IGT
$25.17
International Game Technology
($.30)
(1.18%)
Earnings Details
3rd Quarter September 2016
Monday, November 21, 2016 6:45:00 AM
Tweet Share Watch
Summary

International Game Technology Misses

International Game Technology (IGT) reported 3rd Quarter September 2016 earnings of $0.45 per share on revenue of $1.3 billion. The consensus earnings estimate was $0.44 per share on revenue of $1.2 billion. The Earnings Whisper number was $0.47 per share. Revenue grew 4.1% on a year-over-year basis.

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
$0.45
Earnings Whisper
$0.47
Consensus Estimate
$0.44
Reported Revenue
$1.27 Bil
Revenue Estimate
$1.24 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

International Game Technology PLC Reports Third Quarter 2016 Results

International Game Technology PLC ("IGT") (IGT) today reported financial results for the third quarter and nine months ended September 30, 2016. Today, at 8:00 a.m. EST / 1:00 p.m. GMT / 2:00 p.m. CET, management will host a conference call and webcast to present the third quarter results; access details are provided below.

http://photos.prnewswire.com/prnvar/20150406/196736LOGO

"Strong lottery performance across the world, a larger global installed base, and increased sales of gaming machines drove another quarter of solid revenue and profit expansion," said Marco Sala, CEO of IGT. "IGT’s leadership positions in lottery and gaming machines were evident at the recent gaming and lottery trade shows. The engaging player experiences and technology solutions IGT creates are the cornerstones of our growth strategy, and we are encouraged by customer enthusiasm for our innovative new products."

"We achieved broad-based growth across regions in the third quarter and our financial condition is strong," said Alberto Fornaro, CFO of IGT. "Higher profitability enabled us to maintain our leverage ratio despite the significant interest and tax payments of the quarter. Based on our performance to date, we remain comfortable with our adjusted EBITDA outlook for the full year."

Summary of Consolidated Third Quarter 2016 Financial Results

Quarter Ended
Change Constant
September 30,
Currency
Change
2016
2015
(%)
(%)
(In $ millions, unless otherwise noted)
Revenue
1,266
1,202 5%
6%
Operating Income
164
130
26%
25%
Net (loss) income per diluted share
(0.01)
0.04
NM
Net debt
7,937
8,196 -3%
Adjusted EBITDA
430
414
4%
4%
Adjusted Operating Income
286
261
9%
9%
Adjusted net income per diluted share
0.45
0.42
7%
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 2016 are calculated using the same foreign exchange rates as the corresponding 2015 period.

Overview of Consolidated Third Quarter Results

Consolidated revenue rose 5% to $1,266 million from $1,202 million in the third quarter of 2015. Revenue growth primarily reflects strong performance in the North America Lottery and Italy segments. Global lottery same-store revenue, excluding Italy, increased 6% during the third quarter while Italy lottery wagers increased 7%. Gaming service revenue was below the prior year, primarily on lower DoubleDown revenues. Product sales increased in the quarter on higher gaming machine unit demand in the North America and International segments as well as on higher International systems sales. The Company shipped 8,980 gaming machines worldwide during the third quarter.

Operating income increased 26% to $164 million from $130 million in the third quarter of 2015. Adjusted operating income grew 9% to $286 million, from $261 million, as higher lottery profits were partially offset by the timing of bad debt expense, investment in the installed base, increased global product marketing costs, and research & development spending.

Adjusted EBITDA of $430 million was 4% higher than in the third quarter of 2015, representing the fourth consecutive quarter of year-over-year growth.

Interest expense was $118 million compared to $122 million in the prior-year period.

Net loss attributable to IGT was $2 million in the third quarter of 2016, reflecting the impact of $21 million in primarily non-cash foreign exchange losses. On an adjusted basis, net income attributable to IGT rose 6% to $90 million. The Company reported net loss per diluted share of $(0.01) and earned $0.45 per diluted share on an adjusted basis.

In the first nine months of the year, cash from operations was $621 million and capital expenditures were $372 million. The Company made the first of three upfront installment payments for the new Lotto concession in Italy during the year-to-date period.

Cash and cash equivalents were $350 million as of September 30, 2016, compared to $627 million as of December 31, 2015. Consolidated shareholders’ equity totaled $3,421 million and net debt was $7,937 million as of September 30, 2016.

Operating Segment Review

North America Gaming & Interactive

North America Gaming & Interactive revenue was $317 million compared to $341 million in the third quarter of 2015.

Service revenue was $241 million compared to $267 million in the prior-year period, largely driven by fewer daily active users ("DAU") at DoubleDown and a year-on-year decrease in the installed base. Sequentially, terminal service revenue and the installed base were relatively stable.

Product sales increased to $76 million from $73 million in the third quarter of 2015, primarily due to higher replacement unit volume. The segment shipped 5,238 units compared to 3,326 units in the prior-year period. A portion of the new and expansion unit revenue was deferred and is expected to be recognized in the fourth quarter of 2016.

Operating income for North America Gaming & Interactive was $66 million compared to $85 million in the third quarter of 2015. The decrease was largely attributed to lower revenue, as well as costs to revitalize the installed base and higher research & development spending.

North America Lottery

North America Lottery revenue was $307 million, up 22% from the third quarter of 2015. The strong growth reflects robust same-store revenue expansion as well as an incentive contribution from the New Jersey Lottery, largely driven by the record Powerball jackpot in the first quarter of 2016. Excluding the New Jersey contribution, revenue for the North America Lottery segment rose 10%.

Service revenue of $290 million was 19% higher than in the prior-year period, reflecting 6.3% same-store revenue growth and the New Jersey incentive contribution. The same-store revenue growth was primarily driven by continued strength in multi-state Jackpot games. Product sales were $18 million in the third quarter of 2016, compared to $10 million in the prior-year period, and included higher hardware sales in California as well as increased instant ticket printing revenue.

Operating income for North America Lottery rose 70% to $85 million, reflecting the strong same-store revenue growth and the New Jersey incentive.

International

International revenue was $215 million in the quarter, up from $210 million in the third quarter of 2015. At constant currency, revenue for the International segment rose 5% from the prior year.

International lottery service revenue of $71 million was 8% higher than in the prior-year period at constant currency. Same-store revenue growth of 5.7% was supported by strength in Latin America and Eastern Europe, partially offset by weakness in the United Kingdom.

International gaming service revenue was $43 million compared to $50 million in the third quarter of 2015, mainly due to the exit of certain interactive operations. At constant currency, terminal service revenue grew 3% over the prior year and the installed base rose 500 units to 10,268. Revenue from gaming product sales rose 12% at constant currency, supported by the 3,742 gaming machines shipped at higher average unit prices during the third quarter of 2016 compared to 3,296 units in the prior-year period. Product sales also benefited from a large systems sale in Asia.

International operating income was $39 million compared to $37 million in the third quarter of 2015. At constant currency, operating income rose 15% on strength in lottery, improved contribution from the installed base, and higher gaming product sales.

Italy

Italy revenue was $426 million, 7% higher than in the third quarter of 2015.

Total Lotto wagers in the quarter were EUR 1,967 million, a 17% increase over the prior-year period, reflecting a significant contribution from late numbers. Excluding late numbers, Lotto wagers increased 2% over the same period last year. Scratch & Win wagers were relatively stable at EUR 2,091 million.

Machine gaming service revenue increased 8% over the third quarter of 2015 on improved unit productivity. The strength in service revenues was partially offset by lower installed units. Sports betting wagers increased 7% and payout was steady compared to the prior year.

Operating income for the Italy segment was $147 million, 12% higher than the third quarter of 2015. The increase in operating income was mainly attributable to strong Lotto and sports betting contribution.

Other Developments

The Company’s Board of Directors has declared a quarterly cash dividend of $0.20 per ordinary share. The dividend is payable on December 19, 2016 to all shareholders of record as of the close of business on December 5, 2016.

Outlook

The Company continues to expect adjusted EBITDA of $1,740-$1,790 million for the full year 2016 period. Capital expenditures excluding upfront Lotto concession payments are now expected to be no more than $550 million. This compares to previous capital expenditure guidance of $550-$580 million. Net debt is still expected to be $7,700-$7,900 million at the end of 2016.

Adjusted EBITDA is a non-GAAP measure. 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.

Conference Call and Webcast

Today, at 8:00 a.m. EST / 1:00 p.m. GMT / 2:00 p.m. CET, management will host a conference call to present the third quarter 2016 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 dial in number is +44 (0) 20 3427 1904 for participants in the United Kingdom and +1 877 280 2296 for listeners outside the United Kingdom. The conference ID/confirmation code is 8241308. A telephone replay of the call will be available for one week at +44 (0) 20 3427 0598 or +1 866 932 5017 using the conference ID/confirmation code 8241308.

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 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 International Game Technology PLC as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as "aim," "anticipate," "believe," "plan," "could," "would," "should," "shall," "continue," "estimate," "expect," "forecast," "future," "guidance," "intend," "may," "will," "possible," "potential," "predict," "project" or the negative or other variations of them. These forward-looking statements are subject to various risks and uncertainties, many of which are outside International Game Technology PLC’s control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance or achievements. Therefore, you should not place undue reliance on the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) the possibility that the businesses of International Game Technology (Nevada) and GTECH S.p.A. will not be integrated successfully, or that the combined companies will not realize estimated cost savings, synergies, growth or other anticipated benefits or that such benefits may take longer to realize than expected; unanticipated costs of integration of International Game Technology (Nevada) and GTECH S.p.A.; the possibility that International Game Technology PLC will be unable to pay future dividends to shareholders or that the amount of such dividends may be less than anticipated; the possibility that International Game Technology PLC may not obtain its anticipated financial results in one or more future periods; reductions in customer spending; a slowdown in customer payments and changes in customer demand for products and services as a result of changing economic conditions or otherwise; unanticipated changes relating to competitive factors in the industries in which International Game Technology PLC operates; International Game Technology PLC’s ability to hire and retain key personnel; the impact of the consummation of the business combination on relationships with third parties, including customers, employees and competitors; International Game Technology PLC’s ability to attract new customers and retain existing customers in the manner anticipated; reliance on and integration of information technology systems; changes in legislation or governmental regulations affecting International Game Technology PLC, including as a consequence of the announced withdrawal of the U.K. from the EU; international, national or local economic, social or political conditions that could adversely affect International Game Technology PLC or its customers; conditions in the credit markets; changes in the top management team; risks associated with assumptions International Game Technology PLC makes in connection with its critical accounting estimates; the resolution of pending and potential future legal, regulatory or tax proceedings and investigations; and International Game Technology PLC’s international operations, which are subject to the risks of currency fluctuations and foreign exchange controls. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect International Game Technology PLC’s business, including those described in International Game Technology PLC’s annual report on Form 20-F for the financial year ended December 31, 2015 and other documents filed from time to time with the Securities and Exchange Commission (the "SEC"), which are available on the SEC website at www.sec.gov and on the investor relations section of International Game Technology PLC’s website at www.IGT.com. Except as required under applicable law, International Game Technology PLC does not assume any obligation to update the forward-looking statements. Nothing in this news release is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per International Game Technology PLC share for the current or any future financial years will necessarily match or exceed the historical published earnings per International Game Technology PLC share, as applicable. All forward-looking statements contained in this news release are qualified in their entirety by this cautionary statement. All subsequent written or oral forward-looking statements attributable to International Game Technology PLC, or persons acting on its behalf, are expressly 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,
2016
2015
Service revenue
1,088,842
1,043,709
Product sales
176,808
157,864
Total revenue
1,265,650
1,201,573
Cost of services
625,235
619,630
Cost of sales
136,702
127,980
Selling, general and administrative
242,510
224,487
Research and development
87,354
85,864
Restructuring expense
5,658
11,271
Impairment loss
4,230
-
Transaction expense, net
129
2,301
Total operating expenses
1,101,818
1,071,533
Operating income
163,832
130,040
Interest income
3,240
4,797
Other income (expense), net
2,907
(508)
Foreign exchange (loss) gain, net
(21,143)
9,848
Interest expense
(117,618)
(121,845)
Total non-operating expenses
(132,614)
(107,708)
Income before provision for income taxes
31,218
22,332
Provision for income taxes
12,812
13,367
Net income
18,406
8,965
Less: Net income attributable to non-controlling interests
20,309
1,833
Net (loss) income attributable to IGT PLC
(1,903)
7,132
Net (loss) income attributable to IGT PLC per common share - basic
(0.01)
0.04
Net (loss) income attributable to IGT PLC per common share - diluted (0.01)
0.04
Weighted-average shares - basic
202,029
199,480
Weighted-average shares - diluted
202,029
200,910
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,
2016
2015
Service revenue
3,313,917
2,868,664
Product sales
518,763
455,435
Total revenue
3,832,680
3,324,099
Cost of services
1,911,830
1,743,013
Cost of sales
403,118
340,322
Selling, general and administrative
709,277
552,254
Research and development
256,349
192,849
Restructuring expense
21,514
41,570
Impairment loss
6,582
-
Transaction expense, net
1,560
45,695
Total operating expenses
3,310,230
2,915,703
Operating income
522,450
408,396
Interest income
10,287
12,916
Other expense, net
(4,994)
(120,222)
Foreign exchange loss, net
(94,547)
(85,493)
Interest expense
(353,748)
(338,651)
Total non-operating expenses
(443,002)
(531,450)
Income (loss) before provision for income taxes
79,448
(123,054)
Provision for income taxes
64,593
15,907
Net income (loss)
14,855
(138,961)
Less: Net income attributable to non-controlling interests
36,836
10,114
Net loss attributable to IGT PLC
(21,981)
(149,075)
Net loss attributable to IGT PLC per common share - basic
(0.11)
(0.79)
Net loss attributable to IGT PLC per common share - diluted
(0.11)
(0.79)
Weighted-average shares - basic
201,238
189,884
Weighted-average shares - diluted
201,238
189,884
International Game Technology PLC
Condensed Consolidated Balance Sheets
($ thousands)
Unaudited
September 30,
December 31,
2016
2015
ASSETS
Current assets:
Cash and cash equivalents
349,899
627,484
Restricted cash and investments
135,340
169,101
Trade and other receivables, net
880,943
959,592
Inventories
324,415
269,982
Other current assets
454,666
423,701
Income taxes receivable
35,372
35,514
Total current assets
2,180,635
2,485,374
Systems, equipment and other assets related to contracts, net 1,175,954
1,127,518
Property, plant and equipment, net
346,390
349,677
Goodwill, net
6,843,725
6,830,499
Intangible assets, net
3,010,075
3,335,633
Other non-current assets
1,690,815
937,917
Deferred income taxes
47,556
48,074
Total non-current assets
13,114,515
12,629,318
Total Assets
15,295,150
15,114,692
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
917,891
1,057,860
Other current liabilities
1,269,510
922,586
Current portion of long-term debt
123
160
Income taxes payable
138,289
30,020
Total current liabilities
2,325,813
2,010,626
Long-term debt, less current portion
8,286,690
8,334,013
Deferred income taxes
822,247
941,418
Other non-current liabilities
439,593
462,493
Total non-current liabilities
9,548,530
9,737,924
Total Liabilities
11,874,343
11,748,550
Commitments and contingencies
-
-
Shareholders’ equity
3,420,807
3,366,142
Total liabilities and shareholders’ equity
15,295,150
15,114,692
International Game Technology PLC
Consolidated Statements of Cash Flows
($ thousands)
Unaudited
For the nine months ended
September 30,
2016
2015
Operating activities
Net income (loss)
14,855
(138,961)
Adjustments for:
Amortization
377,163
286,264
Depreciation
293,284
259,676
Foreign exchange loss, net
94,547
85,493
Amortization of upfront payments to customers
85,160
81,178
Stock-based compensation expense
24,502
32,732
Debt issuance cost amortization
13,757
35,788
Loss on early extinguishment of debt
-
73,806
Write-off of bridge facility costs
-
35,061
Other, net
23,185
15,196
Cash flows before changes in operating assets and liabilities
926,453
766,233
Changes in operating assets and liabilities:
Trade and other receivables
83,085
122,739
Inventories
(46,761)
(29,275)
Accounts payable
(135,297)
(102,170)
Other assets and liabilities
(206,483)
(286,533)
Net cash flows from operating activities
620,997
470,994
Investing activities
Upfront payments to customers
(390,390)
-
Capital expenditures
(371,497)
(288,743)
Purchases of jackpot annuity investments
(2,598)
(1,562)
Proceeds from jackpot annuity investments
14,856
27,509
Proceeds from sale of assets
55,713
23,610
Acquisition of IGT, net of cash acquired
-
(3,241,415)
Other
2,938
(127)
Net cash flows used in investing activities
(690,978)
(3,480,728)
Financing activities
Principal payments on long-term debt
(177,977)
(2,492,354)
Dividends paid
(120,726)
(169,633)
Return of capital - non-controlling interest
(35,407)
(30,568)
Dividends paid - non-controlling interest
(27,813)
(28,842)
Debt issuance costs paid
(10,736)
(81,100)
Capital contribution non-controlling interest
151,359
-
Proceeds from issuance of long-term debt
-
6,584,801
Proceeds from interest rate swaps
-
67,773
Payments in connection with note consents
-
(29,022)
Payments on bridge facility
-
(51,409)
Payments in connection with the early extinguishment of debt
-
(79,526)
Payments to withdrawing shareholders
-
(407,759)
Other
2,225
(11,942)
Net cash flows (used in) provided by financing activities
(219,075)
3,270,419
Net (decrease) increase in cash and cash equivalents
(289,056)
260,685
Effect of exchange rate changes on cash
11,471
(25,876)
Cash and cash equivalents at the beginning of the period
627,484
317,106
Cash and cash equivalents at the end of the period
349,899
551,915
Supplemental Cash Flow Information:
Interest paid
(408,864)
(322,074)
Income taxes paid
(136,015)
(163,995)
International Game Technology PLC
Net Debt
($ thousands)
September 30,
December 31,
2016
2015
Long-term debt, less current portion
6.250% Senior Secured Notes due 2022 1,495,417
1,468,875
6.500% Senior Secured Notes due 2025 1,085,207
1,084,249
4.750% Senior Secured Notes due 2023 936,562
912,418
4.125% Senior Secured Notes due 2020 772,849
752,212
5.625% Senior Secured Notes due 2020 593,517
592,245
Senior Secured Notes
4,883,552
4,809,999
6.625% Senior Secured Notes due 2018 550,973
533,915
4.750% Senior Secured Notes due 2020 537,650
520,649
Legacy GTECH Notes
1,088,623
1,054,564
7.500% Senior Secured Notes due 2019 523,966
530,009
5.500% Senior Secured Notes due 2020 126,433
126,833
5.350% Senior Secured Notes due 2023 61,213
61,303
Legacy IGT Notes
711,612
718,145
Term Loan Facilities due 2019
888,438
866,785
Revolving Credit Facilities due 2021 714,465
834,968
Capital Securities
-
49,472
Other
-
80
Long-term debt, less current portion 8,286,690
8,334,013
Current portion of long-term debt
123
160
Total debt
8,286,813
8,334,173
Cash and cash equivalents
349,899
627,484
Net debt
7,936,914
7,706,689
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.
Condensed Consolidated Statement of Operations
Reconciliation of Non-GAAP Financial Measures
($ and shares in thousands, except per share data)
Adjustments
Q3 2015
Transaction
Q3 2015
As
Purchase
Foreign
Restructuring
and Refinancing
As
Reported
Accounting
Exchange
Expense
Expense
Adjusted
Total revenue
1,201,573
2,271
-
-
-
1,203,844
Cost of services
619,630
(48,022)
-
-
-
571,608
Cost of sales
127,980
(34,536)
-
-
-
93,444
Selling, general and administrative
224,487
(32,447)
-
-
-
192,040
Research and development
85,864
(564)
-
-
-
85,300
Restructuring expense
11,271
-
-
(11,271)
-
-
Transaction expense, net
2,301
-
-
-
(2,301)
-
Total operating expenses
1,071,533
(115,569)
-
(11,271)
(2,301)
942,392
Operating income
130,040
117,840
-
11,271
2,301
261,452
Foreign exchange gain, net
9,848
-
(9,848)
-
-
-
Other expense, net
(508)
(208)
-
-
-
(716)
Interest expense, net
(117,048)
20
-
-
-
(117,028)
Total non-operating expenses
(107,708)
(188)
(9,848)
-
-
(117,744)
Income before provision for income taxes
22,332
117,652
(9,848)
11,271
2,301
143,708
Provision for income taxes (a)
13,367
40,869
(1,788)
3,818
377
56,643
Net income
8,965
76,783
(8,060)
7,453
1,924
87,065
Less: Net income attributable to non-controlling interests
1,833
26
-
-
-
1,859
Net income attributable to IGT PLC
7,132
76,757
(8,060)
7,453
1,924
85,206
Net income per common share - diluted
0.04
0.42
Weighted-average shares - diluted
200,910
200,910
(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
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
Year to date
September 2015
Transaction
September 2015
September 2015
As
Purchase
Foreign
Restructuring
and Refinancing
As
Pro Forma
Pro
Reported
Accounting
Exchange
Expense
Expense
Adjusted
Adjustments
Forma
Total revenue
3,324,099
13,919
-
-
-
3,338,018
399,387
3,737,405
Cost of services
1,743,013
(104,686)
-
-
-
1,638,327
113,306
1,751,633
Cost of sales
340,322
(66,764)
-
-
-
273,558
63,355
336,913
Selling, general and administrative
552,254
(67,023)
-
-
-
485,231
134,166
619,397
Research and development
192,849
(1,693)
-
-
-
191,156
62,760
253,916
Restructuring expense
41,570
-
-
(41,570)
-
-
-
-
Transaction expense, net
45,695
-
-
-
(45,695)
-
-
-
Total operating expenses
2,915,703
(240,166)
-
(41,570)
(45,695)
2,588,272
373,587
2,961,859
Operating income
408,396
254,085
-
41,570
45,695
749,746
25,800
775,546
Foreign exchange loss, net
(85,493)
-
85,493
-
-
-
Other (expense) income, net
(120,222)
6,042
-
-
117,877
3,697
Interest expense, net
(325,735)
-
-
-
-
(325,735)
Total non-operating expenses
(531,450)
6,042
85,493
-
117,877
(322,038)
(Loss) income before provision for income taxes
(123,054)
260,127
85,493
41,570
163,572
427,708
Provision for income taxes (a)
15,907
92,015
19,768
13,000
41,115
181,805
Net (loss) income
(138,961)
168,112
65,725
28,570
122,457
245,903
Less: Net income attributable to non-controlling interests
10,114
77
-
-
-
10,191
Net (loss) income attributable to IGT PLC
(149,075)
168,035
65,725
28,570
122,457
235,712
Net (loss) income per common share - diluted
(0.79)
1.23
Weighted-average shares - diluted
189,884
191,142
(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,
2016
2015
Net income
18,406
8,965
Provision for income taxes
12,812
13,367
Non-operating expenses
132,614
107,708
Amortization
124,089
134,129
Depreciation
94,403
95,133
Amortization of upfront payments to customers
29,982
27,302
Stock-based compensation expense
7,468
11,762
Restructuring expense
5,658
11,271
Impairment loss
4,230
-
Non-cash purchase accounting (excluding D&A)
67
1,860
Transaction expense, net
129
2,301
Adjusted EBITDA
429,858
413,798
Cash flows from operating activities
97,190
253,909
Capital expenditures
(151,865)
(121,651)
Free Cash Flow
(54,675)
132,258
International Game Technology PLC Segment Performance
Revenue Detail
($ millions)
INTERNATIONAL GAME TECHNOLOGY PLC
Quarter Change
2015
2016
Percentage Constant FX
Q3
Q3
Q3
Q3
Gaming
Total Revenue
651
644
-1.1%
-0.6%
Gaming Services
508
489
-3.8%
-2.9%
Terminal
322
322
0.0%
0.7%
Social (DDI)
80
66
-17.5%
-17.5%
Other
106
101
-5.4%
-3.2%
Product Sales
142
155
8.8%
7.6%
Terminal
95
108
13.1%
11.8%
Other
47
47
0.0%
-0.8%
Lottery
Total Revenue
478
545
14.1%
14.8%
Lottery Services
463
523
13.1%
13.8%
FM/Concessions
416
436
4.8%
5.4%
LMA
22
59
172.2%
172.2%
Other Services
25
28
14.3%
18.3%
Product Sales
15
22
44.9%
44.8%
Terminal
0
2
592.3%
592.1%
Systems/Other
15
20
35.9%
35.9%
Other
Total Revenue
73
77
5.0%
5.3%
Service Revenue
73
77
5.6%
5.9%
Product Sales
0
(0)
-110.5%
-103.0%
Consolidated
Revenue
1,202
1,266
5.3%
5.9%
Operating Income:
Segment Total
303
338
11.6%
11.7%
Purchase Accounting (118)
(112)
-4.9%
-4.8%
Corporate Support
(55)
(62)
12.7%
15.1%
Total
130
164
26.0%
26.5%
North American Gaming Interactive
Quarter Change
2015
2016
Percentage Constant FX
Q3
Q3
Q3
Q3
Gaming
Total Revenue
341
317
-7.0%
-7.0%
Gaming Services
267
241
-9.8%
-9.8%
Terminal
144
133
-7.8%
-7.8%
Social (DDI)
80
66
-17.5%
-17.5%
Other
43
42
-2.2%
-2.2%
Product Sales
73
76
3.3%
3.2%
Terminal
46
51
11.2%
11.1%
Other
27
24
-10.2%
-10.2%
Total
Revenue
341
317
-7.0%
-7.0%
Operating Income
85
66
-21.8%
-25.0%
North America Lottery
Quarter Change
2015
2016
Percentage Constant FX
Q3
Q3
Q3
Q3
Gaming
Total Revenue
37
37
0.8%
0.7%
Gaming Services
36
37
0.9%
0.8%
Terminal
26
25
-3.7%
-3.7%
Social (DDI)
0
0
0.0%
0.0%
Other
10
12
12.7%
12.4%
Product Sales
0
0
0.0%
0.0%
Terminal
(0)
0
0.0%
0.0%
Other
0
0
0.0%
0.0%
Lottery
Total Revenue
216
271
25.1%
25.1%
Lottery Services
206
253
22.6%
22.6%
FM/Concessions
156
163
4.6%
4.6%
LMA
22
59
172.2%
172.2%
Other Services
29
31
8.0%
8.0%
Product Sales
10
18
73.3%
73.3%
Terminal
0
2
682.6%
682.4%
Systems/Other
10
16
60.3%
60.2%
Total
Revenue
253
307
21.6%
21.5%
Operating Income
50
85
70.1%
69.3%
INTERNATIONAL
Quarter Change
2015
2016
Percentage Constant FX
Q3
Q3
Q3
Q3
Gaming
Total Revenue
120
122
2.1%
4.7%
Gaming Services
50
43
-14.2%
-4.7%
Terminal
15
13
-13.8%
2.8%
Social (DDI)
0
0
0.0%
0.0%
Other
36
31
-14.3%
-7.7%
Product Sales
69
79
13.9%
11.6%
Terminal
49
57
14.9%
12.4%
Other
20
22
11.5%
9.6%
Lottery
Total Revenue
73
75
3.5%
6.0%
Lottery Services
68
71
4.8%
7.5%
FM/Concessions
49
51
3.5%
5.3%
LMA
0
0
0.0%
0.0%
Other Services
19
20
8.3%
13.4%
Product Sales
5
4
-15.6%
-15.7%
Terminal
0
0
-100.0% -100.0%
Systems/Other
5
4
-15.1%
-15.2%
Other
Total Revenue
18
18
1.1%
2.7%
Service Revenue
17
18
3.7%
5.2%
Product Sales
0
(0)
-110.5%
-103.0%
Total
Revenue
210
215
2.5%
5.0%
Operating Income
37
39
6.0%
15.4%
ITALY
Quarter Change
2015
2016
Percentage Constant FX
Q3
Q3
Q3
Q3
Gaming
Total Revenue
156
168
7.7%
7.6%
Gaming Services
156
168
7.7%
7.7%
Terminal
137
151
10.4%
10.4%
Social (DDI)
0
0
0.0%
0.0%
Other
19
16
-12.1%
-12.1%
Product Sales
0
0
0.0%
0.0%
Terminal
0
0
0.0%
0.0%
Other
0
0
0.0%
0.0%
Lottery
Total Revenue
188
199
5.7%
5.6%
Lottery Services
188
199
5.7%
5.6%
FM/Concessions
211
222
5.2%
5.2%
LMA
0
0
0.0%
0.0%
Other Services
(23)
(23)
1.4%
1.3%
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
55
59
6.3%
6.2%
Service Revenue
55
59
6.3%
6.2%
Product Sales
0
0
0.0%
0.0%
Total
Revenue
400
426
6.5%
6.5%
Operating Income
131
147
12.4%
12.4%
Consolidated Key Performance Indicators (KPIs)
Third Quarter
Periods Ended September 30
2016
2015
% change
Installed base (end of period)
Casino
34,159
34,755
-1.7%
VLT - Government Sponsored (ex-Italy)
15,594
15,648
-0.3%
VLT - Italy Supplier (B2B)
8,464
8,439
0.3%
Total installed base
58,217
58,842
-1.1%
Yield (average revenue per unit per day - $0.00)
32.27
34.10
-5.4%
Additional Italian Network Details:
VLT - Operator (B2C)
10,930
10,955
-0.2%
AWP
58,069
60,262
-3.6%
Machine units shipped
New/Expansion
2,315
1,399
65.5%
Replacement
6,665
5,223
27.6%
Total machines shipped
8,980
6,622
35.6%
Global lottery same-store revenue growth
Instants & draw games
2.7%
Multistate Jackpots
35.0%
Total lottery same-store revenue growth (ex-Italy)
6.1%
Italy lottery revenue growth
5.6%
North America KPIs
Third Quarter
Periods Ended September 30
2016
2015
% change
Installed base (end of period)
Casino
24,163
25,237
-4.3%
VLT - Government Sponsored
15,322
15,398
-0.5%
Total installed base
39,485
40,635
-2.8%
Machine units shipped
New/Expansion
2,017
895
125.4%
Replacement
3,221
2,431
32.5%
Total machines shipped
5,238
3,326
57.5%
DoubleDown
Revenue ($ Thousands)
65,820
79,748
-17.5%
Mobile penetration
56%
50%
11.2%
DAU (Daily Active Users - Thousands) 1
1,506
1,852
-18.7%
MAU (Monthly Active Users - Thousands) 1
3,604
4,536
-20.5%
Bookings per DAU ($0.00) 1
$
0.48
$
0.48 0.3%
Lottery same-store revenue growth
Instants & draw games
1.6%
Multistate Jackpots
40.6%
Total lottery same-store revenue growth
6.3%
1As a single application with multiple games, active users equal unique users
International KPIs
Third Quarter
Periods Ended September 30
2016
2015
% change
Installed base (end of period)
Casino
9,996
9,518
5.0%
VLT - Government Sponsored
272
250
8.8%
Total installed base
10,268
9,768
5.1%
Machine units shipped
New/Expansion
298
504
-40.9%
Replacement
3,444
2,792
23.4%
Total machines shipped
3,742
3,296
13.5%
Lottery same-store revenue growth
Instants & draw games
5.9%
Multistate Jackpots
3.3%
Total lottery same-store revenue growth
5.7%
Italy KPIs
Third Quarter
Periods Ended September 30
2016
2015
% change
(In EUR
millions, except machines)
Lottery
Lotto wagers
1,967
1,677
17.3%
10eLotto
1,094
1,009
8.4%
Core
550
605
-9.1%
Late Numbers
324
63
417.5%
Scratch & Win Wagers
2,091
2,108
-0.8%
Italy lottery revenue growth
5.6%
Gaming
Installed base (end of period)
VLT - Operator (B2C)
10,930
10,955
-0.2%
VLT - Supplier (B2B)
8,464
8,439
0.3%
AWP
58,069
60,262
-3.6%
Total Installed Base
77,463
79,656
-2.8%
Wagers
VLT - Operator (B2C)
1,309
1,314
-0.4%
AWP
986
1,026
-3.9%
Interactive Wagers (Gaming)
393
378
4.0%
Other
Sports Betting Wagers1
178
167
6.7%
Sports Betting Payout (%)1
82.0%
81.9%
0.1 pp
1Includes Virtual Wagers and Pools & Horses

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

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/international-game-technology-plc-reports-third-quarter-2016-results-300366441.html

SOURCE International Game Technology PLC

http://rt.prnewswire.com/rt.gif?NewsItemId=LA49941&Transmission_Id=201611210645PR_NEWS_USPR_____LA49941&DateId=20161121