INTERNATIONAL GAME TECHNOLOGY PLC REPORTS THIRD QUARTER 2022 RESULTS


  • Consolidated revenue of $1.06 billion, up 8% as reported and 14% at constant currency, with contributions from each segment including over 30% growth in Global Gaming
  • Operating income of $211 million; operating income margin of 20% at high end of outlook
  • Adjusted EBITDA of $402 million reflects robust Global Lottery profitability and strong increase from Global Gaming
  • Received €700 million in gross proceeds from sale of Italian proximity payments business; completed acquisition of iSoftBet, a leading iGaming content provider and third-party aggregator, for approximately €160 million
  • Net debt leverage improves to 3.1x, the lowest level in Company history
  • $224 million returned to shareholders via dividends and share repurchases through mid-October, a record level in a fiscal-year period
  • Targeting upper half of full-year 2022 outlook range

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.”

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Overview of Consolidated Third Quarter 2022 Results


Quarter Ended

Y/Y
Change
(%)

Constant
Currency
Change (%)

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:

  • Completed acquisition of iSoftBet, a leading iGaming content provider and third-party aggregator, for approximately €160 million in cash in July 2022
  • Successfully completed sale of Italian proximity payments/commercial services business in September 2022 for gross proceeds of €700 million
  • Strengthened Lottery contract portfolio with four-year extension in New York and seven-year extension in Georgia as primary technology supplier, and a new 10-year instant ticket printing and services contract in Texas
  • Signed agreement with Santa Casa de Misericórdia de Lisboa to deliver up to 7,200 Retailer Vue™ lottery terminals in Portugal
  • Award-winning Resort Wallet™ and IGTPay™ cashless gaming solutions deployed enterprise-wide at Station Casinos properties in Las Vegas and at Indigo Sky Casino in Oklahoma
  • Innovative products and solutions recognized with recent industry awards including “Best Slot Product” for Prosperity Link™ video slot game in the 2022 GGB Gaming & Technology Awards and “Land-Based Product of the Year” for PeakBarTop™ with Sports Betting at 2022 Global Gaming Awards Las Vegas
  • Expanded IGT’s sports betting leadership in Washington State via multi-year contract with Nisqually Red Wind Casino, leveraging IGT’s full turnkey solution
  • Recognized as the top-ranking gaming supplier by the All-In Diversity Project (AIDP)

Financial Highlights:
Consolidated revenue of $1.06 billion increased 8%, or 14% at constant currency, from $984 million in the prior year

  • Global Lottery revenue of $626 million, down 4% but up 4% at constant currency, primarily driven by strong, multi-jurisdictional jackpot activity
  • Global Gaming revenue rose to $379 million, up 31% as reported and 34% at constant currency on significant increases in machine shipments, average selling prices, installed base yields, and intellectual property and multi-year poker site licenses
  • Digital & Betting revenue increased 27%, 34% at constant currency, to $54 million, primarily driven by iCasino with contributions from the iSoftBet acquisition, new markets in North America, and organic growth

Operating income of $211 million consistent with the prior-year period, up 9% at constant currency

  • Global Lottery operating income of $211 million, down 10% as reported and stable at constant currency, with strong 34% operating income margin despite lower Italy contribution and increased investment in research and development
  • Global Gaming operating income more than doubled to $65 million on significant operating leverage, partially offset by increased supply chain costs
  • Digital & Betting operating income of $12 million was relatively consistent with the prior year despite continued investments to fund growth
  • Corporate support and other expense of $76 million, up from $66 million in the prior year, driven by higher transaction-related expenses

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

  • Ex-dividend date of November 25, 2022
  • Record date of November 28, 2022
  • Payment date of December 9, 2022

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

  • Revenue of approximately $1.0 billion
  • Operating income margin of 18% – 19% includes approximately 150 – 200 basis point impact from iSoftBet acquisition step-up amortization, project-related costs, and restructuring expenses
  • Assumes EUR/USD exchange rate of 1.00

Full Year

  • Revenue of $4.1 billion$4.2 billion
  • Operating income margin of 20% – 22%
  • Cash from operations of $850$950 million
  • Capital expenditures of approximately $350 million

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
income taxes

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
interests from continuing operations

29


36


105


155

Less: Net loss attributable to non-controlling interests
from discontinued operations




(2)

Net income attributable to IGT PLC

264


65


339


462









Net income from continuing operations attributable
to IGT PLC per common share – basic

1.31


0.32


1.67


0.22

Net income from continuing operations attributable
to IGT PLC per common share – diluted

1.30


0.31


1.66


0.22

Net income attributable to IGT PLC per common
share – basic

1.31


0.32


1.67


2.25

Net income attributable to IGT PLC per common
share – diluted

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
operating activities from continuing operations:








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
divestitures:








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
equivalents

(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
continuing operations

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
Impact


Tax Impact
(3)(4)


Net
Impact

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
Impact


Tax Impact
(2) (3)


Net
Impact

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
Impact


Tax Impact
(3) (4)


Net
Impact

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
Impact


Tax Impact
(2) (3)


Net
Impact

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

SOURCE International Game Technology PLC

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