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International Game Technology PLC Reports First Quarter 2020 Results

May 19, 2020 | Vendor News
  • Results affected by COVID-19-related lockdowns beginning in March
  • Revenue of $940 million, down 18% as global closure of casinos and gaming halls and widespread mobility restrictions significantly hinder service revenue generation
  • Net loss of $248 million includes $296 million non-cash goodwill impairment charge; achieved Adjusted EBITDA of $309 million
  • $2.2 billion in liquidity, comprised of $1.5 billion in unrestricted cash and $743 million in capacity under revolving credit facilities
  • Implementation of robust business continuity plans with cost reduction and capital spending avoidance initiatives to target $500 million in savings for 2020
  • Withdrawing 2020 profit outlook due to COVID-19 uncertainty

LONDON, May 18, 2020 /PRNewswire/ — International Game Technology PLC (“IGT”) (NYSE:IGT) today reported financial results for the first quarter ended March 31, 2020. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the results; access details are provided below.

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

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

Overview of Consolidated First Quarter 2020 Results

Constant
Quarter Ended Y/Y Currency
March 31 Change Change
2020 2019 (%) (%)
(In $ millions, unless otherwise noted)
Revenue 940 1,145 -18% -16%
Operating income/(loss) (197) 178  NM  NM
Net income/(loss) per diluted share ($1.21) $0.20  NM
Adjusted EBITDA 309 417 -26% -25%
Adjusted net income per diluted share $0.08 $0.12 -32%
Net debt 7,170 7,714 -7%

 

Note: Adjusted EBITDA and adjusted net income per diluted share are non-GAAP financial measures. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release.

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

Financial highlights:

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

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

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

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

Interest expense, net declined 2% to $101 million

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

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

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

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

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

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

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

Cash and Liquidity Update

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

COVID-19 Update: Withdrawing 2020 outlook

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

Conference Call and Webcast

May 18, 2020, at 8:00 a.m. EDT

Live webcast available under “News, Events & Presentations” on IGT’s Investor Relations website at www.IGT.com; replay available on the website following the live event

Dial-In Numbers

  • US/Canada toll-free dial-in number: +1 844 842 7999
  • Outside the US/Canada toll-free number: +1 612 979 9887
  • Conference ID/confirmation code: 5782965
  • A telephone replay of the call will be available for one week
    • US/Canada replay number: +1 855 859 2056
    • Outside the US/Canada replay number: +1 404 537 3406
    • ID/Confirmation code: 5782965

Comparability of Results

All figures presented in this news release are prepared under U.S. GAAP, unless noted otherwise. Adjusted figures exclude the impact of items such as purchase accounting, impairment charges, restructuring expense, foreign exchange, and certain one-time, primarily transaction-related items. Reconciliations to the most directly comparable U.S. GAAP measures are included in the tables in this news release. Constant currency changes for 2020 are calculated using the same foreign exchange rates as the corresponding 2019 period. Management uses non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate the Company’s financial performance. Management believes these non-GAAP financial measures reflect the Company’s ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of business trends. These constant currency changes and non-GAAP financial measures should however be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with U.S. GAAP.

About IGT
IGT (NYSE:IGT) is the global leader in gaming. We deliver entertaining and responsible gaming experiences for players across all channels and regulated segments, from Gaming Machines and Lotteries to Sports Betting and Digital. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, our solutions deliver unrivalled gaming experiences that engage players and drive growth. We have a well-established local presence and relationships with governments and regulators in more than 100 countries around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has approximately 12,000 employees. For more information, please visit www.IGT.com.

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