International Game Technology PLC Reports First Quarter 2020 Results

LONDON, May 18, 2020 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the first quarter ended March 31, 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.

"After a solid start in the first two months of the year, we quickly shifted our focus to the global COVID-19 health crisis in March," said Marco Sala, CEO of IGT. "The safety and well-being of our people, customers, and communities have been our highest priority since day one. We implemented robust business continuity plans and maintain service levels at our normal, high standards. I am grateful for the passion and perseverance the entire IGT team has demonstrated during these unprecedented times and I am confident IGT is well positioned to emerge from the crisis a stronger, even more competitive organization."

"We've taken swift actions across all non-essential costs and are now switching our focus to structural cost savings initiatives. At the same time, we have adopted strict measures to preserve liquidity in the current environment," said Max Chiara, CFO of IGT. "Given the uncertainty created by COVID-19, we are withdrawing our previous financial outlook for 2020, but we are confident that with $2.2 billion of liquidity, we are geared with sound financial flexibility to weather the storm caused by the COVID-19 pandemic."

Overview of Consolidated First Quarter 2020 Results

First quarter 2020 results reflect the impact of global COVID-19 restrictions. Revenue declines were evident in each business segment and across all primary revenue streams. Corresponding profits were also affected.

Financial highlights:

Consolidated revenue of $940 million, down 18% from the prior year

• Global closures of casinos and gaming halls impact gaming service revenue
• Lottery service revenue lower on reduced traffic to points of sale
• Gaming product sales reflect fewer unit shipments in North America and International, partly offset by higher non-terminal revenue
• Lottery product sales growth driven by increased non-terminal revenue

Operating loss of $197 million, down from income of $178 million in the prior year

• Includes non-cash, non-tax-deductible goodwill impairment charge of $296 million, reducing the carrying value of the International and North America Gaming & Interactive segments
  • Driven by lower near-term forecasts as a result of COVID-19
  • No impact on the Company's operations, cash flow, ability to service debt, compliance with financial covenants, or underlying liquidity
• Lower profit contribution due to revenue mix
  • Service revenue contribution down on COVID-19 impacts
  • High-margin, non-terminal revenue offsets lower terminal product sales
• Benefit from initial actions taken to reduce operating costs

Interest expense, net declined 2% to $101 million

Income taxes of $3 million, down from $53 million

• Reduced pre-tax income and associated removal of United States corporate minimum tax
• Lower level of foreign earnings subject to United States taxation

Net loss attributable to IGT was $248 million; adjusted net income attributable to IGT of $17 million versus $24 million in the prior year

• Net loss reflects goodwill impairment charge
• Adjusted net income includes higher foreign currency gains in the current year

Adjusted EBITDA of $309 million, down 26% from the prior-year period

Net loss per diluted share of $1.21; adjusted net income per diluted share of $0.08 compared to $0.12 in the prior year

Net debt of $7.17 billion improved 3% from $7.38 billion at December 31, 2019; Net debt leverage of 4.47x, up from 4.31x at December 31, 2019, primarily due to lower EBITDA in the first quarter of 2020

Cash and Liquidity Update

• Preserving cash and liquidity is the top financial priority
• At March 31, 2020, liquidity totalled $2.2 billion, comprised of $1.5 billion in unrestricted cash and $743 million available under revolving credit facilities
• During the quarter and at maturity, the Company redeemed in full its €388 million, 4.750% Senior Secured Euro Notes
• As announced on May 13, 2020, the terms of the Company's revolving credit facilities and term loan were amended, providing increased flexibility to navigate through the uncertainty caused by the COVID-19 pandemic

COVID-19 Update: Withdrawing 2020 outlook

• The Company is withdrawing its previous 2020 outlook due to COVID-19 uncertainty
• IGT's highest priority remains the safety and well-being of its employees, customers, and communities during this challenging time
• 2020: about $500 million in cost savings / capital spending avoidance have been identified to help mitigate the impact of COVID-19; actions taken include:
  • Temporary, company-wide salary reductions; cancellation of 2020 salary increases and short-term incentive compensation programs; furloughs and hiring freeze
  • Significant reductions in discretionary costs such as marketing, travel, and outside services
  • Over one-third reduction in planned maintenance capital expenditures for the balance of the year

Conference Call and Webcast

May 18, 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: 5782965
• 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: 5782965

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

First Quarter Operating Segment Review

North America Gaming & Interactive

Revenue of $196 million, down from $240 million in the prior-year period

• Gaming service revenue of $117 million
  • Casino closures impact terminal revenue
  • Other revenue reflects multi-year poker license in the prior year
• Gaming product sales revenue of $74 million
  • New/expansion shipments to Encore Boston in the prior year
  • Significant non-terminal revenue related to a multi-year strategic agreement
  • Systems revenue in-line with prior year on Advantage install at Isleta Resort & Casino and strong add-on sales

Operating income of $27 million, down from $49 million in the prior year

• Impact of casino closures
• Partly offset by benefit from initial actions to reduce operating costs

North America Lottery

Revenue of $251 million compared to $296 million in the prior-year period

• Lottery service revenue of $201 million
  • Solid mid-single-digit same-store revenue growth in January/February period was offset by mobility restrictions implemented in March
  • LMA revenue reflects accrual for penalties due to lower jackpot activity during the lotteries' fiscal year (ending June 30) and lower overall activity due to COVID-19
• Gaming service revenue impacted by closure of VLT venues

Operating income of $44 million compared to $76 million in the prior year

• LMA dynamics and closure of VLT venues
• Partly offset by modest benefit from initial actions to reduce operating costs

International

Revenue of $164 million, down from $172 million in the prior-year period

• Gaming product sales down 3%; stable at constant currency
  • Fewer unit shipments impact terminal revenue
  • Other product sales higher on Italy AWP upgrades
• Lottery product sales includes non-terminal revenue related to Czech Republic contract extension
• Lottery service revenue of $62 million
  • Low-single-digit same-store revenue growth in January/February was more than offset by impact of mobility restrictions implemented in March
• Gaming service revenue reflects casino closures
• Other service revenue down on sale of Poland commercial services in prior year

Operating income of $28 million, up from $14 million in the prior year

• High-margin software license
• Modest benefit from initial actions to reduce operating costs

Italy

Revenue of $329 million, down from $437 million in the prior-year period

• Lottery service revenue reflects strict COVID-19 mobility restrictions
• Gaming service revenue reflects closure of gaming halls, higher taxes, and age-verification regulations; Interactive wagers rise 20%
• Commercial services revenue higher

Operating income of $85 million compared to $147 million

• Impact of COVID-19 restrictions
• Partly offset by modest benefit from initial actions to reduce operating costs

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SOURCE International Game Technology PLC