International Game Technology PLC Reports Second Quarter 2019 Results

LONDON, Aug. 1, 2019 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the second quarter ended June 30, 2019. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the results; access details are provided below.

"We had a strong second quarter, with top-line growth driven by a sharp increase in gaming product sales and impressive gains in global lottery same-store revenues. Profits were up nicely in our North America Gaming and Italy segments," said Marco Sala, CEO of IGT. "I am pleased with the broad-based improvement in key performance indicators for our main businesses."

"EBITDA in the quarter was the highest we achieved in three years and translated into substantial free cash flow for the first half," said Alberto Fornaro, CFO of IGT. "Recent capital markets activity strengthens our financial structure, enhances flexibility, and positions us well for the coming years."

Overview of Consolidated Second Quarter 2019 Results

Consolidated revenue of $1.23 billion, up 5% at constant currency

• Significant growth in global gaming product sales
• Sustained momentum in lottery same-store revenue
• More than offset increased machine gaming taxes in Italy

At constant currency, operating income rose 10% to $224 million; adjusted operating income up 6% to $274 million

Adjusted EBITDA increased 5% at constant currency to $454 million

• Growth in North America Gaming & Interactive and Italy profits
• Solid North America Lottery results
• Net impact of discrete items in North America Gaming & Interactive segment
• Multi-year, strategic lease and distribution agreement in Oklahoma
• Higher litigation charges

Interest expense, net was $104 million, in line with the prior-year quarter 

Income taxes of $63 million and adjusted taxes of $79 million on increased pre-tax income; adjusted tax rate improved due to higher income in lower-tax jurisdictions

Net income attributable to IGT was $5 million in the quarter; adjusted net income attributable to IGT was $91 million, up from $57 million in the prior year on growth in profit before taxes and a lower adjusted tax rate

Net income per diluted share of $0.02; adjusted net income per diluted share of $0.44 versus $0.28 in the prior year

Net debt of $7.64 billion, down from $7.76 billion at December 31, 2018

Operating Segment Review

North America Gaming & Interactive

Revenue of $274 million, up 8% at constant currency

• Gaming service revenue of $165 million, compared to $169 million in the prior- year period
• Installed base stable year-over-year; up sequentially on an underlying basis
• Growth in Class II markets, opening of Encore Boston Harbor
• Net of 2,076-unit reduction due to new Oklahoma agreement
• Slight decrease in other gaming services; large, multi-year poker contract in each period
• Product sales revenue of $104 million, up 22% over the prior year
• Terminal product sales rose 18% at constant currency
• 54% increase in replacement units driven by strength of product offering; higher average selling price
• Lower new/expansion activity compared to the prior year
• Other product sales up 34% on strong systems revenue
• Other service revenue includes contributions from sports betting and interactive

Operating income up 27% at constant currency on net impact of discrete items

North America Lottery

Revenue of $309 million, stable with the high level achieved in the prior year

• Lottery service revenue of $238 million, essentially in line with the prior year
• Overall same-store revenue up 7.2% driven by growth in instant ticket and draw games and increased jackpot activity
• More than offsets impact of Illinois supply contract conclusion
• Lottery product sales revenue of $32 million
• Essentially matched significant contribution from Massachusetts hardware sales in the prior year

Operating income of $78 million, down 3% at constant currency on higher depreciation

International

Revenue of $229 million, up 20% at constant currency

• Gaming product sales revenue of $114 million, up 76% at constant currency
• Significant increase in terminal units shipped, including approximately 1,600 Sweden VLTs; average selling price down due to mix 
• Other product sales driven by higher software revenue
• Lottery service revenue of $67 million, essentially stable at constant currency
• Gaming service revenue was $28 million
• Year-over-year and sequential declines in the installed base due to conversions
• Other gaming service revenue down on interactive performance and non-wager-related items

Operating income of $30 million compared to $36 million in the prior year, down $4 million at constant currency

• Lower profit flow-through on service and product revenue
• Higher SG&A

Italy