LONDON, March 8, 2018 /PRNewswire/ — International Game Technology PLC (“IGT”) (NYSE: IGT) today reported financial results for the fourth quarter and year ended December 31, 2017. Today, at 8:00 a.m. EST, management will host a conference call and webcast to present the fourth quarter and full year 2017 results; access details are provided below.

“We had a strong finish to 2017, amplifying the progress we made throughout the year,” said Marco Sala, CEO of IGT. “We delivered outstanding results in our Lottery business and improved our key performance indicators in the Gaming business. These achievements were enhanced by disciplined expense management. Bringing innovative content and technology to market remains the cornerstone of our strategy. Last year, we executed well along this path and established a solid foundation for growth in 2018 and beyond.”

“We met all of our financial objectives for the year, including the top end of our EBITDA expectations. Net debt was slightly better than our outlook, despite the early Scratch & Win renewal in the fourth quarter,” said Alberto Fornaro, CFO of IGT. “The results for the fourth quarter and full year highlight the diversity and resilience of the IGT franchise.”

Summary of Consolidated Fourth Quarter and Full Year 2017 Financial Results

Summary of Consolidated Fourth Quarter 2017 Financial Results

Quarter Ended
December 31, 

Change

Constant

Currency
Change 

2017

2016

(%)

(%)

(In $ millions, unless otherwise noted)

Revenue

1,346

1,321

2%

-2%

Operating income

194

138

41%

32%

Net income per diluted share

$0.39

$1.15

N/M

Net debt

7,319

7,569

-3%

Adjusted EBITDA

452

422

7%

2%

Adjusted operating income

268

281

-4%

-9%

Adjusted net income per diluted share

$0.02

$0.88

N/M

Year Ended
December 31, 

Change

Constant
Currency
Change 

2017

2016

(%)

(%)

(In $ millions, unless otherwise noted)

Revenue

4,939

5,154

-4%

-5%

Operating income

(51)

660

Net income per diluted share

($5.26)

$1.05

Net debt

7,319

7,569

-3%

Adjusted EBITDA

1,676

1,755

-5%

-6%

Adjusted operating income

1,028

1,167

-12%

-13%

Adjusted net income per diluted share

$0.86

$2.33

N/M

Note: Adjusted EBITDA, adjusted operating income, 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. 

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 2017 are calculated using the same foreign exchange rates as the corresponding 2016 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.

Overview of Consolidated Fourth Quarter Results

Consolidated revenue was $1,346 million compared to $1,321 million in the fourth quarter of 2016. At constant currency and scope (which adjusts for the Italy Lotto upfront payment amortization and the sale of Double Down Interactive LLC (“DoubleDown”)), revenue was up 3%.

Adjusted operating income was $268 million compared to $281 million in the prior-year period. Adjusted EBITDA was $452 million compared to $422 million in the fourth quarter of 2016, on strong International performance, Italy sports betting results, and lower operating expenses.

Interest expense was $114 million compared to $116 million in the prior-year period.

Benefit from income taxes rose to $83 million from $5 million in the fourth quarter of 2016. Tax dynamics in the fourth quarter of 2017 primarily reflect the non-cash impacts of recent U.S. tax reform. Additional detail on the tax impacts is provided with the reconciliation tables in this news release.

Net income attributable to IGT was $80 million in the fourth quarter of 2017. On an adjusted basis, net income attributable to IGT was $4 million. The Company reported net income per diluted share of $0.39 and earned $0.02 per diluted share on an adjusted basis, which includes $0.66 of non-cash, net negative tax impacts.

Cash from operations was $686 million in 2017 versus $281 million in 2016. As previously disclosed, gross upfront payments for Italian license fees are now included in Cash Flows from Operating Activities. Capital expenditures were $698 million in 2017 compared to $542 million in the prior year.

Cash and cash equivalents were $1,057 million as of December 31, 2017, compared to $294 million as of December 31, 2016. Net debt was $7,319 million as of December 31, 2017, compared to $7,569 million as of December 31, 2016.

Operating Segment Review

North America Gaming & Interactive
Revenue for North America Gaming & Interactive was $281 million compared to $368 million in the fourth quarter of 2016. At constant scope, revenue was down 9%, primarily on lower product sales. 

Gaming service revenue was $167 million compared to $230 million in the prior-year period. The decline is primarily attributed to the sale of DoubleDown and a year-over-year decrease in the installed base. Yields were stable with the prior year.

Product sales revenue of $113 million declined from $138 million in the prior year, which benefited from significant new and expansion gaming machine and systems sales, as well as higher intellectual property revenue. The segment shipped 5,295 gaming machine units in the quarter compared to 5,419 units in the prior-year period.

Operating income for North America Gaming & Interactive was $69 million compared to $102 million in the fourth quarter of 2016. The decline is attributable to the sale of DoubleDown, lower revenue, and the timing of jackpot expense, partially offset by lower operating costs.

North America Lottery
North America Lottery revenue of $304 million was up 7% from the prior-year period, on strong wager growth and product sales.

Lottery same-store revenue rose 8.3%, supported by broad-based strength in instant tickets and draw games as well as multistate jackpots.

Product sales revenue doubled to $34 million, primarily due to lottery terminal and VLT central system sales.

Operating income was relatively stable at $66 million in the fourth quarter, as revenue growth was offset by higher service delivery costs and legal fees.

International
International revenue of $280 million was up 27% from the prior year, reflecting strong growth in both Lottery and Gaming.

Lottery same-store revenue was slightly below the prior year. Broad-based strength in EMEA and Latin America was offset by weakness in Colombia.  U.K. Lottery trends were stable.

Gaming service revenue from terminals was up 1% at constant currency, as a higher installed base was offset by lower average yields due to the geographic mix of revenue. The installed base grew to 15,543 machines from 10,453 in the fourth quarter of 2016 on unit growth in Africa, Greek VLTs, and video bingo machines.

Product sales revenue rose 20%, benefiting from higher lottery software sales. The segment shipped a total of 5,565 gaming machine units during the fourth quarter of 2017 compared to 4,901 units in the prior-year period, as a 41% increase in replacement units more than offset lower new and expansion activity.

Operating income of $72 million increased 64%, reflecting higher revenue and disciplined cost management.

Italy
Italy revenue rose 7% to $481 million. At constant currency and scope, revenue was stable with the prior-year period.

Total Lotto wagers were €1,951 million compared to €2,141 million in the prior-year period. Excluding Late Numbers, Lotto wagers increased 4% over the prior-year period reflecting strong growth in 10eLotto.

Scratch & Win wagers increased 2% to €2,344 million on continued demand for Miliardario and multiplier tickets.

Machine gaming revenue was slightly below the prior year, primarily on the higher gaming machine taxes that went in effect in April 2017.

Sports betting revenues were up sharply on higher wagers and lower payout. Wagers grew over 8% as a result of recent network optimization and increased levels of online play. Total payout of 76.2% was 10 percentage points below the prior year.

Operating income was $115 million compared to $129 million in the prior-year period, reflecting higher depreciation and amortization related to the new Lotto concession. 

Overview of Consolidated Full Year 2017 Results

Consolidated revenue was $4,939 million compared to $5,154 million in 2016. At constant currency and scope, consolidated revenue was in line with the prior year.

Global lottery same-store revenue, excluding Italy, increased 0.7% in 2017, on top of 8.1% growth in 2016, which included a record Powerball jackpot. Italy lottery wagers declined 3% in 2017 primarily as a result of high Late Numbers activity in the prior year. Excluding Late Numbers, Lotto wagers increased 3% over the prior year.

The Company shipped 32,103 gaming machines worldwide in 2017. The total installed base grew over 6% to 62,236 units.

Adjusted operating income was $1,028 million compared to $1,167 million in the prior year. Adjusted EBITDA of $1,676 million declined 6% at constant currency from $1,755 million in 2016 primarily due to the high-margin contribution from elevated jackpot and Late Number activity in the prior year, in addition to the DoubleDown sale, partially offset by expense savings.

Interest expense was $459 million compared to $469 million in the prior-year period.

Benefit from income taxes was $29 million compared to a provision for taxes of $59 million in 2016, reflecting the impact of recent U.S. tax reform.

Net loss attributable to IGT was $1,069 million in 2017 and includes a $714 million non-cash impairment charge and $444 million of primarily non-cash net foreign exchange loss. On an adjusted basis, net income was $175 million. The Company reported net loss per diluted share of ($5.26) and earned $0.86 per diluted share on an adjusted basis in 2017.

Other Developments

The Company’s board of directors declared a quarterly cash dividend of $0.20 per ordinary share. The dividend is payable on April 5, 2018 to holders of record as of the close of business on March 22, 2018.   

Outlook

The Company currently expects to achieve adjusted EBITDA of $1,700$1,780 million in 2018. Capital expenditures are expected to be $575$625 million. The Company’s outlook assumes a 2018 average EUR/USD exchange rate of 1.22.

The Italy Scratch & Win renewal will require upfront payments of approximately €750 million during 2018, which will be reflected in Cash Flows from Operating Activities. The €270 million in contributions from minority partners for their portion of these payments will be included in Cash Flows from Financing Activities.

Conference Call and Webcast

Today, at 8:00 a.m. EST, management will host a conference call to present the fourth quarter and full year 2017 results. Listeners may access a live webcast of the conference call along with accompanying slides under “News, Events & Presentations” on IGT’s Investor Relations website at www.IGT.com. A replay of the webcast will be available on the website following the live event. To listen by telephone, the US/Canada toll-free dial-in number is +1 844 842 7999 and the dial-in number for participants outside the US/Canada is +1 612 979 9887. The conference ID/confirmation code is 4448629. A telephone replay of the call will be available for one week at +1 855 859 2056 for the US/Canada or +1 404 537 3406 outside the US/Canada using the conference ID/confirmation code 4448629.

About IGT
IGT (NYSE:IGT) is the global leader in gaming. We enable players to experience their favorite games across all channels and regulated segments, from Gaming Machines and Lotteries to Interactive and Social Gaming. Leveraging a wealth of premium content, substantial investment in innovation, in-depth customer intelligence, operational expertise and leading-edge technology, our gaming solutions anticipate the demands of consumers wherever they decide to play. 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 over 12,000 employees. For more information, please visit www.IGT.com.

Cautionary Statement Regarding Forward-Looking Statements
This news release may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning International Game Technology PLC and its consolidated subsidiaries (the “Company”) and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, dividends, results of operations, or financial condition, or otherwise, based on current beliefs of the management of the Company as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “would,” “should,” “shall”, “continue,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or the negative or other variations of them. These forward-looking statements speak only as of the date on which such statements are made and are subject to various risks and uncertainties, many of which are outside the Company’s control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance, or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) the factors and risks described in the Company’s annual report on Form 20-F for the financial year ended December 31, 2016 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. 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 its entirety by this cautionary statement.

Contact:
Robert K. Vincent, Corporate Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
James Hurley, Investor Relations, +1 (401) 392-7190
Simone Cantagallo, +39 06 51899030; for Italian media inquiries

 

International Game Technology PLC

Condensed Consolidated Statements of Operations

($ and shares in thousands, except per share data)

Unaudited

 For the three months ended 

 December 31, 

2017

2016

Service revenue

1,073,079

1,061,669

Product sales

272,591

259,547

Total revenue

1,345,670

1,321,216

Cost of services

686,802

641,649

Cost of product sales

176,375

179,240

Selling, general and administrative

208,522

236,547

Research and development

70,946

87,182

Restructuring expense

9,170

6,420

Impairment loss

31,162

Transaction (income) expense, net

(58)

1,030

Total operating expenses

1,151,757

1,183,230

Operating income

193,913

137,986

Interest income

2,444

2,553

Interest expense

(114,405)

(115,520)

Foreign exchange (loss) gain, net

(59,228)

195,587

Other (expense) income, net

(146)

23,359

Total non-operating (expenses) income

(171,335)

105,979

Income before benefit from income taxes

22,578

243,965

Benefit from income taxes

(83,346)

(5,387)

Net income

105,924

249,352

Less: Net income attributable to non-controlling interests

26,195

16,034

Net income attributable to IGT PLC

79,729

233,318

Net income attributable to IGT PLC per common share – basic

0.39

1.15

Net income attributable to IGT PLC per common share – diluted

0.39

1.15

Weighted-average shares – basic

203,513

202,324

Weighted-average shares – diluted

204,104

203,146

 

International Game Technology PLC

Condensed Consolidated Statements of Operations

($ and shares in thousands, except per share data)

Unaudited

 For the year ended 

 December 31, 

2017

2016

Service revenue

4,136,556

4,375,586

Product sales

802,403

778,310

Total revenue

4,938,959

5,153,896

Cost of services

2,553,083

2,553,479

Cost of product sales

579,431

582,358

Selling, general and administrative

816,093

945,824

Research and development

313,088

343,531

Restructuring expense

39,876

27,934

Impairment loss

715,220

37,744

Transaction (income) expense, net

(26,740)

2,590

Total operating expenses

4,990,051

4,493,460

Operating (loss) income

(51,092)

660,436

Interest income

10,436

12,840

Interest expense

(458,899)

(469,268)

Foreign exchange (loss) gain, net

(443,977)

101,040

Other (expense) income, net

(33,393)

18,365

Total non-operating expenses

(925,833)

(337,023)

(Loss) income before (benefit from) provision for income taxes

(976,925)

323,413

(Benefit from) provision for income taxes

(29,414)

59,206

Net (loss) income

(947,511)

264,207

Less: Net income attributable to non-controlling interests

121,065

52,870

Net (loss) income attributable to IGT PLC

(1,068,576)

211,337

Net (loss) income attributable to IGT PLC per common share – basic

(5.26)

1.05

Net (loss) income attributable to IGT PLC per common share – diluted

(5.26)

1.05

Weighted-average shares – basic

203,130

201,511

Weighted-average shares – diluted

203,130

202,214

 

International Game Technology PLC

Condensed Consolidated Statements of Cash Flows

($ thousands)

Unaudited

 For the year ended December 31, 

2017

2016

Restated

Cash flows from operating activities

Net (loss) income

(947,511)

264,207

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Impairment loss

715,220

37,744

Foreign exchange loss (gain), net

443,977

(101,040)

Amortization 

401,355

492,021

Depreciation 

401,085

390,448

Service revenue amortization

209,774

116,980

Loss on early extinguishment of debt

25,733

Debt issuance cost amortization

23,217

18,347

Stock-based compensation expense

4,704

26,346

Non-cash gain on sale of Double Down Interactive LLC

(51,348)

Deferred income tax provision

(296,265)

(153,649)

Other non-cash costs, net

25,768

(142)

Changes in operating assets and liabilities, excluding the effects of disposition and acquisition:

Trade and other receivables

45,465

(23,758)

Inventories

51,406

(76,321)

Upfront Italian license fees

(244,698)

(665,260)

Accounts payable

(3,031)

(22,855)

Other assets and liabilities

(118,923)

(21,736)

Net cash provided by operating activities

685,928

281,332

Cash flows from investing activities

Proceeds from sale of Double Down Interactive LLC, net of cash divested

823,788

Proceeds from sale of assets

167,452

185,798

Capital expenditures

(698,010)

(541,943)

Other

5,435

40,160

Net cash provided by (used in) investing activities

298,665

(315,985)

Cash flows from financing activities

Principal payments on long-term debt

(1,754,259)

(357,513)

Dividends paid

(162,528)

(161,179)

Return of capital – non-controlling interests

(84,391)

(35,407)

Dividends paid – non-controlling interests

(57,908)

(32,717)

Payments in connection with the early extinguishment of debt

(38,832)

Debt issuance costs paid

(16,378)

(10,825)

Net (payments of) receipts from financial liabilities

(150)

30,595

Capital increase – non-controlling interests

148,468

256,455

Proceeds from long-term debt

1,762,270

Other

(43,264)

(1,548)

Net cash used in financing activities

(246,972)

(312,139)

Net increase (decrease) in cash and cash equivalents

737,621

(346,792)

Effect of exchange rate changes on cash

25,703

13,402

Cash and cash equivalents at the beginning of the period

294,094

627,484

Cash and cash equivalents at the end of the period

1,057,418

294,094

Supplemental Cash Flow Information:

Interest paid

(417,110)

(450,655)

Income taxes paid

(296,386)

(183,278)

 

International Game Technology PLC

Condensed Consolidated Balance Sheets

($ thousands)

Unaudited

December 31,

2017

2016

Assets

Current assets:

Cash and cash equivalents

1,057,418

294,094

Restricted cash and investments

248,012

247,222

Trade and other receivables, net

937,854

947,237

Inventories

319,545

347,494

Other current assets

407,520

424,727

Income taxes receivable

94,168

28,792

   Total current assets

3,064,517

2,289,566

Systems, equipment and other assets related to contracts, net

1,434,194

1,199,674

Property, plant and equipment, net

193,723

357,841

Goodwill

5,723,815

6,810,012

Intangible assets, net

2,273,460

2,874,031

Other non-current assets

2,427,953

1,497,662

Deferred income taxes

41,546

31,376

   Total non-current assets

12,094,691

12,770,596

Total assets

15,159,208

15,060,162

Liabilities, redeemable non-controlling interests, and shareholders’ equity

Current liabilities:

Accounts payable

1,240,753

1,216,079

Other current liabilities

1,780,875

1,097,045

Current portion of long-term debt

599,114

77

Income taxes payable

55,935

28,590

   Total current liabilities

3,676,677

2,341,791

Long-term debt, less current portion

7,777,445

7,863,085

Deferred income taxes

491,460

761,924

Income taxes payable

55,665

Other non-current liabilities

446,113

444,556

   Total non-current liabilities

8,770,683

9,069,565

Total liabilities

12,447,360

11,411,356

Commitments and contingencies

Redeemable non-controlling interests and shareholders’ equity

2,711,848

3,648,806

Total liabilities, redeemable non-controlling interests, and shareholders’ equity

15,159,208

15,060,162

 

International Game Technology PLC

Net Debt

($ thousands)

December 31,

2017

2016

6.250% Senior Secured Notes due 2022

1,470,075

1,472,150

6.500% Senior Secured Notes due 2025

1,086,913

1,085,537

4.750% Senior Secured Notes due 2023

1,008,601

884,917

4.125% Senior Secured Notes due 2020

833,655

730,465

5.625% Senior Secured Notes due 2020

595,767

593,954

4.750% Senior Secured Notes due 2020

585,171

509,050

7.500% Senior Secured Notes due 2019

148,231

521,894

5.500% Senior Secured Notes due 2020

125,709

126,294

5.350% Senior Secured Notes due 2023

61,082

61,187

6.625% Senior Secured Notes due 2018

521,556

Senior Secured Notes

5,915,204

6,507,004

Term Loan Facilities due 2023

1,785,361

Revolving Credit Facilities due 2021

76,880

516,529

Term Loan Facilities due 2019

839,552

Long-term debt, less current portion

7,777,445

7,863,085

6.625% Senior Secured Notes due 2018

599,114

Other

77

Current portion of long-term debt 

599,114

77

Total debt

8,376,559

7,863,162

Cash and cash equivalents

1,057,418

294,094

Net debt

7,319,141

7,569,068

 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)

For the three months ended

December 31,

2017

2016

Net income

105,924

249,352

Benefit from income taxes

(83,346)

(5,387)

Non-operating expenses (income)

171,335

(105,979)

Depreciation 

111,997

97,164

Amortization

83,366

114,858

Service revenue amortization

54,456

31,820

Restructuring expense

9,170

6,420

Impairment loss

31,162

Transaction (income) expense, net

(58)

1,030

Non-cash purchase accounting (excluding D&A)

(223)

(126)

Stock-based compensation expense

(398)

1,844

Adjusted EBITDA

452,223

422,158

Cash flows from operating activities

270,343

86,067

Capital expenditures

(145,841)

(185,741)

Free Cash Flow

124,502

(99,674)

 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)

For the year ended

December 31,

2017

2016

Net (loss) income

(947,511)

264,207

(Benefit from) provision for income taxes

(29,414)

59,206

Non-operating expenses

925,833

337,023

Impairment loss

715,220

37,744

Amortization

401,355

492,021

Depreciation 

401,085

390,448

Service revenue amortization

209,774

116,980

Restructuring expense

39,876

27,934

Stock-based compensation expense

4,704

26,346

Non-cash purchase accounting (excluding D&A)

(736)

795

Bad debt recovery

(17,858)

Transaction (income) expense, net

(26,740)

2,590

Adjusted EBITDA

1,675,588

1,755,294

Cash flows from operating activities

685,928

281,332

Capital expenditures

(698,010)

(541,943)

Free Cash Flow

(12,082)

(260,611)

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

 ($ and shares in thousands, except per share data) 

Adjustments

Q4 2017

Q4 2017

As

Purchase

Foreign

Restructuring

Transaction

As

Reported

Accounting

Exchange

Expense

Income

Adjusted

 Total revenue 

1,345,670

(182)

1,345,488

 Cost of services 

686,802

(27,563)

659,239

 Cost of product sales 

176,375

(10,454)

165,921

 Selling, general and administrative 

208,522

(27,183)

181,339

 Research and development 

70,946

(230)

70,716

 Restructuring expense 

9,170

(9,170)

 Transaction income, net 

(58)

58

 Total operating expenses 

1,151,757

(65,430)

(9,170)

58

1,077,215

 Operating income 

193,913

65,248

9,170

(58)

268,273

 Foreign exchange loss, net 

(59,228)

59,228

 Other expense, net 

(146)

1

(8)

(153)

 Interest expense, net 

(111,961)

513

(111,448)

 Total non-operating expenses 

(171,335)

514

59,228

(8)

(111,601)

 Income before benefit from income taxes 

22,578

65,762

59,228

9,170

(66)

156,672

 (Benefit from) provision for income taxes (a) (b) (c) 

(83,346)

267,714

(60,593)

2,887

(2)

126,660

 Net income 

105,924

(201,952)

119,821

6,283

(64)

30,012

 Less: Net income attributable to non-controlling interests 

26,195

25

26,220

 Net income attributable to IGT PLC 

79,729

(201,977)

119,821

6,283

(64)

3,792

 Net income per common share – diluted 

0.39

0.02

 Weighted-average shares – diluted 

204,104

204,104

(a) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated.

(b) As Reported includes a net $103.6 million one-time, non-cash income tax benefit related to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) composed of (i) a $64.4 million non-cash income tax expense for the restatement of deferred tax assets and a $239.2 million non-cash income tax benefit for the restatement of deferred tax liabilities related to Purchase Accounting, both driven by the decrease in the income tax rate from 35% to 21% and (ii) a $71.2 million non-cash income tax expense in 2017 associated with unremitted foreign earnings. Separate from the Tax Act, As Reported includes a $73.3 million one-time, non-cash tax expense for the write-off of a deferred tax asset related primarily to unrealized foreign exchange losses.

(c) As Adjusted excludes the $239.2 million non-cash income tax benefit for the restatement of deferred tax liabilities related to Purchase Accounting and the $73.3 million one-time, non-cash tax expense for the write-of of a deferred tax asset related primarily to unrealized foreign exchange losses.

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

 ($ and shares in thousands, except per share data) 

 Year to date 

Adjustments

 Year to date 

December 2017

Impairment/

Transaction Income

December 2017

As

Purchase

Foreign

Restructuring

and Refinancing

As

Reported

Accounting

Exchange

Expense

Expense

Adjusted

 Total revenue 

4,938,959

(722)

4,938,237

 Cost of services 

2,553,083

(145,221)

2,407,862

 Cost of product sales 

579,431

(87,715)

491,716

 Selling, general and administrative 

816,093

(117,460)

698,633

 Research and development 

313,088

(656)

312,432

 Restructuring expense 

39,876

(39,876)

 Impairment loss 

715,220

(715,220)

 Transaction income, net 

(26,740)

26,740

 Total operating expenses 

4,990,051

(351,052)

(755,096)

26,740

3,910,643

 Operating (loss) income 

(51,092)

350,330

755,096

(26,740)

1,027,594

 Foreign exchange loss, net 

(443,977)

443,977

 Other (expense) income, net 

(33,393)

1,568

35,420

3,595

 Interest expense, net 

(448,463)

2,928

(445,535)

 Total non-operating expenses 

(925,833)

4,496

443,977

35,420

(441,940)

 (Loss) income before (benefit from) provision for income taxes 

(976,925)

354,826

443,977

755,096

8,680

585,654

 (Benefit from) provision for income taxes (a) (b) (c) 

(29,414)

368,780

26,559

12,019

(88,161)

289,783

 Net (loss) income 

(947,511)

(13,954)

417,418

743,077

96,841

295,871

 Less: Net income attributable to non-controlling interests 

121,065

102

121,167

 Net (loss) income attributable to IGT PLC 

(1,068,576)

(14,056)

417,418

743,077

96,841

174,704

 Net (loss) income per common share – diluted 

(5.26)

0.86

 Weighted-average shares – diluted (d) 

203,130

203,504

(a) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated.

(b) As Reported includes a net $103.6 million one-time, non-cash income tax benefit related to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) composed of (i) a $64.4 million non-cash income tax expense for the restatement of deferred tax assets and a $239.2 million non-cash income tax benefit for the restatement of deferred tax liabilities related to Purchase Accounting, both driven by the decrease in the income tax rate from 35% to 21% and (ii) a $71.2 million non-cash income tax expense in 2017 associated with unremitted foreign earnings. Separate from the Tax Act, As Reported includes a $73.3 million one-time, non-cash tax expense for the write-off of a deferred tax asset related primarily to unrealized foreign exchange losses.

(c) As Adjusted excludes the $239.2 million non-cash income tax benefit for the restatement of deferred tax liabilities related to Purchase Accounting and the $73.3 million one-time, non-cash tax expense for the write-offf of a deferred tax asset related primarily to unrealized foreign exchange losses.

(d) Weighted-average shares – diluted, as adjusted, include shares that were excluded from the as reported computation, due to the net loss as reported.  

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

 ($ and shares in thousands, except per share data) 

Adjustments

Q4 2016

Impairment/

Q4 2016

As

Purchase

Foreign

Restructuring

Transaction

As

Reported

Accounting

Exchange

Expense

Expense

Adjusted

 Total revenue 

1,321,216

244

1,321,460

 Cost of services 

641,649

(44,186)

597,463

 Cost of sales 

179,240

(29,845)

149,395

 Selling, general and administrative 

236,547

(29,468)

207,079

 Research and development 

87,182

(277)

86,905

 Restructuring expense 

6,420

(6,420)

 Impairment loss 

31,162

(30,000)

(1,162)

 Transaction expense, net 

1,030

(1,030)

 Total operating expenses 

1,183,230

(133,776)

(7,582)

(1,030)

1,040,842

 Operating income 

137,986

134,020

7,582

1,030

280,618

 Foreign exchange gain, net 

195,587

(195,587)

 Other income, net 

23,359

11,672

35,031

 Interest expense, net 

(112,967)

2,084

(110,883)

 Total non-operating expenses 

105,979

13,756

(195,587)

(75,852)

 Income before provision for income taxes 

243,965

147,776

(195,587)

7,582

1,030

204,766

 (Benefit from) provision for income taxes (a) 

(5,387)

51,662

(50,323)

13,230

356

9,538

 Net income 

249,352

96,114

(145,264)

(5,648)

674

195,228

 Less: Net income attributable to non-controlling interests 

16,034

26

16,060

 Net income attributable to IGT PLC 

233,318

96,088

(145,264)

(5,648)

674

179,168

 Net income per common share – diluted 

1.15

0.88

 Weighted-average shares – diluted 

203,146

203,146

(a) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated.

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

 ($ and shares in thousands, except per share data) 

 Year to date 

Adjustments

 Year to date 

December 2016

Impairment/

December 2016

As

Purchase

Foreign

Restructuring

Transaction

As

Reported

Accounting

Exchange

Expense

Expense

Adjusted

 Total revenue 

5,153,896

1,576

5,155,472

 Cost of services 

2,553,479

(181,552)

2,371,927

 Cost of sales 

582,358

(118,936)

463,422

 Selling, general and administrative 

945,824

(134,325)

811,499

 Research and development 

343,531

(1,736)

341,795

 Restructuring expense 

27,934

(27,934)

 Impairment loss 

37,744

(30,000)

(7,744)

 Transaction expense, net 

2,590

(2,590)

 Total operating expenses 

4,493,460

(466,549)

(35,678)

(2,590)

3,988,643

 Operating income 

660,436

468,125

35,678

2,590

1,166,829

 Foreign exchange gain, net 

101,040

(101,040)

 Other income, net 

18,365

15,553

33,918

 Interest expense, net 

(456,428)

8,231

(448,197)

 Total non-operating expenses 

(337,023)

23,784

(101,040)

(414,279)

 Income before provision for income taxes 

323,413

491,909

(101,040)

35,678

2,590

752,550

 Provision for income taxes (a) 

59,206

174,000

(26,892)

20,948

658

227,920

 Net income 

264,207

317,909

(74,148)

14,730

1,932

524,630

 Less: Net income attributable to non-controlling interests 

52,870

102

52,972

 Net income attributable to IGT PLC 

211,337

317,807

(74,148)

14,730

1,932

471,658

 Net income per common share – diluted 

1.05

2.33

 Weighted-average shares – diluted 

202,214

202,214

(a) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated.

 

International Game Technology PLC Segment Performance

Revenue Detail 

($ millions)

INTERNATIONAL GAME TECHNOLOGY PLC

Quarter Change

YTD Change

2016

2017

Percentage

Constant FX

Percentage

Constant FX

Q4 

YTD

Q4 

YTD

Q4

Q4

YTD

YTD

Gaming

Total Revenue

730

2,667

664

2,501

-9.0%

-12.5%

-6.2%

-7.2%

Gaming Services

492

1,976

452

1,836

-8.1%

-12.5%

-7.1%

-8.2%

Terminal 

325

1,282

331

1,284

2.0%

-3.3%

0.2%

-1.3%

Social (DDI)

61

279

0

111

-100.0%

-100.0%

-60.1%

-59.9%

Other

107

415

121

440

13.0%

9.3%

6.2%

5.6%

Product Sales

237

691

212

665

-10.7%

-12.5%

-3.7%

-4.6%

Terminal 

156

449

146

444

-6.9%

-9.0%

-1.1%

-2.1%

Other

81

243

66

222

-18.2%

-19.2%

-8.6%

-9.3%

Lottery

Total Revenue

520

2,176

559

2,067

7.6%

3.6%

-5.0%

-5.9%

Lottery Services

500

2,092

511

1,952

2.2%

-1.6%

-6.7%

-7.5%

FM/Concessions

444

1,829

463

1,769

4.3%

-1.6%

-3.3%

-4.8%

LMA

37

174

36

157

-3.1%

-3.1%

-9.7%

-9.7%

Other Services

19

88

12

25

-36.0%

2.6%

-71.1%

-57.8%

Product Sales

20

85

48

115

140.0%

130.8%

35.8%

33.9%

Terminal 

1

11

2

4

266.8%

266.8%

-63.5%

-63.5%

Systems/Other

20

74

47

111

136.7%

127.3%

50.0%

47.8%

Other

Total Revenue

72

311

122

371

70.3%

55.7%

19.4%

15.3%

Service Revenue

70

308

110

349

57.8%

43.8%

13.1%

9.2%

Product Sales

2

3

12

22

465.9%

432.1%

N/M

N/M

Consolidated

Revenue

1,321

5,154

1,346

4,939

1.9%

-2.5%

-4.2%

-5.3%

Operating Income:

Segment Total

340

1,374

322

1,210

-5.3%

-9.4%

-11.9%

-12.7%

Purchase Accounting

(134)

(468)

(65)

(1,064)

-51.3%

-51.4%

127.4%

126.3%

Corporate Support

(68)

(246)

(63)

(197)

-7.6%

-10.3%

-19.8%

-22.2%

Total

138

660

194

(51)

40.5%

31.9%

-107.7%

-109.3%

NORTH AMERICA GAMING & INTERACTIVE

Quarter Change

YTD Change

2016

2017

Percentage

Constant FX

Percentage

Constant FX

Q4 

YTD

Q4 

YTD

Q4

Q4

YTD

YTD

Gaming

Total Revenue

368

1,373

281

1,158

-23.8%

-24.1%

-15.7%

-15.8%

Gaming Services

230

975

167

781

-27.4%

-27.5%

-19.9%

-19.9%

Terminal 

126

525

118

488

-6.0%

-6.2%

-7.0%

-7.1%

Social (DDI)

61

279

0

111

-100.0%

-100.0%

-60.1%

-59.9%

Other

44

171

49

181

11.5%

11.4%

5.8%

5.8%

Product Sales

138

398

113

377

-17.8%

-18.3%

-5.3%

-5.5%

Terminal 

85

249

72

244

-14.6%

-15.1%

-2.2%

-2.4%

Other

53

149

41

133

-22.9%

-23.4%

-10.5%

-10.8%

Total

Revenue

368

1,373

281

1,158

-23.8%

-24.1%

-15.7%

-15.8%

Operating Income

102

349

69

279

-32.6%

-30.8%

-20.1%

-19.8%

NORTH AMERICA LOTTERY

Quarter Change

YTD Change

2016

2017

Percentage

Constant FX

Percentage

Constant FX

Q4 

YTD

Q4 

YTD

Q4

Q4

YTD

YTD

Gaming

Total Revenue

35

146

42

162

20.6%

18.9%

11.0%

10.5%

Gaming Services

35

146

38

150

8.1%

7.2%

2.6%

2.2%

Terminal 

24

100

24

99

1.6%

1.6%

-0.4%

-0.4%

Social (DDI)

0

0

0

0

0.0%

0.0%

0.0%

0.0%

Other

11

46

13

50

22.2%

19.2%

9.0%

7.7%

Product Sales

(0)

0

4

13

N/M

N/M

N/M

N/M

Terminal 

0

(0)

0

0

N/M

N/M

N/M

N/M

Other

(0)

0

4

13

N/M

N/M

N/M

N/M

Lottery

Total Revenue

250

1,047

262

1,023

5.0%

4.8%

-2.3%

-2.4%

Lottery Services

232

982

232

943

0.0%

0.0%

-4.0%

-4.0%

FM/Concessions

159

686

165

660

3.4%

3.4%

-3.8%

-3.8%

LMA

37

174

36

157

-3.1%

-3.1%

-9.7%

-9.7%

Other Services

36

122

32

126

-11.9%

-11.9%

3.2%

3.2%

Product Sales

17

65

30

80

71.9%

69.5%

22.4%

21.4%

Terminal 

0

10

2

4

N/M

N/M

-61.8%

-61.9%

Systems/Other

17

55

28

76

62.8%

60.4%

37.0%

35.9%

Total

Revenue

284

1,194

304

1,185

6.9%

6.5%

-0.7%

-0.8%

Operating Income

65

299

66

289

0.8%

0.6%

-3.4%

-3.7%

INTERNATIONAL

Quarter Change

YTD Change

2016

2017

Percentage

Constant FX

Percentage

Constant FX

Q4 

YTD

Q4 

YTD

Q4

Q4

YTD

YTD

Gaming

Total Revenue

144

473

149

472

3.6%

-0.1%

-0.3%

-1.3%

Gaming Services

44

181

55

197

23.5%

18.8%

9.3%

9.3%

Terminal 

12

51

13

51

1.8%

0.7%

1.3%

1.6%

Social (DDI)

0

0

0

0

0.0%

0.0%

0.0%

0.0%

Other

32

130

42

146

31.9%

25.7%

12.4%

12.3%

Product Sales

99

293

94

275

-5.4%

-8.6%

-6.2%

-7.8%

Terminal 

72

199

73

200

2.2%

-1.9%

0.1%

-1.8%

Other

28

93

21

75

-24.9%

-25.9%

-19.6%

-20.7%

Lottery

Total Revenue

65

288

99

323

53.0%

50.3%

11.9%

13.3%

Lottery Services

62

269

80

288

29.8%

29.4%

6.9%

8.8%

FM/Concessions

51

206

52

198

0.6%

-5.3%

-4.1%

-4.6%

LMA

0

0

0

0

0.0%

0.0%

0.0%

0.0%

Other Services

10

63

28

90

175.7%

202.6%

42.9%

52.9%

Product Sales

3

19

19

35

N/M

499.6%

80.8%

75.8%

Terminal 

0

1

0

0

-100.0%

-100.0%

-81.3%

-81.3%

Systems/Other

3

18

19

35

N/M

N/M

88.9%

83.6%

Other

Total Revenue

12

65

32

94

178.0%

161.6%

44.0%

40.1%

Service Revenue

9

63

20

72

110.0%

97.8%

14.3%

11.0%

Product Sales

2

3

12

22

465.9%

432.1%

N/M

N/M

Total

Revenue

220

827

280

889

27.2%

23.2%

7.5%

7.1%

Operating Income

44

142

72

164

64.3%

56.9%

15.2%

17.2%

ITALY

Quarter Change

YTD Change

2016

2017

Percentage

Constant FX

Percentage

Constant FX

Q4 

YTD

Q4 

YTD

Q4

Q4

YTD

YTD

Gaming

Total Revenue

183

676

193

707

5.1%

-5.0%

4.7%

1.6%

Gaming Services

183

674

192

706

5.2%

-4.9%

4.7%

1.6%

Terminal 

162

606

176

644

8.3%

-2.1%

6.2%

3.0%

Social (DDI)

0

0

0

0

0.0%

0.0%

0.0%

0.0%

Other

20

68

16

62

-19.6%

-27.2%

-8.6%

-11.3%

Product Sales

0

1

0

1

-59.6%

-62.2%

-11.3%

-11.9%

Terminal 

0

0

0

0

N/M

N/M

N/M

N/M

Other

0

1

0

1

-59.6%

-62.2%

-22.9%

-23.3%

Lottery

Total Revenue

205

840

198

721

-3.5%

-12.7%

-14.2%

-16.8%

Lottery Services

205

840

198

721

-3.5%

-12.7%

-14.2%

-16.8%

FM/Concessions

233

937

246

912

5.8%

-4.3%

-2.7%

-5.7%

LMA

0

0

0

0

0.0%

0.0%

0.0%

0.0%

Other Services

(27)

(97)

(48)

(191)

75.1%

58.6%

96.0%

90.3%

Product Sales

0

0

0

0

0.0%

0.0%

0.0%

0.0%

Terminal 

0

0

0

0

0.0%

0.0%

0.0%

0.0%

Systems/Other

0

0

0

0

0.0%

0.0%

0.0%

0.0%

Other

Total Revenue

60

245

90

277

49.8%

35.5%

12.8%

8.8%

Service Revenue

60

245

90

277

49.8%

35.5%

12.8%

8.8%

Product Sales

0

0

0

0

0.0%

0.0%

0.0%

0.0%

Total

Revenue

449

1,761

481

1,705

7.2%

-3.1%

-3.2%

-6.2%

Operating Income

129

584

115

479

-10.4%

-19.9%

-18.0%

-20.5%

 

KEY PERFORMANCE INDICATORS (KPIs)

Consolidated Key Performance Indicators (KPIs)

Fourth Quarter

Full Year

Period Ended December 31

2017

2016

% change 

2017

2016

% change 

Installed base (end of period)

   Casino

35,625

34,653

2.8%

35,625

34,653

2.8%

   VLT – Government Sponsored (ex-Italy)

18,019

15,150

18.9%

18,019

15,150

18.9%

   VLT – Italy Supplier (B2B)

8,592

8,840

-2.8%

8,592

8,840

-2.8%

   Total installed base

62,236

58,643

6.1%

62,236

58,643

6.1%

   Yield (average revenue per unit per day – $0.00)

27.49

30.27

-9.2%

29.26

31.92

-8.3%

   Additional Italian Network Details:

   VLT – Operator (B2C)

10,985

11,036

-0.5%

10,985

11,036

-0.5%

   AWP

56,590

58,937

-4.0%

56,590

58,937

-4.0%

Machine units shipped

   New/Expansion

1,349

3,073

-56.1%

5,855

7,922

-26.1%

   Replacement 

9,511

7,247

31.2%

26,248

25,225

4.1%

   Total machines shipped

10,860

10,320

5.2%

32,103

33,147

-3.1%

Global lottery same-store revenue growth

   Instants & draw games

5.0%

4.0%

   Multistate Jackpots

15.3%

-18.7%

   Total lottery same-store revenue growth (ex-Italy)

6.0%

0.7%

   Italy lottery revenue growth

-12.6%

-16.7%

North America KPIs

Fourth Quarter

Full Year

Period Ended December 31

2017

2016

% change 

2017

2016

% change 

Installed base (end of period)

    Casino

22,807

24,472

-6.8%

22,807

24,472

-6.8%

    VLT – Government Sponsored

15,294

14,878

2.8%

15,294

14,878

2.8%

   Total installed base

38,101

39,350

-3.2%

38,101

39,350

-3.2%

Machine units shipped

   New/Expansion

805

1,733

-53.5%

4,099

5,929

-30.9%

   Replacement 

4,490

3,686

21.8%

14,030

13,842

1.4%

   Total machines shipped

5,295

5,419

-2.3%

18,129

19,771

-8.3%

Lottery same-store revenue growth

   Instants & draw games

7.1%

5.1%

   Multistate Jackpots

17.7%

-21.0%

   Total lottery same-store revenue growth

8.3%

0.6%

International KPIs

Fourth Quarter

Full Year

Period Ended December 31

2017

2016

% change 

2017

2016

% change 

Installed base (end of period)

    Casino

12,818

10,181

25.9%

12,818

10,181

25.9%

    VLT – Government Sponsored

2,725

272

901.8%

2,725

272

901.8%

   Total installed base

15,543

10,453

48.7%

15,543

10,453

48.7%

Machine units shipped

   New/Expansion

544

1,340

-59.4%

1,756

1,993

-11.9%

   Replacement 

5,021

3,561

41.0%

12,218

11,383

7.3%

   Total machines shipped

5,565

4,901

13.5%

13,974

13,376

4.5%

Lottery same-store revenue growth

   Instants & draw games

-1.2%

0.8%

   Multistate Jackpots

0.6%

1.9%

   Total lottery same-store revenue growth

-1.1%

0.9%

Italy KPIs

Fourth Quarter

Full Year

Period Ended December 31

2017

2016

% change 

2017

2016

% change 

(In € millions, except machines)

Lottery

Lotto wagers

1,951

2,141

-8.9%

7,481

8,093

-7.6%

   10eLotto

1,386

1,239

11.9%

5,160

4,716

9.4%

   Core

508

577

-12.0%

2,011

2,227

-9.7%

   Late Numbers

57

326

-82.5%

310

1,150

-73.0%

Scratch & Win Wagers

2,344

2,289

2.4%

9,065

8,935

1.5%

Italy lottery revenue growth

-12.6%

-16.7%

Gaming

Installed base (end of period)

   VLT – Operator (B2C)

10,985

11,036

-0.5%

10,985

11,036

-0.5%

   VLT – Supplier (B2B)

8,592

8,840

-2.8%

8,592

8,840

-2.8%

   AWP

56,590

58,937

-4.0%

56,590

58,937

-4.0%

   Total Installed Base

76,167

78,813

-3.4%

76,167

78,813

-3.4%

Wagers

   VLT – Operator (B2C)

1,428

1,428

0.0%

5,543

5,460

1.5%

   AWP

1,032

1,087

-5.1%

3,949

4,188

-5.7%

   Interactive Wagers (Gaming)

461

443

4.0%

1,745

1,659

5.2%

Other

   Sports Betting Wagers1

271

250

8.8%

959

855

12.2%

   Sports Betting Payout (%)1

76.2%

85.9%

-9.7 pp

82.7%

84.0%

-1.3 pp

1Includes Virtual Wagers and Pools & Horses

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/international-game-technology-plc-reports-fourth-quarter-and-full-year-2017-results-300610584.html

SOURCE International Game Technology PLC