LONDON, May 21, 2018 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the first quarter ended March 31, 2018. Tomorrow, at 8:00 a.m. EDT, management will host a conference call and webcast to present the first quarter results; access details are provided below.

"Compelling content and technology solutions are driving our results," said Marco Sala, CEO of IGT.  "Lottery same-store revenue growth was among the highest levels in the last several quarters, even in our largest markets. A sharp increase in systems sales, double-digit growth in global gaming machine replacement unit shipments, and sequential improvement in the North America installed base confirm the good momentum of our global Gaming business.  The positive underlying contribution from each of our operating segments provides a strong start to the year."

"We are solidly positioned to achieve our 2018 strategic and financial goals," said Alberto Fornaro, CFO of IGT.  "With revenue growing 5% and Adjusted EBITDA up 18%, our first quarter results are some of the best we've reported."

Overview of Consolidated First Quarter Results

Consolidated revenue was $1,207 million, up 5% from the prior-year quarter

• Up 4% at constant currency and scope (adjusted for the sale of Double Down Interactive LLC ("DoubleDown"))
• Driven by strong global casino systems sales, broad-based momentum in lottery, and Italy sports betting results

Adjusted EBITDA rose 18% to $436 million, up 14% at constant currency and scope

• Higher underlying revenue and profit across all business segments
• Includes $15 million timing benefit from adoption of new accounting standard, ASC 606

Adjusted operating income was $251 million, a 6% increase from the prior-year period

• Increase driven by revenue growth
• Selling, general and administrative expenses up $15 million compared to the prior year, which had benefited from $18 million in one-off bad debt recovery

Interest expense was $110 million compared to $115 million in the prior-year period

Provision for income taxes rose to $61 million from a $10 million benefit in the prior-year period

• Reflects increases in valuation allowances in the U.K. and higher tax accruals in the current quarter
• Prior-year benefit driven by pretax loss in the quarter

Net loss attributable to IGT was $103 million in the quarter; Adjusted net income attributable to IGT was $31 million

Net loss per diluted share of ($0.51); Adjusted net income per diluted share of $0.15

Cash from operations was $77 million compared to $294 million in the prior-year quarter, the decline primarily attributed to

• A change in accounting standards requiring restricted cash to be included with cash and cash equivalents within the statement of cash flows
• The timing of Italy receivables and incentive compensation payments

Cash and cash equivalents were $570 million as of March 31, 2018, compared to $1,057 million as of December 31, 2017

• Maturity of €500 million 6.625% Senior Secured Notes funded in the quarter

Net debt was $7,525 million as of March 31, 2018, compared to $7,319 million as of December 31, 2017

• $119 million net negative impact from foreign currency adjustments
• $50 million reclassified from cash to restricted cash due to legislative changes impacting the Italy commercial services business

Operating Segment Review

North America Gaming & Interactive

Revenue of $244 million compared to $305 million in the prior-year quarter, which included DoubleDown

• Up 3% at constant scope, primarily on higher product sales 
• Gaming service revenue was $154 million compared to $234 million in the prior-year period
• Decline fully attributable to the sale of DoubleDown and ASC 606 classification of jackpot expense as a contra revenue item (previously included in cost of services)
• Installed base up approximately 375 units sequentially; down year-over-year due to large conversion sales in 2017
• Product sales of $89 million, up 26% from the prior year
• Strong systems sales, for both central systems and add-on solutions
• Shipped 3,716 gaming machine units in the quarter compared to 3,944 units in the prior-year period
• New and Expansion units down from 1,157 units to 1,024 units on fewer openings
• Continued growth in replacement units to casino customers; overall decline due to fewer VLT sales in Canada and Oregon

Operating income of $57 million compared to $69 million in the prior-year quarter

• Up 17% at constant scope
• Increased revenues
• Higher-margin business mix

North America Lottery

Revenue up 5% to $295 million

• Lottery Service revenue rose 4% to $241 million
• Same-store revenue up 11.0% on higher jackpot activity and instants innovation
• Benefit from incentives accrued for New Jersey and Indiana lottery management agreements
• Impacted by exit of low-margin contracts, lower effective rates on recent contract extensions, and weather-related service disruption
• Lottery Product Sales increased 27% on a reported basis to $16 million on higher sales of retailer terminals

Operating income rose 11% to $76 million

• Same-store revenue growth and New Jersey and Indiana incentives
• Partially offset by increased depreciation and amortization and investment in research and development

International

Revenue grew 12% on a reported basis, and 6% at constant currency, to $184 million

• Lottery Service revenue increased 9% on a reported basis, and 3% at constant currency, to $72 million
• Same-store revenue growth of 4.1% on broad-based geographic strength
• Higher EuroMillions jackpot activity
• Gaming Product Sales revenue up 37% on a reported basis, and 32% at constant currency, to $51 million
• Strong systems sales
• Higher gaming machine unit shipments, including double-digit growth in replacement units
• Gaming Service revenue dropped 3% on a reported basis, and 8% at constant currency, to $40 million
• Decline entirely attributable to ASC 606 classification of jackpot expense as contra revenue item (previously included in cost of services)
• Up 5% on a reported basis, and down 1% at constant currency, before ASC 606
• Significant installed base growth driven by Greek VLT and video bingo machines
• Partially offset by exit of certain low margin businesses and lower yields due to geographic mix

Operating income up significantly to $22 million from $7 million

• Higher revenue, improved product mix, and lower SG&A
• Unusually low results in prior-year period

Italy

Revenue up 20% on a reported basis, and up 4% at constant currency, to $483 million

• Lottery Service revenue was $214 million, increase of 24% on a reported basis, and 8% at constant currency
• Lotto wagers up 8.6% to €2,034 million on 17% growth in 10eLotto wagers
• Scratch & Win wagers up 2.9% to €2.4 billion on Miliardario momentum
• Gaming Service revenue of $190 million was up 8%; down 6% at constant currency
• Decline reflects higher gaming machine taxes and regulator-mandated reduction in AWP units
• Partially offset by improved underlying game performance
• Sports betting revenue up on payout of 81.2% versus 89.5% in the prior year

Operating income increased to $147 million compared to $124 million in the prior-year period; up 1% at constant currency

• Revenue growth
• Partially offset by higher operating expenses
• Advertising and marketing costs for new Lottery games 
• Increased depreciation and amortization

Other Developments

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

• Record date of June 5, 2018
• Payment date of June 19, 2018

In a separate news release today, the Company is announcing a derivatives transaction by De Agostini S.p.A. ("De Agostini") relating to IGT ordinary shares

• De Agostini, IGT's majority shareholder with 103 million ordinary shares, entered into a variable forward transaction relating to 18 million IGT ordinary shares
• IGT is not a party to the variable forward transaction and is not issuing or selling any IGT ordinary shares in connection with the transaction
• IGT will be filing a registration statement on Form F-3 (including a base prospectus) and a preliminary prospectus supplement with the U.S. Securities Exchange Commission ("SEC") in connection with the transaction
• De Agostini has advised IGT that they are not considering any additional transactions involving their IGT ordinary shares, and they intend to remain IGT's controlling shareholder
• De Agostini will be filing an amendment to its Schedule 13D in connection with the transaction
• Please refer to IGT's and De Agostini's respective SEC filings for additional details
• This news release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any offer or sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction

The Company has consolidated leadership of the North America Gaming & Interactive and North America Lottery segments under Renato Ascoli as CEO of North America

• Aligns North America with the regional model that already exists for the International and Italy segments
• Global product and service responsibilities for Lottery, Gaming, and Interactive will continue to be assigned primarily to the North America region; local Gaming product marketing, field services, and operations will remain within each region
• Better positions the Company to leverage strategic new opportunities, such as sports betting
• The Company will continue to report financial results and key performance indicators for the North America Gaming & Interactive and North America Lottery segments

IGT will host an Investor Day on August 2, 2018 in New York City

• Primary focus of the event will be on IGT's global Lottery operations
• Please contact Investor_Relations@IGT.com for additional details

Outlook

• Adjusted EBITDA of $1,700-$1,780 million
• Unchanged from prior outlook
• Inclusive of $10-$15 million negative impact from treatment of intellectual property contracts under ASC 606
• Capital expenditures of $575-$625 million
• Average EUR/USD exchange rate assumption of 1.22

Conference Call and Webcast

May 22, 2018, at 8:00 am 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 5181158
• 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 5181158

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 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, 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. 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