IGT
$15.18
International Game Technology
$.23
1.54%
Earnings Details
3rd Quarter September 2018
Wednesday, October 31, 2018 6:45:00 AM
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Summary

IGT Narrows EBITDA Guidance to High-end of Range

International Game Technology (IGT) reported 3rd Quarter September 2018 earnings of $0.31 per share on revenue of $1.2 billion. The consensus earnings estimate was $0.28 per share on revenue of $1.2 billion. Revenue fell 5.4% compared to the same quarter a year ago.

The company said it now expects 2018 Adjusted EBITDA of $1.74 billion to $1.78 billion. The company's previous guidance was Adjusted EBITDA of $1.70 billion to $1.78 billion for the year ending December 31, 2018.

International Game Technology is a gaming company specializing in the design, development, manufacturing and marketing of casino-style gaming equipment, systems technology and game content across multiple platforms.

Results
Reported Earnings
$0.31
Earnings Whisper
-
Consensus Estimate
$0.28
Reported Revenue
$1.16 Bil
Revenue Estimate
$1.17 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

International Game Technology PLC Reports Third Quarter 2018 Results

LONDON, Oct. 31, 2018 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the third quarter ended September 30, 2018. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the third quarter results; access details are provided below.

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...

"Solid performance and important, long-term contracts drove very good third quarter and year-to-date results," said Marco Sala, CEO of IGT. "Global Lottery same-store revenues for instants and draw games rose mid-single digits. The installed base of gaming machines was up, and unit shipments of gaming machines increased 10%. And, we enjoyed particularly strong sales and profit growth in Italy, confirming the vitality of that important market. We are firmly on track to achieve our 2018 financial and operational goals."

"We've delivered Adjusted EBITDA growth of 4% and 7% for the third quarter and year-to-date periods at constant currency and scope," said Alberto Fornaro, CFO of IGT. "As a result, we are narrowing our Adjusted EBITDA outlook for 2018 to $1,740 - $1,780 million, the top half of the prior range."

Overview of Consolidated Third Quarter Results



Quarter Ended
September 30,

Y/Y
Change

Constant
Currency
Change 


2018(1)

2017

(%)

(%)

(In $ millions, unless otherwise noted)





Revenue

1,156

1,221

-5%

-4%

Operating income

200

(556)

NM


Net income/(loss) per diluted share

$0.11

($3.95)

NM


Net debt

7,570

7,335

3%


Adjusted EBITDA

443

428

3%

4%

Adjusted operating income

257

258

0%

0%

Adjusted net income per diluted share

$0.31

$0.40

-23%



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.


(1) On January 1, 2018, IGT adopted ASU 2014-09 (Topic 606), Revenue from Contracts with Customers ("ASC 606"). This negatively impacted Revenue in the third quarter by $22 million and positively impacted Adjusted EBITDA by $12 million. Comparative schedules summarizing the impact on the third quarter and nine months ended September 30, 2018 Condensed Consolidated Statements of Operations are included later in this release.  

Consolidated revenue was $1,156 million, down 4% at constant currency

  • $22 million negative impact due to ASC 606
  • Impacted by lumpiness of product sales and timing of multi-state jackpots
  • Strong global Lottery performance, improved Gaming KPIs, and broad-based strength in Italy

Adjusted EBITDA rose 3% to $443 million; Adjusted operating income was unchanged from prior year at $257 million

  • Disciplined expense management more than offset lower revenue
  • Adjusted operating income includes higher depreciation associated with recent Lottery contract extensions and upgrading of Gaming installed base

Interest expense was $107 million compared to $114 million in prior-year quarter 

Provision for income taxes was $46 million compared to a benefit of $20 million in the prior-year period 

Net income attributable to IGT was $22 million in the quarter; Adjusted net income attributable to IGT was $64 million

Net income per diluted share of $0.11; Adjusted net income per diluted share of $0.31

Cash from operations was $249 million for the first nine months of the year and capital expenditures were $374 million

  • $366 million (gross) upfront payments for the Scratch & Win license in Italy

Cash and cash equivalents were $448 million as of September 30, 2018, compared to $1,057 million as of December 31, 2017

Net debt was $7,570 million as of September 30, 2018, compared to $7,319 million as of December 31, 2017

Operating Segment Review

North America Gaming & Interactive

Select Financial Data



Constant


Key Performance Indicators



%

Period Ended September 30

Q3 '18

Q3 '17

FX


Period Ended September 30

Q3 '18

Q3 '17

Change 

Gaming


Total Revenue

231

262

-12%


Installed base (end of period)





Gaming Services

152

171

-11%


    Casino

23,357

22,924

1.9%



Terminal 

106

123

-14%








Social (DDI)

0

0

0%


Machine units shipped






Other

46

48

-4%


   New/Expansion

843

729

15.6%


Product Sales

79

91

-13%


   Replacement 

2,998

2,868

4.5%



Terminal 

54

46

17%


   Total machines shipped

3,841

3,597

6.8%



Other

25

44

-44%


















Total


Revenue

231

262

-12%







Operating Income

45

65

-33%






Revenue of $231 million compared to $262 million in the prior-year quarter

  • Decline of $14 million, or 5%, after adjusting for $17 million jackpot expense reclass
  • Gaming services revenue of $152 million compared to $171 million in the prior year
    • Stable after adjusting for jackpot expense reclass
    • Installed base up 433 units from prior year; yields and installed base stable sequentially
  • Product sales revenue of $79 million compared to $91 million in the prior year
    • 16% increase in terminal sale revenue includes growth in casino replacement and VLT units, higher average selling prices
    • Large software sale in prior year

Operating income of $45 million compared to $65 million in the prior-year quarter

  • Large, high-margin product sales mix in the prior year
  • Increased depreciation related to upgrading installed base
  • Timing of jackpots

North America Lottery

Select Financial Data



Constant


Key Performance Indicators



%

Period Ended September 30

Q3 '18

Q3 '17

FX


Period Ended September 30

Q3 '18

Q3 '17

Change 

Gaming


Total Revenue

37

48

-22%


Installed base (end of period)





Gaming Services

37

40

-6%


    VLT - Government Sponsored

14,965

15,225

-1.7%



Terminal 

25

25

-1%








Other

12

14

-16%


Lottery same-store revenue growth





Product Sales

0

8

-98%


   Instants & draw games



4.8%









   Multistate Jackpots



-25.9%

Lottery


Total Revenue

242

259

-7%


   Total lottery same-store revenue growth


-0.6%


Lottery Services

225

237

-5%








FM/Concessions

164

170

-4%








LMA

25

34

-25%








Other Services

36

33

8%







Product Sales

17

22

-22%








Terminal 

0

1

-100%








Systems/Other

17

22

-20%


















Total


Revenue

279

307

-9%







Operating Income

60

75

-20%






Revenue of $279 million compared to $307 million in prior-year period

  • Lottery service revenue down 5% to $225 million
    • 4.8% same-store revenue growth for instant tickets and draw-based games more than offset by significantly lower multistate jackpot activity
    • Lower LMA revenue from Illinois
  • Lottery product sales of $17 million compared to $22 million in prior year
    • Growth in instant ticket printing
    • Large VLT system and lottery terminal sales in prior year

Operating income of $60 million compared to $75 million in prior-year period

  • Tough jackpot and product sales revenue comparisons
  • Higher depreciation related to recent contract wins and extensions

International

Select Financial Data



Constant


Key Performance Indicators



%

Period Ended September 30

Q3 '18

Q3 '17

FX


Period Ended September 30

Q3 '18

Q3 '17

Change 

Gaming


Total Revenue

98

128

-20%


Installed base (end of period)





Gaming Services

33

59

-40%


    Casino

12,332

13,022

-5.3%



Terminal 

13

14

7%


    VLT - Government Sponsored

3,675

1,569

134.2%



Other

19

45

-55%


   Total installed base

16,007

14,591

9.7%


Product Sales

65

69

-2%








Terminal 

47

43

15%


Machine units shipped






Other

18

26

-30%


   New/Expansion

529

176

200.6%









   Replacement 

2,681

2,633

1.8%

Lottery


Total Revenue

100

82

23%


   Total machines shipped

3,210

2,809

14.3%


Lottery Services

69

70

0%








FM/Concessions

54

52

6%


Lottery same-store revenue growth






Other Services

15

18

-18%


   Instants & draw games



3.8%


Product Sales

31

12

162%


   Multistate Jackpots



2.7%



Systems/Other

31

12

162%


   Total lottery same-store revenue growth


3.7%













Other


Total Revenue

18

24

-23%







Service Revenue

17

18

-1%







Product Sales

0

6

-92%


















Total


Revenue

216

234

-5%







Operating Income

56

40

46%






Revenue down 5% in constant currency to $216 million

  • Stable Lottery service revenue
    • Same-store revenue growth of 3.7%
    • Lower non-wager revenue compared to prior year
  • Significant increase in Lottery product sales from large, multi-year software license
  • Gaming service revenue of $33 million compared to $59 million in the prior year
    • Prior year had benefit of certain discrete, non-recurring items
    • Jackpot expense reclass of $3 million
    • Service revenue from terminals up high single-digits at constant currency from growth in the installed base
  • Gaming product sales revenue down 2% in constant currency to $65 million
    • 14% increase in gaming machine unit shipments; higher average selling prices
    • Lower systems revenue

Operating income up 46% at constant currency to $56 million

  • High-margin software license sale
  • Disciplined expense management

Italy

Select Financial Data



Constant


Key Performance Indicators



%

Period Ended September 30

Q3 '18

Q3 '17

FX


Period Ended September 30

Q3 '18

Q3 '17

Change 

Gaming


Total Revenue

175

173

2%


(In € millions, except machines)





Gaming Services

175

173

2%


Lottery






Terminal 

159

157

2%


Lotto wagers

1,913

1,815

5.4%



Other

16

16

5%


   10eLotto

1,361

1,261

7.9%


Product Sales

0

0

0%


   Core

434

494

-12.2%









   Late Numbers

70

60

17.9%

Lottery


Total Revenue

184

180

4%


   MillionDAY

47

-

NM


Lottery Services

184

180

4%








FM/Concessions

233

229

3%


Scratch & Win Wagers

2,179

2,198

-0.9%



Other Services

(49)

(50)

-1%







Product Sales

0

0

0%


Italy lottery revenue growth



3.6%













Other


Total Revenue

70

66

8%


Gaming





Service Revenue

70

66

8%


Installed base (end of period)





Product Sales

0

0

0%


   VLT - Operator (B2C)

11,027

10,958

0.6%









   VLT - Supplier (B2B)

8,094

8,752

-7.5%

Total


Revenue

430

418

4%


   AWP

43,074

59,084

-27.1%


Operating Income

145

126

17%


   Total Installed Base

62,195

78,794

-21.1%





















Wagers












   VLT - Operator (B2C)

1,426

1,329

7.3%









   AWP

879

948

-7.2%









   Interactive Wagers (Gaming)

447

404

10.5%





















Other












   Sports Betting Wagers1

225

204

9.9%









   Sports Betting Payout (%)1

81.1%

83.3%

-2.1 pp





















1Includes Virtual Wagers and Pools & Horses

Revenue up 4% at constant currency to $430 million with growth across all Gaming businesses

  • Lottery Service revenue up to $184 million from $180 million in the prior year
    • Lotto wagers up 5.4% on continued strength in 10eLotto and contribution from MillionDAY
    • Scratch & Win wagers down modestly on comparison with successful relaunch of Miliardario in the prior-year period
  • Gaming Service revenue up 2% at constant currency
    • Higher revenue despite state-mandated reductions in AWP units, incremental taxes, and certain regional restrictions
    • Strong underlying productivity
  • Sports betting wagers increased 9.9% to €225 million, payout 210 basis points better

Operating income increased to $145 million, up 17% at constant currency

  • Strong profit flow-through, especially for Lotteries
  • Disciplined cost management

Other Developments

The Company's board of directors declared a quarterly cash dividend of $0.20 per ordinary share

  • Record date of November 14, 2018
  • Payment date of November 28, 2018

Recent Capital Markets Activity

  • Issuance of $750 million 6.25% Senior Secured Notes due 2027
  • Net proceeds used to redeem $600 million 5.625% bonds due 2020, $144 million 7.50% notes due 2019, and $97 million of its 5.5% bonds due 2020, with the balance funded through utilization of the revolving credit facility
  • Average debt maturity extended to over 4 years

Full Year Outlook

  • Narrowing 2018 Adjusted EBITDA outlook to $1,740 - $1,780 million at a EUR/USD rate of 1.19, the top half of the prior range
  • Continue to expect capital expenditures of $575-$625 million

Conference Call and Webcast

October 31, 2018, at 8:00 a.m. EDT

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 9277539
  • 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 9277539

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 2018 are calculated using the same foreign exchange rates as the corresponding 2017 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, 2017 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:
Robert K. Vincent, Corporate Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
James Hurley, Investor Relations, +1 (401) 392-7190
Simone Cantagallo, +39 06 51899030; for Italian media inquiries

 

International Game Technology PLC

Condensed Consolidated Statements of Operations

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

Unaudited






 For the three months ended 


September 30


2018


2017





Service revenue

963,265


1,013,054

Product sales

192,565


208,147

Total revenue

1,155,830


1,221,201





Cost of services

586,811


625,247

Cost of product sales

107,311


150,358

Selling, general and administrative

194,099


196,862

Research and development

63,277


79,009

Restructuring expense

2,768


9,976

Impairment loss

1,530


715,220

Transaction expense, net

6


627

Total operating expenses

955,802


1,777,299





Operating income (loss)

200,028


(556,098)





Interest income

3,249


2,906

Interest expense

(106,802)


(113,711)

Foreign exchange gain (loss), net

21,104


(117,526)

Other expense, net

(17,244)


(9,802)

Total non-operating expenses

(99,693)


(238,133)





Income (loss) before provision for (benefit from) income taxes

100,335


(794,231)





Provision for (benefit from) income taxes

46,327


(19,824)





Net income (loss)

54,008


(774,407)





Less: Net income attributable to non-controlling interests

31,709


29,207





Net income (loss) attributable to IGT PLC

22,299


(803,614)









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

0.11


(3.95)

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

0.11


(3.95)





Weighted-average shares - basic

204,219


203,489

Weighted-average shares - diluted

204,344


203,489

 

International Game Technology PLC

Condensed Consolidated Statements of Operations

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

Unaudited






 For the nine months ended 


 September 30, 


2018


2017





Service revenue

3,017,283


3,063,477

Product sales

547,841


529,812

Total revenue

3,565,124


3,593,289





Cost of services

1,812,553


1,866,281

Cost of product sales

333,065


403,056

Selling, general and administrative

605,405


607,571

Research and development

198,497


242,142

Restructuring expense

7,924


30,706

Impairment loss

1,530


715,220

Transaction expense (income), net

50


(26,682)

Total operating expenses

2,959,024


3,838,294





Operating income (loss)

606,100


(245,005)





Interest income

9,599


7,992

Interest expense

(323,320)


(344,494)

Foreign exchange gain (loss), net

96,955


(384,749)

Other expense, net

(45,567)


(33,247)

Total non-operating expenses

(262,333)


(754,498)





Income (loss) before provision for income taxes

343,767


(999,503)





Provision for income taxes

159,064


53,932





Net income (loss)

184,703


(1,053,435)





Less: Net income attributable to non-controlling interests

104,054


94,870





Net income (loss) attributable to IGT PLC

80,649


(1,148,305)









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

0.40


(5.66)

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

0.39


(5.66)





Weighted-average shares - basic

204,009


203,002

Weighted-average shares - diluted

204,375


203,002

 

International Game Technology PLC

Condensed Consolidated Balance Sheets

($ thousands)

Unaudited






September 30,


December 31,


2018


2017

Assets




Current assets:




Cash and cash equivalents

447,550


1,057,418

Restricted cash and cash equivalents

255,470


248,012

Trade and other receivables, net

821,764


937,854

Inventories, net

332,921


319,545

Other current assets

469,741


407,520

Income taxes receivable

50,298


94,168

Total current assets

2,377,744


3,064,517

Systems, equipment and other assets related to contracts, net

1,390,707


1,434,194

Property, plant and equipment, net

184,425


193,723

Goodwill

5,697,030


5,723,815

Intangible assets, net

2,088,573


2,273,460

Other non-current assets

2,206,794


2,427,953

Deferred income taxes

37,706


41,546

Total non-current assets

11,605,235


12,094,691

Total assets

13,982,979


15,159,208





Liabilities, redeemable non-controlling interests, and shareholders' equity




Current liabilities:




Accounts payable

1,040,701


1,240,753

Other current liabilities

1,161,113


1,780,875

Current portion of long-term debt

-


599,114

Short-term borrowings

29,957


-

Income taxes payable

82,127


55,935

Total current liabilities

2,313,898


3,676,677

Long-term debt, less current portion

7,987,583


7,777,445

Deferred income taxes

493,605


491,460

Income taxes payable

25,654


55,665

Other non-current liabilities

450,951


446,113

Total non-current liabilities

8,957,793


8,770,683

Total liabilities

11,271,691


12,447,360

Commitments and contingencies




Redeemable non-controlling interests and shareholders' equity

2,711,288


2,711,848

Total liabilities, redeemable non-controlling interests, and shareholders' equity

13,982,979


15,159,208

 

Condensed Consolidated Statements of Cash Flows

($ thousands)

Unaudited






 For the nine months ended 



September 30,



2018


2017

Cash flows from operating activities





Net income (loss)


184,703


(1,053,435)

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





Depreciation 


312,203


289,088

Amortization 


204,256


317,989

Service revenue amortization


164,952


155,318

Loss on extinguishment of debt


49,460


35,428

Stock-based compensation expense


24,944


5,102

Debt issuance cost amortization


16,511


16,602

Deferred income tax provision


11,815


(170,698)

Impairment loss


1,530


715,220

Foreign exchange (gain) loss, net


(96,955)


384,749

Gain on sale of Double Down Interactive LLC


-


(51,348)

Other non-cash costs, net


3,132


8,428

Changes in operating assets and liabilities:





Trade and other receivables


92,823


42,023

Inventories


(26,682)


16,526

Upfront Italian license fees


(366,270)


(185,368)

Accounts payable


(123,057)


(60,733)

Other assets and liabilities


(204,053)


(67,954)

Net cash provided by operating activities


249,312


396,937






Cash flows from investing activities





Capital expenditures


(374,313)


(552,169)

Proceeds from sale of assets


8,200


168,201

Proceeds from sale of Double Down Interactive LLC, net of cash divested


-


823,788

Other


2,064


1,990

Net cash (used in) provided by investing activities


(364,049)


441,810






Cash flows from financing activities





Principal payments on long-term debt


(1,658,753)


(1,601,134)

Dividends paid - non-controlling interests


(126,926)


(51,508)

Dividends paid


(122,394)


(121,840)

Return of capital - non-controlling interests


(64,974)


(62,538)

Net payments of financial liabilities


(36,407)


(32,495)

Payments in connection with the extinguishment of debt


(42,148)


(38,832)

Debt issuance costs paid


(10,199)


(16,350)

Net proceeds from short-term borrowings


29,957


-

Capital increase - non-controlling interests


135,536


127,211

Proceeds from long-term debt


1,415,762


938,160

Other


(18,051)


(24,785)

Net cash used in financing activities


(498,597)


(884,111)






Net decrease in cash and cash equivalents, and restricted cash


(613,334)


(45,364)

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


10,924


40,858

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


1,305,430


541,316

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


703,020


536,810











Supplemental Cash Flow Information:





Interest paid


(419,508)


(397,555)

Income taxes paid


(125,388)


(159,613)

 

International Game Technology PLC

Net Debt

($ thousands)








September 30,


December 31,



2018


2017






7.500% Senior Secured Notes due July 2019


146,237


148,231

4.125% Senior Secured Notes due February 2020


504,248


833,655

5.625% Senior Secured Notes due February 2020


-


595,767

4.750% Senior Secured Notes due March 2020


441,871


585,171

5.500% Senior Secured Notes due June 2020


125,247


125,709

6.250% Senior Secured Notes due February 2022


1,457,021


1,470,075

4.750% Senior Secured Notes due February 2023


974,884


1,008,601

5.350% Senior Secured Notes due October 2023


61,005


61,082

3.500% Senior Secured Notes due July 2024


573,132


-

6.500% Senior Secured Notes due February 2025


1,088,008


1,086,913

6.250% Senior Secured Notes due January 2027


742,760


-

Senior Secured Notes, long-term


6,114,413


5,915,204






Revolving Credit Facilities due July 2021


147,951


76,880

Term Loan Facilities due January 2023


1,725,219


1,785,361

Long-term debt, less current portion


7,987,583


7,777,445






6.625% Senior Secured Notes due February 2018


-


599,114

Current portion of long-term debt 


-


599,114






Short-term borrowings


29,957


-

Total debt


8,017,540


8,376,559






Less: Cash and cash equivalents


447,550


1,057,418






Net debt


7,569,990


7,319,141


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)








For the three months ended



September 30,



2018


2017






Net income (loss)


54,008


(774,407)

Provision for (benefit from) income taxes


46,327


(19,824)

Non-operating expenses


99,693


238,133

Depreciation 


109,755


103,182

Amortization


67,806


99,562

Service revenue amortization


53,837


54,279

Stock-based compensation expense


7,825


1,829

Restructuring expense


2,768


9,976

Impairment loss


1,530


715,220

Transaction expense, net


6


627

Non-cash purchase accounting (excluding D&A)


(233)


(126)

Bad debt expense


-


4

Adjusted EBITDA


443,322


428,455
















Cash flows from operating activities


129,162


73,013

Capital expenditures


(115,346)


(181,579)

Free Cash Flow


13,816


(108,566)

 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)








For the nine months ended



September 30,



2018


2017






Net income (loss)


184,703


(1,053,435)

Provision for income taxes


159,064


53,932

Non-operating expenses


262,333


754,498

Depreciation 


312,203


289,088

Amortization


204,256


317,989

Service revenue amortization


164,952


155,318

Stock-based compensation expense


24,944


5,102

Restructuring expense


7,924


30,706

Impairment loss


1,530


715,220

Transaction expense (income), net


50


(26,682)

Non-cash purchase accounting (excluding D&A)


(666)


(513)

Bad debt recovery


-


(17,858)

Adjusted EBITDA


1,321,293


1,223,365
















Cash flows from operating activities


249,312


396,937

Capital expenditures


(374,313)


(552,169)

Free Cash Flow


(125,001)


(155,232)

 

International Game Technology PLC

ASC 606 - Revenue Recognition Impact

Condensed Consolidated Statements of Operations

($ thousands, except per share data)

Unaudited



Q3 2018



Under Prior
Accounting


Revenue
Recognition
Adjustment


As Adjusted







Revenue


1,177,375


(21,545)


1,155,830

Operating expenses


(988,995)


33,193


(955,802)

Provision for income taxes


(46,006)


(321)


(46,327)

Net income attributable to IGT PLC


10,972


11,327


22,299








Net income attributable to IGT PLC per common share - basic


0.05


0.06


0.11

Net income attributable to IGT PLC per common share - diluted


0.05


0.06


0.11

















Q3 2018 YTD



Under Prior
Accounting


Revenue
Recognition
Adjustment


As Adjusted







Revenue


3,619,952


(54,828)


3,565,124

Operating expenses


(3,020,100)


61,076


(2,959,024)

Provision for income taxes


(159,342)


278


(159,064)

Net income attributable to IGT PLC


74,123


6,526


80,649








Net income attributable to IGT PLC per common share - basic


0.37


0.03


0.40

Net income attributable to IGT PLC per common share - diluted


0.36


0.03


0.39

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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
















Quarter to date


Adjustments


Quarter to date



September 2018






Impairment/


Transaction


September 2018



As


Purchase


Foreign


Restructuring


and Refinancing


As



Reported


Accounting


Exchange


Expense


Expense, net


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

Restructuring expense 


2,768


-


-


(2,768)


-


-

Impairment loss 


1,530


-


-


(1,530)


-


-

Transaction expense, net 


6


-


-


-


(6)


-

Total operating expenses 


955,802


(52,444)


-


(4,298)


(6)


899,054














Operating income 


200,028


52,263


-


4,298


6


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)


4,298


19,881


156,197














Provision for income taxes (a) 


46,327


12,846


301


688


2


60,164














Net income 


54,008


39,941


(21,405)


3,610


19,879


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)


3,610


19,879


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 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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
















 Year to date 


Adjustments


 Year to date 



September 2018






Impairment/


Transaction


September 2018



As


Purchase


Foreign


Restructuring


and Refinancing


As



Reported


Accounting


Exchange


Expense


Expense, net


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

Restructuring expense 


7,924


-


-


(7,924)


-


-

Impairment loss 


1,530


-


-


(1,530)


-


-

Transaction expense, net 


50


-


-


-


(50)


-

Total operating expenses 


2,959,024


(156,480)


-


(9,454)


(50)


2,793,040














Operating income 


606,100


155,940


-


9,454


50


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)


9,454


49,509


461,067














Provision for income taxes (a) 


159,064


37,101


6,630


1,829


2


204,626














Net income 


184,703


118,191


(103,585)


7,625


49,507


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)


7,625


49,507


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 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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
















Quarter to date


Adjustments


Quarter to date



September 2017






Impairment/


Transaction


September 2017



As


Purchase


Foreign


Restructuring


and Refinancing


As



Reported


Accounting


Exchange


Expense


Expense, net


Adjusted














Total revenue 


1,221,201


(182)


-


-


-


1,221,019














Cost of services 


625,247


(36,918)


-


-


-


588,329

Cost of product sales 


150,358


(23,961)


-


-


-


126,397

Selling, general and administrative 


196,862


(27,180)


-


-


-


169,682

Research and development 


79,009


(15)


-


-


-


78,994

Restructuring expense 


9,976


-


-


(9,976)


-


-

Impairment loss 


715,220


-


-


(715,220)


-


-

Transaction expense, net 


627


-


-


-


(627)


-

Total operating expenses 


1,777,299


(88,074)


-


(725,196)


(627)


963,402














Operating (loss) income 


(556,098)


87,892


-


725,196


627


257,617














Foreign exchange loss, net 


(117,526)


-


117,526


-


-


-

Other expense, net 


(9,802)


(84)


-


-


9,703


(183)

Interest expense, net 


(110,805)


610


-


-


-


(110,195)

Total non-operating expenses 


(238,133)


526


117,526


-


9,703


(110,378)














(Loss) income before (benefit from) provision for income taxes 


(794,231)


88,418


117,526


725,196


10,330


147,239














(Benefit from) provision for income taxes (a) 


(19,824)


30,834


26,056


2,998


(3,230)


36,834














Net (loss) income 


(774,407)


57,584


91,470


722,198


13,560


110,405














Less: Net income attributable to non-controlling interests 


29,207


26


-


-


-


29,233














Net (loss) income attributable to IGT PLC 


(803,614)


57,558


91,470


722,198


13,560


81,172














Net (loss) income per common share - diluted 


(3.95)










0.40

Weighted-average shares - diluted (b)  


203,489










203,689















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

(b) Weighted-average shares – diluted, as adjusted, include shares that were excluded from the as reported computation, due to the net loss as reported.   

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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
















 Year to date 


Adjustments


 Year to date 



September 2017






Impairment/


Transaction


September 2017



As


Purchase


Foreign


Restructuring


and Refinancing


As



Reported


Accounting


Exchange


Expense


Expense, net


Adjusted














Total revenue 


3,593,289


(540)


-


-


-


3,592,749














Cost of services 


1,866,281


(117,658)


-


-


-


1,748,623

Cost of product sales 


403,056


(77,261)


-


-


-


325,795

Selling, general and administrative 


607,571


(90,277)


-


-


-


517,294

Research and development 


242,142


(426)


-


-


-


241,716

Restructuring expense 


30,706


-


-


(30,706)


-


-

Impairment loss 


715,220


-


-


(715,220)


-


-

Transaction expense, net 


(26,682)


-


-


-


26,682


-

Total operating expenses 


3,838,294


(285,622)


-


(745,926)


26,682


2,833,428














Operating (loss) income 


(245,005)


285,082


-


745,926


(26,682)


759,321














Interest expense, net 


(336,502)


2,415


-


-


-


(334,087)

Foreign exchange loss, net 


(384,749)


-


384,749


-


-


-

Other (expense) income, net 


(33,247)


1,567


-


-


35,428


3,748

Total non-operating expenses 


(754,498)


3,982


384,749


-


35,428


(330,339)














(Loss) income before provision for income taxes 


(999,503)


289,064


384,749


745,926


8,746


428,982














Provision for income taxes (a) 


53,932


101,066


87,152


9,132


(88,159)


163,123














Net (loss) income 


(1,053,435)


187,998


297,597


736,794


96,905


265,859














Less: Net income attributable to non-controlling interests 


94,870


77


-


-


-


94,947














Net (loss) income attributable to IGT PLC 


(1,148,305)


187,921


297,597


736,794


96,905


170,912














Net (loss) income per common share - diluted 


(5.66)










0.84

Weighted-average shares - diluted (b) 


203,002










203,303















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

(b) Weighted-average shares – diluted, as adjusted, include shares that were excluded from the as reported computation, due to the net loss as reported.   

 

INTERNATIONAL GAME TECHNOLOGY PLC
















Select Financial Data



Constant


Key Performance Indicators



%

Period Ended September 30

Q3 '18

Q3 '17

FX


Period Ended September 30

Q3 '18

Q3 '17

Change 

Gaming


Total Revenue

541

611

-10%


Installed base (end of period)





Gaming Services

397

443

-9%


   Casino

35,689

35,946

-0.7%



Terminal 

303

319

-4%


   VLT - Government Sponsored (ex-Italy)

18,640

16,794

11.0%



Social (DDI)

0

0

0%


   VLT - Italy Supplier (B2B)

8,094

8,752

-7.5%



Other

94

124

-23%


   Total installed base

62,423

61,492

1.5%


Product Sales

144

168

-13%


   Yield 

$27.84

$29.12

-4.4%



Terminal 

101

89

16%


      (average revenue per unit per day)






Other

43

79

-45%














   Additional Italian Network Details:




Lottery


Total Revenue

527

521

2%


   VLT - Operator (B2C)

11,027

10,958

0.6%


Lottery Services

479

487

-1%


   AWP

43,074

59,084

-27.1%



FM/Concessions

452

452

1%








LMA

25

34

-25%


Machine units shipped






Other Services

2

1

-17%


   New/Expansion

1,372

905

51.6%


Product Sales

48

34

42%


   Replacement 

5,679

5,501

3.2%



Terminal 

0

1

-60%


   Total machines shipped

7,051

6,406

10.1%



Systems/Other

48

34

44%














Global lottery same-store revenue growth



Other


Total Revenue

88

89

0%


   Instants & draw games



4.5%


Service Revenue

88

84

6%


   Multistate Jackpots



-23.1%


Product Sales

0

6

-92%


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

0.4%









   Italy lottery revenue growth



3.6%

Consolidated


Revenue

1,156

1,221

-4%







Operating Income:











Segment Total

306

305

1%








Purchase Accounting

(52)

(802)

93%








Corporate Support

(54)

(59)

8%








Total

200

(556)

NM






 

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SOURCE International Game Technology PLC