IGT
$27.97
International Game Technology
($.54)
(1.89%)
Earnings Details
3rd Quarter September 2017
Tuesday, November 14, 2017 6:45:00 AM
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Summary

IGT Narrows Guidance

International Game Technology (IGT) reported 3rd Quarter September 2017 earnings of $0.40 per share on revenue of $1.2 billion. The consensus earnings estimate was $0.24 per share on revenue of $1.2 billion. Revenue fell 3.5% compared to the same quarter a year ago.

The company said it now expects 2017 Adjusted EBITDA of $1.64 billion to $1.68 billion. The company's previous guidance was Adjusted EBITDA of $1.60 billion to $1.68 billion for the year ending December 31, 2017.

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
$0.40
Earnings Whisper
-
Consensus Estimate
$0.24
Reported Revenue
$1.22 Bil
Revenue Estimate
$1.17 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

International Game Technology PLC Reports Third Quarter 2017 Results

International Game Technology PLC ("IGT") (IGT) today reported financial results for the third quarter and nine months ended September 30, 2017. Today, at 8:00 a.m. EST, management will host a conference call and webcast to present the third quarter results; access details are provided below.

https://mma.prnewswire.com/media/602950/IGT.jpg

"Our strong third quarter performance reflects the scope and balance of our business," said Marco Sala, CEO of IGT. "Our largest global Lottery operations are growing steadily and acceptance of our newest gaming machines is expanding around the world. The significant increase in Gaming and Lottery product sales demonstrates clear interest in our systems and technology solutions. We expect our sustained investment in innovation, led by a customer-first, player-centric focus, to drive continued momentum in both Lottery and Gaming."

"Thanks to a favorable product sales mix and reduced operating expenses, Adjusted EBITDA improved from the prior-year period, after considering certain non-comparable items, such as the DoubleDown sale," said Alberto Fornaro, CFO of IGT. "Based on the year-to-date results and current exchange rates, we expect to achieve Adjusted EBITDA of $1,640-$1,680 million for the full-year period."

Summary of Consolidated Third Quarter 2017 Financial Results

Quarter Ended Change Constant
September 30,
Currency
Change
2017
2016
(%)
(%)
(In $ millions, unless otherwise noted)
Revenue
1,221
1,266
-4%
-6%
Operating income (loss)
(556)
164
-439%
-447%
Net (loss) income per diluted share
(3.95) (0.01) NM
Net debt
7,335
7,937
-8%
Adjusted EBITDA
428
430
0%
-3%
Adjusted operating income
258
286
-10%
-12%
Adjusted net income per diluted share
0.40
0.45
-11%

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.

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 2017 are calculated using the same foreign exchange rates as the corresponding 2016 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.

Overview of Consolidated Third Quarter Results

Consolidated revenue was $1,221 million compared to $1,266 million in the third quarter of 2016. Revenue was down 6% in constant currency, primarily on the sale of Double Down Interactive LLC ("DoubleDown") and new Lotto concession amortization. Adjusted for these items, consolidated revenue was up 2% in constant currency, reflecting growth in global Lottery and Gaming revenue.

Global lottery same-store revenue, excluding Italy, grew a robust 6.8% in the third quarter, led by broad-based strength in North America. In Italy, late numbers activity was considerably lower than the elevated levels in the third quarter of 2016. Excluding late numbers, Italy lottery wagers increased 6% on exceptional growth for both 10eLotto and Scratch & Win.

Gaming service revenue declined 9%, primarily impacted by the DoubleDown sale; adjusted for DoubleDown, gaming service revenue increased 5%. The global installed base grew 3,275 units from the prior-year period, including expansion for both casino and VLT units. Global gaming product revenue increased 9% from the prior-year period on strong system and software sales. The Company shipped 6,406 gaming machines worldwide during the third quarter with higher average selling prices than the prior year.

Operating loss of $556 million is due to a non-cash, non-tax deductible impairment charge of $714 million to write down the carrying value of the Company’s North America Gaming and Interactive reporting unit to fair value. The impairment charge reflects a delayed recovery for the North America Gaming and Interactive reporting unit. Going forward, revenue and profit levels for the North America Gaming and Interactive reporting unit are expected to grow as new games and cabinets come to market. The impairment charge has no impact on the Company’s operations, cash flow, ability to service debt, compliance with financial covenants, or underlying liquidity.

Adjusted operating income was $258 million compared to $286 million in the prior-year period. Adjusted EBITDA was $428 million compared to $430 million in the third quarter of 2016, as higher product sales and lower operating expenses essentially compensated for the DoubleDown sale and the timing of incentive contributions from the New Jersey Lottery.

Interest expense was $114 million compared to $118 million in the prior-year period.

Net loss attributable to IGT was $804 million in the third quarter of 2017, reflecting the previously mentioned impairment charge and $118 million of net foreign exchange loss. On an adjusted basis, net income attributable to IGT was to $81 million. The Company reported a net loss per diluted share of $(3.95) and earned $0.40 per diluted share on an adjusted basis.

Cash from operations was $601 million in the first nine months of the year and capital expenditures were $552 million.

Cash and cash equivalents were $300 million as of September 30, 2017, compared to $294 million as of December 31, 2016. Net debt was $7,335 million as of September 30, 2017, compared to $7,569 million as of December 31, 2016.

Operating Segment Review

North America Gaming & Interactive Revenue for North America Gaming & Interactive was $262 million compared to $317 million in the third quarter of 2016. Comparability is affected by the DoubleDown sale; adjusted for DoubleDown, revenue for North America Gaming & Interactive rose 4% in the third quarter.

Service revenue was $171 million compared to $241 million in the prior-year period, the decline is primarily attributed to DoubleDown and a year-over-year decrease in the installed base.

Product sales revenue increased 20% to $91 million, driven by large software and system sales. The segment shipped 3,597 gaming machine units in the quarter compared to 5,238 units in the prior-year period, when there was significant new and expansion and VLT replacement activity. Average selling price per unit was higher, supported by demand for new cabinets.

Operating income for North America Gaming & Interactive was $65 million compared to $68 million in the third quarter of 2016. The decline is entirely attributable to the DoubleDown sale, which was largely offset by a high-margin product sales mix and lower operating expenses.

North America Lottery North America Lottery revenue of $307 million was in line with the prior-year period, which included a significant incentive contribution from the New Jersey Lottery; the 2017 New Jersey incentive was mostly recognized in the second quarter of 2017. Adjusting for the timing of the New Jersey contribution, revenue increased 9% from the prior year.

Lottery same-store revenue rose 9.4% on top of 6.3% growth in the prior year, supported by broad-based strength in draw-based games, instant tickets, and multi-state jackpots. Product sales were significantly above the prior year.

Operating income for North America Lottery was $75 million compared to $85 million in the third quarter of 2016. Adjusted for the timing of the New Jersey Lottery incentive, operating income was up double-digits on the high profit flow-through of strong same-store revenue growth.

International International revenue increased 9% to $234 million, and was up 8% on a constant currency basis.

Lottery service revenue of $70 million was essentially in line with the prior year, as a 1.4% decline in same-store revenue was offset by a higher effective rate in the period.

Gaming service revenue increased 36% to $59 million, reflecting the benefit of discrete, non-recurring items and significant expansion in the installed base.

Product sales revenue rose 5% to $87 million, supported by Gaming system and Lottery software sales. Gaming terminal sales were below the prior year, as the segment shipped a total of 2,809 gaming machine units during the third quarter of 2017 compared to 3,742 units in the prior-year period.

International operating income of $40 million increased 7% at constant currency, reflecting higher revenue and disciplined cost management that was partially offset by product mix.

Italy Italy revenue was $418 million compared to $426 million in the third quarter of 2016. The decline in revenue is entirely attributable to amortization associated with the new Lotto concession and significantly lower late numbers activity.

Total Lotto wagers in the quarter were EUR 1,815 million compared to EUR 1,967 million in the prior-year period. Excluding late numbers, Lotto wagers increased 7% over the prior- year period reflecting strong growth in 10eLotto. Instant-ticket wagers grew 5% reaching EUR 2,198 million on the strong acceptance of new games.

Machine gaming service revenue was down in constant currency on higher gaming machine taxes that were partially offset by improved VLT performance. Sports betting revenue rose on strong wager growth.

Italy operating income was $126 million compared to $147 million in the third quarter of 2016. The decrease was entirely attributable to the new Lotto amortization, as strong underlying performance offset higher gaming machine taxes and lower late number wagers.

Other Developments

The Company’s board of directors declared a quarterly cash dividend of $0.20 per ordinary share. The dividend is payable on December 12, 2017 to holders of record as of the close of business on November 28, 2017.

Outlook

Based on the year-to-date results and current exchange rates, the Company expects to achieve adjusted EBITDA of $1,640-$1,680 million for the full-year period. Net debt is expected to remain essentially in line with the third quarter level.

Conference Call and Webcast

Today, at 8:00 a.m. EST, management will host a conference call to present the third quarter 2017 results. Listeners may access a live webcast of the conference call along with accompanying slides under "News, Events & Presentations" on IGT’s Investor Relations website at www.IGT.com. A replay of the webcast will be available on the website following the live event. To listen by telephone, the US/Canada toll-free dial-in number is +1 844 842 7999 and the dial-in number for participants outside the US/Canada is +1 612 979 9887. The conference ID/confirmation code is 2259942. A telephone replay of the call will be available for one week at +1 855 859 2056 for the US/Canada or +1 404 537 3406 outside the US/Canada using the conference ID/confirmation code 2259942.

About IGT IGT (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 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, 2016 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. All subsequent written or oral forward-looking statements attributable to International Game Technology PLC, or persons acting on its behalf, are expressly qualified in its 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,
2017
2016
Service revenue
1,013,054
1,088,842
Product sales
208,147
176,808
Total revenue
1,221,201
1,265,650
Cost of services
625,247
625,235
Cost of product sales
150,358
136,702
Selling, general and administrative
196,862
242,510
Research and development
79,009
87,354
Restructuring expense
9,976
5,658
Impairment loss
715,220
4,230
Transaction expense, net
627
129
Total operating expenses
1,777,299
1,101,818
Operating (loss) income
(556,098)
163,832
Interest income
2,906
3,240
Other (expense) income, net
(9,802)
2,907
Foreign exchange loss, net
(117,526)
(21,143)
Interest expense
(113,711)
(117,618)
Total non-operating expenses
(238,133)
(132,614)
(Loss) income before (benefit from) provision for income taxes (794,231)
31,218
(Benefit from) provision for income taxes
(19,824)
12,812
Net (loss) income
(774,407)
18,406
Less: Net income attributable to non-controlling interests
29,207
20,309
Net loss attributable to IGT PLC
(803,614)
(1,903)
Net loss attributable to IGT PLC per common share - basic
(3.95)
(0.01)
Net loss attributable to IGT PLC per common share - diluted
(3.95)
(0.01)
Weighted-average shares - basic
203,489
202,029
Weighted-average shares - diluted
203,489
202,029
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,
2017
2016
Service revenue
3,063,477
3,313,917
Product sales
529,812
518,763
Total revenue
3,593,289
3,832,680
Cost of services
1,866,281
1,911,830
Cost of product sales
403,056
403,118
Selling, general and administrative
607,571
709,277
Research and development
242,142
256,349
Restructuring expense
30,706
21,514
Impairment loss
715,220
6,582
Transaction (income) expense, net
(26,682)
1,560
Total operating expenses
3,838,294
3,310,230
Operating (loss) income
(245,005)
522,450
Interest income
7,992
10,287
Other expense, net
(33,247)
(4,994)
Foreign exchange loss, net
(384,749)
(94,547)
Interest expense
(344,494)
(353,748)
Total non-operating expenses
(754,498)
(443,002)
(Loss) income before provision for income taxes
(999,503)
79,448
Provision for income taxes
53,932
64,593
Net (loss) income
(1,053,435)
14,855
Less: Net income attributable to non-controlling interests
94,870
36,836
Net loss attributable to IGT PLC
(1,148,305)
(21,981)
Net loss attributable to IGT PLC per common share - basic
(5.66)
(0.11)
Net loss attributable to IGT PLC per common share - diluted (5.66)
(0.11)
Weighted-average shares - basic
203,002
201,238
Weighted-average shares - diluted
203,002
201,238
International Game Technology PLC
Condensed Consolidated Balance Sheets
($ thousands)
Unaudited
September 30,
December 31,
2017
2016
Assets
Current assets:
Cash and cash equivalents
300,079
294,094
Restricted cash and investments
236,731
247,222
Trade and other receivables, net
948,993
947,237
Inventories
370,911
347,494
Other current assets
400,991
424,727
Income taxes receivable
26,919
28,792
Total current assets
2,284,624
2,289,566
Systems, equipment and other assets related to contracts, net
1,405,335
1,199,674
Property, plant and equipment, net
197,633
357,841
Goodwill, net
5,715,885
6,810,012
Intangible assets, net
2,325,960
2,874,031
Other non-current assets
1,485,199
1,497,662
Deferred income taxes
32,303
31,376
Total non-current assets
11,162,315
12,770,596
Total assets
13,446,939
15,060,162
Liabilities, redeemable non-controlling interests, and shareholders’ equity
Current liabilities:
Accounts payable
1,150,748
1,216,079
Other current liabilities
814,161
1,097,045
Current portion of long-term debt
588,342
77
Income taxes payable
165,072
28,590
Total current liabilities
2,718,323
2,341,791
Long-term debt, less current portion
7,046,678
7,863,085
Deferred income taxes
602,015
761,924
Other non-current liabilities
434,174
444,556
Total non-current liabilities
8,082,867
9,069,565
Total liabilities
10,801,190
11,411,356
Commitments and contingencies
-
-
Redeemable non-controlling interests and shareholders’ equity
2,645,749
3,648,806
Total liabilities, redeemable non-controlling interests, and shareholders’ equity 13,446,939
15,060,162
International Game Technology PLC
Condensed Consolidated Statements of Cash Flows
($ thousands)
Unaudited
For the nine months ended
September 30,
2017
2016
Operating activities
Net (loss) income
(1,053,435)
14,855
Adjustments for:
Impairment loss
715,220
6,582
Foreign exchange loss, net
384,749
94,547
Amortization
317,989
377,163
Depreciation
289,088
293,284
Amortization of upfront payments to customers
155,318
85,160
Loss on early extinguishment of debt
35,428
-
Debt issuance cost amortization
16,602
13,757
Stock-based compensation expense
5,102
24,502
Non-cash gain on sale of Double Down Interactive LLC
(51,348)
-
Other, net
8,428
16,603
Cash flows before changes in operating assets and liabilities
823,141
926,453
Changes in operating assets and liabilities, net of disposition:
Trade and other receivables
42,023
83,085
Inventories
16,526
(46,761)
Accounts payable
(60,733)
(135,297)
Other assets and liabilities
(220,004)
(206,483)
Net cash flows provided by operating activities
600,953
620,997
Investing activities
Proceeds from sale of Double Down Interactive LLC, net of cash divested
823,788
-
Proceeds from sale of assets
168,201
55,713
Upfront payments to customers
(185,368)
(390,390)
Capital expenditures
(552,169)
(371,497)
Other
2,779
15,196
Net cash flows provided by (used in) investing activities
257,231
(690,978)
Financing activities
Principal payments on long-term debt
(1,601,134)
(177,977)
Dividends paid
(121,840)
(120,726)
Return of capital - non-controlling interests
(62,538)
(35,407)
Dividends paid - non-controlling interests
(51,508)
(27,813)
Payments in connection with the early extinguishment of debt
(38,832)
-
Net payments of financial liabilities
(32,495)
-
Debt issuance costs paid
(16,350)
(10,736)
Capital increase - non-controlling interests
127,211
151,359
Proceeds from long-term debt
938,160
-
Other
(24,785)
2,225
Net cash flows used in financing activities
(884,111)
(219,075)
Net decrease in cash and cash equivalents
(25,927)
(289,056)
Effect of exchange rate changes on cash
31,912
11,471
Cash and cash equivalents at the beginning of the period
294,094
627,484
Cash and cash equivalents at the end of the period
300,079
349,899
Supplemental Cash Flow Information:
Interest paid
(397,555)
(408,864)
Income taxes paid
(159,613)
(136,015)
International Game Technology PLC
Net Debt
($ thousands)
September 30,
December 31,
2017
2016
6.250% Senior Secured Notes due 2022 1,476,058
1,472,150
6.500% Senior Secured Notes due 2025 1,086,560
1,085,537
4.750% Senior Secured Notes due 2023 992,426
884,917
4.125% Senior Secured Notes due 2020 820,013
730,465
5.625% Senior Secured Notes due 2020 595,304
593,954
4.750% Senior Secured Notes due 2020 574,535
509,050
7.500% Senior Secured Notes due 2019 148,876
521,894
5.500% Senior Secured Notes due 2020 125,856
126,294
5.350% Senior Secured Notes due 2023 61,106
61,187
6.625% Senior Secured Notes due 2018 -
521,556
Senior Secured Notes
5,880,734
6,507,004
Term Loan Facilities due 2023
935,198
-
Revolving Credit Facilities due 2021 230,746
516,529
Term Loan Facilities due 2019
-
839,552
Long-term debt, less current portion 7,046,678
7,863,085
6.625% Senior Secured Notes due 2018 588,320
-
Other
22
77
Current portion of long-term debt
588,342
77
Total debt
7,635,020
7,863,162
Cash and cash equivalents
300,079
294,094
Net debt
7,334,941
7,569,068
International Game Technology PLC
Condensed Consolidated Statement of Operations
Reconciliation of Non-GAAP Financial Measures
($ and shares in thousands, except per share data)
Adjustments
Q3 2017
Impairment/
Transaction
Q3 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) Benefit from income taxes was 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 income, 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
Foreign exchange loss, net
(384,749)
-
384,749
-
-
-
Other (expense) income, net
(33,247)
1,567
-
-
35,428
3,748
Interest expense, net
(336,502)
2,415
-
-
-
(334,087)
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) Provision for income taxes was 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)
Adjustments
Q3 2016
Impairment/
Transaction
Q3 2016
As
Purchase
Foreign
Restructuring
(Income)
As
Reported
Accounting
Exchange
Expense
Expense
Adjusted
Total revenue
1,265,650
376
-
-
-
1,266,026
Cost of services
625,235
(46,222)
-
-
-
579,013
Cost of sales
136,702
(29,740)
-
-
-
106,962
Selling, general and administrative
242,510
(35,254)
-
-
-
207,256
Research and development
87,354
(465)
-
-
-
86,889
Restructuring expense
5,658
-
-
(5,658)
-
-
Impairment loss
4,230
-
-
(4,230)
-
-
Transaction expense, net
129
-
-
-
(129)
-
Total operating expenses
1,101,818
(111,681)
-
(9,888)
(129)
980,120
Operating income
163,832
112,057
-
9,888
129
285,906
Foreign exchange loss, net
(21,143)
-
21,143
-
-
-
Other income, net
2,907
(211)
-
-
-
2,696
Interest expense, net
(114,378)
2,073
-
-
-
(112,305)
Total non-operating expenses
(132,614)
1,862
21,143
-
-
(109,609)
Income before provision for income taxes
31,218
113,919
21,143
9,888
129
176,297
Provision for income taxes (a)
12,812
40,437
9,857
2,538
40
65,684
Net income
18,406
73,482
11,286
7,350
89
110,613
Less: Net income attributable to non-controlling interests
20,309
26
-
-
-
20,335
Net (loss) income attributable to IGT PLC
(1,903)
73,456
11,286
7,350
89
90,278
Net (loss) income per common share - diluted
(0.01)
0.45
Weighted-average shares - diluted
202,029
202,606
(a) Provision for income taxes was 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 2016
Impairment/
September 2016
As
Purchase
Foreign
Restructuring
Transaction
As
Reported
Accounting
Exchange
Expense
Expense
Adjusted
Total revenue
3,832,680
1,332
-
-
-
3,834,012
Cost of services
1,911,830
(137,366)
-
-
-
1,774,464
Cost of sales
403,118
(89,091)
-
-
-
314,027
Selling, general and administrative
709,277
(104,857)
-
-
-
604,420
Research and development
256,349
(1,459)
-
-
-
254,890
Restructuring expense
21,514
-
-
(21,514)
-
-
Impairment loss
6,582
-
-
(6,582)
-
-
Transaction expense, net
1,560
-
-
-
(1,560)
-
Total operating expenses
3,310,230
(332,773)
-
(28,096)
(1,560)
2,947,801
Operating income
522,450
334,105
-
28,096
1,560
886,211
Foreign exchange loss, net
(94,547)
-
94,547
-
-
-
Other expense, net
(4,994)
3,881
-
-
-
(1,113)
Interest expense, net
(343,461)
6,147
-
-
-
(337,314)
Total non-operating expenses
(443,002)
10,028
94,547
-
-
(338,427)
Income before provision for income taxes
79,448
344,133
94,547
28,096
1,560
547,784
Provision for income taxes (a)
64,593
122,338
23,431
7,718
302
218,382
Net income
14,855
221,795
71,116
20,378
1,258
329,402
Less: Net income attributable to non-controlling interests
36,836
76
-
-
-
36,912
Net (loss) income attributable to IGT PLC
(21,981)
221,719
71,116
20,378
1,258
292,490
Net (loss) income per common share - diluted
(0.11)
1.45
Weighted-average shares - diluted
201,238
201,901
(a) Provision for income taxes was determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated.
International Game Technology PLC
Adjusted EBITDA and Free Cash Flow
Reconciliations of Non-GAAP Financial Measures
($ thousands)
For the three months ended
September 30,
2017
2016
Net (loss) income
(774,407)
18,406
(Benefit from) provision for income taxes
(19,824)
12,812
Non-operating expenses
238,133
132,614
Impairment loss
715,220
4,230
Depreciation
103,182
94,403
Amortization
99,562
124,089
Amortization of upfront payments to customers
54,279
29,982
Restructuring expense
9,976
5,658
Stock-based compensation expense
1,829
7,468
Transaction expense, net
627
129
Bad debt expense
4
-
Non-cash purchase accounting (excluding D&A)
(126)
67
Adjusted EBITDA
428,455
429,858
Cash flows from operating activities
57,729
97,190
Capital expenditures
(181,579)
(151,865)
Free Cash Flow
(123,850)
(54,675)
For the nine months ended
September 30,
2017
2016
Net (loss) income
(1,053,435)
14,855
Provision for income taxes
53,932
64,593
Non-operating expenses
754,498
443,002
Impairment loss
715,220
6,582
Amortization
317,989
377,163
Depreciation
289,088
293,284
Amortization of upfront payments to customers
155,318
85,160
Restructuring expense
30,706
21,514
Stock-based compensation expense
5,102
24,502
Non-cash purchase accounting (excluding D&A)
(513)
921
Bad debt recovery
(17,858)
-
Transaction (income) expense, net
(26,682)
1,560
Adjusted EBITDA
1,223,365
1,333,136
Cash flows from operating activities
600,953
620,997
Capital expenditures
(552,169)
(371,497)
Upfront payments to customers
(185,368)
(390,390)
Free Cash Flow
(136,584)
(140,890)
International Game Technology PLC Segment Performance
Revenue Detail
($ millions)
INTERNATIONAL GAME TECHNOLOGY PLC
Quarter Change
2016
2017
Percentage Constant FX
Q3
Q3
Q3
Q3
Gaming
Total Revenue
644
611
-5.1%
-7.1%
Gaming Services
489
443
-9.4%
-11.7%
Terminal
322
319
-1.1%
-3.8%
Social (DDI)
66
0
-100.0% -100.0%
Other
101
124
23.1%
20.8%
Product Sales
155
168
8.6%
7.4%
Terminal
108
98
-9.7%
-10.7%
Other
47
70
50.8%
49.5%
Lottery
Total Revenue
545
521
-4.4%
-6.0%
Lottery Services
523
487
-6.9%
-8.6%
FM/Concessions
436
448
2.7%
-0.4%
LMA
59
34
-42.9%
-42.9%
Other Services
28
5
-81.5%
-63.1%
Product Sales
22
34
55.3%
55.9%
Terminal
2
1
-63.2%
-63.2%
Systems/Other
20
34
65.2%
65.8%
Other
Total Revenue
77
89
16.1%
10.7%
Service Revenue
77
84
8.6%
3.2%
Product Sales
(0)
6
NM
NM
Consolidated
Revenue
1,266
1,221
-3.5%
-5.5%
Operating Income:
Segment Total
338
305
-9.6%
-11.3%
Purchase Accounting (112)
(802)
615.6%
615.6%
Corporate Support
(62)
(59)
-3.9%
-5.6%
Total
164
(556)
-439.4% -442.2%
NORTH AMERICA GAMING & INTERACTIVE
Quarter Change
2016
2017
Percentage Constant FX
Q3
Q3
Q3
Q3
Gaming
Total Revenue
317
262
-17.5%
-17.7%
Gaming Services
241
171
-29.1%
-29.2%
Terminal
133
123
-8.0%
-8.2%
Social (DDI)
66
0
-100.0% -100.0%
Other
42
48
14.9%
14.8%
Product Sales
76
91
19.7%
19.1%
Terminal
51
47
-9.3%
-9.5%
Other
24
44
80.5%
79.2%
Total
Revenue
317
262
-17.5%
-17.7%
Operating Income
68
65
-4.1%
-2.4%
NORTH AMERICA LOTTERY
Quarter Change
2016
2017
Percentage Constant FX
Q3
Q3
Q3
Q3
Gaming
Total Revenue
37
48
29.7%
28.9%
Gaming Services
37
40
8.1%
7.3%
Terminal
25
25
0.3%
0.3%
Social (DDI)
0
0
0.0%
0.0%
Other
12
14
25.2%
22.5%
Product Sales
0
8
NM
NM
Terminal
0
6
0.0%
0.0%
Other
0
2
NM
NM
Lottery
Total Revenue
271
259
-4.1%
-4.2%
Lottery Services
253
237
-6.1%
-6.1%
FM/Concessions
163
171
4.7%
4.7%
LMA
59
34
-42.9%
-42.9%
Other Services
31
33
6.7%
6.7%
Product Sales
18
22
24.1%
22.9%
Terminal
2
1
-63.2%
-63.2%
Systems/Other
16
22
33.2%
31.9%
Total
Revenue
307
307
-0.1%
-0.2%
Operating Income
85
75
-11.6%
-11.6%
INTERNATIONAL
Quarter Change
2016
2017
Percentage Constant FX
Q3
Q3
Q3
Q3
Gaming
Total Revenue
122
128
4.8%
2.9%
Gaming Services
43
59
36.3%
34.0%
Terminal
12
14
10.9%
11.2%
Social (DDI)
0
0
0.0%
0.0%
Other
31
45
46.6%
43.3%
Product Sales
79
69
-12.4%
-14.2%
Terminal
57
45
-19.9%
-21.8%
Other
22
24
6.8%
5.4%
Lottery
Total Revenue
75
82
8.9%
11.0%
Lottery Services
71
70
-1.6%
0.1%
FM/Concessions
51
48
-5.5%
-7.9%
LMA
0
0
0.0%
0.0%
Other Services
20
22
8.3%
20.3%
Product Sales
4
12
191.9%
200.1%
Terminal
0
0
0.0%
0.0%
Systems/Other
4
12
191.9%
200.1%
Other
Total Revenue
18
24
31.9%
28.9%
Service Revenue
18
18
-0.4%
-3.2%
Product Sales
(0)
6
NM
NM
Total
Revenue
215
234
8.5%
7.9%
Operating Income
38
40
3.8%
7.0%
ITALY
Quarter Change
2016
2017
Percentage Constant FX
Q3
Q3
Q3
Q3
Gaming
Total Revenue
168
173
3.1%
-2.6%
Gaming Services
168
173
3.1%
-2.6%
Terminal
151
157
3.8%
-1.9%
Social (DDI)
0
0
0.0%
0.0%
Other
16
16
-3.7%
-9.0%
Product Sales
0
0
5.7%
0.3%
Terminal
0
0
-100.0% -100.0%
Other
0
0
7.0%
1.5%
Lottery
Total Revenue
199
180
-9.9%
-14.8%
Lottery Services
199
180
-9.9%
-14.8%
FM/Concessions
222
229
3.2%
-2.5%
LMA
0
0
0.0%
0.0%
Other Services
(23)
(50)
115.8%
103.9%
Product Sales
0
0
0.0%
0.0%
Terminal
0
0
0.0%
0.0%
Systems/Other
0
0
0.0%
0.0%
Other
Total Revenue
59
66
11.3%
5.2%
Service Revenue
59
66
11.3%
5.2%
Product Sales
0
0
0.0%
0.0%
Total
Revenue
426
418
-1.8%
-7.2%
Operating Income
147
126
-14.5%
-20.0%
Consolidated Key Performance Indicators (KPIs)
Third Quarter
Period Ended September 30
2017
2016
% change
Installed base (end of period)
Casino
35,946 34,159 5.2%
VLT - Government Sponsored (ex-Italy)
16,794 15,594 7.7%
VLT - Italy Supplier (B2B)
8,752
8,464
3.4%
Total installed base
61,492 58,217 5.6%
Yield (average revenue per unit per day - $0.00)
29.07
32.27
-9.9%
Additional Italian Network Details:
VLT - Operator (B2C)
10,958 10,930 0.3%
AWP
59,084 58,069 1.7%
Machine units shipped
New/Expansion
905
2,315
-60.9%
Replacement
5,501
6,665
-17.5%
Total machines shipped
6,406
8,980
-28.7%
Global lottery same-store revenue growth
Instants & draw games
4.2%
Multistate Jackpots
24.3%
Total lottery same-store revenue growth (ex-Italy)
6.8%
Italy lottery revenue growth
-14.9%
North America KPIs
Third Quarter
Period Ended September 30
2017
2016
% change
Installed base (end of period)
Casino
22,924 24,163 -5.1%
VLT - Government Sponsored
15,225 15,322 -0.6%
Total installed base
38,149 39,485 -3.4%
Machine units shipped
New/Expansion
729
2,017
-63.9%
Replacement
2,868
3,221
-11.0%
Total machines shipped
3,597
5,238
-31.3%
Lottery same-store revenue growth
Instants & draw games
6.3%
Multistate Jackpots
26.4%
Total lottery same-store revenue growth
9.4%
International KPIs
Third Quarter
Period Ended September 30
2017
2016
% change
Installed base (end of period)
Casino
13,022 9,996
30.3%
VLT - Government Sponsored
1,569
272
476.8%
Total installed base
14,591 10,268 42.1%
Machine units shipped
New/Expansion
176
298
-40.9%
Replacement
2,633
3,444
-23.5%
Total machines shipped
2,809
3,742
-24.9%
Lottery same-store revenue growth
Instants & draw games
-1.8%
Multistate Jackpots
5.8%
Total lottery same-store revenue growth
-1.4%
Italy KPIs
Third Quarter
Period Ended September 30
2017
2016
% change
(In EUR
millions, except machines)
Lottery
Lotto wagers
1,815
1,967
-7.7%
10eLotto
1,261
1,094
15.3%
Core
494
550
-10.1%
Late Numbers
60
324
-81.6%
Scratch & Win Wagers
2,198
2,091
5.1%
Italy lottery revenue growth
-14.9%
Gaming
Installed base (end of period)
VLT - Operator (B2C)
10,958 10,930 0.3%
VLT - Supplier (B2B)
8,752
8,464
3.4%
AWP
59,084 58,069 1.7%
Total Installed Base
78,794 77,463 1.7%
Wagers
VLT - Operator (B2C)
1,329
1,309
1.5%
AWP
948
986
-3.9%
Interactive Wagers (Gaming)
404
393
2.8%
Other
Sports Betting Wagers1
204
178
14.6%
Sports Betting Payout (%)1
83.3%
82.1%
1.1 pp
1Includes Virtual Wagers and Pools & Horses

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SOURCE International Game Technology PLC

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