6-K
Brightstar Lottery PLC (BRSL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of August 2021
Commission File Number 001-36906
INTERNATIONAL GAME TECHNOLOGY PLC
(Translation of registrant’s name into English)
66 Seymour Street, Second Floor
London, W1H 5BT
United Kingdom
(Address of principal executive offices)
| Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: | ||||
|---|---|---|---|---|
| Form 20-F | ☒ | Form 40-F | ☐ | |
| Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): | ☐ | |||
| Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): | ☐ |
Second Quarter 2021 Results of International Game Technology PLC
On August 3, 2021, International Game Technology PLC reported results for the quarter ended June 30, 2021.
A copy of the news release relating to the above matter is set forth in Exhibit 99.1, which is being furnished herewith. In addition, a slide presentation relating to the results is set forth in Exhibit 99.2, which is being furnished herewith.
| Exhibit<br><br>Number | Description |
|---|---|
| 99.1 | News Release “International Game Technology PLC Reports Second Quarter 2021 Results,” dated August 3, 2021 |
| 99.2 | Presentation “2021 Second Quarter Results period ended June 30, 2021,” dated August 3, 2021 |
EXHIBIT INDEX
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: August 3, 2021 | INTERNATIONAL GAME TECHNOLOGY PLC | |
|---|---|---|
| By: | /s/ Pierfrancesco Boccia | |
| Pierfrancesco Boccia | ||
| Corporate Secretary |
4
Document
NEWS RELEASE
INTERNATIONAL GAME TECHNOLOGY PLC REPORTS
SECOND QUARTER 2021 RESULTS
•Revenue up 74% to over $1.0 billion, fueled by strong increases in all businesses, including 35% Global Lottery same-store sales growth
•Delivered operating income of $244 million, highlighting impressive Global Lottery operating leverage and excellent progress on structural cost savings
•Net income of $365 million comprised of $39 million loss from continuing operations and income from discontinued operations of $404 million, including gain on sale of assets
•Adjusted EBITDA increases 170% to $442 million, among the highest in Company history
•Generated $500 million in cash from continuing operations and a record-level $380 million of free cash flow during the first half of the year
•$1.0 billion net debt reduction in first half; net debt leverage improved from 6.4x to 4.3x, reaching target six months early
•Raising 2021 outlook; now expect to exceed 2019 levels for key financial metrics this year
LONDON – August 3, 2021 – International Game Technology PLC (“IGT”) (NYSE:IGT) today reported financial results for the second quarter ended June 30, 2021. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the results; access details are provided below.
"Impressive second quarter results highlight the vitality of our portfolio," said Marco Sala, CEO of IGT. "Outstanding Lottery performance, the progressive recovery in land-based Gaming, and strong increase in Digital & Betting activities drove substantial revenue and profit growth, delivering Adjusted EBITDA that is among the highest recorded in a quarterly period. On the strength of the first half performance, we are raising our outlook for the year and now expect to exceed 2019 levels for key financial metrics this year."
"Record free cash flow from continuing operations and proceeds from recent asset sales fueled significant debt reduction in the first half," said Max Chiara, CFO of IGT. "Our leverage profile improved substantially, reaching pre-pandemic levels well ahead of expectations, and improving our credit profile and overall financial condition."
Overview of Consolidated Second Quarter 2021 Results
| Y/Y Change (%) | Constant Currency Change (%) | ||
|---|---|---|---|
| All amounts from continuing operations | |||
| 2020 | |||
| ( in millions, unless otherwise noted) | |||
| GAAP Financials: | |||
| Revenue | |||
| Global Lottery | 460 | 58% | 50% |
| Global Gaming | 140 | 126% | 120% |
| Total revenue | 600 | 74% | 67% |
| Operating income (loss) | |||
| Global Lottery | 107 | 180% | 163% |
| Global Gaming | (111) | NA | NA |
| Corporate support expense | (26) | —% | 11% |
| Other(1) | (43) | 7% | 7% |
| Total operating income (loss) | (72) | NA | |
| Net cash provided by operating activities | 127 | 95% | |
| Cash and cash equivalents | 1,338 | (52)% | |
| Non-GAAP Financial Measures: | |||
| Adjusted EBITDA | |||
| Global Lottery | 221 | 87% | 76% |
| Global Gaming | (36) | NA | NA |
| Corporate support expense | (20) | (2)% | 12% |
| Total Adjusted EBITDA | 164 | 170% | 157% |
| Free cash flow | 73 | 140% | |
| Net debt(2) | 7,297 | (13)% |
All values are in US Dollars.
(1) Primarily includes purchase price amortization
(2) Historical net debt recast to only reflect continuing operations
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:
•Global Lottery delivers second-highest revenue and profit levels in segment history, driven by strong player demand
•Achieved approximately two-thirds of $200M+ 2021 OPtiMa savings targets year-to-date
•Global Gaming returns to profitability as progressive recovery continues; Digital & Betting revenue increases 41% in the quarter
•Growing adoption of IGT's best-in-class cashless solutions, most recently with Agua Caliente Casinos and Washington's Lottery
•Completed sale of Italy B2C gaming businesses; net proceeds used to partially fund full redemption, by make-whole call, of 4.750% Senior Secured Euro Notes due February 2023
•Announced 25th anniversary of Wheel of Fortune® Slots; deployed Wheel of Fortune®-themed Historical Horse Racing games at Churchill Downs in Kentucky
•Signed seven-year systems contract with Maryland Lottery connecting 11,500 Video Lottery Terminals and Electronic Table Games across six casinos
•Expanded availability of PeakSlant49™ cabinet, with high-performing core video content, under purchase model
•Recently won "Casino Supplier of the Year" award in 2021 Global Gaming Awards London
Financial highlights:
Consolidated revenue of $1.0 billion, up 74% from the prior year
•Global Lottery revenue rises 58% to $725 million, driven by 35% growth in same-store sales
•Global Gaming revenue totals $316 million, up 126% from the prior year and 19% sequentially on continued recovery trends
Operating income of $244 million compared to operating loss of $72 million in the prior year
•High profit flow-through of Global Lottery same-store sales growth
•Mix of high-margin Italy lottery sales
•Disciplined cost management and benefits from OPtiMa structural cost-savings program
Net interest expense of $91 million compared to $96 million in the prior year, driven by lower average debt balances and interest rates
Provision for income taxes of $32 million compared to a benefit from income taxes of $3 million in the prior year, on significant increase in operating profitability
Net loss of $39 million versus net loss of $268 million in the prior-year period, primarily driven by significant increase in revenue
Adjusted EBITDA of $442 million compared to $164 million in the prior-year period; Global Lottery delivers near record segment-level Adjusted EBITDA
Net debt of $6.3 billion, down over $1.0 billion from $7.3 billion at December 31, 2020; Net debt leverage of 4.3x, down from 6.4x at December 31, 2020, driven by strong financial results, cash flow generation, and proceeds from sale of Italy gaming businesses
Cash and Liquidity Update
•Total liquidity of $1.9 billion as of June 30, 2021; $639 million in unrestricted cash and $1.3 billion in additional borrowing capacity
•$748 million in net cash proceeds from sale of Italy gaming businesses used to fund redemption of 4.750% Euro bonds due 2023
•Executed amendment and extension of Term Loan Facility in July, increasing liquidity, extending debt maturities, and lowering interest costs
Outlook
•Second half 2021 revenue and operating income from continuing operations of $2.0 billion and $300 million, respectfully, meaningfully higher than prior year
◦Global Lottery returns to more normal growth rates applied to higher levels of consumption; third quarter-to-date same-store sales up double digits versus 2019
◦Global Gaming progressive recovery continues
•Second half 2021 compared to first half 2021
◦Revenue, operating income, and cash from operations lower on normalization of lottery growth trends
◦Capital expenditures of approximately $175 million, sequentially accelerating to support growth; full year capital expenditures below 2019 levels
◦Depreciation and amortization stable
•Does not factor in any additional impact from COVID-19 restrictions
Conference Call and Webcast
August 3, 2021, 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: +1 866 968-0344
•Outside the US/Canada toll-free number: +1 873 415-0264
•Conference ID/confirmation code: 8589154
•A telephone replay of the call will be available for one week
◦US/Canada replay number: +1 800 585-8367
◦Outside the US/Canada replay number: +1 416 621-4642
◦ID/Confirmation code: 8589154
Note: Certain totals in the tables included in this press release may not add due to rounding
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 2021 are calculated using the same foreign exchange rates as the corresponding 2020 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 11,000 employees. For more information, please visit www.IGT.com.
Cautionary Statement Regarding Forward-Looking Statements
This news release may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning International Game Technology PLC and its consolidated subsidiaries (the “Company”) and other matters. 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, 2020 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, foreign exchange gain (loss), other non-operating expenses, 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. Adjusted EBITDA – discontinued operations represents income (loss) from discontinued operations (a GAAP measure) before income taxes, interest expense, depreciation and amortization, and gain on sale of discontinued operations. Adjusted EBITDA – combined represents Total Adjusted EBITDA plus Adjusted EBITDA – discontinued operations. Management believes that the non-GAAP measures just mentioned are 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 and equivalents. Cash and cash equivalents 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. Prior to the disposal of the Italian B2C gaming businesses in the second quarter of 2021, management calculated the Net debt leverage ratio as the ratio of Net debt as of a particular balance sheet date to the LTM of Adjusted EBITDA – combined prior to such date. Management believes that Net debt leverage is a useful measure to assess our 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 is a non-GAAP financial measure that expresses the current financial data using the prior-year/period exchange rate (i.e., the 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 3485475493; 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 | |||||||||||
| Q2'21 | Q2'20 | Y/Y Change | Currency | Reported | ||||||||
| GLOBAL LOTTERY | (%) | Change (%)(1) | Q1'21 | (%) | ||||||||
| Revenue | ||||||||||||
| Service | ||||||||||||
| Operating and facilities management contracts | 675 | 416 | 62% | 55% | 695 | (3)% | ||||||
| Upfront license fee amortization | (53) | (48) | (9)% | —% | (52) | (1)% | ||||||
| Operating and facilities management contracts, net | 623 | 367 | 70% | 62% | 643 | (3)% | ||||||
| Other | 79 | 70 | 12% | 4% | 83 | (4)% | ||||||
| Total service revenue | 702 | 438 | 60% | 53% | 725 | (3)% | ||||||
| Product sales | 23 | 22 | 6% | 3% | 23 | (1)% | ||||||
| Total revenue | 725 | 460 | 58% | 50% | 749 | (3)% | ||||||
| Operating income | 300 | 107 | 180% | 163% | 337 | (11)% | ||||||
| Adjusted EBITDA(1) | 414 | 221 | 87% | 76% | 447 | (7)% | ||||||
| Global same-store sales growth (%) | ||||||||||||
| Instant ticket & draw games | 34.9 | % | (7.1) | % | 27.4 | % | ||||||
| Multi-jurisdiction jackpots | 28.8 | % | (24.2) | % | 94.7 | % | ||||||
| Total | 34.5 | % | (8.5) | % | 32.4 | % | ||||||
| North America & Rest of world same-store sales growth (%) | ||||||||||||
| Instant ticket & draw games | 20.5 | % | 3.5 | % | 20.9 | % | ||||||
| Multi-jurisdiction jackpots | 28.8 | % | (24.2) | % | 94.7 | % | ||||||
| Total | 21.1 | % | 0.6 | % | 27.8 | % | ||||||
| Italy same-store sales growth (%) | ||||||||||||
| Instant ticket & draw games | 115.2 | % | (40.5) | % | 52.2 | % | ||||||
| (1) Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||||
| Constant | ||||||||||||
| Q2'20 | Y/Y Change | Currency | ||||||||||
| GLOBAL GAMING | Change (%)(1) | Q1'21 | (%) | |||||||||
| Revenue | ||||||||||||
| Service | ||||||||||||
| Terminal | 25 | 325% | 323% | 90 | ||||||||
| Systems, software, and other | 59 | 54% | 50% | 86 | ||||||||
| Total service revenue | 84 | 136% | 132% | 175 | ||||||||
| Product sales | ||||||||||||
| Terminal | 44 | 97% | 91% | 62 | ||||||||
| Other | 12 | 160% | 147% | 29 | ||||||||
| Total product sales revenue | 56 | 110% | 103% | 91 | ||||||||
| Total revenue | 140 | 126% | 120% | 266 | ||||||||
| Operating income (loss) | (111) | NA | NA | (19) | ||||||||
| Adjusted EBITDA(1) | (36) | NA | NA | 19 | ||||||||
| Installed base units | ||||||||||||
| Casino | 48,704 | (2)% | 48,230 | |||||||||
| Casino - L/T lease(2) | 930 | 22% | 1,135 | |||||||||
| Total installed base units | 49,634 | (1)% | 49,365 | |||||||||
| Installed base units (by geography) | ||||||||||||
| US & Canada | 34,800 | (3)% | 34,138 | |||||||||
| Rest of world | 14,834 | 3% | 15,227 | |||||||||
| Total installed base units | 49,634 | (1)% | 49,365 | |||||||||
| Yields (by geography)(3), in absolute | ||||||||||||
| US & Canada | 8.69 | 342% | 32.27 | |||||||||
| Rest of world | 0.49 | NM | 2.58 | |||||||||
| Total yields | 6.21 | 343% | 22.93 | |||||||||
| Global machine units sold | ||||||||||||
| New/expansion | 1,443 | (19)% | 884 | |||||||||
| Replacement | 1,538 | 236% | 3,521 | |||||||||
| Total machine units sold | 2,981 | 113% | 4,405 | |||||||||
| US & Canada machine units sold | ||||||||||||
| New/expansion | 1,382 | (53)% | 620 | |||||||||
| Replacement | 1,330 | 162% | 2,276 | |||||||||
| Total machine units sold | 2,712 | 52% | 2,896 | |||||||||
| (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 fewer active units |
All values are in US Dollars.
| Constant | |||||||
| Q2'20 | Y/Y Change | Currency | |||||
| GLOBAL GAMING (Continued) | Change (%)(1) | Q1'21 | (%) | ||||
| Rest of world machine units sold | |||||||
| New/expansion | 61 | NM | 264 | ||||
| Replacement | 208 | NM | 1,245 | ||||
| Total machine units sold | 269 | NM | 1,509 | ||||
| Average Selling Price (ASP), in absolute | |||||||
| US & Canada | 14,700 | (5)% | 13,900 | ||||
| Rest of world | 14,000 | (9)% | 13,700 | ||||
| Total ASP | 14,600 | (8)% | 13,800 | ||||
| Gaming Systems Revenue | 23 | 66% | 30 | ||||
| CONSOLIDATED | |||||||
| Revenue (by geography) | |||||||
| US & Canada | 369 | 52% | 51% | 542 | |||
| Italy | 146 | 141% | 122% | 348 | |||
| Rest of world | 84 | 51% | 40% | 124 | |||
| Total revenue | 600 | 74% | 67% | 1,015 | |||
| Digital & Betting Revenue(2) | 44 | 41% | 34% | 58 | |||
| (1) Non-GAAP measures; see disclaimer and reconciliations to the most directly comparable GAAP measure included herein | |||||||
| (2) Included within consolidated revenue |
All values are in US Dollars.
| International Game Technology PLC | |||
|---|---|---|---|
| Consolidated Statements of Operations | |||
| ( in millions and shares in thousands, except per share amounts) | |||
| Unaudited | |||
| For the six months ended | |||
| June 30, | |||
| 2020 | 2021 | 2020 | |
| Service revenue | 522 | 1,802 | 1,178 |
| Product sales | 78 | 254 | 236 |
| Total revenue | 600 | 2,055 | 1,414 |
| Cost of services | 361 | 880 | 776 |
| Cost of product sales | 67 | 160 | 160 |
| Selling, general and administrative | 168 | 393 | 332 |
| Research and development | 31 | 116 | 92 |
| Goodwill impairment | — | — | 296 |
| Restructuring | 43 | — | 47 |
| Other operating expense | 1 | 1 | 2 |
| Total operating expenses | 672 | 1,551 | 1,704 |
| Operating income (loss) | (72) | 504 | (290) |
| Interest expense, net | 96 | 185 | 196 |
| Foreign exchange loss (gain), net | 74 | (55) | 4 |
| Other expense, net | 28 | 94 | 29 |
| Total non-operating expenses | 198 | 224 | 229 |
| (Loss) income from continuing operations before provision for (benefit from) income taxes | (271) | 280 | (519) |
| Provision for (benefit from) income taxes | (3) | 181 | (4) |
| (Loss) income from continuing operations | (268) | 100 | (515) |
| Income (loss) from discontinued operations, net of tax | (15) | 24 | (1) |
| Gain on sale of discontinued operations, net of tax | — | 391 | — |
| Income (loss) from discontinued operations | (15) | 415 | (1) |
| Net income (loss) | (282) | 514 | (516) |
| Less: Net income attributable to non-controlling interests from continuing operations | — | 119 | 15 |
| Less: Net loss attributable to non-controlling interests from discontinued operations | (3) | (2) | (4) |
| Net income (loss) attributable to IGT PLC | (280) | 397 | (528) |
| Net loss from continuing operations attributable to IGT PLC per common share - basic & diluted | (1.31) | (0.09) | (2.59) |
| Net income (loss) attributable to IGT PLC per common share - basic & diluted | (1.37) | 1.94 | (2.58) |
| Weighted-average shares - basic & diluted | 204,748 | 204,977 | 204,591 |
All values are in US Dollars.
| International Game Technology PLC | |
|---|---|
| Consolidated Balance Sheets | |
| ( in millions) | |
| Unaudited | |
| December 31, | |
| 2020 | |
| Assets | |
| Current assets: | |
| Cash and cash equivalents | 907 |
| Restricted cash and cash equivalents | 199 |
| Trade and other receivables, net | 846 |
| Inventories | 169 |
| Other current assets | 480 |
| Assets held for sale | 839 |
| Total current assets | 3,440 |
| Systems, equipment and other assets related to contracts, net | 1,068 |
| Property, plant and equipment, net | 132 |
| Operating lease right-of-use assets | 288 |
| Goodwill | 4,713 |
| Intangible assets, net | 1,577 |
| Other non-current assets | 1,774 |
| Total non-current assets | 9,552 |
| Total assets | 12,992 |
| Liabilities and shareholders' equity | |
| Current liabilities: | |
| Accounts payable | 1,126 |
| Current portion of long-term debt | 393 |
| Other current liabilities | 847 |
| Liabilities held for sale | 250 |
| Total current liabilities | 2,615 |
| Long-term debt, less current portion | 7,857 |
| Deferred income taxes | 333 |
| Operating lease liabilities | 266 |
| Other non-current liabilities | 360 |
| Total non-current liabilities | 8,816 |
| Total liabilities | 11,431 |
| Commitments and contingencies | |
| IGT PLC’s shareholders’ equity | 777 |
| Non-controlling interests | 784 |
| Shareholders’ equity | 1,561 |
| Total liabilities and shareholders’ equity | 12,992 |
All values are in US Dollars.
| International Game Technology PLC | |||
|---|---|---|---|
| Consolidated Statements of Cash Flows | |||
| ( in millions) | |||
| Unaudited | |||
| For the six months ended | |||
| June 30, | |||
| 2020 | 2021 | 2020 | |
| Cash flows from operating activities | |||
| Net income (loss) | (282) | 514 | (516) |
| Less: Income (loss) from discontinued operations | (15) | 415 | (1) |
| Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities from continuing operations: | |||
| Foreign exchange loss (gain), net | 74 | (55) | 4 |
| Depreciation | 88 | 165 | 173 |
| Loss on extinguishment of debt | 28 | 91 | 28 |
| Amortization of upfront license fees | 51 | 110 | 101 |
| Amortization | 52 | 100 | 108 |
| Stock-based compensation | 1 | 11 | (12) |
| Debt issuance cost amortization | 5 | 11 | 10 |
| Goodwill impairment | — | — | 296 |
| Deferred income taxes | (13) | 82 | (37) |
| Other non-cash items, net | 4 | 5 | (1) |
| Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions: | |||
| Trade and other receivables | (192) | (134) | 88 |
| Inventories | 10 | 5 | (6) |
| Accounts payable | 175 | 24 | (19) |
| Other assets and liabilities | 111 | (14) | (67) |
| Net cash provided by operating activities from continuing operations | 127 | 500 | 153 |
| Net cash provided by (used in) operating activities from discontinued operations | 40 | (31) | 172 |
| Net cash provided by operating activities | 168 | 469 | 325 |
| Cash flows from investing activities | |||
| Capital expenditures | (54) | (121) | (140) |
| Proceeds from sale of assets | (1) | 11 | 5 |
| Other | — | 1 | 11 |
| Net cash used in investing activities from continuing operations | (55) | (108) | (124) |
| Net cash provided by (used in) investing activities from discontinued operations | (6) | 734 | (20) |
| Net cash provided by (used in) investing activities | (61) | 626 | (144) |
| Cash flows from financing activities | |||
| Principal payments on long-term debt | (527) | (2,422) | (959) |
| Payments in connection with the extinguishment of debt | (25) | (85) | (25) |
| Net (payments of) receipts from financial liabilities | (14) | 3 | 36 |
| Payments of debt issuance costs | (20) | (7) | (20) |
| Proceeds from long-term debt | 750 | 750 | 750 |
| Net proceeds from (repayments of) short-term borrowings | (35) | 3 | 75 |
| Net proceeds from (repayments of) Revolving Credit Facilities | (263) | 516 | 725 |
| Dividends paid | — | — | (41) |
| Dividends paid - non-controlling interests | (76) | (89) | (91) |
| Return of capital - non-controlling interests | — | (61) | — |
| Capital increase - non-controlling interests | — | 11 | 2 |
| Other | (4) | (10) | (6) |
| Net cash (used in) provided by financing activities | (213) | (1,392) | 446 |
| Net (decrease) increase in cash and cash equivalents and restricted cash and cash equivalents | (106) | (297) | 627 |
| Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents | 18 | (13) | 8 |
| Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period | 1,618 | 1,129 | 894 |
| Cash and cash equivalents and restricted cash and cash equivalents at the end of the period | 1,530 | 819 | 1,530 |
| Less: Cash and cash equivalents and restricted cash and cash equivalents of discontinued operations | 19 | — | 19 |
| Cash and cash equivalents and restricted cash and cash equivalents at the end of the period of continuing operations | 1,511 | 819 | 1,511 |
| Supplemental Cash Flow Information | |||
| Interest paid | 49 | 219 | 231 |
| Income taxes paid | 7 | 39 | 18 |
All values are in US Dollars.
| International Game Technology PLC | |
|---|---|
| Net Debt | |
| ( in millions) | |
| Unaudited | |
| December 31, | |
| 2020 | |
| 6.250% Senior Secured U.S. Dollar Notes due February 2022 | 1,004 |
| 4.750% Senior Secured Euro Notes due February 2023 | 1,038 |
| 5.350% Senior Secured U.S. Dollar Notes due October 2023 | 61 |
| 3.500% Senior Secured Euro Notes due July 2024 | 610 |
| 6.500% Senior Secured U.S. Dollar Notes due February 2025 | 1,092 |
| 4.125% Senior Secured U.S. Dollar Notes due April 2026 | — |
| 3.500% Senior Secured Euro Notes due June 2026 | 913 |
| 6.250% Senior Secured U.S. Dollar Notes due January 2027 | 744 |
| 2.375% Senior Secured Euro Notes due April 2028 | 608 |
| 5.250% Senior Secured U.S. Dollar Notes due January 2029 | 743 |
| Senior Secured Notes | 6,813 |
| Euro Term Loan Facility due January 2023 | 1,044 |
| Euro Revolving Credit Facility B due July 2024 | — |
| Long-term debt, less current portion | 7,857 |
| Euro Term Loan Facility due January 2023 | 393 |
| Current portion of long-term debt | 393 |
| Short-term borrowings | — |
| Total debt | 8,250 |
| Less: Cash and cash equivalents | 907 |
| Less: Debt issuance costs, net - Revolving Credit Facilities due July 2024 | 24 |
| Net debt | 7,319 |
| Note: Net debt is a non-GAAP financial measure |
All values are in US Dollars.
| International Game Technology PLC | ||||
|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures | ||||
| ( in millions) | ||||
| Unaudited | ||||
| Business | ||||
| Global | Segment | Corporate | Total IGT | |
| Gaming | Total | and Other | PLC | |
| Loss from continuing operations | (39) | |||
| Provision for income taxes | 32 | |||
| Interest expense, net | 91 | |||
| Foreign exchange loss, net | 90 | |||
| Other non-operating expense, net | 70 | |||
| Operating income (loss) | 10 | 310 | (66) | 244 |
| Depreciation | 35 | 83 | — | 83 |
| Amortization - service revenue (1) | — | 55 | — | 55 |
| Amortization - non-purchase accounting | 1 | 10 | 1 | 11 |
| Amortization - purchase accounting | — | — | 39 | 39 |
| Stock-based compensation | 2 | 3 | 4 | 7 |
| Other (2) | — | — | 1 | 1 |
| Adjusted EBITDA | 49 | 463 | (21) | 442 |
| Income from discontinued operations | 404 | |||
| Gain on sale of discontinued operations | (396) | |||
| Provision for income taxes | — | |||
| Interest expense, net | — | |||
| Depreciation | — | |||
| Amortization | — | |||
| Adjusted EBITDA - discontinued operations | 9 | |||
| Adjusted EBITDA - combined | 451 | |||
| Cash flows from operating activities - continuing operations | 249 | |||
| Capital expenditures | (73) | |||
| Free Cash Flow | 176 | |||
| (1) Includes amortization of upfront license fees | ||||
| (2) Primarily includes transaction-related costs |
All values are in US Dollars.
| International Game Technology PLC | ||||
|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures | ||||
| ( in millions) | ||||
| Unaudited | ||||
| Business | ||||
| Global | Segment | Corporate | Total IGT | |
| Gaming | Total | and Other | PLC | |
| Loss from continuing operations | (268) | |||
| Benefit from income taxes | (3) | |||
| Interest expense, net | 96 | |||
| Foreign exchange loss, net | 74 | |||
| Other non-operating expense, net | 28 | |||
| Operating income (loss) | (111) | (4) | (69) | (72) |
| Depreciation | 37 | 87 | — | 88 |
| Amortization - service revenue (1) | — | 51 | — | 51 |
| Amortization - non-purchase accounting | 2 | 9 | 1 | 10 |
| Amortization - purchase accounting | — | — | 42 | 42 |
| Restructuring | 35 | 40 | 3 | 43 |
| Stock-based compensation | — | — | 1 | 1 |
| Other (2) | — | — | 1 | 1 |
| Adjusted EBITDA | (36) | 184 | (20) | 164 |
| Loss from discontinued operations | (15) | |||
| Benefit from income taxes | (8) | |||
| Interest expense, net | — | |||
| Depreciation | 12 | |||
| Amortization | 14 | |||
| Adjusted EBITDA - discontinued operations | 4 | |||
| Adjusted EBITDA - combined | 167 | |||
| Cash flows from operating activities - continuing operations | 127 | |||
| Capital expenditures | (54) | |||
| Free Cash Flow | 73 | |||
| (1) Includes amortization of upfront license fees | ||||
| (2) Primarily includes transaction-related costs |
All values are in US Dollars.
| International Game Technology PLC | ||||
|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures | ||||
| ( in millions) | ||||
| Unaudited | ||||
| Business | ||||
| Global | Segment | Corporate | Total IGT | |
| Gaming | Total | and Other | PLC | |
| Income from continuing operations | 100 | |||
| Provision for income taxes | 181 | |||
| Interest expense, net | 185 | |||
| Foreign exchange gain, net | (55) | |||
| Other non-operating expense, net | 94 | |||
| Operating income (loss) | (9) | 628 | (124) | 504 |
| Depreciation | 70 | 166 | (1) | 165 |
| Amortization - service revenue (1) | — | 110 | — | 110 |
| Amortization - non-purchase accounting | 3 | 19 | 2 | 21 |
| Amortization - purchase accounting | — | — | 79 | 79 |
| Restructuring | 1 | — | — | — |
| Stock-based compensation | 3 | 5 | 6 | 11 |
| Other (2) | — | — | 1 | 1 |
| Adjusted EBITDA | 67 | 929 | (37) | 892 |
| Income from discontinued operations | 415 | |||
| Gain on sale of discontinued operations | (396) | |||
| Provision for income taxes | 4 | |||
| Interest expense, net | — | |||
| Depreciation | — | |||
| Amortization | — | |||
| Adjusted EBITDA - discontinued operations | 23 | |||
| Adjusted EBITDA - combined | 915 | |||
| Cash flows from operating activities - continuing operations | 500 | |||
| Capital expenditures | (121) | |||
| Free Cash Flow | 380 | |||
| (1) Includes amortization of upfront license fees | ||||
| (2) Primarily includes transaction-related costs |
All values are in US Dollars.
| International Game Technology PLC | ||||
|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures | ||||
| ( in millions) | ||||
| Unaudited | ||||
| Business | ||||
| Global | Segment | Corporate | Total IGT | |
| Gaming | Total | and Other | PLC | |
| Loss from continuing operations | (515) | |||
| Benefit from income taxes | (4) | |||
| Interest expense, net | 196 | |||
| Foreign exchange loss, net | 4 | |||
| Other non-operating expense, net | 29 | |||
| Operating income (loss) | (117) | 135 | (425) | (290) |
| Goodwill impairment | — | — | 296 | 296 |
| Depreciation | 77 | 173 | 1 | 173 |
| Amortization - service revenue (1) | — | 101 | — | 101 |
| Amortization - non-purchase accounting | 3 | 17 | 2 | 19 |
| Amortization - purchase accounting | — | — | 89 | 89 |
| Restructuring | 36 | 41 | 6 | 47 |
| Stock-based compensation | (5) | (9) | (3) | (12) |
| Other (2) | — | — | 2 | 2 |
| Adjusted EBITDA | (6) | 458 | (33) | 425 |
| Loss from discontinued operations | (1) | |||
| Benefit from income taxes | (4) | |||
| Interest expense, net | — | |||
| Depreciation | 25 | |||
| Amortization | 28 | |||
| Adjusted EBITDA - discontinued operations | 48 | |||
| Adjusted EBITDA - combined | 473 | |||
| Cash flows from operating activities - continuing operations | 153 | |||
| Capital expenditures | (140) | |||
| Free Cash Flow | 13 | |||
| (1) Includes amortization of upfront license fees | ||||
| (2) Primarily includes transaction-related costs |
All values are in US Dollars.
The following table summarizes Adjusted EBITDA and Adjusted EBITDA - discontinued operations for the actual period end dates and LTM, and the respective net debt leverage calculations:
| ( in millions) | Q4'20 | Q1'21 | Q2'21 |
|---|---|---|---|
| Adjusted EBITDA | 295 | 450 | 442 |
| Adjusted EBITDA - discontinued operations | 26 | 14 | 9 |
| Adjusted EBITDA - combined | 321 | 464 | 451 |
| LTM Adjusted EBITDA (1) | 1,008 | 1,196 | 1,474 |
| LTM Adjusted EBITDA - combined (1)(2) | 1,146 | 1,305 | 1,588 |
| Net debt | 7,319 | 7,069 | 6,312 |
| Net debt leverage | |||
| LTM Adjusted EBITDA (3) | 4.3x | ||
| LTM Adjusted EBITDA - combined (4) | 6.4x | 5.4x | 4.0x |
| (1) Adjusted EBITDA was 164 million, 261 million, and 365 million for the quarters ended June 30, 2020, March 31, 2020, and December 31, 2019, respectively. | |||
| (2) Adjusted EBITDA - discontinued operations was 4 million, 44 million, and 69 million for the quarters ended June 30, 2020, March 31, 2020, and December 31, 2019, respectively. | |||
| (3) Net debt / LTM Adjusted EBITDA | |||
| (4) Net debt / LTM Adjusted EBITDA - combined |
All values are in US Dollars.
16
q221earningsslidedeck
1 International Game Technology PLC 2021 Second Quarter Results Period ended June 30, 2021 August 3, 2021
Cautionary Statement Regarding Forward-Looking Statements This presentation 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 to 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, 2020 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 presentation 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 presentation 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. Comparability of Results All figures presented in this release are prepared under U.S. GAAP, unless otherwise noted. 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, foreign exchange gain (loss), other non-operating expenses, 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. Adjusted EBITDA – discontinued operations represents income from discontinued operations (a GAAP measure) before income taxes, interest expense, depreciation and amortization, and gain on sale of discontinued operations. Adjusted EBITDA – combined represents Total Adjusted EBITDA plus EBITDA – discontinued operations. Management believes that the non-GAAP measures just mentioned are 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 and equivalents. Cash and cash equivalents 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. Prior to the disposal of the Italian B2C gaming businesses in the second quarter of 2021, management calculated the Net debt leverage ratio as the ratio of Net debt as of a particular balance sheet date to the LTM of Adjusted EBITDA – combined prior to such date. Management believes that Net debt leverage is a useful measure to assess our 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 is a non-GAAP financial measure that expresses the current financial data using the prior-year/period exchange rate (i.e., the 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. 2
Business Update 3 Business Update
Impressive Q2'21 Results Confirm Vitality of Portfolio Revenue up over 70% on outstanding Global Lottery performance, progressive recovery in land-based Global Gaming, and significant growth in Digital & Betting activities Structural cost reductions tracking ahead of plan Once again, among highest Adjusted EBITDA(1) in Company history ($ and margin(2)); generated $380M of free cash flow in H1'21, a record level for a first half period Publication of 14th annual Sustainability Report highlights improved ESG performance; diversity and inclusion efforts recognized for their scope and impact Raising outlook for 2021; now expect to exceed 2019 levels for key financial metrics this year 4 Digital & Betting revenue up 41% +35% Lottery SSS Growth Active U.S. units and yields up sequentially $442M in Adjusted EBITDA(1) (42% margin (2)) Note: All amounts presented represent continuing operations (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details (2) Margin defined as Adjusted EBITDA divided by revenue
Innovation Driving Stronger Global Lottery Growth Profile 5 Global Same-Store Sales (Y/Y) 4% 6% 2% (5)% (7)% (9)% 9% 8% 32% 35% Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 35% SSS growth and a 24% increase over Q2’19 on broad-based gains across games and regions ◦ 21% growth in North America & Rest of World ◦ 115% increase in Italy, helped by closure of gaming halls & betting shops ◦ Growing acceptance of iLottery Consistent, multi-year industry growth fueled by game innovation, improved retail penetration, and sales execution Expect mid-single digit H2'21 global SSS growth; up low-double digits versus H2'19 levels, at upper end of historical rate ◦ Research confirms an expanding player base with intention to increase play over pre- COVID levels ◦ Return to more normal growth rate applied to higher levels of consumption
Global Gaming Recovery Progressing Nicely 6 Global markets mostly open, some restrictions still in place outside the U.S. Recurring revenue recovering swiftly; sequential improvement in U.S. active units and installed base yields Improved unit sales both Y/Y and sequentially Growing adoption of IGT's best-in-class cashless solutions (Resort Wallet™, IGTPay™), most recently with Agua Caliente Casinos Won "Casino Supplier of the Year" in 2021 Global Gaming Awards London Expect continued, progressive improvement throughout year
Sports Betting Spotlight on Digital & Betting: Building on Leadership Positions Leveraging deep and proven land-based portfolio Success developing digitally native games that are among the strongest performing ever (Cash Eruption) Working with third parties to complement our proprietary IP Deploying next-generation platform, starting with Georgia in Q3 Expanding portfolio of innovative and high-performing e-instants: VIP Gold Grand, Triple Platinum, Ruby 7, Sfida al Campionato, Invasioni Spaziali PlaySports platform powering ~50 U.S. sportsbooks, including Resorts World Las Vegas’s retail sportsbook and statewide mobile betting app 40+ leads in pipeline for turnkey solution 7 iGaming iLottery
Strong Player Demand, Disciplined Execution Drive Improved Outlook 8 Top-line momentum supported by attractive long-term Lottery industry trends, Global Gaming recovery, and high-growth Digital & Betting activities Substantial cost savings already achieved, increasing profit margin and cash flow outlook Significantly reduced debt and leverage returns to pre-COVID levels; expect positive trends to continue Unwavering commitment to sustainability, building on our important progress ◦ Selected for 2020 Bloomberg Gender-Equality Index ◦ Awarded responsible gaming certification from Global Gambling Guidance Group; first gaming supplier to achieve accreditation for land-based and digital operations ◦ Lakeland, Florida printing facility recognized as winner of the Sustainability Program in the 2021 FTA Sustainability Excellence Awards
9 Financial Results
10 Quarter Ended Year-To-Date All amounts from continuing operations, unless otherwise noted June 30, June 30, 2021 2020 2021 2020 GAAP Financials: Revenue 1,041 600 74% 2,055 1,414 45% Operating income (loss) 244 (72) NA 504 (290) NA Net income (loss)(1) 365 (282) NA 514 (516) NA Net income (loss) attributable to IGT PLC per common share(1) $1.49 $(1.37) NA $1.94 $(2.58) NA Net cash provided by operating activities 249 127 95% 500 153 227% Non-GAAP Financial Measures: Adjusted EBITDA(2) 442 164 170% 892 425 110% Free cash flow(2) 176 73 140% 380 13 NM Significant Profit Growth in Q2'21 and YTD Periods Note: $ in millions, except where noted otherwise (1) includes results of discontinued operations, net of tax (2) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details
(72) 244 Q2'20 Q2'21 164 442 Q2'20 Q2'21 11 Note: $ in millions; EUR/USD FX daily average: 1.20 in Q2'21, 1.10 in Q2'20; all amounts presented reflect continuing operations (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details Revenue Adjusted EBITDA(1)Operating (Loss) Income Q2'21 Financial Highlights: Impressive Operating Leverage on Robust Revenue Growth 600 1,041 Q2'20 Q2'21 127 249 73 176 Q2'20 Q2'21 Cash Flow ☐ Cash From Operations ☐ Free Cash Flow(1) All key financial measures up significantly Y/Y ~2/3 of OPtiMa $200M+ structural cost savings target achieved YTD ◦ Product simplification and margin improvement initiatives ~70% complete ◦ Operational excellence initiative ~30% complete; incremental benefits tied to ramp in production volumes 74% 170%
460 228 2 1 691 34 725 Q2'20 Lottery Service Other Service Product Sales Excluding FX FX Q2'21 Q2'21 Global Lottery Highlights: Strong Player Demand Drives Near-Record Results and Profit Growth 12 Q2'21 Q2'20 Y/Y % change as reported Y/Y % change at constant FX Q2'19(1) % change as reported Revenue 725 460 58% 50% 586 24% Operating income 300 107 180% 163% 183 64% Adjusted EBITDA(2) 414 221 87% 76% 289 43% Global SSS growth Y/Y % change at constant FX % change at constant FX vs Q2'19 Instants & Draw Games 34.9% 26.5% Multi-jurisdiction jackpots 28.8% (2.4)% Total 34.5% 24.1% Note: $ in millions; all amounts presented reflect continuing operations except where noted otherwise (1) As previously disclosed, does not reflect impact of discontinued operations (2) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details Italy SSS growth Y/Y % change at constant FX % change at constant FX vs Q2'19 Instants & Draw Games 115.2% 28.5% Revenue North America & Rest of world SSS growth Y/Y % change at constant FX % change at constant FX vs Q2'19 Instants & Draw Games 20.5% 25.8% Multi-jurisdiction jackpots 28.8% (2.4)% Total 21.1% 22.9% Significant increase in lottery service over one and two-year periods ◦ 35% global SSS growth; sharp increase in all main geographies ◦ Italy SSS more than double ◦ 24% higher than Q2'19 Operating income more than doubles ◦ High flow-through of SSS growth and positive geographic mix ◦ Disciplined cost management 57% Adjusted EBITDA margin; second highest quarterly level in segment history
Q2'21 Global Gaming Highlights: Continued Recovery Drives Return to Profitability 13 Service revenue more than doubles; on path to achieve Q4'19 levels in Q4'21 Progressive quarterly increase in machine units sold since Q2'20 Digital & Betting(1) revenue up over 40% Profitability measures significantly higher ◦ Increased operating leverage as business scales ◦ Disciplined cost management and benefits from OPtiMa cost saving initiatives Sequential growth in revenue, profit, and margins ◦ Higher number of active units and yields ◦ 44% increase in machine units sold Machine Units Sold Q2'21 Q2'20 Q1'21 New & expansion 1,167 1,443 884 Replacement 5,168 1,538 3,521 Total 6,335 2,981 4,405 Average selling price $13,400 $14,600 $13,800 Note: $ in millions, except where noted otherwise; all amounts presented reflect continuing operations (1) Reported Digital & Betting revenue reflects activity across the Company’s business portfolio and includes iLottery (2) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details (3) Excludes L/T lease units treated as sales-type leases; comparability on a Y/Y basis hindered due to fewer active units Installed Base (units) Q2'21 Q2'20 Q1'21 US & Canada 33,820 34,800 34,138 Rest of world 15,280 14,834 15,227 Total 49,100 49,634 49,365 Yields(3) $27.49 $6.21 $22.93 Revenue 140 82 29 40 18 309 7 316 Q2'20 Terminal Service Other Service Terminal Product Sales Other Product Sales Excluding FX FX Q2'21 Results from continuing operations Q2'21 Q2'20 Y/Y % change as reported Y/Y % change at constant FX Q1'21 Sequential % change as reported Revenue 316 140 126% 120% 266 19% Operating income (loss) 10 -111 NA NA -19 NA Adjusted EBITDA(1) 49 -36 NA NA 19 158%
127 (54) 73 Strong Cash Generation Continues; Net Debt Leverage Improves to 4.3x 14 Generated $500M in cash from operating activities and $380M in free cash flow YTD Net debt lower by over $1.0 billion, as reported, $866M excluding foreign currency impact ◦ Strong YTD financial results including solid cash flow generation; 56% cash conversion rate(4) ◦ $748M in net cash proceeds from sale of Italy gaming businesses Net debt leverage improves to 4.3x, reaching pre-pandemic level six months ahead of target Note: $ in millions, except where noted otherwise; all amounts presented represent continuing operations (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details (2) Non-GAAP measure; calculation predates Italy asset sales therefore based on LTM Adjusted EBITDA - Combined; see disclaimer on page 2 and schedule in Appendix for further details (3) Non-GAAP measure; see disclaimer on page 2 and schedule in Appendix for further details (4) Cash conversion defined as Cash from Operations divided by Adjusted EBITDA 7,319 7,069 6,312 249 (73) 176 Cash from Operations CapEx Free Cash Flow (1) Q4'20 Q2'21Q1'21 Net debt leverage 6.4x(2) 5.4x(2) 4.3x (3) 153 (140) 13 500 (121) 380 Free Cash Flow (1)CapEx Cash from Operations QTD YTD Cash from Operations CapEx Free Cash Flow (1) Cash from Operations CapEx Free Cash Flow (1) Q2'20 Q2'21 Q2'20 Q2'21 Net Debt
Significantly Improved Balance Sheet with Lower Debt and Longer Maturities; No Significant Debt Maturity Until 2024 15 Euro Notes 35% Note: $ in millions, except where noted otherwise Total liquidity of $1.9B at quarter end; $639M in unrestricted cash and $1.3B in additional borrowing capacity Net proceeds from Italy asset sale used to fund redemption of 4.750% Euro bonds due 2023 Term Loan refinancing generates additional liquidity, extends maturities, and lowers interest costs
Outstanding YTD Operating Results; Improved Financial Condition 16 Sustained Global Lottery performance drives near-record results; progressive recovery in Global Gaming results in sequential and Y/Y growth in revenue, profit, and margins OPtiMa program ahead of schedule; ~2/3 of $200M+ structural cost savings target achieved YTD, boosting operating margins Generated $500 million in cash from continuing operations and a record-level $380 million in free cash flow from continuing operations during the first half of the year Net debt reduced by ~$1.0B YTD as reported; net debt leverage improves to 4.3x(1), returning to pre- pandemic level six months ahead of target Substantial liquidity with no material near-term debt maturities (1) Net debt leverage defined as Net Debt divided by LTM Adjusted EBITDA from continuing operations
Company's H2'21 outlook for revenue and operating income from continuing operations is ~$2 billion and ~$300 million, respectively, meaningfully higher Y/Y ◦ Global Lottery returns to more normal growth rates applied to higher levels of consumption; Q3-to-date SSS up double digits versus 2019 ◦ Global Gaming progressive recovery continues H2'21 vs H1'21 perspective: ◦ Revenue and operating income lower versus H1'21 on normalization of lottery growth trends ◦ Cash from operations below H1'21 levels ◦ CapEx of ~$175 million, sequentially accelerating to support growth; FY CapEx remains below 2019 levels ◦ Depreciation and amortization stable versus H1'21 Does not factor in any impact from additional COVID-19 restrictions 17 H2'21 Outlook
18 Q&A
19 Appendix
$ in millions except otherwise noted (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details Q2'21 Select Performance and KPI Data 20 GLOBAL LOTTERY Q2'21 Q2'20 Y/Y Change (%) Constant Currency Change (%) (1) Q1'21 Sequential Change as Reported (%) Revenue Service Operating and facilities management contracts 675 416 62 % 55 % 695 (3) % Upfront license fee amortization (53) (48) (9) % — % (52) (1) % Operating and facilities management contracts, net 623 367 70 % 62 % 643 (3) % Other 79 70 12 % 4 % 83 (4) % Total service revenue 702 438 60 % 53 % 725 (3) % Product sales 23 22 6 % 3 % 23 (1) % Total revenue 725 460 58 % 50 % 749 (3) % Operating income 300 107 180 % 163 % 337 (11) % Adjusted EBITDA(1) 414 221 87 % 76 % 447 (7) % Q2'21 Constant Currency Change (%) (1) Q2'20 Constant Currency Change (%) (1) Q1'21 Constant Currency Change (%) (1) Global same-store sales growth (%) Instant ticket & draw games 34.9 % (7.1) % 27.4 % Multi-jurisdiction jackpots 28.8 % (24.2) % 94.7 % Total 34.5 % (8.5) % 32.4 % North America & Rest of world same-store sales growth (%) Instant ticket & draw games 20.5 % 3.5 % 20.9 % Multi-jurisdiction jackpots 28.8 % (24.2) % 94.7 % Total 21.1 % 0.6 % 27.8 % Italy same-store sales growth (%) Instant ticket & draw games 115.2 % (40.5) % 52.2 %
$ in millions except otherwise noted (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details (2) Excluded from yield calculations due to treatment as sales-type leases Q2'21 Select Performance and KPI Data 21 GLOBAL GAMING Q2'21 Q2'20 Y/Y Change (%) Constant Currency Change (%) (1) Q1'21 Sequential Change as Reported (%) Revenue Service Terminal 108 25 325 % 323 % 90 20 % Systems, software, and other 91 59 54 % 50 % 86 6 % Total service revenue 199 84 136 % 132 % 175 13 % Product sales Terminal 86 44 97 % 91 % 62 40 % Other 31 12 160 % 147 % 29 7 % Total product sales revenue 117 56 110 % 103 % 91 29 % Total revenue 316 140 126 % 120 % 266 19 % Operating income (loss) 10 (111) NA NA (19) NA Adjusted EBITDA(1) 49 (36) NA NA 19 158 % Installed base units Casino 47,964 48,704 (2) % 48,230 Casino - L/T lease (2) 1,136 930 22 % 1,135 Total installed base units 49,100 49,634 (1) % 49,365 Installed base units (by geography) US & Canada 33,820 34,800 (3) % 34,138 Rest of world 15,280 14,834 3 % 15,227 Total installed base units 49,100 49,634 (1) % 49,365
$ in millions except otherwise noted (1) Excludes Casino L/T lease units due to treatment as sales-type leases; comparability on a Y/Y basis hindered due to fewer active units Q2'21 Select Performance and KPI Data 22 GLOBAL GAMING (Continued) Q2'21 Q2'20 Y/Y Change (%) Q1'21 Yields (by geography)(1), in absolute $ US & Canada $38.41 $8.69 342 % $32.27 Rest of world $4.03 $0.49 NM $2.58 Total yields $27.49 $6.21 343 % $22.93 Global machine units sold New/expansion 1,167 1,443 (19) % 884 Replacement 5,168 1,538 236 % 3,521 Total machine units sold 6,335 2,981 113 % 4,405 US & Canada machine units sold New/expansion 643 1,382 (53) % 620 Replacement 3,485 1,330 162 % 2,276 Total machine units sold 4,128 2,712 52 % 2,896 Rest of world machine units sold New/expansion 524 61 NM 264 Replacement 1,683 208 NM 1,245 Total machine units sold 2,207 269 NM 1,509 Average Selling Price (ASP), in absolute $ US & Canada $13,900 $14,700 (5) % $13,900 Rest of world $12,700 $14,000 (9) % $13,700 Total ASP $13,400 $14,600 (8) % $13,800 Gaming Systems Revenue 39 23 66 % 30
$ in millions except otherwise noted (1) Non-GAAP measure; see disclaimer on page 2 (2) Included within consolidated revenue Q2'21 Select Performance and KPI Data 23 CONSOLIDATED Q2'21 Q2'20 Y/Y Change (%) Constant Currency Change (%) (1) Q1'21 Sequential Change as Reported (%) Revenue (by geography) US & Canada 561 369 52 % 51 % 542 4 % Italy 353 146 141 % 122 % 348 1 % Rest of world 127 84 51 % 40 % 124 2 % Total revenue 1,041 600 74 % 67 % 1,015 3 % Digital & Betting Revenue (2) 61 44 41 % 34 % 58 5 %
$ in millions except per share amounts (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details Q2'21 Summarized Income Statement 24 Q2'21 Q2'20 Y/Y Change (%) Service revenue 901 522 73 % Product sales 140 78 81 % Total revenue 1,041 600 74 % Total operating expenses 796 672 19 % Operating income (loss) 244 (72) NA Interest expense, net 91 96 Foreign exchange loss, net 90 74 Other expense, net 70 28 Total non-operating expenses 251 198 Loss from continuing operations before provision for (benefit from) income taxes (7) (271) Provision for (benefit from) income taxes 32 (3) Loss from continuing operations (39) (268) Income (loss) from discontinued operations, net of tax 13 (15) Gain on sale of discontinued operations, net of tax 391 — Net income (loss) 365 (282) Net income (loss) attributable to IGT PLC per common share - basic $1.49 $(1.37)
Summarized Cash Flow Statement 25 For the three months ended For the six months ended June 30, March 31, June 30, 2021 2020 2021 2021 2020 Net Cash Flows Provided by Operating Activities 249 127 251 500 153 CapEx (73) (54) (48) (121) (140) Free Cash Flow(1) 176 73 204 380 13 Cash Flow Provided by Discontinued Operations 748 34 (46) 702 152 Debt (Repayment)/Proceeds, Net (947) (75) (206) (1,153) 591 Other - Net (137) (139) (89) (226) (128) Other Investing/Financing Activities (336) (180) (341) (677) 614 Net Cash Flow (160) (106) (137) (297) 627 Effect of Exchange Rates/Other 23 18 (36) (13) 8 Net Change in Cash and Restricted Cash (137) (88) (173) (310) 636 $ in millions except per share amounts; all amounts presented reflect continuing operations unless otherwise noted (1) Non-GAAP measure; see disclaimer on page 2 and reconciliations to the most directly comparable GAAP measures in Appendix for further details
26 For the three months ended June 30, 2021 Global Lottery Global Gaming Business Segment Total Corporate and Other Total IGT PLC Loss from continuing operations (39) Provision for income taxes 32 Interest expense, net 91 Foreign exchange loss, net 90 Other non-operating expense, net 70 Operating income (loss) 300 10 310 (66) 244 Depreciation 49 35 83 — 83 Amortization - service revenue (1) 55 — 55 — 55 Amortization - non-purchase accounting 9 1 10 1 11 Amortization - purchase accounting — — — 39 39 Stock-based compensation 2 2 3 4 7 Other (2) — — — 1 1 Adjusted EBITDA 414 49 463 (21) 442 Income from discontinued operations 404 Gain on sale of discontinued operations (396) Provision for income taxes — Interest expense, net — Depreciation — Amortization — Adjusted EBITDA - discontinued 9 Adjusted EBITDA - combined 451 Cash flows from operating activities - 249 Capital expenditures (73) Free Cash Flow 176 $ in millions; all amounts presented reflect continuing operations (1) Includes amortization of upfront license fees (2) Primarily includes transaction-related costs For the three months ended June 30, 2020 Global Lottery Global Gaming Business Segment Total Corporate and Other Total IGT PLC Loss from continuing operations (268) Benefit from income taxes (3) Interest expense, net 96 Foreign exchange loss, net 74 Other non-operating expense, net 28 Operating income (loss) 107 (111) (4) (69) (72) Goodwill impairment 50 37 87 — 88 Depreciation 51 — 51 — 51 Amortization - service revenue (1) 7 2 9 1 10 Amortization - non-purchase accounting — — — 42 42 Amortization - purchase accounting 5 35 40 3 43 Restructuring — — — 1 1 Stock-based compensation — — — 1 1 Other (2) — — — 1 1 Adjusted EBITDA 221 (36) 184 (20) 164 Loss from discontinued operations (15) Benefit from income taxes (8) Interest expense, net — Depreciation 12 Amortization 14 Adjusted EBITDA - discontinued 4 Adjusted EBITDA - combined 167 Cash flows from operating activities - 127 Capital expenditures (54) Free Cash Flow 73 Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures 27 For the six months ended June 30, 2021Global Lottery Global Gaming Business Segment Total Corporate and Other Total IGT PLC Income from continuing operations 100 Provision for income taxes 181 Interest expense, net 185 Foreign exchange gain, net (55) Other non-operating expense, net 94 Operating income (loss) 637 (9) 628 (124) 504 Depreciation 96 70 166 (1) 165 Amortization - service revenue (1) 110 — 110 — 110 Amortization - non-purchase accounting 17 3 19 2 21 Amortization - purchase accounting — — — 79 79 Restructuring (1) 1 — — — Stock-based compensation 2 3 5 6 11 Other (2) — — — 1 1 Adjusted EBITDA 862 67 929 (37) 892 Income from discontinued operations 415 Gain on sale of discontinued operations (396) Provision for income taxes 4 Interest expense, net — Depreciation — Amortization — Adjusted EBITDA - discontinued 23 Adjusted EBITDA - combined 915 Cash flows from operating activities - 500 Capital expenditures (121) Free Cash Flow 380 $ in millions; all amounts presented reflect continuing operations (1) Includes amortization of upfront license fees (2) Primarily includes transaction-related costs For the six months ended June 30, 2020Global Lottery Global Gaming Segment Total Corporate and Other Total IGT PLC Loss from continuing operations (515) Benefit from income taxes (4) Interest expense, net 196 Foreign exchange loss, net 4 Other non-operating expense, net 29 Operating income (loss) 251 (117) 135 (425) (290) Goodwill impairment — — — 296 296 Depreciation 96 77 173 1 173 Amortization - service revenue (1) 101 — 101 — 101 Amortization - non-purchase accounting 14 3 17 2 19 Amortization - purchase accounting — — — 89 89 Restructuring 5 36 41 6 47 Stock-based compensation (4) (5) (9) (3) (12) Other (2) — — — 2 2 Adjusted EBITDA 464 (6) 458 (33) 425 Loss from discontinued operations (1) Benefit from income taxes (4) Interest expense, net — Depreciation 25 Amortization 28 Adjusted EBITDA - discontinued 48 Adjusted EBITDA - combined 473 Cash flows from operating activities - 153 Capital expenditures (140) Free Cash Flow 13
Summary of Adjusted EBITDA and Leverage From Continuing Operations and Including Discontinued Operations 28 $ in millions; all amounts presented reflect continuing operations unless otherwise noted (1) Adjusted EBITDA was $164 million, $261 million, and $365 million for the quarters ended June 30, 2020, March 31, 2020, and December 31, 2019, respectively. (2) Adjusted EBITDA from discontinued operations was $4 million, $44 million, and $69 million for the quarters ended June 30, 2020, March 31, 2020, and December 31, 2019, respectively. Q3'20 Q4'20 Q1'21 Q2'21 Adjusted EBITDA 287 295 450 442 Adjusted EBITDA - discontinued operations 65 26 14 9 Adjusted EBITDA - combined 352 321 464 451 LTM Adjusted EBITDA (1) 1,078 1,008 1,196 1,474 LTM Adjusted EBITDA - combined (1)(2) 1,260 1,146 1,305 1,588 Net debt 7,243 7,319 7,069 6,312 Net debt leverage LTM Adjusted EBITDA (3) 4.3x LTM Adjusted EBITDA - combined (4) 5.7x 6.4x 5.4x 4.0x