International Game Technology PLC Reports Third Quarter 2019 Results

LONDON, Nov. 14, 2019 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the third quarter ended September 30, 2019. Today, at 8:00 a.m. EST, management will host a conference call and webcast to present the results; access details are provided below.

"Our core businesses achieved significant momentum in the third quarter and year-to-date periods," said Marco Sala, CEO of IGT. "Key performance indicators were solid in the quarter – gaming machine unit shipments increased 44%, while same-store revenue for draw games and instants rose 4%. Our leading positions are rooted in our focus on player-driven performance, which was on display at recent lottery and gaming trade shows and should sustain our momentum going forward."

"IGT has generated free cash flow in excess of $450 million in the first nine months," said Alberto Fornaro, CFO of IGT. "This confirms the inflection we expected to achieve this year. We are well positioned to achieve our 2019 strategic and financial goals."

Overview of Consolidated Third Quarter 2019 Results

Consolidated revenue of $1.15 billion, up 3% at constant currency

• Sharp growth in global gaming product sales
• Overcame significant Finland multi-year software sale in prior-year quarter and impact of higher machine gaming taxes in Italy

At constant currency, operating income down 19% to $154 million; adjusted operating income down 11% to $221 million

• Non-cash write-down of pre-paid social gaming-related license

Adjusted EBITDA declined 5% at constant currency to $407 million

• Differential profit flow-through on revenue mix, primarily due to high-margin Finland software transaction in prior year
• Higher R&D and SG&A expenses, primarily due to timing

Interest expense, net was $103 million, down 1% from the prior-year quarter

Income taxes of $45 million; adjusted taxes of $51 million, down from $60 million on lower pre-tax income

Net income attributable to IGT was $104 million; adjusted net income attributable to IGT was $43 million, down from $64 million in the prior year

Net income per diluted share of $0.51; adjusted net income per diluted share of $0.21 versus $0.31 in the prior year

Net debt of $7.35 billion, down 5% from $7.76 billion at December 31, 2018

Operating Segment Review

North America Gaming & Interactive

Revenue of $257 million, up 11%

• Product sales revenue of $107 million, up 36% over the prior year
• Terminal product sales rose 37%
• Significant 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 high-margin, multi-year technology license
• Gaming service revenue of $146 million, compared to $152 million in the prior-year period
• Installed base stable year-over-year and sequentially on an underlying basis; yields higher
• Impact of multi-year poker contracts executed in prior periods
• Other service revenue driven by contribution from sports betting

Operating income of $62 million, up 38% compared to the prior year

• Increased unit shipments
• High-margin, multi-year technology license

North America Lottery

Revenue of $281 million, essentially in line with the prior year

• Lottery service revenue of $215 million, compared to $225 million in the prior year
• Instant ticket & draw game same-store revenue up 3.9% driven by broad-based strength across jurisdictions
• Lower multistate jackpot activity
• Impact of Illinois contract conclusion
• Lottery product sales revenue up on strong demand for self-service vending machines
• Gaming service revenue stable

Operating income of $51 million, down from $60 million

• Impact of Illinois and lower jackpot activity (including effect on LMAs)
• Expenses related to Rhode Island contract extension

International

Revenue of $213 million, up 3% at constant currency

• Gaming product sales revenue of $91 million, up 46% at constant currency
• Broad-based geographic demand drives significant increase in units shipped, including 1,547 Sweden VLTs
• Other product sales up on higher systems revenue
• Gaming service revenue was $27 million
• Year-over-year and sequential declines in the installed base due to conversions in prior periods
• Lower interactive performance
• Other revenue stable
• Lottery service revenue of $73 million, up 9% at constant currency, fueled by 6.5% same-store revenue growth
• Lottery product sales reflect significant Finland software sale in the prior year

Operating income of $30 million compared to $56 million in the prior year

• Differential profit flow-through of revenue mix (high-margin Finland software sale in prior year)

Italy