International Game Technology PLC Reports First Quarter 2019 Results

LONDON, May 20, 2019 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the first quarter ended March 31, 2019. Today, 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.

"Our first quarter results confirm the consistent growth profile of our global lottery business and the progress we've made in sales of gaming machines, where global unit shipments increased 20%," said Marco Sala, CEO of IGT. "The results of our Italy operations are also noteworthy, with further growth in lottery and resilient machine gaming performance. As we look to the future, our focus remains on improving revenue and profits from gaming activities, innovating with new lottery games and technologies, and pursuing emerging growth opportunities."

"First quarter revenue and adjusted EBITDA were stable at constant currency, thanks to important contributions from our Italy and North America Lottery segments," said Alberto Fornaro, CFO of IGT. "Operating expenses were well controlled, our financial condition is solid, and we are maintaining our financial outlook for the year."

Overview of Consolidated First Quarter 2019 Results

Consolidated revenue of $1.14 billion, stable at constant currency

• 20% increase in global gaming machine unit shipments
• Stable lottery revenue
• Offset by increased gaming machine taxes in Italy and lower gaming systems sales

Adjusted EBITDA of $417 million, stable at constant currency

• Strong Italy and North America Lottery performance
• Selling, general and administrative expenses and research and development costs better than the prior-year period despite higher legal costs

Adjusted operating income was $230 million, down 4% at constant currency

• Higher depreciation associated with upgrading the gaming installed base and lottery contract wins and extensions

Interest expense, net was $103 million compared to $107 million in the prior-year quarter 

Provision for income taxes was $53 million compared to $61 million in the prior-year period

Net income attributable to IGT was $40 million in the quarter; adjusted net income attributable to IGT was $24 million

Net income per diluted share of $0.20; adjusted net income per diluted share of $0.12

Net debt of $7.71 billion, down from $7.76 billion at December 31, 2018

Operating Segment Review

North America Gaming & Interactive

Revenue of $240 million, stable with the prior year at constant currency

• Gaming service revenue of $155 million, stable compared to the prior year
• Terminal service revenue reflects decline in installed base and lower average yields due to product mix
• Increase in other service revenue from a large, multi-year poker contract
• Product sales revenue of $84 million
• Strong 28% increase in terminal revenue at constant currency resulting from 8% increase in gaming machine units shipped at higher average selling prices
• Current quarter new/expansion units include shipments to Encore Boston Harbor
• Replacement units declined slightly due to fewer VLT unit shipments
• Decline in other product sales revenue driven by comparison with exceptionally high sales of systems in the prior year

Operating income of $49 million compared to $57 million in the prior-year quarter

• Higher depreciation related to upgrading the installed base
• Lower sales of high-margin systems
• Stable operating expenses

North America Lottery

Revenue of $296 million, stable with the prior-year period

• Lottery service revenue of $241 million, in line with the prior year
• Overall same-store revenue growth driven by instant ticket and draw games; difficult comparison with elevated jackpot activity in the prior year
• Recovery of certain service level agreement provisions incurred previously, partially offset by lower revenue in Illinois
• LMA impacted by timing of pass-through revenue with no associated profit
• Lottery product sales revenue of $14 million
• Large Massachusetts retailer terminal sales in the prior year
• Gaming service revenue of $41 million
• Growth from interactive jackpot game in Canada

Operating income of $76 million, stable with the prior-year period

• Service level agreement recoveries and disciplined cost control offset higher profit flow-through from elevated jackpot activity in prior year
• Despite increased depreciation related to contract wins and extensions

International

Revenue of $172 million, stable with the prior year at constant currency

• Lottery service revenue of $70 million, up 3% at constant currency
• 3.7% same-store revenue growth with broad-based expansion across games and geographies
• Gaming service revenue was $30 million compared to $40 million in the prior year
• Lower interactive revenue and reduced contribution from installed base
• Decline in installed base year-over-year due to large conversions in the prior year, partially offset by continued expansion of Greece VLTs; sequential increase in the installed base
• Gaming product sales revenue of $51 million, up 4% at constant currency
• 22% rise in terminal revenue with growth in both new/expansion and replacement units partially offset by lower ASPs
• Decline in other product sales revenue primarily driven by higher system sales in the prior year

Operating income of $14 million

• Includes $5 million settlement cost associated with lottery contract
• Large, high-margin system sale in the prior year

Italy