INTERNATIONAL GAME TECHNOLOGY PLC REPORTS FOURTH QUARTER AND FULL YEAR 2023 RESULTS

Rhea-AI Summary

IGT reports strong financial performance in Q4 2023 with revenue of $1.1 billion, operating income up 11%, and full-year revenue of $4.3 billion, a 2% increase. The company achieved record profits and expects revenue of $4.3-$4.4 billion for 2024. IGT plans to split its business to create separate lottery and gaming companies.

Positive

• IGT achieved a strong finish in Q4 2023 with revenue reaching $1.1 billion, driven by 7% growth in Global Lottery.
• Operating income rose by 11% to $256 million, with improvements across Global Lottery, Global Gaming, and PlayDigital segments.
• Full-year 2023 revenue hit $4.3 billion, up 2% year-over-year, and 7% net of Italy commercial services sale, driven by growth in Global Lottery, Global Gaming, and PlayDigital.
• Record Adjusted EBITDA of $1.8 billion and Adjusted EBITDA margin of 41.3% were reported, with net debt leverage at 2.9x, the lowest in Company history.
• IGT anticipates full-year 2024 revenue of $4.3-$4.4 billion with an operating margin of 20%-21%, including a 300 basis point negative impact from separation and divestiture costs.
• The company concluded a strategic review by deciding to split the business into separate lottery and gaming companies to enhance customer service and create value for stakeholders.
• S&P Global Ratings placed IGT on CreditWatch Positive, and Fitch Ratings moved IGT to Rating Watch Positive, indicating positive market sentiment.
• IGT declared a quarterly cash dividend of $0.20 per common share with an ex-dividend date of March 25, 2024, and a payment date of April 9, 2024.
• The company expects to finalize the spin and merger transaction with Everi Holdings, Inc. in early 2025, where IGT shareholders are projected to own approximately 54% of the combined entity.

Negative

• None.

Insights

Financial Analyst

The reported financial performance of International Game Technology PLC (IGT) indicates a solid growth trajectory, with a 7% increase in Global Lottery revenue and an 11% rise in operating income for the fourth quarter. The full-year performance showcases a 2% year-over-year revenue increase, with a more substantial 7% growth net of the Italy commercial services sale. The operating income for the full year grew by 9%, reaching a record $1.0 billion, suggesting robust operational efficiency and effective cost management. The improvement in operating income margin by 140 basis points to 23.2% reflects a strong command over expenses relative to revenue.

IGT's performance is particularly notable given the 160 basis point expansion in operating income margin during the fourth quarter, implying a competitive advantage in profitability. The record Adjusted EBITDA of $1.8 billion and an Adjusted EBITDA margin of 41.3% are indicative of the company's ability to generate earnings before interest, taxes, depreciation and amortization, which is a key metric for assessing a company's operating performance. The reduction in net debt leverage to 2.9x, the lowest in the company's history, demonstrates a healthier balance sheet and improved financial flexibility.

Market Research Analyst

The strategic decision to split the business into separate lottery and gaming pure play companies could be a significant move towards specialization and customer focus. This reorganization may enhance the ability to innovate and tailor solutions to specific market segments, potentially leading to increased market share and customer retention. The move is also expected to unlock value for shareholders, as it allows each entity to pursue growth strategies more aligned with their respective markets.

IGT's expansion of its product portfolio, including the launch of the omnichannel Wheel of Fortune® jackpot game and the introduction of the PeakBarTop™ cabinet with sports betting, reflects a commitment to innovation and customer engagement. These initiatives are likely to strengthen the company's competitive position in the gaming and lottery industry, which is characterized by rapid technological advancements and shifting consumer preferences.

Economist

The broader economic implications of IGT's financial results include a positive signal for the gaming and lottery industry's resilience amid macroeconomic challenges. The company's revenue growth, despite a complex global economic environment, suggests that the gaming sector may have inelastic demand characteristics, where consumers continue to spend on gaming and lottery entertainment regardless of broader economic conditions.

IGT's ability to generate free cash flow and reduce debt levels is particularly noteworthy in the context of rising interest rates. The company's proactive financial management, as evidenced by its improved credit ratings from Moody's and Fitch, positions it favorably for future investments and growth opportunities. The 44% increase in net cash provided by operating activities in the fourth quarter underscores the company's strong operational cash flow generation capabilities, which is crucial for sustaining growth without relying excessively on external financing.

Fourth Quarter 2023 Financial Performance Achieves Outlook:

• Revenue of $1.1 billion driven by 7% Global Lottery growth
• Operating income rose 11% to $256 million, with strength across Global Lottery, Global Gaming, and PlayDigital; operating income margin expanded 160 basis points to 22.7%

Full Year 2023 Financial Performance Delivers Record Profit on Continued Momentum Across Segments:

• Revenue of $4.3 billion, up 2% year-over-year and 7% net of Italy commercial services sale, driven by Global Lottery same-store sales growth and a 9% increase in both Global Gaming and PlayDigital
• Operating income rose 9% to a record $1.0 billion with growth across segments; operating income margin improved 140 basis points to 23.2%
• Record Adjusted EBITDA of $1.8 billion and Adjusted EBITDA margin of 41.3%
• Net debt leverage improves to 2.9x, the lowest in Company history
• Expect full year 2024 revenue of $4.3 billion - $4.4 billion with operating margin of 20% - 21%, including 300 basis point negative impact from separation and divestiture costs

LONDON, March 12, 2024 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the fourth quarter and full year ended December 31, 2023. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the results; access details are provided below.

"We delivered a strong finish to the year in the fourth quarter, propelling full year 2023 profits to record levels," said Vince Sadusky, CEO of IGT. "A compelling array of products and solutions fueled broad-based momentum in key performance indicators, driving margin improvement across our Global Lottery, Global Gaming, and PlayDigital segments. We believe the recent determination to split the business and create separate lottery and gaming pure play companies, each with experienced management teams and simplified business models, better positions each company to service customers and create significant value for stakeholders."

"We achieved all of our financial goals in 2023," said Max Chiara, CFO of IGT. "Robust cash generation funded incremental investments in the business and shareholder returns, while driving leverage to historically low levels, putting IGT in a strong financial position as we enter 2024. This gives us confidence in further expanding our investment in the business to fund future growth."

Overview of Consolidated Fourth Quarter and Full Year 2023 Results

	Quarter Ended			Y/Y Change	Constant Currency Change	Year Ended			Y/Y Change	Constant Currency Change
	December 31,					December 31,
	2023		2022			2023		2022
($ in millions)
GAAP Financials:
Revenue
Global Lottery	681		639	7 %	4 %	2,530		2,593	(2) %	(4) %
Global Gaming	390		389	— %	1 %	1,552		1,423	9 %	10 %
PlayDigital	59		65	(10) %	(10) %	228		209	9 %	10 %
Total revenue	1,130		1,093	3 %	2 %	4,310		4,225	2 %	2 %
Operating income (loss)
Global Lottery	238		216	10 %	7 %	913		909	— %	(1) %
Global Gaming	80		68	17 %	17 %	313		242	29 %	29 %
PlayDigital	17		17	3 %	4 %	65		50	32 %	36 %
Corporate support expense	(42)		(30)	(36) %	(36) %	(135)		(121)	(12) %	(12) %
Other(1)	(38)		(41)	7 %	8 %	(155)		(158)	2 %	2 %
Total operating income	256		230	11 %	8 %	1,001		922	9 %	7 %
Operating Income margin	22.7 %		21.1 %			23.2 %		21.8 %
Earnings per share - diluted	$(0.04)		$(0.32)	NA		$0.77		$1.35	(43) %
Net cash provided by operating activities	400		278	44 %		1,040		899	16 %
Cash and cash equivalents	572		590	(3) %		572		590	(3) %
Non-GAAP Financial Measures:
Adjusted EBITDA
Global Lottery	343		318	8 %	5 %	1,320		1,314	— %	(1) %
Global Gaming	124		101	23 %	23 %	482		365	32 %	33 %
PlayDigital	20		22	(11) %	(11) %	78		68	15 %	18 %
Corporate support expense	(32)		(23)	(41) %	(41) %	(101)		(83)	(22) %	(22) %
Total Adjusted EBITDA	454		419	9 %	6 %	1,779		1,664	7 %	6 %
Adjusted EBITDA margin	40.2 %		38.3 %			41.3 %		39.4 %
Adjusted earnings per share - diluted	$0.56		$0.40	40 %		$2.02		$1.99	2 %
Free cash flow	295		187	57 %		619		582	6 %
Adjusted free cash flow	295		237	24 %		803		632	27 %
Net debt	5,099		5,150	(1) %		5,099		5,150	(1) %

(1) Primarily includes purchase price amortization

Note: Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release

 

Fourth Quarter and Full Year 2023 Key Highlights:

• Live with new facilities management contract in Connecticut and instants & passive lottery games in Minas Gerais (Brazil)
• Awarded 8-year iLottery contract in Connecticut and deployed cloud-based iLottery system for Totalizator Sportowy in Poland
• Executed Lottery facilities management contract extensions in multiple jurisdictions including California, Costa Rica, Kentucky, South Dakota, Sweden, the U.K., and recently in Virginia
• Secured 10-year brand licensing extension with Sony Pictures Television granting IGT exclusive rights to the legendary Wheel of Fortune_® brand across Gaming, Lottery, iGaming, and iLottery
• Recognized with four top honors at EKG slot awards including "Most Improved Supplier - Premium" and "Top Performing New Mechanical Reel Cabinet"
• Launched first-ever omnichannel Wheel of Fortune_® jackpot game in the U.S. and bespoke games for key customers such as CAESARS CLEOPATRA^® for Caesars Palace Online Casino and Blackjack Surrender for FanDuel Casino
• Debuted award-winning PeakBarTop™ cabinet with sports betting, providing players with the market's most advanced sports betting interface for land-based casinos
• Upgraded to Ba1 from Ba2 by Moody's Investors Service with stable outlook; received BB+ Long-Term Issuer rating from Fitch with stable outlook and an investment grade senior secured debt rating of BBB-
• Continued progress on ESG initiatives including improved scores from FTSE Russell and S&P Global Corporate Sustainability Assessment; recognized for Diversity, Equality, and Inclusion excellence in the All-In Diversity Project 2023 All-Index Report; earned top score in Human Rights Campaign Foundation's 2023-2024 Corporate Equality Index

Fourth Quarter 2023 Financial Highlights:

Consolidated revenue of $1.1 billion increased 3% compared to $1.1 billion in the prior-year period

• Global Lottery revenue of $681 million, up 7% from $639 million in the prior year, driven by strong product sales and Italy same-store sales growth
• Global Gaming revenue of $390 million, in line with the prior year, as higher terminal product sales revenue and increased intellectual property revenue were offset by lower systems sales
• PlayDigital revenue of $59 million compared to $65 million in the prior year, due to a one-time benefit related to jackpot expense in the prior year and lower sports betting volumes and hold rates in Rhode Island in the current year

Operating income of $256 million, up 11% from $230 million in the prior year; operating income margin increased 160 basis points to 22.7% with growth across business segments

• Global Lottery operating income of $238 million increased 10% from $216 million in the prior-year period; operating income margin up 110 basis points to 35.0% on strong Italy same-store sales, increased high-margin product sales, and despite lower jackpot benefits
• Global Gaming operating income of $80 million, up 17% from $68 million in the prior year; operating income margin expanded 290 basis points to 20.5% on easing of supply chain costs and research and development process improvements, partially offset by higher jackpot expense
• PlayDigital operating income of $17 million, in line with the prior year; operating income margin up 360 basis points to 29.1%, primarily on cost discipline and reduced variable compensation costs due to lower-than-expected revenue
• Corporate support and other expense of $79 million compared to $71 million in the prior year, primarily driven by higher Separation and divestiture costs related to the exploration of strategic alternatives for the Global Gaming and PlayDigital segments in addition to higher restructuring costs

Adjusted EBITDA of $454 million, up 9% compared to $419 million in the prior year, primarily driven by higher operating income and amortization, partially offset by Separation and divestiture costs; Adjusted EBITDA margin expanded 190 basis points to 40.2%

Net interest expense of $71 million compared to $66 million in the prior year due to higher interest rates on variable rate debt and retirement of lower-coupon senior-secured notes

Foreign exchange loss of $66 million versus $95 million in the prior year, primarily reflecting the impact of fluctuations in the EUR/USD exchange rate on debt

Other non-operating expense of $8 million compared to other non-operating income of $1 million in the prior year, primarily related to the purchase and sale of a blue-chip swap used to transfer funds out of Argentina in the current year

Provision for income taxes of $83 million, compared to $101 million in the prior year, primarily driven by lower non-deductible foreign exchange losses

Net income of $27 million versus net loss of $31 million in the prior-year period

Diluted loss per share of $0.04, versus $0.32 in the prior year, primarily reflects higher operating income and lower non-cash foreign exchange loss; Adjusted earnings per share up 40% to $0.56 versus $0.40 in the prior year, primarily due to higher operating income

Full Year 2023 Financial Highlights:

Consolidated revenue of $4.3 billion increased 2%, or 7% net of Italy commercial services sale, from $4.2 billion in the prior-year period

• Global Lottery revenue of $2.5 billion, down 2% from $2.6 billion; net of Italy commercial services sale, revenue rose 6% on 2.3% global same-store sales driven by strong Italy performance and higher product sales
• Global Gaming revenue up 9% to $1.6 billion on broad-based strength in key performance indicators
• PlayDigital revenue rose to a record $228 million, up 9% from $209 million in the prior-year period, on iGaming growth across geographies

Record operating income of $1.0 billion, up 9% from $922 million in the prior-year period, with increases across business segments; operating income margin expanded 140 basis points to 23.2% with improvement across segments

• Global Lottery operating income of $913 million, in line with the prior year, despite sale of Italy commercial services business (Italy commercial services contributed $34 million in the prior year); operating income margin up 100 basis points to 36.1%
• Global Gaming operating income increased 29% to $313 million; operating income margin improved 320 basis points to 20.2% on easing of supply chain costs and research and development process improvements
• Record PlayDigital operating income of $65 million, up 32% versus $50 million in the prior year on strong operating leverage; operating income margin expanded 490 basis points to 28.6%
• Corporate support and other expense of $290 million, up from $279 million in the prior year, primarily driven by Separation and divestiture costs, partially offset by lower transaction costs due to acquisition and divestiture activity in the prior year

Record Adjusted EBITDA of $1.8 billion, up 7% from $1.7 billion in the prior-year period, primarily driven by higher operating income and amortization, partially offset by higher Separation and divestiture costs; Adjusted EBITDA margin expanded 190 basis points to 41.3%

Net interest expense of $285 million compared to $289 million in the prior-year period

Foreign exchange loss of $75 million, versus $36 million in the prior-year period, primarily reflecting the impact of fluctuations in the EUR/USD exchange rate on debt

Other non-operating expense of $12 million versus $7 million in the prior-year period

• $5 million loss on extinguishment of debt and $5 million loss on the purchase and sale of a blue-chip swap used to transfer funds out of Argentina in current year
• $278 million gain on sale of Italian commercial services business offset by $270 million accrual associated with the DDI/Benson matter and $13 million loss on extinguishment of debt in prior year

Provision for income taxes of $322 million versus $175 million in the prior year, primarily driven by higher incremental valuation allowances on deferred tax assets and negative impact from settlement of a tax audit in Italy in the current year, partially offset by the benefit arising from the DDI/Benson matter in the prior year

Net income of $307 million compared to $414 million in the prior-year period

Diluted income per share of $0.77, versus $1.35 in the prior year, primarily reflects higher operating income partially offset by higher non-cash foreign exchange loss and provision for income taxes; Adjusted earnings per share of $2.02 compared to $1.99 primarily reflects higher operating income

Record cash from operations of $1.0 billion, compared to $899 million in the prior-year period, despite a $220 million, $184 million net of tax, payment in final settlement of DDI/Benson matter

Net debt of $5.1 billion, down $0.1 billion from $5.2 billion at December 31, 2022; Net debt leverage improved to 2.9x, the lowest level in Company history, compared to 3.1x at December 31, 2022

Cash and Liquidity Update
Total liquidity of $1.8 billion as of December 31, 2023; $572 million in unrestricted cash and $1.2 billion in additional borrowing capacity

Other Developments
Conclusion of strategic review communicated on 2/29/24; Global Gaming and PlayDigital businesses to be spun off and combined with Everi Holdings, Inc., creating a comprehensive global gaming and fintech enterprise; at closing, IGT shareholders are expected to own approximately 54% of the combined company

S&P Global Ratings recently placed IGT on CreditWatch Positive and Fitch Ratings recently moved IGT to Rating Watch Positive

The Company's Board of Directors declared a quarterly cash dividend of $0.20 per common share

• Ex-dividend date of March 25, 2024
• Record date of March 26, 2024
• Payment date of April 9, 2024

Introducing First Quarter and Full Year 2024 Expectations⁽¹⁾
First quarter

• Revenue of ~$1.0 billion
• Operating income margin of ~20%; includes ~300 basis point negative impact from pre-closing Separation and divestiture costs

Full Year

• Revenue of $4.3 billion - $4.4 billion
• Operating income margin of 20% - 21%; includes ~300 basis point negative impact from pre-closing Separation and divestiture costs
• Cash from operations of ≥$1.0 billion
• Capital expenditures of ~$500 million

(1) Assumes spin and merger transaction closes in early 2025

Earnings Conference Call and Webcast:
March 12, 2024, at 8:00 a.m. EDT

To register to participate in the conference call, or to listen to the live audio webcast, please visit the "Events Calendar" on IGT's Investor Relations website at www.IGT.com. A replay will be available on the website following the live event.

Comparability of Results
All figures presented in this news release are prepared under U.S. GAAP, unless noted otherwise. Adjusted figures exclude the impact of items such as purchase accounting, impairment charges, restructuring expense, foreign exchange, and certain one-time, primarily transaction-related items. Reconciliations to the most directly comparable U.S. GAAP measures are included in the tables in this news release. Constant currency changes for 2023 are calculated using the same foreign exchange rates as the corresponding 2022 period. Management uses non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate the Company's financial performance. Management believes these non-GAAP financial measures reflect the Company's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of business trends. These constant currency changes and non-GAAP financial measures should however be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with U.S. GAAP. Amounts reported in millions are computed based on amounts in thousands. As a result, the sum of the components may not equal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages and earnings per share amounts presented are calculated from the underlying unrounded amounts.

About IGT
IGT (NYSE:IGT) is a global leader in gaming. We deliver entertaining and responsible gaming experiences for players across all channels and regulated segments, from Lotteries and Gaming Machines to Sports Betting and Digital. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, our solutions deliver unrivaled gaming experiences that engage players and drive growth. We have a well-established local presence and relationships with governments and regulators in more than 100 jurisdictions around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has approximately 10,500 employees. For more information, please visit www.IGT.com.

Cautionary Statement Regarding Forward-Looking Statements
This news release may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning International Game Technology PLC and its consolidated subsidiaries (the "Company") and other matters. These statements may discuss goals, intentions, and expectations as to future plans and strategies, transactions, trends, events, dividends, results of operations, and/or financial condition or measures, including our expectations regarding revenue, operating income, cash, and capital expenditures for the first quarter and full year 2024, 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," "outlook," "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, 2022 and other documents filed or furnished 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 may affect the Company's business, including management's discussion and analysis of potential or actual impacts to operations and financial performance. 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) (a GAAP measure) before income taxes, interest expense, net, foreign exchange gain (loss), net, other non-operating expenses (e.g., DDI/Benson Matter, gains/losses on extinguishment and modifications of debt, etc.), net, depreciation, impairment losses, amortization (service revenue, purchase accounting, and non-purchase accounting), restructuring expenses, stock-based compensation, litigation expense (income), and certain other non-recurring items. Other non-recurring items are infrequent in nature and are not reflective of ongoing operational activities. For the business segments, Adjusted EBITDA represents segment operating income (loss) before depreciation, amortization (service revenue, purchase accounting, and non-purchase accounting), restructuring expenses, stock-based compensation, litigation expense (income), and certain other non-recurring items. Management believes that Adjusted EBITDA is useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance.

Adjusted EPS represents diluted earnings per share (a GAAP measure), excluding the effects of foreign exchange, impairments, amortization from purchase accounting, discrete tax items, and other significant non-recurring adjustments that are not reflective of on-going operational activities (e.g., DDI / Benson Matter provision, gains/losses on sale of business, gains/losses on extinguishment and modifications of debt, etc.). Adjusted EPS is calculated using diluted weighted-average number of shares outstanding, including the impact of any potentially dilutive common stock equivalents that are anti-dilutive to GAAP net income (loss) per share but dilutive to Adjusted EPS. Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance.

Net debt is a non-GAAP financial measure that represents debt (a GAAP measure, calculated as long-term obligations plus short-term borrowings) minus capitalized debt issuance costs and cash and cash equivalents, including cash and cash equivalents classified as held for sale, are subtracted from the GAAP measure because they could be used to reduce the Company's debt obligations. Management believes that net debt is a useful measure to monitor leverage and evaluate the balance sheet.

Net debt leverage is a non-GAAP financial measure that represents the ratio of Net debt as of a particular balance sheet date to Adjusted EBITDA for the last twelve months ("LTM") prior to such date. Management believes that Net debt leverage is a useful measure to assess IGT's financial strength and ability to incur incremental indebtedness when making key investment decisions.

Free cash flow is a non-GAAP financial measure that represents cash flow from operations (a GAAP measure) less capital expenditures (a component of investing cash flows) and payments on license obligations (a component of financing cash flows). 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.

Adjusted free cash flow is a non-GAAP financial measure that represents free cash flow excluding the net of tax cash payments in connection with material litigation (e.g. DDI / Benson Matter). To enhance investor understanding of the Company's performance in comparison with the prior year, the Company excluded the net of cash impacts related to the settlement of the DDI / Benson Matter. Management believes adjusted free cash flow is a useful measure of liquidity and an additional basis for assessing IGT's performance.

Constant currency is a non-GAAP financial measure that expresses current financial data using the prior-year/period exchange rate (i.e., the exchange rate used in preparing the financial statements for the prior year). Management believes that constant currency is a useful measure to compare period-to-period results without regard to the impact of fluctuating foreign currency exchange rates.

A reconciliation of the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this release. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.

Contact:
Phil O'Shaughnessy, Global Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
Francesco Luti, +39 06 5189 9184; for Italian media inquiries
James Hurley, Investor Relations, +1 (401) 392-7190 

Select Performance and KPI data: (In $ millions, unless otherwise noted)
GLOBAL LOTTERY		Q4'23		Q4'22		Y/Y Change		Constant Currency Change(1)		FY'23		FY'22		Y/Y Change		Constant Currency Change(1)
Revenue
Service
Operating and facilities management contracts		624		622		— %		(2) %		2,495		2,364		6 %		4 %
Upfront license fee amortization		(47)		(45)		(5) %		— %		(189)		(183)		(3) %		— %
Operating and facilities management contracts, net		577		577		— %		(2) %		2,306		2,181		6 %		4 %
Other		15		16		(6) %		(4) %		53		255		(79) %		(79) %
Total service revenue		592		593		— %		(2) %		2,359		2,436		(3) %		(4) %
Product sales		89		46		94 %		90 %		171		157		9 %		7 %
Total revenue		681		639		7 %		4 %		2,530		2,593		(2) %		(4) %
Operating income		238		216		10 %		7 %		913		909		— %		(1) %
Adjusted EBITDA(1)		343		318		8 %		5 %		1,320		1,314		— %		(1) %
Global same-store sales growth (%)
Instant ticket & draw games		— %		1.0 %						1.9 %		(3.9 %)
Multi-jurisdiction jackpots		(25.0 %)		66.0 %						5.8 %		15.3 %
Total		(3.5 %)		6.7 %						2.3 %		(2.2 %)
North America & Rest of world same-store sales growth (%)
Instant ticket & draw games		(0.9 %)		0.4 %						0.6 %		(2.4 %)
Multi-jurisdiction jackpots		(25.0 %)		66.0 %						5.8 %		15.3 %
Total		(5.0 %)		7.7 %						1.2 %		(0.4 %)
Italy same-store sales growth (%)
Instant ticket & draw games		2.9 %		3.1 %						6.6 %		(8.5 %)
(1) Non-GAAP measure; see disclaimer on page 6 and reconciliations to the most directly comparable GAAP measure in Appendix for further details

 

GLOBAL GAMING		Q4'23		Q4'22		Y/Y Change		Constant Currency Change(1)		FY'23		FY'22		Y/Y Change		Constant Currency Change(1)
Revenue
Service
Terminal		127		126		1 %		3 %		520		483		8 %		10 %
Systems, software, and other		62		60		2 %		2 %		242		232		4 %		5 %
Total service revenue		188		186		1 %		2 %		762		714		7 %		8 %
Product sales
Terminal		153		149		2 %		2 %		571		501		14 %		14 %
Other		49		54		(9) %		(9) %		220		208		6 %		6 %
Total product sales revenue		202		203		(1) %		(1) %		791		709		12 %		12 %
Total revenue		390		389		— %		1 %		1,552		1,423		9 %		10 %
Operating income		80		68		17 %		17 %		313		242		29 %		29 %
Adjusted EBITDA(1)		124		101		23 %		23 %		482		365		32 %		33 %
Installed base units
Casino		53,190		48,578		9 %				53,190		48,578		9 %
Casino - L/T lease (2)		716		1,008		(29 %)				716		1,008		(29 %)
Total installed base units		53,906		49,586		9 %				53,906		49,586		9 %
Installed base units (by geography)
US & Canada		34,221		32,335		6 %				34,221		32,335		6 %
Rest of world		19,685		17,251		14 %				19,685		17,251		14 %
Total installed base units		53,906		49,586		9 %				53,906		49,586		9 %
Yields (by geography)(3), in absolute $
US & Canada		$41.28		$42.08		(2 %)				$42.19		$41.87		1 %
Rest of world		$7.02		$6.53		8 %				$7.40		$6.22		19 %
Total yields		$28.71		$29.72		(3 %)				$29.68		$29.89		(1 %)
Global machine units sold
New/expansion		425		728		(42 %)				3,084		2,879		7 %
Replacement		8,966		8,755		2 %				32,006		29,941		7 %
Total machine units sold		9,391		9,483		(1 %)				35,090		32,820		7 %
US & Canada machine units sold
New/expansion		248		574		(57 %)				2,397		2,020		19 %
Replacement		6,481		6,875		(6 %)				23,811		22,202		7 %
Total machine units sold		6,729		7,449		(10 %)				26,208		24,222		8 %
(1) Non-GAAP measure; see disclaimer on page 6 and reconciliations to the most directly comparable GAAP measure in Appendix for further details
(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

 

GLOBAL GAMING (Continued)		Q4'23		Q4'22		Y/Y Change		Constant Currency Change(1)		FY'23		FY'22		Y/Y Change		Constant Currency Change(1)
Rest of world machine units sold
New/expansion		177		154		15 %				687		859		(20) %
Replacement		2,485		1,880		32 %				8,195		7,739		6 %
Total  machine units sold		2,662		2,034		31 %				8,882		8,598		3 %
Average selling price (ASP), in absolute $
US & Canada		16,300		15,600		4 %				16,100		15,400		5 %
Rest of world		15,000		15,300		(2 %)				15,100		13,700		10 %
Total ASP		15,900		15,500		3 %				15,800		15,000		5 %

 

PLAYDIGITAL		Q4'23		Q4'22		Y/Y Change		Constant Currency Change(1)		FY'23		FY'22		Y/Y Change		Constant Currency Change(1)
Revenue
Service		59		65		(9) %		(10) %		227		209		9 %		10 %
Product sales		—		—		NM		NM		1		1		21 %		21 %
Total revenue		59		65		(10) %		(10) %		228		209		9 %		10 %
Operating income		17		17		3 %		4 %		65		50		32 %		36 %
Adjusted EBITDA(1)		20		22		(11) %		(11) %		78		68		15 %		18 %
CONSOLIDATED
Revenue (by geography)
US & Canada		707		714		(1) %		(1) %		2,701		2,549		6 %		6 %
Italy		244		226		8 %		3 %		949		1,059		(10) %		(13) %
Rest of world		178		153		17 %		16 %		661		618		7 %		8 %
Total revenue		1,130		1,093		3 %		2 %		4,310		4,225		2 %		2 %
(1) Non-GAAP measure; see disclaimer on page 6 and reconciliations to the most directly comparable GAAP measure in Appendix for further details

 

International Game Technology PLC
Consolidated Statements of Operations
($ and shares in millions, except per share amounts)
Unaudited
	For the three months ended				For the year ended
	December 31,				December 31,
	2023		2022		2023		2022
Service revenue	839		845		3,347		3,359
Product sales	291		249		963		866
Total revenue	1,130		1,093		4,310		4,225
Cost of services	423		408		1,630		1,671
Cost of product sales	169		166		573		554
Selling, general and administrative	201		219		834		814
Research and development	56		70		234		255
Separation and divestiture costs	13		—		24		—
Restructuring	12		6		13		6
Other operating expense (income), net	—		(5)		—		4
Total operating expenses	873		863		3,309		3,303
Operating income	256		230		1,001		922
Interest expense, net	71		66		285		289
Foreign exchange loss, net	66		95		75		36
Other non-operating expense (income), net	8		(1)		12		7
Total non-operating expenses	146		161		372		333
Income before provision for income taxes	110		70		629		589
Provision for income taxes	83		101		322		175
Net income (loss)	27		(31)		307		414
Less: Net income attributable to non-controlling interests	35		34		151		139
Net (loss) income attributable to IGT PLC	(7)		(64)		156		275
Net (loss) income attributable to IGT PLC per common share - basic	(0.04)		(0.32)		0.78		1.36
Net (loss) income attributable to IGT PLC per common share - diluted	(0.04)		(0.32)		0.77		1.35
Weighted-average shares - basic	200		199		200		202
Weighted-average shares - diluted	200		199		203		203

Full-year 2022 results include Italy commercial services business that was sold in September 2022.

 

International Game Technology PLC
Consolidated Balance Sheets
($ in millions)
Unaudited
	December 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	572		590
Restricted cash and cash equivalents	167		150
Trade and other receivables, net	685		670
Inventories, net	317		254
Other current assets	382		467
Total current assets	2,123		2,131
Systems, equipment and other assets related to contracts, net	928		899
Property, plant and equipment, net	119		118
Operating lease right-of-use assets	230		254
Goodwill	4,507		4,482
Intangible assets, net	1,555		1,375
Other non-current assets	1,004		1,174
Total non-current assets	8,342		8,302
Total assets	10,465		10,433
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	797		731
Current portion of long-term debt	—		61
Short-term borrowings	16		—
DDI / Benson Matter provision	—		220
Other current liabilities	879		837
Total current liabilities	1,691		1,848
Long-term debt, less current portion	5,655		5,690
Deferred income taxes	344		305
Operating lease liabilities	214		239
Other non-current liabilities	609		372
Total non-current liabilities	6,821		6,607
Total liabilities	8,513		8,454
Commitments and contingencies
IGT PLC's shareholders' equity	1,443		1,429
Non-controlling interests	510		550
Total shareholders' equity	1,952		1,979
Total liabilities and shareholders' equity	10,465		10,433

 

International Game Technology PLC
Consolidated Statements of Cash Flows
($ in millions)
Unaudited
	For the three months ended				For the year ended
	December 31,				December 31,
	2023		2022		2023		2022
Cash flows from operating activities
Net income (loss)	27		(31)		307		414
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	74		78		301		301
Foreign exchange loss, net	66		95		75		36
Amortization	57		49		222		191
Amortization of upfront license fees	50		48		200		193
Stock-based compensation	6		7		41		41
DDI / Benson Matter provision	—		—		—		270
Gain on sale of business	—		—		—		(278)
Deferred income taxes	(40)		14		21		(77)
Other non-cash items, net	10		(5)		20		14
Changes in operating assets and liabilities, excluding the effects of acquisitions and divestitures:
Trade and other receivables	(25)		16		(5)		45
Inventories	8		8		(59)		(65)
Accounts payable	68		8		48		(22)
DDI / Benson Matter provision	—		(50)		(220)		(50)
Accrued interest payable	20		26		4		(11)
Accrued income taxes	45		(20)		96		(83)
Other assets and liabilities	34		33		(12)		(20)
Net cash provided by operating activities	400		278		1,040		899
Cash flows from investing activities
Capital expenditures	(98)		(91)		(399)		(317)
Proceeds from sale of business, net of cash and restricted cash transferred	—		(21)		—		476
Business acquisitions, net of cash acquired	—		—		—		(142)
Proceeds from sale of assets	2		8		16		22
Other	(8)		2		(9)		3
Net cash (used in) provided by investing activities from continuing operations	(104)		(102)		(393)		42
Net cash provided by investing activities from discontinued operations	—		—		—		126
Net cash (used in) provided by investing activities	(104)		(102)		(393)		168
Cash flows from financing activities
Principal payments on long-term debt	(339)		—		(801)		(597)
Net (payments of) proceeds from short-term borrowings	(43)		—		13		(51)
Payments on license obligations	(7)		—		(22)		—
Net receipts from financial liabilities	67		77		1		75
Net proceeds from Revolving Credit Facilities	131		30		609		72
Repurchases of common stock	—		(22)		—		(115)
Dividends paid	(40)		(40)		(160)		(161)
Dividends paid - non-controlling interests	(3)		—		(158)		(178)
Return of capital - non-controlling interests	(18)		(17)		(74)		(75)
Other	(15)		(9)		(45)		(35)
Net cash (used in) provided by financing activities	(267)		19		(638)		(1,065)
Net increase in cash and cash equivalents and restricted cash and cash equivalents	29		195		10		2
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents	13		28		(11)		(70)
Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period	697		517		740		808
Cash and cash equivalents and restricted cash and cash equivalents at the end of the period	739		740		739		740
Supplemental Cash Flow Information:
Interest paid	58		39		294		298
Income taxes paid	79		107		205		335

 

International Game Technology PLC
Net Debt
($ in millions)
Unaudited
		December 31,
		2023		2022
3.500% Senior Secured Euro Notes due July 2024		—		319
6.500% Senior Secured U.S. Dollar Notes due February 2025		499		697
4.125% Senior Secured U.S. Dollar Notes due April 2026		747		745
3.500% Senior Secured Euro Notes due June 2026		826		796
6.250% Senior Secured U.S. Dollar Notes due January 2027		747		746
2.375% Senior Secured Euro Notes due April 2028		550		530
5.250% Senior Secured U.S. Dollar Notes due January 2029		745		745
Senior Secured Notes		4,113		4,578
Euro Term Loan Facilities due January 2027		876		1,058
Revolving Credit Facility A due July 2027		207		55
Revolving Credit Facility B due July 2027		458		—
Long-term debt, less current portion		5,655		5,690
5.350% Senior Secured U.S. Dollar Notes due October 2023		—		61
Current portion of long-term debt		—		61
Short-term borrowings		16		—
Total debt		5,671		5,750
Less: Cash and cash equivalents		572		590
Less: Debt issuance costs, net - Revolving Credit Facility B due July 2027		—		9
Net debt		5,099		5,150
Note: Net debt is a non-GAAP financial measure

 

International Game Technology PLC
Reconciliation of Non-GAAP Financial Measures
($ in millions, except per share amounts)
Unaudited
		For the three months ended December 31, 2023
		Global Lottery		Global Gaming		PlayDigital		Business Segments Total		Corporate and Other		Total IGT PLC
Net income												27
Provision for income taxes												83
Interest expense, net												71
Foreign exchange loss, net												66
Other non-operating expense, net												8
Operating income (loss)		238		80		17		336		(79)		256
Depreciation		41		31		2		74		(1)		74
Amortization - service revenue (1)		50		—		—		50		—		50
Amortization - non-purchase accounting		5		13		—		18		1		19
Amortization - purchase accounting		—		—		—		—		38		38
Restructuring		8		—		—		8		4		12
Stock-based compensation		1		—		—		1		5		6
Adjusted EBITDA		343		124		20		487		(32)		454
Cash flows from operating activities												400
Capital expenditures												(98)
Payments on license obligations												(7)
Free Cash Flow												295
Payments on DDI / Benson Matter, net of cash tax benefit												—
Adjusted Free Cash Flow												295
								Pre-Tax Impact		Tax Impact (2)(3)		Net Impact
Reported EPS attributable to IGT PLC - diluted												(0.04)
Adjustments:
Foreign exchange loss, net								0.25		(0.04)		0.29
Currency conversion impacts of hyper-inflationary economies (4)								0.10		—		0.10
Amortization - purchase accounting								0.18		0.07		0.11
Discrete tax items								—		(0.05)		0.05
Other (non-recurring adjustments)								0.06		0.02		0.04
Net adjustments												0.60
Adjusted EPS attributable to IGT PLC - diluted (5)												0.56
(1) Includes amortization of upfront license fees
(2) Calculated based on nature of item, including any realizable deductions, and statutory tax rate in effect for the relevant jurisdiction
(3) The reported effective tax rate was 75.3%. Adjusted for the above items, the effective tax rate was 35.8%
(4) Includes blue-chip swap loss of $5 million
(5) Adjusted EPS was calculated using weighted average shares outstanding of 203.3 million, which includes the dilutive impact of share-based payment awards

 

International Game Technology PLC
Reconciliation of Non-GAAP Financial Measures
($ in millions, except per share amounts)
Unaudited
		For the three months ended December 31, 2022
		Global Lottery		Global Gaming		PlayDigital		Business Segments Total		Corporate and Other		Total IGT PLC
Net loss												(31)
Provision for income taxes												101
Interest expense, net												66
Foreign exchange loss, net												95
Other non-operating income, net												(1)
Operating income (loss)		216		68		17		302		(71)		230
Depreciation		42		31		6		79		—		78
Amortization - service revenue (1)		48		—		—		48		—		48
Amortization - non-purchase accounting		6		2		—		8		1		9
Amortization - purchase accounting		—		—		—		—		41		41
Restructuring		5		—		—		5		1		6
Stock-based compensation		2		(1)		—		1		6		7
Adjusted EBITDA		318		101		22		442		(23)		419
Cash flows from operating activities												278
Capital expenditures												(91)
Free Cash Flow												187
Payments on DDI / Benson Matter, net of cash tax benefit												50
Adjusted Free Cash Flow												237
								Pre-Tax Impact		Tax Impact (2)(3)		Net Impact
Reported EPS attributable to IGT PLC - diluted												(0.32)
Adjustments:
Foreign exchange loss, net								0.46		(0.04)		0.50
Currency conversion impacts of hyper-inflationary economies								0.01		—		0.01
Amortization - purchase accounting								0.20		0.02		0.18
Discrete tax items								—		(0.01)		0.01
DDI / Benson Matter provision								—		0.01		(0.01)
Other (non-recurring adjustments)								0.03		0.01		0.02
Net adjustments												0.72
Adjusted EPS attributable to IGT PLC - diluted (4)												0.40
(1) Includes amortization of upfront license fees
(2) Calculated based on nature of item, including any realizable deductions, and statutory tax rate in effect for the relevant jurisdiction
(3) The reported effective tax rate was 144.0%. Adjusted for the above items, the effective tax rate was 46.2%
(4) Adjusted EPS was calculated using weighted average shares outstanding of 201.4 million, which includes the dilutive impact of share-based payment awards

 

International Game Technology PLC
Reconciliation of Non-GAAP Financial Measures
($ in millions, except per share amounts)
Unaudited
		For the year ended December 31, 2023
		Global Lottery		Global Gaming		PlayDigital		Business Segments Total		Corporate and Other		Total IGT PLC
Net income												307
Provision for income taxes												322
Interest expense, net												285
Foreign exchange loss, net												75
Other non-operating expense, net												12
Operating income (loss)		913		313		65		1,291		(290)		1,001
Depreciation		173		118		10		301		—		301
Amortization - service revenue (1)		199		1		—		200		—		200
Amortization - non-purchase accounting		20		45		1		66		3		70
Amortization - purchase accounting		—		—		—		—		152		152
Restructuring		9		—		—		9		4		13
Stock-based compensation		6		5		1		12		30		41
Adjusted EBITDA		1,320		482		78		1,880		(101)		1,779
Cash flows from operating activities												1,040
Capital expenditures												(399)
Payments on license obligations												(22)
Free Cash Flow												619
Payments on DDI / Benson Matter, net of cash tax benefit ($36 million)												184
Adjusted Free Cash Flow												803
								Pre-Tax Impact		Tax Impact (2)(3)		Net Impact
Reported EPS attributable to IGT PLC - diluted												0.77
Adjustments:
Foreign exchange loss, net								0.21		(0.03)		0.24
Currency conversion impacts of hyper-inflationary economies (4)								0.18		—		0.18
Amortization - purchase accounting								0.75		0.21		0.54
Loss on extinguishment and modifications of debt, net								0.02		—		0.02
Discrete tax items								—		(0.22)		0.22
Other (non-recurring adjustments)								0.07		0.02		0.04
Net adjustments												1.25
Adjusted EPS attributable to IGT PLC - diluted (5)												2.02
(1) Includes amortization of upfront license fees
(2) Calculated based on nature of item, including any realizable deductions, and statutory tax rate in effect for the relevant jurisdiction
(3) The reported effective tax rate was 51.2%. Adjusted for the above items, the effective tax rate was 36.2%
(4) Includes blue-chip swap loss of $5 million
(5) Adjusted EPS was calculated using weighted average shares outstanding of 202.7 million, which includes the dilutive impact of share-based payment awards

 

International Game Technology PLC
Reconciliation of Non-GAAP Financial Measures
($ in millions, except per share amounts)
Unaudited
		For the year ended December 31, 2022
		Global Lottery		Global Gaming		PlayDigital		Business Segments Total		Corporate and Other		Total IGT PLC
Net income												414
Provision for income taxes												175
Interest expense, net												289
Foreign exchange loss, net												36
Other non-operating expense, net												7
Operating income (loss)		909		242		50		1,201		(279)		922
Depreciation		173		112		17		302		(1)		301
Amortization - service revenue (1)		193		—		—		193		—		193
Amortization - non-purchase accounting		24		7		—		31		3		34
Amortization - purchase accounting		—		—		—		—		158		158
Restructuring		6		(1)		—		5		1		6
Stock-based compensation		9		5		1		14		27		41
Other		—		—		—		—		9		9
Adjusted EBITDA		1,314		365		68		1,746		(83)		1,664
Cash flows from operating activities												899
Capital expenditures												(317)
Free Cash Flow												582
Payments on DDI / Benson Matter, net of cash tax benefit												50
Adjusted Free Cash Flow												632
								Pre-Tax Impact		Tax Impact (2)(3)		Net Impact
Reported EPS attributable to IGT PLC - diluted												1.35
Adjustments:
Foreign exchange loss, net								0.13		0.08		0.05
Currency conversion impacts of hyper-inflationary economies								0.05		—		0.05
Amortization - purchase accounting								0.77		0.16		0.61
Loss on extinguishment and modifications of debt, net								0.06		0.01		0.06
Discrete tax items								—		(0.17)		0.17
DDI / Benson Matter provision								1.33		0.33		1.00
Gain on sale of business								(1.36)		(0.01)		(1.36)
Other (non-recurring adjustments)								0.07		0.01		0.06
Net adjustments												0.64
Adjusted EPS attributable to IGT PLC - diluted (4)												1.99
(1) Includes amortization of upfront license fees
(2) Calculated based on nature of item, including any realizable deductions, and statutory tax rate in effect for the relevant jurisdiction
(3) The reported effective tax rate was 29.7%. Adjusted for the above items, the effective tax rate was 32.2%
(4) Adjusted EPS was calculated using weighted average shares outstanding of 203.4 million, which includes the dilutive impact of share-based payment awards

 

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SOURCE International Game Technology PLC

FAQ

What was IGT's revenue in the fourth quarter of 2023?

IGT reported revenue of $1.1 billion in the fourth quarter of 2023.

How much did IGT's operating income increase by in Q4 2023?

IGT's operating income rose by 11% to $256 million in Q4 2023.

What was IGT's full-year 2023 revenue?

IGT's full-year 2023 revenue was $4.3 billion.

What is IGT's expected revenue range for full-year 2024?

IGT expects full-year 2024 revenue of $4.3-$4.4 billion.

What is the net debt leverage for IGT in 2023?

IGT's net debt leverage improved to 2.9x in 2023, the lowest level in Company history.

When is the ex-dividend date for IGT's quarterly cash dividend?

IGT's ex-dividend date for the quarterly cash dividend is March 25, 2024.

What strategic decision did IGT make regarding its business structure?

IGT decided to split its business into separate lottery and gaming companies.

Which credit rating agencies showed positive sentiment towards IGT?

S&P Global Ratings placed IGT on CreditWatch Positive, and Fitch Ratings moved IGT to Rating Watch Positive.

What percentage of the combined company is expected to be owned by IGT shareholders post-merger with Everi Holdings, Inc.?

IGT shareholders are expected to own approximately 54% of the combined company post-merger with Everi Holdings, Inc.