||
($ and shares in thousands, except per share amounts) | |||||||||||
Unaudited | |||||||||||
Year to date | Year to date | ||||||||||
September 2018 | Adjustments | September 2018 | |||||||||
As | Purchase | Foreign | Refinancing and | As | |||||||
Reported | Accounting | Exchange | Impairment | Other | Adjusted | ||||||
Total revenue | 3,565,124 | (540) | - | - | - | 3,564,584 | |||||
Cost of services | 1,812,553 | (63,457) | - | - | - | 1,749,096 | |||||
Cost of product sales | 333,065 | (11,735) | - | - | - | 321,330 | |||||
Selling, general and administrative | 605,405 | (80,602) | - | - | - | 524,803 | |||||
Research and development | 198,497 | (686) | - | - | - | 197,811 | |||||
Impairment | 1,530 | - | - | (1,530) | - | - | |||||
Other operating expense, net | 7,974 | - | - | - | (7,974) | - | |||||
Total operating expenses | 2,959,024 | (156,480) | - | (1,530) | (7,974) | 2,793,040 | |||||
Operating income | 606,100 | 155,940 | - | 1,530 | 7,974 | 771,544 | |||||
Interest expense, net | (313,721) | 1,536 | - | - | - | (312,185) | |||||
Foreign exchange gain, net | 96,955 | - | (96,955) | - | - | - | |||||
Other (expense) income, net | (45,567) | (2,184) | - | - | 49,459 | 1,708 | |||||
Total non-operating expenses | (262,333) | (648) | (96,955) | - | 49,459 | (310,477) | |||||
Income before provision for income taxes | 343,767 | 155,292 | (96,955) | 1,530 | 57,433 | 461,067 | |||||
Provision for income taxes (a) | 159,064 | 37,101 | 6,630 | - | 1,831 | 204,626 | |||||
Net income | 184,703 | 118,191 | (103,585) | 1,530 | 55,602 | 256,441 | |||||
Less: Net income attributable to non-controlling interests | 104,054 | 77 | - | - | - | 104,131 | |||||
Net income attributable to IGT PLC | 80,649 | 118,114 | (103,585) | 1,530 | 55,602 | 152,310 | |||||
Net income per common share - diluted | 0.39 | 0.75 | |||||||||
Weighted-average shares - diluted | 204,375 | 204,375 | |||||||||
(a) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. |
INTERNATIONAL GAME TECHNOLOGY PLC | |||||||||||
Select Financial Data | Constant | Key Performance Indicators | % | ||||||||
Period Ended September 30 | Q3 '19 | Q3 '18 | FX | Period Ended September 30 | Q3 '19 | Q3 '18 | Change | ||||
Gaming | Total revenue | 563 | 541 | 7% | Installed base units (end of period) | ||||||
Gaming services | 364 | 397 | -5% | Casino | 30,948 | 35,689 | -13.3% | ||||
Terminal | 276 | 303 | -6% | VLT - Government sponsored (ex-Italy) | 18,749 | 18,640 | 0.6% | ||||
Other | 88 | 94 | -4% | VLT - Italy supplier (B2B) | 7,514 | 8,094 | -7.2% | ||||
Product sales | 199 | 144 | 41% | Total installed base units | 57,211 | 62,423 | -8.3% | ||||
Terminal | 139 | 101 | 39% | Yield (average gross revenue per unit per day) | $ 28.46 | $ 27.84 | 2.2% | ||||
Other | 60 | 43 | 44% | ||||||||
Additional Italian network details: | |||||||||||
Lottery | Total revenue | 493 | 527 | -4% | VLT - Operator (B2C) | 10,984 | 11,027 | -0.4% | |||
Lottery services | 460 | 479 | -1% | AWP | 41,129 | 43,074 | -4.5% | ||||
FMC | 438 | 454 | -1% | ||||||||
Instant ticket & draw games | 431 | 452 | -1% | Machine units shipped | |||||||
Other services | 6 | 2 | 113% | New/expansion | 1,001 | 1,372 | -27.0% | ||||
LMA | 23 | 25 | -10% | Replacement | 9,184 | 5,679 | 61.7% | ||||
Product sales | 33 | 48 | -32% | Total machines shipped | 10,185 | 7,051 | 44.4% | ||||
Other | Total revenue | 97 | 88 | 17% | Global lottery same-store revenue growth | ||||||
Service revenue | 97 | 88 | 17% | Instant ticket & draw games | 4.2% | ||||||
Product sales | 0 | 0 | 0% | Multistate jackpots | -19.5% | ||||||
Total lottery same-store revenue growth (ex-Italy) | 1.7% | ||||||||||
Consolidated | Revenue | 1,153 | 1,156 | 3% | Italy lottery revenue growth | -1.1% | |||||
Operating Income: | |||||||||||
Segment total | 270 | 306 | -9% | ||||||||
Purchase accounting | (49) | (52) | 7% | ||||||||
Corporate support | (67) | (54) | -28% | ||||||||
Total | 154 | 200 | -19% | ||||||||
SOURCE International Game Technology PLC
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