International Game Technology PLC IGT

• Achieved record H1'24 Operating income and Adjusted EBITDA excluding Separation and divestiture costs
• Delivered Q2'24 revenue of $1.05 billion and Operating income of $230 million, in line with outlook; Adjusted EBITDA was $420 million
• Best-in-class technology and solutions bolster Global Lottery portfolio while advancing key strategic initiatives; compelling games driving Gaming & Digital performance
• Generated over $460 million in cash from operations and over $260 million in free cash flow in the first half of the year

LONDON, July 30, 2024 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the second quarter ended June 30, 2024. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the results; access details are provided below.

"IGT delivered strong first half results, including record operating income and Adjusted EBITDA net of Separation and divestiture costs," said Vince Sadusky, CEO of IGT. "Consistent investments in technology, game content, and other innovative solutions provide us a solid foundation to build from as we execute on our growth objectives. The recently announced sale of our Gaming & Digital business for $4.05 billion in cash is an important step in unlocking the intrinsic value of IGT's best-in-class businesses."

"We generated over $460 million in cash from operations in the first half of the year and our balance sheet is as strong as ever," said Max Chiara, CFO of IGT. "Our ample liquidity and manageable near-term debt maturities provide us significant flexibility in light of upcoming investments to extend and secure our long-term lottery contract portfolio for the coming years."

Overview of Consolidated Second Quarter 2024 Results

Key Highlights:

• Recently awarded seven-year facilities management contract with the Colorado Lottery and three-year contract extension with the Mississippi Lottery Corporation
• Signed five-year iLottery content contract with Atlantic Lottery Corporation and launched iLottery in Connecticut
• Continued success in securing instant ticket contract wins and extensions including a five-year agreement with ONCE in Spain and three-year extension in Mississippi
• Launched Tiger and Dragon on the PeakCurve49 cabinet, which ranks as the #1 new premium leased & WAP game in industry performance reports; introduced Whitney Houston on the new SkyRise™ cabinet
• Recently launched award-winning Prosperity Link™ game in digital format in U.S.
• Continued international progress including deployment of Diamond Mania MLP in Spain AWP market, Holland Casino purchase of 500 PeakBar Top™ Video Poker cabinets, and expansion of HHR footprint to Malta
• Recently published 17th annual Sustainability Report, highlighting Environmental, Social, and Governance accomplishments
• Won "Diversity and Inclusion" category at 2024 Women in Gaming Diversity Awards and recognized as "Best Place to Work for Disability Inclusion"

Financial Highlights:
Consolidated revenue of $1.05 billion, in line with the prior-year period, as strength in Gaming & Digital is offset by elevated prior year product sales in Global Lottery

• Global Lottery revenue of $613 million decreased 2% year-over-year, primarily due to a multi-year software license sale in the prior year
• Gaming & Digital revenue of $436 million, up 1% versus the prior year, driven by installed base growth with resilient yields and elevated intellectual property and software license sales, offset by lower terminal unit shipments

Operating income of $230 million, compared to $251 million in the prior-year period; excluding $26 million in Separation and divestiture costs, operating income rose to $256 million

• Global Lottery operating income of $212 million versus $229 million in the prior year, primarily due to a multi-year software license sale and resolution of a customer contract dispute in the prior-year period
• Gaming & Digital operating income of $103 million compared to $89 million in the prior-year period on high-margin intellectual property and software sales and easing of supply chain costs, partially offset by lower terminal sales; operating income margin expands 300 basis points to 23.7%
• Corporate support and other expense of $86 million versus $68 million driven by $26 million in Separation and divestiture costs

Adjusted EBITDA of $420 million compared to $443 million in the prior-year period; excluding Separation and divestiture costs, Adjusted EBITDA was stable at $446 million and Adjusted EBITDA margin expanded 30 basis points

Net interest expense of $73 million compared to $71 million in the prior year

No foreign exchange gain or loss, compared to a $5 million loss in the prior year, primarily due to non-cash impact of fluctuations in the EUR/USD exchange rate on debt and reduced losses related to the devaluation of the Argentine peso

Other non-operating expense, net, of $1 million versus other non-operating income, net, of $2 million in the prior year

Income tax provision of $71 million, compared to $86 million in the prior year, primarily driven by lower valuation allowances on deferred tax assets and lower pre-tax income

Net income of $85 million versus $90 million in the prior-year period

Diluted earnings per share of $0.20 versus $0.23 in the prior year; Adjusted diluted earnings per share of $0.36 compared to $0.45 in the prior year primarily driven by lower net income, coupled with reduced foreign currency and discrete tax items

Net debt of $5.1 billion compared to $5.1 billion at December 31, 2023; Net debt leverage of 2.9x consistent with the December 31, 2023 level

Cash and Liquidity Update
Total liquidity of $1.7 billion as of June 30, 2024; $0.4 billion in unrestricted cash and $1.3 billion in additional borrowing capacity from undrawn credit facilities

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

• Record date of August 13, 2024
• Payment date of August 27, 2024

As announced on July 26, 2024, the Company entered into a definitive agreement to sell its Gaming & Digital business to funds managed by affiliates of Apollo for $4.05 billion in gross cash proceeds. The transaction is expected to be completed by the end of the third quarter of 2025.

Withdrawing Full Year 2024 Outlook
Due to the planned sale of the Gaming & Digital business, the Company expects to classify and report Gaming & Digital results as discontinued operations beginning in the third quarter of 2024. As a result, the Company is withdrawing its previously provided full year financial outlook. The Company expects to provide an outlook for full year 2024 continuing operations once the preparation of the discontinued operations reporting is complete.

Earnings Conference Call and Webcast
July 30, 2024, at 8:00 a.m. EDT 

To register to participate in the conference call, or to listen to the live audio webcast, please visit the "Events Calendar" on IGT's Investor Relations website at www.IGT.com. A replay will be available on the website following the live event.

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 2024 are calculated using the same foreign exchange rates as the corresponding 2023 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. Amounts reported in millions are computed based on amounts in thousands. As a result, the sum of the components may not equal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages and earnings per share amounts presented are calculated from the underlying unrounded amounts.

About IGT
IGT (NYSE:IGT) is a global leader in gaming. We deliver entertaining and responsible gaming experiences for players across all channels and regulated segments, from Lotteries and Gaming Machines 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 unrivaled 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 jurisdictions around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has approximately 11,000 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, including with respect to the proposed sale of the Gaming & Digital business to the Apollo Funds. These statements may discuss goals, intentions, and expectations as to future plans and strategies, transactions, including the divestiture of Gaming & Digital, trends, events, dividends, results of operations, and/or financial condition or measures, including our expectations on the future release of revenue, operating income, cash, and capital expenditures guidance, 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," "outlook," "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, 2023 and other documents filed or furnished 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 may affect the Company's business, including management's discussion and analysis of potential or actual impacts to operations and financial performance. 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 of 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.

Non-GAAP Financial Measures
Management supplements the reporting of financial information, determined under GAAP, with certain non-GAAP financial information. Management believes the non-GAAP information presented provides investors with additional useful information, but it is not intended to nor should it be considered in isolation or as a substitute for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. The Company encourages investors to review its financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Adjusted EBITDA represents net income (loss) (a GAAP measure) before income taxes, interest expense, net, foreign exchange gain (loss), net, other non-operating expenses (e.g., DDI/Benson Matter provision, gains/losses on extinguishment and modifications of debt, etc.), net, depreciation, impairment losses, amortization (service revenue, purchase accounting, and non-purchase accounting), restructuring expenses, stock-based compensation, litigation expense (income), and certain other non-recurring items. Other non-recurring items are infrequent in nature and are not reflective of ongoing operational activities. For the business segments, Adjusted EBITDA represents segment operating income (loss) before depreciation, amortization (service revenue, purchase accounting, and non-purchase accounting), restructuring expenses, stock-based compensation, litigation expense (income), and certain other non-recurring items. Management believes that Adjusted EBITDA is useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance.

Adjusted EBITDA margin represents Adjusted EBITDA divided by revenue

Adjusted EPS represents diluted earnings per share (a GAAP measure), excluding the effects of foreign exchange, impairments, amortization from purchase accounting, discrete tax items, and other significant non-recurring adjustments that are not reflective of on-going operational activities (e.g., gains/losses on sale of business, gains/losses on extinguishment and modifications of debt, etc.). Adjusted EPS is calculated using diluted weighted-average number of shares outstanding, including the impact of any potentially dilutive common stock equivalents that are anti-dilutive to GAAP net income (loss) per share but dilutive to Adjusted EPS. Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance.

Net debt is a non-GAAP financial measure that represents debt (a GAAP measure, calculated as long-term obligations plus short-term borrowings) minus capitalized debt issuance costs and cash and cash equivalents, including cash and cash equivalents classified as held for sale. Cash and cash equivalents, including cash and cash equivalents held for sale, are subtracted from the GAAP measure because they could be used to reduce the Company's debt obligations. Management believes that net debt is a useful measure to monitor leverage and evaluate the balance sheet.

Net debt leverage is a non-GAAP financial measure that represents the ratio of Net debt as of a particular balance sheet date to Adjusted EBITDA for the last twelve months ("LTM") prior to such date. Management believes that Net debt leverage is a useful measure to assess IGT's financial strength and ability to incur incremental indebtedness when making key investment decisions.

Free cash flow is a non-GAAP financial measure that represents cash flow from operations (a GAAP measure) less capital expenditures (a component of investing cash flows) and payments on license obligations (a component of financing cash flows). Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing IGT's ability to fund its activities, including debt service and distribution of earnings to shareholders.

Constant currency is a non-GAAP financial measure that expresses current financial data using the prior-year/period exchange rate (i.e., the exchange rate used in preparing the financial statements for the prior year). Management believes that constant currency is a useful measure to compare period-to-period results without regard to the impact of fluctuating foreign currency exchange rates.

A reconciliation of the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this release. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.

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 06 5189 9184; for Italian media inquiries
James Hurley, Investor Relations, +1 (401) 392-7190