International Game Technology PLC Reports First Quarter 2019 Results

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"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."

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International Game Technology PLC Reports First Quarter 2019 Results

- Revenue of $1.14 billion includes significant increase in global gaming unit shipments and continued growth in global lottery same-store revenue
- Operating income of $178 million; adjusted EBITDA of $417 million, stable at constant currency on strong Italy and North America Lottery results
- Maintaining full-year adjusted EBITDA outlook
- Cash dividend declared of $0.20 per ordinary share

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.

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...

"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

     

Constant

 

  Quarter Ended  

  Y/Y 

Currency

 

  March 31, 

Change 

Change

 

2019

2018

(%)

(%)

         

(In $ millions, unless otherwise noted)  

       

Revenue  

1,145

1,207

-5%

-1%

Operating income  

178

197

-10%

-4%

Net income/(loss) per diluted share  

$0.20

($0.51)

  NM 

 

Adjusted EBITDA  

417

436

-4%

0%

Adjusted operating income  

230

251

-8%

-4%

Adjusted net income per diluted share  

$0.12

$0.15

-20%

 

Net debt   

7,714

7,525

3%

 
 

Note: Adjusted EBITDA, adjusted operating income, and adjusted net 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.

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

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended March 31

Q1 '19

Q1 '18

FX

 

Period Ended March 31

Q1 '19

Q1 '18

Change 

Gaming

 

Total revenue

239

243

-2%

 

Installed base units (end of period) 

     
 

Gaming services

155

154

1%

 

    Casino

22,713

23,183

-2.0%

   

Terminal 

100

105

-5%

         
   

Other

55

49

13%

 

Machine units shipped

     
 

Product sales

84

89

-6%

 

   New/expansion

1,482

1,024

44.7%

   

Terminal 

63

50

28%

 

   Replacement 

2,544

2,692

-5.5%

   

Other

21

40

-47%

 

   Total machines shipped

4,026

3,716

8.3%

                       

Other

 

Total revenue

1

0

NM

         
 

Service revenue

1

0

NM

         
                       

Total

 

Revenue

240

244

-1%

         
 

Operating income

49

57

-20%

         

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

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended March 31

Q1 '19

Q1 '18

FX

 

Period Ended March 31

Q1 '19

Q1 '18

Change 

Gaming

 

Total revenue

41

38

10%

 

Installed base units (end of period)

     
 

Gaming services

41

38

9%

 

    VLT - Government sponsored

14,799

15,101

-2.0%

   

Terminal 

25

25

2%

         
   

Other

16

13

22%

 

Lottery same-store revenue growth

     
 

Product sales

0

0

0%

 

   Instant ticket & draw games

   

5.2%

               

   Multistate jackpots

   

-9.3%

Lottery

 

Total revenue

255

257

-1%

 

   Total lottery same-store revenue growth

 

2.8%

 

Lottery services

241

241

0%

         
   

FMC

209

205

2%

         
   

  Instant ticket & draw games

170

176

-4%

         
   

  Other services

39

29

34%

         
   

LMA

32

36

-10%

         
 

Product sales

14

16

-12%

         
                       

Total

 

Revenue

296

295

0%

         
 

Operating income

76

76

0%

         

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

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended March 31

Q1 '19

Q1 '18

FX

 

Period Ended March 31

Q1 '19

Q1 '18

Change 

Gaming

 

Total revenue

81

91

-5%

 

Installed base units (end of period)

     
 

Gaming services

30

40

-15%

 

    Casino

10,666

12,917

-17.4%

   

Terminal 

12

14

-1%

 

    VLT - Government sponsored

4,419

2,937

50.5%

   

Other

18

25

-23%

 

   Total installed base units

15,085

15,854

-4.9%

 

Product sales

51

51

4%

         
   

Terminal 

35

30

22%

 

Machine units shipped

     
   

Other

15

21

-22%

 

   New/expansion

382

91

319.8%

               

   Replacement 

2,593

2,021

28.3%

Lottery

 

Total revenue

74

74

5%

 

   Total machines shipped

2,975

2,112

40.9%

 

Lottery services

70

72

3%

         
   

FMC

70

72

3%

 

Lottery same-store revenue growth

     
   

  Instant ticket & draw games

56

57

4%

 

   Instant ticket & draw games

   

3.4%

   

  Other services

14

15

-4%

 

   Multistate jackpots

   

8.2%

 

Product sales

4

3

76%

 

   Total lottery same-store revenue growth

 

3.7%

                       

Other

 

Total revenue

17

19

-4%

         
 

Service revenue

17

19

-4%

         
 

Product sales

0

0

-31%

         
                       

Total

 

Revenue

172

184

-1%

         
 

Operating income

14

22

-22%

         

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

Select Financial Data

   

Constant

 

Key Performance Indicators

   

%

Period Ended March 31

Q1 '19

Q1 '18

FX

 

Period Ended March 31

Q1 '19

Q1 '18

Change 

Gaming

 

Total revenue

153

191

-13%

 

(In € millions, except machines)

     
 

Gaming services

153

190

-13%

 

Lottery

     
   

Terminal 

137

172

-14%

 

Lotto wagers

2,142

2,034

5.3%

   

Other

16

18

-4%

 

   10eLotto

1,544

1,451

6.4%

 

Product sales

0

0

0%

 

   Core

501

504

-0.4%

               

   Late numbers

47

45

2.7%

Lottery

 

Total revenue

204

214

3%

 

   MillionDAY

50

34

45.8%

 

Lottery services

204

214

3%

         
   

FMC

204

214

3%

 

Scratch & Win wagers

2,386

2,408

-0.9%

   

  Instant ticket & draw games

252

266

3%

         
   

  Other services

(49)

(52)

0%

 

Italy lottery revenue growth

   

3.2%

 

Product sales

0

0

0%

         
               

Gaming

     

Other

 

Total revenue

80

79

9%

 

Installed base (end of period)

     
 

Service revenue

80

79

9%

 

   VLT - Operator (B2C)

10,995

10,931

0.6%

 

Product sales

0

0

0%

 

   VLT - Supplier (B2B)

7,847

8,425

-6.9%

               

   AWP

40,746

51,315

-20.6%

Total

 

Revenue

437

483

-2%

 

   Total installed base

59,588

70,671

-15.7%

 

Operating income

147

147

9%

         
               

Wagers

     
               

   VLT - Operator (B2C)

1,503

1,441

4.3%

               

   AWP

939

955

-1.6%

               

   Interactive wagers (gaming)

489

493

-0.6%

                       
               

Other

     
               

   Sports betting wagers (1)

274

246

11.1%

               

   Sports betting payout (%) (1)

83.3%

81.2%

2.1 pp

                       
               

(1) Includes virtual wagers and pools & horses

   

Revenue of $437 million compared to $483 million, down 2% at constant currency

  • Lottery service revenue of $204 million, up 3% at constant currency
    • Lotto wagers up 5.3% on steady growth in 10eLotto
    • Scratch & Win wagers reflect one fewer day of sales year-over-year; exceptional performance from the Multiplier family of games against the successful Miliardario relaunch in the prior year
  • Gaming service revenue was $153 million compared to $190 million in the prior year, down 13% at constant currency
    • Increased taxes on AWP and VLT machines
    • Improved productivity of gaming machines; 21% decline in AWP units results in less than 2% reduction in wagers
  • Other service revenue includes pass-through revenue related to new commercial services offer

Operating income up 9% at constant currency to $147 million

  • High profit flow-through on growth in Lotto wagers
  • Beneficial shift in timing of expenses
  • Despite increased taxes on gaming machines

Other Developments
The Company's Board of Directors declared a quarterly cash dividend of $0.20 per ordinary share

  • Record date of June 3, 2019
  • Payment date of June 17, 2019

Outlook
Outlook unchanged

  • 2019 adjusted EBITDA $1.70 - $1.76 billion
  • Capital expenditures of $450 - $550 million
  • Assumes a EUR/USD exchange rate of 1.15

Conference Call and Webcast

May 20, 2019, 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 is +1 844 842 7999
  • Outside the US/Canada toll-free number is +1 612 979 9887
  • Conference ID/confirmation code is 2599793
  • 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 2599793

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 2019 are calculated using the same foreign exchange rates as the corresponding 2018 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 Digital 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, 2018 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.

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

 

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