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LONDON, Nov. 8, 2022 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the third quarter ended September 30, 2022. Today, at 8:00 a.m. EST, management will host a conference call and webcast to present the results; access details are provided below.
"IGT's organization along three business segments enables our teams to be focused on developing and delivering best-in-class products and services," said Vince Sadusky, CEO of IGT. "The accomplishments are evidenced in accelerated revenue and profit expansion in the third quarter, achieving the top-end of our margin outlook. Customer and player demand trends remain encouraging and IGT's suite of innovative products and solutions has never been better. In addition, we reached the lowest debt leverage in the Company's history, while returning a record $224 million in capital to shareholders so far this year."
"Our strategy to innovate, optimize, and grow is fueling progress across the portfolio," said Max Chiara, CFO of IGT. "Robust year-to-date cash flows and proceeds from the sale of the Italy proximity payments/commercial services business, in addition to proactive liability management, enabled us to reduce debt to the lowest level ever. This enhanced credit profile provides greater financial flexibility to execute on the broadened, balanced capital allocation strategy presented at the Investor Day last November."
Overview of Consolidated Third Quarter 2022 Results
Quarter Ended | Y/Y | Constant | |||
All amounts from continuing operations | September 30, | ||||
2022 | 2021 | ||||
($ in millions) | |||||
GAAP Financials: | |||||
Revenue | |||||
Global Lottery | 626 | 652 | (4) % | 4 % | |
Global Gaming | 379 | 289 | 31 % | 34 % | |
Digital & Betting | 54 | 43 | 27 % | 34 % | |
Total revenue | 1,060 | 984 | 8 % | 14 % | |
Operating income (loss) | |||||
Global Lottery | 211 | 234 | (10) % | — % | |
Global Gaming | 65 | 31 | 107 % | 113 % | |
Digital & Betting | 12 | 12 | (5) % | (3) % | |
Corporate support expense | (36) | (26) | (38) % | (57) % | |
Other(1) | (41) | (40) | (1) % | (2) % | |
Total operating income | 211 | 212 | — % | 9 % | |
Operating income margin | 20 % | 22 % | |||
Net cash provided by operating activities | 236 | 113 | 109 % | ||
Cash and cash equivalents | 401 | 435 | (8) % | ||
Earnings per share - diluted | $1.30 | $0.31 | 319 % | ||
Non-GAAP Financial Measures: | |||||
Adjusted EBITDA | |||||
Global Lottery | 310 | 347 | (11) % | (1) % | |
Global Gaming | 96 | 64 | 50 % | 55 % | |
Digital & Betting | 16 | 15 | 4 % | 6 % | |
Corporate support expense | (19) | (19) | 1 % | (23) % | |
Total Adjusted EBITDA | 402 | 407 | (1) % | 7 % | |
Adjusted EBITDA margin | 38 % | 41 % | |||
Adjusted earnings per share - diluted | $0.43 | $0.38 | 13 % | ||
Free cash flow | 163 | 66 | 148 % | ||
Net debt | 5,075 | 6,109 | (17) % | ||
(1) | Primarily includes purchase price amortization |
Note: Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release |
Key Highlights:
Financial Highlights:
Consolidated revenue of $1.06 billion increased 8%, or 14% at constant currency, from $984 million in the prior year
Operating income of $211 million consistent with the prior-year period, up 9% at constant currency
Adjusted EBITDA of $402 million, stable as reported and up 7% at constant currency
Net interest expense of $73 million compared to $79 million in the prior year, driven by lower average debt balances
Foreign exchange gain of $37 million, up from $6 million, primarily reflecting the impact of fluctuations in the EUR/USD exchange rate on debt
Other non-operating income of $139 million versus non-operating expense of $1 million in the prior-year period, primarily driven by gain on sale of business and a $120 million incremental accrual associated with the DDI/Benson matter
Income tax provision of $21 million compared to $37 million in the prior year, primarily driven by discrete tax benefit arising from the DDI/Benson matter
Income from continuing operations of $294 million versus $101 million in the prior-year period, driven by gain on sale of business, higher foreign exchange gains, a decrease in income taxes and cost of debt, partially offset by accrual related to the DDI/Benson matter and loss on extinguishment of debt
Net debt of $5.1 billion compared to $5.9 billion at December 31, 2021; Net debt leverage of 3.1x, down from 3.5x at December 31, 2021
Cash and Liquidity Update
Total liquidity of $2.2 billion as of September 30, 2022; $0.4 billion in unrestricted cash and $1.8 billion in additional borrowing capacity from undrawn credit facilities
Successfully completed a partial tender of certain Senior Secured Notes, repurchasing $400 million of 6.500% Notes due 2025 and €200 million of 3.500% Notes due 2024
Other Developments
The Company's Board of Directors declared a quarterly cash dividend of $0.20 per common share
Repurchased 2.0 million shares for $39 million in the third quarter at an average price of $19.35 per share and an incremental 0.6 million shares repurchased for $10 million through mid-October; 4.7 million shares repurchased on a year-to-date basis through mid-October for $103 million at an average price of $21.52 per share
Completed the purchase of iSoftBet in July 2022 and sale of Italian proximity payments/commercial services business in September 2022
Reached an agreement in principle to settle the Benson v. DoubleDown Interactive LLC, et. al. lawsuit and associated proceedings; the agreement remains contingent upon court approval by the U.S. Federal District Court for the Western District of Washington
Introducing Fourth Quarter 2022 Expectations; Targeting Upper Half of Full-Year 2022 Outlook Range
Fourth Quarter
Full Year
Earnings Conference Call and Webcast
November 8, 2022, at 8:00 a.m. EST
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 2022 are calculated using the same foreign exchange rates as the corresponding 2021 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. Certain amounts in columns and rows within tables may not foot due to rounding. 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 countries around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has approximately 10,500 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, 2021 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 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) from continuing operations (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 EPS represents diluted earnings per share from continuing operations (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., DDI / Benson Matter provision, 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 held for sale. Cash and cash equivalents, including cash and cash equivalents classified as 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. 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 or constant FX is a non-GAAP financial measure that expresses the current financial data using the prior-year/period exchange rate (i.e., the month end exchange rates 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
Select Performance and KPI data: ($ in millions, unless otherwise noted) | |||||||||||
Sequential | |||||||||||
Constant | Change as | ||||||||||
Q3'22 | Q3'21 | Y/Y Change | Currency | Reported | |||||||
GLOBAL LOTTERY | ( %) | Change (%)(1) | Q2'22 | ( %) | |||||||
Revenue | |||||||||||
Service | |||||||||||
Operating and facilities management contracts | 561 | 590 | (5) % | 3 % | 581 | (3) % | |||||
Upfront license fee amortization | (44) | (51) | 15 % | — % | (46) | 5 % | |||||
Operating and facilities management contracts, net | 518 | 539 | (4) % | 3 % | 535 | (3) % | |||||
Other | 70 | 78 | (11) % | 3 % | 85 | (18) % | |||||
Total service revenue | 588 | 617 | (5) % | 3 % | 621 | (5) % | |||||
Product sales | 39 | 35 | 12 % | 18 % | 27 | 42 % | |||||
Total revenue | 626 | 652 | (4) % | 4 % | 648 | (3) % | |||||
Operating income | 211 | 234 | (10) % | — % | 230 | (9) % | |||||
Adjusted EBITDA(1) | 310 | 347 | (11) % | (1) % | 330 | (6) % | |||||
Global same-store sales growth (%) | |||||||||||
Instant ticket & draw games | (0.5 %) | 7.1 % | (8.6 %) | ||||||||
Multi-jurisdiction jackpots | 46.7 % | 42.2 % | 10.8 % | ||||||||
Total | 3.3 % | 9.3 % | (7.4 %) | ||||||||
North America & Rest of world same-store sales growth (%) | |||||||||||
Instant ticket & draw games | (0.2 %) | 4.6 % | (5.6 %) | ||||||||
Multi-jurisdiction jackpots | 46.7 % | 42.2 % | 10.8 % | ||||||||
Total | 4.7 % | 7.5 % | (4.2 %) | ||||||||
Italy same-store sales growth (%) | |||||||||||
Instant ticket & draw games | (1.5 %) | 16.3 % | (17.5 %) |
(1) | Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein |
Sequential | |||||||||||
Constant | Change as | ||||||||||
Q3'22 | Q3'21 | Y/Y Change | Currency | Reported | |||||||
GLOBAL GAMING | ( %) | Change (%)(1) | Q2'22 | ( %) | |||||||
Revenue | |||||||||||
Service | |||||||||||
Terminal | 126 | 116 | 8 % | 10 % | 123 | 3 % | |||||
Systems, software, and other | 58 | 56 | 4 % | 7 % | 56 | 4 % | |||||
Total service revenue | 184 | 172 | 7 % | 9 % | 179 | 3 % | |||||
Product sales | |||||||||||
Terminal | 140 | 81 | 72 % | 77 % | 108 | 30 % | |||||
Other | 55 | 36 | 54 % | 59 % | 44 | 27 % | |||||
Total product sales revenue | 195 | 117 | 67 % | 71 % | 151 | 29 % | |||||
Total revenue | 379 | 289 | 31 % | 34 % | 330 | 15 % | |||||
Operating income | 65 | 31 | 107 % | 113 % | 57 | 15 % | |||||
Adjusted EBITDA(1) | 96 | 64 | 50 % | 55 % | 87 | 10 % | |||||
Installed base units | |||||||||||
Casino | 47,411 | 48,434 | (2) % | 46,765 | |||||||
Casino - L/T lease(2) | 1,116 | 1,144 | (2) % | 1,133 | |||||||
Total installed base units | 48,527 | 49,578 | (2) % | 47,898 | |||||||
Installed base units (by geography) | |||||||||||
US & Canada | 32,303 | 34,347 | (6) % | 32,270 | |||||||
Rest of world | 16,224 | 15,231 | 7 % | 15,628 | |||||||
Total installed base units | 48,527 | 49,578 | (2) % | 47,898 | |||||||
Yields (by geography)(3), in absolute $ | |||||||||||
US & Canada | $43.73 | $40.79 | 7 % | $42.64 | |||||||
Rest of world | $6.32 | $5.64 | 12 % | $6.20 | |||||||
Total yields | $31.09 | $29.67 | 5 % | $30.55 | |||||||
Global machine units sold | |||||||||||
New/expansion | 1,005 | 1,009 | — % | 818 | |||||||
Replacement | 7,960 | 4,692 | 70 % | 6,378 | |||||||
Total machine units sold | 8,965 | 5,701 | 57 % | 7,196 | |||||||
US & Canada machine units sold | |||||||||||
New/expansion | 959 | 524 | 83 % | 469 | |||||||
Replacement | 5,448 | 3,451 | 58 % | 4,580 | |||||||
Total machine units sold | 6,407 | 3,975 | 61 % | 5,049 |
(1) | Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein |
(2) | Excluded from yield calculations due to treatment as sales-type leases |
(3) | Excludes Casino L/T lease units due to treatment as sales-type leases; comparability on a Y/Y basis hindered due to lower active units in the prior year |
Sequential | |||||||||||
Constant | Change as | ||||||||||
Q3'22 | Q3'21 | Y/Y Change | Currency | Reported | |||||||
GLOBAL GAMING (Continued) | ( %) | Change (%)(1) | Q2'22 | ( %) | |||||||
Rest of world machine units sold | |||||||||||
New/expansion | 46 | 485 | (91) % | 349 | |||||||
Replacement | 2,512 | 1,241 | 102 % | 1,798 | |||||||
Total machine units sold | 2,558 | 1,726 | 48 % | 2,147 | |||||||
Average Selling Price (ASP), in absolute $ | |||||||||||
US & Canada | $15,900 | $13,900 | 14 % | $15,200 | |||||||
Rest of world | $13,900 | $14,400 | (3) % | $13,400 | |||||||
Total ASP | $15,400 | $14,100 | 9 % | $14,600 |
(1) | Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein |
Sequential | |||||||||||
Constant | Change as | ||||||||||
Q3'22 | Q3'21 | Y/Y Change | Currency | Reported | |||||||
DIGITAL & BETTING | ( %) | Change (%)(1) | Q2'22 | ( %) | |||||||
Revenue | |||||||||||
Service | 54 | 43 | 27 % | 34 % | 43 | 28 % | |||||
Product sales | — | — | (91) % | (91) % | — | (89) % | |||||
Total revenue | 54 | 43 | 27 % | 34 % | 43 | 27 % | |||||
Operating income | 12 | 12 | (5) % | (3) % | 8 | 43 % | |||||
Adjusted EBITDA(1) | 16 | 15 | 4 % | 6 % | 12 | 32 % | |||||
CONSOLIDATED | |||||||||||
Revenue (by geography) | |||||||||||
US & Canada | 651 | 556 | 17 % | 17 % | 585 | 11 % | |||||
Italy | 247 | 294 | (16) % | (1) % | 288 | (14) % | |||||
Rest of world | 161 | 134 | 21 % | 32 % | 148 | 9 % | |||||
Total revenue | 1,060 | 984 | 8 % | 14 % | 1,021 | 4 % | |||||
(1) | Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein |
International Game Technology PLC | |||||||
Consolidated Statements of Operations | |||||||
($ in millions and shares in thousands, except per share amounts) | |||||||
Unaudited | |||||||
For the three months ended | For the nine months ended | ||||||
September 30, | September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Service revenue | 826 | 832 | 2,514 | 2,634 | |||
Product sales | 234 | 152 | 618 | 406 | |||
Total revenue | 1,060 | 984 | 3,132 | 3,039 | |||
Cost of services | 415 | 422 | 1,263 | 1,302 | |||
Cost of product sales | 149 | 93 | 388 | 253 | |||
Selling, general and administrative | 207 | 195 | 595 | 588 | |||
Research and development | 67 | 63 | 185 | 179 | |||
Other operating expense | 8 | — | 9 | 1 | |||
Total operating expenses | 849 | 772 | 2,441 | 2,323 | |||
Operating income | 211 | 212 | 691 | 716 | |||
Interest expense, net | 73 | 79 | 223 | 264 | |||
Foreign exchange gain, net | (37) | (6) | (59) | (62) | |||
Other non-operating (income) expense, net | (139) | 1 | 8 | 96 | |||
Total non-operating (income) expenses | (103) | 74 | 172 | 298 | |||
Income from continuing operations before provision for | 315 | 138 | 519 | 418 | |||
Provision for income taxes | 21 | 37 | 74 | 217 | |||
Income from continuing operations | 294 | 101 | 445 | 200 | |||
Income from discontinued operations, net of tax | — | — | — | 24 | |||
Gain on sale of discontinued operations, net of tax | — | — | — | 391 | |||
Income from discontinued operations | — | — | — | 415 | |||
Net income | 294 | 101 | 445 | 615 | |||
Less: Net income attributable to non-controlling | 29 | 36 | 105 | 155 | |||
Less: Net loss attributable to non-controlling interests | — | — | — | (2) | |||
Net income attributable to IGT PLC | 264 | 65 | 339 | 462 | |||
Net income from continuing operations attributable | 1.31 | 0.32 | 1.67 | 0.22 | |||
Net income from continuing operations attributable | 1.30 | 0.31 | 1.66 | 0.22 | |||
Net income attributable to IGT PLC per common | 1.31 | 0.32 | 1.67 | 2.25 | |||
Net income attributable to IGT PLC per common | 1.30 | 0.31 | 1.66 | 2.24 | |||
Weighted-average shares - basic | 201,593 | 205,188 | 202,669 | 205,048 | |||
Weighted-average shares - diluted | 203,105 | 206,899 | 204,104 | 206,728 |
International Game Technology PLC | ||||
Consolidated Balance Sheets | ||||
($ in millions) | ||||
Unaudited | ||||
September 30, | December 31, | |||
2022 | 2021 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | 401 | 591 | ||
Restricted cash and cash equivalents | 116 | 218 | ||
Trade and other receivables, net | 674 | 903 | ||
Inventories, net | 251 | 183 | ||
Other current assets | 448 | 593 | ||
Total current assets | 1,890 | 2,487 | ||
Systems, equipment and other assets related to contracts, net | 874 | 937 | ||
Property, plant and equipment, net | 113 | 119 | ||
Operating lease right-of-use assets | 247 | 283 | ||
Goodwill | 4,425 | 4,656 | ||
Intangible assets, net | 1,331 | 1,413 | ||
Other non-current assets | 1,148 | 1,429 | ||
Total non-current assets | 8,138 | 8,836 | ||
Total assets | 10,028 | 11,322 | ||
Liabilities and shareholders' equity | ||||
Current liabilities: | ||||
Accounts payable | 668 | 1,035 | ||
Short term borrowings | — | 52 | ||
DDI / Benson Matter provision | 270 | — | ||
Other current liabilities | 687 | 828 | ||
Total current liabilities | 1,625 | 1,914 | ||
Long-term debt, less current portion | 5,485 | 6,477 | ||
Deferred income taxes | 282 | 368 | ||
Operating lease liabilities | 233 | 269 | ||
Other non-current liabilities | 326 | 323 | ||
Total non-current liabilities | 6,326 | 7,437 | ||
Total liabilities | 7,951 | 9,351 | ||
Commitments and contingencies | ||||
IGT PLC's shareholders' equity | 1,582 | 1,282 | ||
Non-controlling interests | 495 | 689 | ||
Shareholders' equity | 2,077 | 1,971 | ||
Total liabilities and shareholders' equity | 10,028 | 11,322 |
International Game Technology PLC | |||||||
Consolidated Statements of Cash Flows | |||||||
($ in millions) | |||||||
Unaudited | |||||||
For the three months ended | For the nine months ended | ||||||
September 30, | September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Cash flows from operating activities | |||||||
Net income | 294 | 101 | 445 | 615 | |||
Less: Income from discontinued operations, net of tax | — | — | — | 415 | |||
Adjustments to reconcile net income from continuing operations to net cash provided by | |||||||
DDI / Benson Matter provision | 120 | — | 270 | — | |||
Depreciation | 75 | 81 | 223 | 246 | |||
Amortization | 48 | 51 | 142 | 150 | |||
Amortization of upfront license fees | 46 | 54 | 146 | 164 | |||
Loss on extinguishment of debt | 13 | 1 | 13 | 92 | |||
Stock-based compensation | 12 | 11 | 34 | 22 | |||
Amortization of debt issuance costs | 4 | 4 | 11 | 15 | |||
Foreign exchange gain, net | (37) | (6) | (59) | (62) | |||
Deferred income taxes | (59) | (27) | (91) | 56 | |||
Gain on sale of business | (278) | — | (278) | — | |||
Other non-cash items, net | 4 | (6) | (6) | (1) | |||
Changes in operating assets and liabilities, excluding the effects of acquisitions and | |||||||
Trade and other receivables | (38) | (50) | 29 | (184) | |||
Inventories | (21) | (17) | (74) | (12) | |||
Accounts payable | 105 | (101) | (30) | (77) | |||
Accrued interest payable | (37) | (25) | (37) | (64) | |||
Accrued income taxes | (70) | (1) | (64) | 58 | |||
Other assets and liabilities | 55 | 44 | (53) | 10 | |||
Net cash provided by operating activities from continuing operations | 236 | 113 | 621 | 613 | |||
Net cash used in operating activities from discontinued operations | — | — | — | (31) | |||
Net cash provided by operating activities | 236 | 113 | 621 | 582 | |||
Cash flows from investing activities | |||||||
Proceeds from sale of business, net of cash and restricted cash transferred | 497 | — | 497 | — | |||
Proceeds from sale of assets | 2 | 3 | 15 | 15 | |||
Capital expenditures | (73) | (47) | (226) | (168) | |||
Business acquisitions, net of cash acquired | (142) | — | (142) | — | |||
Other | 1 | — | 1 | 1 | |||
Net cash provided by (used in) investing activities from continuing operations | 284 | (44) | 145 | (152) | |||
Net cash provided by investing activities from discontinued operations | 126 | 118 | 126 | 852 | |||
Net cash provided by investing activities | 410 | 74 | 271 | 700 | |||
Cash flows from financing activities | |||||||
Principal payments on long-term debt | (597) | (424) | (597) | (2,846) | |||
Net (repayments of) proceeds from Revolving Credit Facilities | (203) | (498) | 42 | 17 | |||
Net payments of financial liabilities | (38) | (55) | (2) | (52) | |||
Payments of debt issuance costs | (10) | (7) | (10) | (14) | |||
Payments in connection with the extinguishment of debt | (7) | — | (7) | (85) | |||
Proceeds from long-term debt | — | 589 | — | 1,339 | |||
Net proceeds from (payments of) short-term borrowings | 1 | 16 | (51) | 19 | |||
Repurchases of common stock | (39) | — | (93) | — | |||
Dividends paid | (40) | — | (121) | — | |||
Dividends paid - non-controlling interests | (4) | — | (177) | (89) | |||
Return of capital - non-controlling interests | (10) | (31) | (58) | (92) | |||
Capital increase - non-controlling interests | — | 1 | 3 | 12 | |||
Other | (2) | (3) | (12) | (12) | |||
Net cash used in financing activities | (951) | (412) | (1,085) | (1,804) | |||
Net decrease in cash and cash equivalents and restricted cash and cash equivalents | (305) | (225) | (193) | (522) | |||
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash | (36) | (6) | (98) | (19) | |||
Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period | 858 | 819 | 808 | 1,129 | |||
Cash and cash equivalents and restricted cash and cash equivalents at the end of the period of | 517 | 588 | 517 | 588 | |||
Supplemental Cash Flow Information | |||||||
Interest paid | 110 | 104 | 259 | 323 | |||
Income taxes paid | 150 | 64 | 229 | 104 |
International Game Technology PLC | |||
Net Debt | |||
($ in millions) | |||
Unaudited | |||
September 30, | December 31, | ||
2022 | 2021 | ||
5.350% Senior Secured U.S. Dollar Notes due October 2023 | 61 | 61 | |
3.500% Senior Secured Euro Notes due July 2024 | 292 | 564 | |
6.500% Senior Secured U.S. Dollar Notes due February 2025 | 697 | 1,093 | |
4.125% Senior Secured U.S. Dollar Notes due April 2026 | 745 | 744 | |
3.500% Senior Secured Euro Notes due June 2026 | 727 | 844 | |
6.250% Senior Secured U.S. Dollar Notes due January 2027 | 746 | 745 | |
2.375% Senior Secured Euro Notes due April 2028 | 484 | 562 | |
5.250% Senior Secured U.S. Dollar Notes due January 2029 | 744 | 744 | |
Senior Secured Notes | 4,495 | 5,357 | |
Euro Term Loan Facilities due January 2027 | 966 | 1,121 | |
U.S. Dollar Revolving Credit Facility A due July 2027 | 24 | — | |
Long-term debt, less current portion | 5,485 | 6,477 | |
Short-term borrowings | — | 52 | |
Total debt | 5,485 | 6,529 | |
Less: Cash and cash equivalents | 401 | 591 | |
Less: Debt issuance costs, net - U.S. Dollar Revolving Credit Facility A due July 2027 | — | 10 | |
Less: Debt issuance costs, net - Euro Revolving Credit Facility B due July 2027 | 9 | 7 | |
Net debt | 5,075 | 5,922 | |
Note: Net debt is a non-GAAP financial measure |
International Game Technology PLC | ||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||
($ in millions, except per share amounts) | ||||||||||||
Unaudited | ||||||||||||
For the three months ended September 30, 2022 | ||||||||||||
Business | ||||||||||||
Global | Global | Digital & | Segments | Corporate | Total | |||||||
Lottery | Gaming | Betting | Total | and Other | IGT PLC | |||||||
Income from continuing operations | 294 | |||||||||||
Provision for income taxes | 21 | |||||||||||
Interest expense, net | 73 | |||||||||||
Foreign exchange gain, net | (37) | |||||||||||
Other non-operating income, net | (139) | |||||||||||
Operating income (loss) | 211 | 65 | 12 | 287 | (76) | 211 | ||||||
Depreciation | 44 | 27 | 4 | 75 | — | 75 | ||||||
Amortization - service revenue (1) | 46 | — | — | 46 | — | 46 | ||||||
Amortization - non-purchase accounting | 5 | 2 | — | 7 | 1 | 8 | ||||||
Amortization - purchase accounting | — | — | — | — | 40 | 40 | ||||||
Stock-based compensation | 2 | 2 | — | 5 | 7 | 12 | ||||||
Other (2) | — | — | — | — | 8 | 8 | ||||||
Adjusted EBITDA | 310 | 96 | 16 | 422 | (19) | 402 | ||||||
Cash flows from operating activities - continuing operations | 236 | |||||||||||
Capital expenditures | (73) | |||||||||||
Free Cash Flow | 163 | |||||||||||
Pre-Tax | Tax Impact | Net | ||||||||||
Reported EPS from continuing operations attributable to IGT PLC - diluted | 1.30 | |||||||||||
Adjustments: | ||||||||||||
Foreign exchange gain, net | (0.18) | 0.04 | (0.22) | |||||||||
Amortization - purchase accounting | 0.20 | 0.05 | 0.15 | |||||||||
Loss on extinguishment and modifications of debt, net | 0.06 | — | 0.06 | |||||||||
DDI / Benson Matter provision | 0.59 | 0.14 | 0.45 | |||||||||
Gain on sale of business | (1.37) | (0.01) | (1.36) | |||||||||
Other (non-recurring adjustments) | 0.05 | — | 0.04 | |||||||||
Net adjustments | (0.87) | |||||||||||
Adjusted EPS from continuing operations attributable to IGT PLC - diluted (5) | 0.43 |
(1) | Includes amortization of upfront license fees |
(2) | Primarily includes transaction-related costs |
(3) | Calculated based on nature of item, including any realizable deductions, and statutory tax rate in effect for the relevant jurisdiction |
(4) | The reported effective tax rate was 6.7%. Adjusted for the above items, the effective tax rate was 36.2% |
(5) | Adjusted EPS was calculated using weighted average shares outstanding of 203.1 million, which includes the dilutive impact of share-based payment awards |
International Game Technology PLC | ||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||
($ in millions, except per share amounts) | ||||||||||||
Unaudited | ||||||||||||
For the three months ended September 30, 2021 | ||||||||||||
Business | ||||||||||||
Global | Global | Digital & | Segments | Corporate | Total | |||||||
Lottery | Gaming | Betting | Total | and Other | IGT PLC | |||||||
Income from continuing operations | 101 | |||||||||||
Provision for income taxes | 37 | |||||||||||
Interest expense, net | 79 | |||||||||||
Foreign exchange gain, net | (6) | |||||||||||
Other non-operating expense, net | 1 | |||||||||||
Operating income (loss) | 234 | 31 | 12 | 278 | (66) | 212 | ||||||
Depreciation | 48 | 29 | 4 | 81 | — | 81 | ||||||
Amortization - service revenue (1) | 54 | — | — | 54 | — | 54 | ||||||
Amortization - non-purchase accounting | 8 | 1 | — | 10 | 1 | 11 | ||||||
Amortization - purchase accounting | — | — | — | — | 40 | 40 | ||||||
Stock-based compensation | 3 | 2 | — | 5 | 6 | 11 | ||||||
Adjusted EBITDA | 347 | 64 | 15 | 426 | (19) | 407 | ||||||
Cash flows from operating activities - continuing operations | 113 | |||||||||||
Capital expenditures | (47) | |||||||||||
Free Cash Flow | 66 | |||||||||||
Pre-Tax | Tax Impact | Net | ||||||||||
Reported EPS from continuing operations attributable to IGT PLC - diluted | 0.31 | |||||||||||
Adjustments: | ||||||||||||
Foreign exchange gain, net | (0.03) | 0.06 | (0.09) | |||||||||
Amortization - purchase accounting | 0.19 | 0.05 | 0.15 | |||||||||
Net adjustments | 0.06 | |||||||||||
Adjusted EPS from continuing operations attributable to IGT PLC - diluted (4) | 0.38 |
(1) | Includes amortization of upfront license fees |
(2) | Calculated based on nature of item, including any realizable deductions, and statutory tax rate in effect for the relevant jurisdiction |
(3) | The reported effective tax rate was 26.8%. Adjusted for the above items, the effective tax rate was 33.4% |
(4) | Adjusted EPS was calculated using weighted average shares outstanding of 206.9 million, which includes the dilutive impact of share-based payment awards |
International Game Technology PLC | ||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||
($ in millions, except per share amounts) | ||||||||||||
Unaudited | ||||||||||||
For the nine months ended September 30, 2022 | ||||||||||||
Business | ||||||||||||
Global | Global | Digital & | Segments | Corporate | Total | |||||||
Lottery | Gaming | Betting | Total | and Other | IGT PLC | |||||||
Income from continuing operations | 445 | |||||||||||
Provision for income taxes | 74 | |||||||||||
Interest expense, net | 223 | |||||||||||
Foreign exchange gain, net | (59) | |||||||||||
Other non-operating expense, net | 8 | |||||||||||
Operating income (loss) | 693 | 174 | 33 | 899 | (208) | 691 | ||||||
Depreciation | 131 | 81 | 12 | 223 | (1) | 223 | ||||||
Amortization - service revenue (1) | 146 | — | — | 146 | — | 146 | ||||||
Amortization - non-purchase accounting | 18 | 5 | — | 23 | 2 | 25 | ||||||
Amortization - purchase accounting | — | — | — | — | 117 | 117 | ||||||
Stock-based compensation | 7 | 5 | 1 | 13 | 21 | 34 | ||||||
Other (2) | — | — | — | — | 9 | 9 | ||||||
Adjusted EBITDA | 996 | 264 | 45 | 1,305 | (60) | 1,245 | ||||||
Cash flows from operating activities - continuing operations | 621 | |||||||||||
Capital expenditures | (226) | |||||||||||
Free Cash Flow | 395 | |||||||||||
Pre-Tax | Tax Impact | Net | ||||||||||
Reported EPS from continuing operations attributable to IGT PLC - diluted | 1.66 | |||||||||||
Adjustments: | ||||||||||||
Foreign exchange gain, net | (0.29) | 0.12 | (0.41) | |||||||||
Amortization - purchase accounting | 0.57 | 0.14 | 0.43 | |||||||||
Loss on extinguishment and modifications of debt, net | 0.06 | — | 0.06 | |||||||||
Discrete tax items | — | (0.15) | 0.15 | |||||||||
DDI / Benson Matter provision | 1.32 | 0.32 | 1.00 | |||||||||
Gain on sale of business | (1.36) | (0.01) | (1.35) | |||||||||
Other (non-recurring adjustments) | 0.04 | — | 0.04 | |||||||||
Net adjustments | (0.06) | |||||||||||
Adjusted EPS from continuing operations attributable to IGT PLC - diluted (5) | 1.60 |
(1) | Includes amortization of upfront license fees | |
(2) | Primarily includes transaction-related costs | |
(3) | Calculated based on nature of item, including any realizable deductions, and statutory tax rate in effect for the relevant jurisdiction | |
(4) | The reported effective tax rate was 14.3%. Adjusted for the above items, the effective tax rate was 26.9% | |
(5) | Adjusted EPS was calculated using weighted average shares outstanding of 204.1 million, which includes the dilutive impact of share-based payment awards |
International Game Technology PLC | ||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||
($ in millions, except per share amounts) | ||||||||||||
Unaudited | ||||||||||||
For the nine months ended September 30, 2021 | ||||||||||||
Business | ||||||||||||
Global | Global | Digital & | Segments | Corporate | Total | |||||||
Lottery | Gaming | Betting | Total | and Other | IGT PLC | |||||||
Income from continuing operations | 200 | |||||||||||
Provision for income taxes | 217 | |||||||||||
Interest expense, net | 264 | |||||||||||
Foreign exchange gain, net | (62) | |||||||||||
Other non-operating expense, net | 96 | |||||||||||
Operating income (loss) | 871 | 7 | 28 | 906 | (190) | 716 | ||||||
Depreciation | 144 | 92 | 11 | 247 | (1) | 246 | ||||||
Amortization - service revenue (1) | 164 | — | — | 164 | — | 164 | ||||||
Amortization - non-purchase accounting | 25 | 4 | — | 29 | 3 | 32 | ||||||
Amortization - purchase accounting | — | — | — | — | 118 | 118 | ||||||
Stock-based compensation | 5 | 4 | — | 10 | 12 | 22 | ||||||
Other | — | — | — | — | 1 | 1 | ||||||
Adjusted EBITDA | 1,209 | 107 | 39 | 1,355 | (57) | 1,299 | ||||||
Cash flows from operating activities - continuing operations | 613 | |||||||||||
Capital expenditures | (168) | |||||||||||
Free Cash Flow | 445 | |||||||||||
Pre-Tax | Tax Impact | Net | ||||||||||
Reported EPS from continuing operations attributable to IGT PLC - diluted | 0.22 | |||||||||||
Adjustments: | ||||||||||||
Foreign exchange gain, net | (0.30) | 0.08 | (0.38) | |||||||||
Amortization - purchase accounting | 0.57 | 0.14 | 0.43 | |||||||||
Loss on extinguishment and modifications of debt, net | 0.42 | — | 0.42 | |||||||||
Discrete tax items | — | (0.33) | 0.33 | |||||||||
Net adjustments | 0.81 | |||||||||||
Adjusted EPS from continuing operations attributable to IGT PLC - diluted (4) | 1.03 |
(1) | Includes amortization of upfront license fees |
(2) | Calculated based on nature of item, including any realizable deductions, and statutory tax rate in effect for the relevant jurisdiction |
(3) | The reported effective tax rate was 52.0%. Adjusted for the above items, the effective tax rate was 34.7% |
(4) | Adjusted EPS was calculated using weighted average shares outstanding of 206.7 million, which includes the dilutive impact of share-based payment awards |
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SOURCE International Game Technology PLC