International Game Technology PLC Reports Second Quarter 2020 Results

LONDON, Aug. 4, 2020 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE: IGT) today reported financial results for the second quarter ended June 30, 2020. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the results; access details are provided below.

"Our second quarter results reflect the intense impact of global lockdowns caused by the pandemic," said Marco Sala, CEO of IGT. "That said, thanks to strong North America Lottery performance and our swift adoption of cost-saving and avoidance measures, we delivered better cash flow than we expected back in May. Our resilience is a direct consequence of the diversity of our global portfolio of products and solutions. The improving trends we are currently seeing are encouraging, but we remain prudent with our planning. Our new organizational structure enhances our readiness to adapt to changes in market conditions."

"Cash generation and liquidity remain our top financial priority," said Max Chiara, CFO of IGT. "The proactive efficiency initiatives and focused capital markets activity we executed in the quarter have us tracking ahead of plan on all key measures and we expect to deliver positive free cash flow this fiscal year. We have the resources we need to navigate the impact COVID-19 is having on our business and we are making important, strategic decisions to enhance our operational flexibility. This includes over $200 million in structural and discretionary cost savings compared to pre-pandemic levels."

Overview of Consolidated Second Quarter 2020 Results

Note: Adjusted EBITDA and adjusted net (loss)/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.

Second quarter 2020 results reflect the impact of global COVID-19 restrictions. Revenue was down across all business segments and all primary revenue streams except for digital activities, where revenue increased 35%. Progressive easing of restrictions during the quarter and cost-saving initiatives helped mitigate impact.

Financial highlights:

Consolidated revenue of $637 million, down 48% from the prior year

• Global gaming revenue declined 72%, driven by the closure of casinos and gaming halls, fewer unit shipments, and lower systems and software sales compared to the prior year
• Global lottery revenue down 26% on reduced traffic to points of sale and temporary game shutdowns in Italy
• Gaming and lottery trends improved each month as venues re-opened and restrictions eased

Operating loss of $94 million, down from income of $224 million in the prior year

• Lower profit contribution from reduced business volumes
• Includes $43 million in restructuring expense
• Oklahoma strategic transaction and high-margin poker and systems sales embedded in the prior year
• Accelerating benefit from actions taken to reduce costs

Net interest expense of $96 million compared to $104 million in the prior year

• Capital market transactions drive lower cost of debt

Benefit from income taxes of $11 million, compared to a provision of $63 million, driven by lower pre-tax income

Net loss attributable to IGT was $280 million; adjusted net loss attributable to IGT of $121 million versus adjusted net income of $91 million in the prior year

• Reflects operating loss and higher foreign exchange and debt extinguishment losses in the current year

Net loss per diluted share of $1.37; adjusted net loss per diluted share of $0.59 compared to adjusted net income of $0.44 in the prior year

Adjusted EBITDA of $168 million compared to $454 million in the prior-year period

Net debt of $7.29 billion improved $93 million from $7.38 billion at December 31, 2019; Net debt to LTM adjusted EBITDA of 5.52x, up from 4.31x at December 31, 2019, primarily due to lower EBITDA in the first half of 2020

Cash and Liquidity Update

• Preserving cash and liquidity is the top financial priority
• At June 30, 2020, liquidity totalled $2.3 billion, comprised of $1.3 billion in unrestricted cash and $1.0 billion available under revolving credit facilities

Other Developments

• In an effort to accelerate the Company's response to market conditions, over $200 million has been identified in structural cost savings compared to pre-pandemic levels. These savings are mostly expected in 2021 and to come from:
• Eliminating duplicative functions and streamlining back-office activities
• Optimizing the global investment in technology to focus on value-accretive know-how
• Rationalizing R&D based on disciplined risk/return priorities
• Optimizing our supply chain for maximum cost efficiency
  
• Issuance of $750 million 5.25% Notes due 2029, as previously announced
• $500 million of net proceeds used to fund a partial tender of 6.25% Notes due 2022
• Lowest USD-denominated coupon ever issued by the Company
• Longest duration issuance since 2015

Conference Call and Webcast

August 4, 2020, at 8:00 a.m. 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: +1 844 842 7999
• Outside the US/Canada toll-free number: +1 612 979 9887
• Conference ID/confirmation code: 4889985
• A telephone replay of the call will be available for one week
• US/Canada replay number: +1 855 859 2056
• Outside the US/Canada replay number: +1 404 537 3406
• ID/Confirmation code: 4889985

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 2020 are calculated using the same foreign exchange rates as the corresponding 2019 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 deliver entertaining and responsible gaming experiences for players across all channels and regulated segments, from Gaming Machines and Lotteries to Sports Betting and Digital. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, our solutions deliver unrivalled gaming experiences that engage players and drive growth. 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 approximately 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 uncertainty of the duration, extent, and effects of the COVID-19 pandemic and the response of governments, including government-mandated property closures and travel restrictions, and other third parties on the Company's business, results of operations, cash flows, liquidity and development prospects and the factors and risks described in the Company's annual report on Form 20-F for the financial year ended December 31, 2019 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. Nothing in this news release is intended, or is to be construed, as a profit forecast or to be interpreted to mean that the financial performance of International Game Technology PLC for the current or any future financial years will necessarily match or exceed the historical published financial performance or International Game Technology PLC, 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:
Phil O'Shaughnessy, Global Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
Francesco Luti, +39 3485475493; for Italian media inquiries
James Hurley, Investor Relations, +1 (401) 392-7190

Second Quarter Operating Segment Review

North America Gaming & Interactive

Revenue of $96 million, down from $274 million in the prior-year period

• Gaming service revenue of $47 million
• Casino closures impact terminal revenue
• Drop in other revenue reflects multi-year poker license in the prior year
• Gaming product sales revenue of $45 million
• New/expansion shipments driven by 977 historical horse racing units
• Shipped 1,344 replacement units
• Systems revenue down from high level in the prior year

Operating loss of $20 million compared to operating income of $85 million in the prior year

• Impact of casino closures
• Oklahoma strategic transaction and high-margin poker and systems sales in the prior year
• Partly offset by benefit from cost-saving initiatives

North America Lottery  

Revenue of $273 million, down from $309 million in the prior-year period

• Lottery service revenue of $234 million, down 2%
• Strong double-digit same-store revenue growth for instant ticket & draw games nearly offsets impact of mobility restrictions and lower jackpot activity
• LMA revenue reflects reduced play levels in NJ and lower pass-through revenue
• Gaming service revenue impacted by closure of VLT venues, partly offset by growth in Canada iGaming
• Product sales revenue reflects lower systems revenue

Operating income of $75 million compared to $78 million in the prior year

• Same-store revenue growth and cost-saving initiatives mostly offset lower gaming and LMA contributions

International