International Game Technology PLC Reports Fourth Quarter And Full Year 2020 Results

Rhea-AI Summary

International Game Technology PLC (IGT) reported its financial results for Q4 and full year 2020. Total revenue for Q4 was $885 million, down 15% year-over-year, while full-year revenue decreased 23% to $3.12 billion. Global Lottery revenue rose 11% in Q4, but Global Gaming faced a 46% decline. IGT generated $866 million in cash from operating activities, with significant liquidity improvements to over $2.7 billion. Notably, a temporary cost savings of $500 million was achieved in 2020. The company plans to enhance shareholder value with ongoing restructuring efforts.

Positive

• Generated $866 million in cash from operating activities, one of the highest levels in five years.
• Achieved $500 million in temporary cost savings/avoidance in 2020.
• Implemented a new organizational structure focused on Global Lottery and Global Gaming.
• Global Lottery revenue saw an 11% increase in Q4, the highest segment-level revenue in two years.

Negative

• Total revenue declined 23% year-over-year, significantly impacting overall financial performance.
• Global Gaming revenue decreased by 46% in Q4 due to pandemic effects on casinos.
• Net loss attributable to IGT was $898 million, a stark increase from $19 million in the prior year.

LONDON, March 2, 2021 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the fourth quarter and full year ended December 31, 2020. Today, at 8:00 a.m. EST, management will host a conference call and webcast to present the results; access details are provided below.

"The solid results we achieved for this pandemic-impacted year have given us momentum into 2021. They are a result of the vision, agility, and discipline of the IGT team as well as the distinct advantages of our diverse portfolio," said Marco Sala, CEO of IGT. "We also made important strategic progress. The Company undertook a comprehensive reorganization to sharpen our focus on our core competencies and drive structural operational efficiencies. This provides a clear path to increasing shareholder value as we build on our leadership positions with a stronger revenue and profit growth profile."

"We generated $866 million in cash from operating activities during the year, among the highest level in five years, primarily driven by resilient Global Lottery performance and rigorous cost and invested capital controls," said Max Chiara, CFO of IGT. "Liquidity improved more than $300 million to over $2.7 billion. As a leaner, stronger Company, we expect leverage to return to pre-pandemic levels in the next 12-18 months."

Overview of Consolidated Fourth Quarter and Full Year 2020 Results

All amounts from continuing operations unless otherwise noted	Quarter Ended			Y/Y Change (%)	Constant Currency Change (%)	Year Ended			Y/Y Change (%)	Constant Currency Change (%)
	December 31,					December 31,
	2020		2019			2020		2019
(In $ millions, unless otherwise noted)
GAAP Financials:
Revenue
Global Lottery	630		568	11%	8%	2,164		2,293	(6)%	(6)%
Global Gaming	255		476	(46)%	(47)%	951		1,739	(45)%	(45)%
Total revenue	885		1,044	(15)%	(17)%	3,115		4,032	(23)%	(23)%
Operating income/(loss)
Global Lottery	195		154	26%	21%	642		697	(8)%	(10)%
Global Gaming	(39)		59	NA	NA	(206)		180	NA	NA
Corporate support expense	(20)		(25)	20%	32%	(76)		(105)	28%	29%
Other(1)	(40)		(148)	73%	73%	(468)		(294)	(59)%	(59)%
Total operating income/(loss)	96		40	138%	132%	(107)		478	NA	NA
Net cash provided by operating activities from continuing operations	251		278	(10)%		595		907	(34)%
Net cash provided by operating activities from discontinued operations	4		26	(83)%		271		186	46%
Net cash provided by operating activities	255		304	(16)%		866		1,093	(21)%
Cash and cash equivalents	907		655	39%		907		655	39%
Non-GAAP Financial Measures:
Adjusted EBITDA
Global Lottery	313		268	17%	12%	1,086		1,136	(4)%	(6)%
Global Gaming	(2)		115	NA	NA	(16)		397	NA	NA
Corporate support expense	(16)		(18)	12%	21%	(62)		(79)	21%	21%
Total Adjusted EBITDA	295		365	(19)%	(22)%	1,008		1,454	(31)%	(32)%
EBITDA from discontinued operations	26		69	(63)%		138		256	(46)%
Adjusted EBITDA - combined	321		435	(26)%		1,146		1,710	(33)%
Free cash flow	201		186	8%		340		530	(36)%
Free cash flow from discontinued operations	(10)		9	NA		236		121	94%
Free cash flow - combined	191		195	(2)%		576		651	(12)%
Net debt						7,319		7,390	(1)%

(1) Primarily includes purchase price amortization and goodwill impairment

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 2020 Key Highlights:

• Consolidated:
• Generated $866 million in cash from operating activities and $576 million in combined free cash flow during 2020; cash flow performance especially strong in the back half of the year
• Achieved $500 million in 2020 temporary cost savings/avoidance
• Launched OPtiMa business efficiency program and accelerated timing with $200M+ in targeted savings to be achieved in 2021
• Implemented a simplified global organizational structure focused primarily on two business segments: Global Lottery and Global Gaming
• Announced agreement to sell Italian B2C gaming businesses for €950 million
• Global Lottery:
• Delivered highest quarterly segment-level revenue and Adjusted EBITDA in two years in the fourth quarter; full year same-store sales up 7% in North America including the strongest annual growth for instant tickets and draw games in seven years
• Awarded long-term contracts with the Czech Republic, Poland and Nebraska lotteries following competitive bid processes in 2020
• In 2020, signed two-year contract extensions with the New York, Tennessee, and Minnesota lotteries; seven-year contract extensions with Western Canada Lottery Corporation and, more recently, with the Jamaica lottery
• Global Gaming:
• Sequential stability in Global Gaming revenue and profit in the fourth quarter; KPIs stable to improving
• 2020 product highlights: growing acceptance of cashless solutions with Resort Wallet™ launched at Resorts World Catskills and, more recently, obtaining Nevada regulatory approval; entered Historical Horse Racing market; launched Peak family of cabinets
• Strong double-digit growth in Digital & Betting for the year

Fourth Quarter 2020 Financial Highlights:

The Company's B2C gaming machine and sports betting activities in Italy have been classified as discontinued operations due to the pending sale of these businesses. Unless otherwise noted, results presented in this release are from continuing operations.

Fourth quarter results reflect the continued, global impact of the COVID-19 pandemic.

Total revenue of $885 million compared to $1.04 billion in the prior-year period

• Global Lottery revenue totals $630 million, up 11% from the prior year
• Double-digit same-store sales growth in North America with a return to growth in Italy
• Reduced by $19 million catch-up adjustment for unspent advertising in Italy
• Global Gaming revenue of $255 million, down 46% from the prior year
• Impacted by pandemic-related casino closures and operating restrictions
• Sequential stability with the third quarter supported by stable to improving KPIs
• Digital & Betting service revenue rose nearly 55% compared to the prior year; overall increase of 4% includes impact of non-recurring software sale in the prior year

Operating income of $96 million, up from $40 million in the prior year

• Goodwill impairment of $99 million in the prior-year period
• High profit flow-through of Global Lottery same-store sales growth
• Global Gaming impacted by pandemic-related decline in revenue
• Benefit of disciplined cost-saving actions across segments

Net interest expense of $101 million, in line with prior-year period

Provision for income taxes of $73 million compared to $2 million

• Higher valuation allowances on deferred tax assets in the current period
• Income taxes paid of $51 million versus $77 million in the prior year

Net loss attributable to IGT was $242 million versus $168 million, driven by higher non-cash foreign exchange losses, primarily on Euro-denominated debt instruments

Net loss attributable to IGT per diluted share of $(1.18) compared to $(0.82)

Adjusted EBITDA of $295 million versus $365 million in the prior year

Net debt of $7.32 billion compared to $7.39 billion at December 31, 2019; reduced $71 million as reported, $433 million excluding unfavorable foreign currency impact

Full Year 2020 Financial Highlights:

Year-over-year comparisons reflect the global impact of the COVID-19 pandemic in 2020.

Total revenue was $3.12 billion versus $4.03 billion in the prior year

• Global Lottery revenue of $2.16 billion, down 6%, demonstrating remarkable resilience
• Global same-store sales stable
• Steep recovery in second half driven by double-digit North America same-store sales growth
• Global Gaming revenue was $951 million, down 45%, as the pandemic caused protracted casino closures and operating restrictions around the world

Operating loss of $107 million compared to operating income of $478 million in the prior-year period       

• Impact of lower revenue
• Goodwill impairment of $296 million in the current year compared to $99 million in the prior year
• Benefit of disciplined cost-saving actions across segments

Net interest expense of $398 million versus $411 million in the prior year, on lower average cost of debt

Provision for income taxes of $28 million versus $131 million in the prior year

• Pre-tax loss in 2020 compared to income in 2019, in addition to higher valuation allowances on deferred tax assets in 2020
• Income taxes paid of $89 million compared to $197 million in the prior year

Net loss attributable to IGT was $898 million compared to $19 million in the prior-year period, driven by higher non-cash foreign exchange losses, primarily on Euro-denominated debt instruments, and goodwill impairment

Net loss attributable to IGT per diluted share of $(4.39) versus $(0.09)

Adjusted EBITDA totaled $1.01 billion compared to $1.45 billion

Cash from operations was $595 million compared to $907 million in 2019, relatively resilient despite pandemic impact, on solid Global Lottery financial results and diligent invested capital management

Capital expenditures of $255 million versus $377 million in the prior year, reflecting focus on cash cost savings during the pandemic

Cash and cash equivalents of $907 million as of December 31, 2020, versus $655 million as of December 31, 2019

Cash and Liquidity Update

• Total liquidity increased over $300 million compared to December 31, 2019, due to strong cash flow generation
• At December 31, 2020, liquidity totaled $2.72 billion, comprised of $907 million in unrestricted cash and $1.82 billion available under revolving credit facilities

Conference Call and Webcast:

March 2, 2021, at 8:00 a.m. EST

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

Dial-In Numbers

• US/Canada toll-free dial-in number: +1 844 842 7999
• Outside the US/Canada toll-free number: +1 612 979 9887
• Conference ID/confirmation code: 4538018
• A telephone replay of the call will be available for one week
• US/Canada replay number: +1 855 859 2056
• Outside the US/Canada replay number: +1 404 537 3406
• ID/Confirmation code: 4538018

Note: Certain totals in the tables included in this press release may not add due to rounding

Comparability of Results

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

About IGT
IGT (NYSE:IGT) is the global leader in gaming. We deliver entertaining and responsible gaming experiences for players across all channels and regulated segments, from Gaming Machines and Lotteries to Sports Betting and Digital. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, our solutions deliver unrivalled gaming experiences that engage players and drive growth. We have a well-established local presence and relationships with governments and regulators in more than 100 countries around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has approximately 11,000 employees. For more information, please visit www.IGT.com.

Cautionary Statement Regarding Forward-Looking Statements
This news release may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning International Game Technology PLC and its consolidated subsidiaries (the "Company") and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, dividends, results of operations, or financial condition, or otherwise, based on current beliefs of the management of the Company as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as "aim," "anticipate," "believe," "plan," "could," "would," "should," "shall", "continue," "estimate," "expect," "forecast," "future," "guidance," "intend," "may," "will," "possible," "potential," "predict," "project" or the negative or other variations of them. These forward-looking statements speak only as of the date on which such statements are made and are subject to various risks and uncertainties, many of which are outside the Company's control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance, or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) the factors and risks described in the Company's annual report on Form 20-F for the financial year ended December 31, 2020 and other documents filed from time to time with the SEC, which are available on the SEC's website at www.sec.gov and on the investor relations section of the Company's website at www.IGT.com. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. You should carefully consider these factors and other risks and uncertainties that affect the Company's business. Nothing in this news release is intended, or is to be construed, as a profit forecast or to be interpreted to mean that the financial performance of International Game Technology PLC for the current or any future financial years will necessarily match or exceed the historical published financial performance or 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.

Total Adjusted EBITDA represents loss from continuing operations (a GAAP measure) before income taxes, interest expense, foreign exchange gain (loss), other non-operating expenses, depreciation, impairment losses, amortization (service revenue, purchase accounting and non-purchase accounting) restructuring expenses, stock-based compensation, and certain other non-recurring items. Other non-recurring items are infrequent in nature and are not reflective of on-going 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, and certain other non-recurring items. EBITDA – discontinued operations represents income from discontinued operations (a GAAP measure) before income taxes, interest expense, depreciation and amortization. Adjusted EBITDA – combined represents Total Adjusted EBITDA plus EBITDA – discontinued operations. Management believes that the non-GAAP measures just mentioned are useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance.

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

Free cash flow is a non-GAAP financial measure that represents cash flow from operations (a GAAP measure) less capital expenditures. Free cash flow – discontinued operations represents cash flows from operating activities – discontinued operations (a GAAP measure) less cash flows from investing activities – discontinued operations (a GAAP measure).  Free cash flow – combined represents Free Cash Flow plus Free Cash Flow – discontinued operations. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing  IGT's  ability to fund its activities, including debt service and distribution of earnings to shareholders.

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

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

Contact:
Phil O'Shaughnessy, Global Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
Francesco Luti, +39 3485475493; for Italian media inquiries
James Hurley, Investor Relations, +1 (401) 392-7190

Select Performance and KPI data: (In $ millions, unless otherwise noted)
GLOBAL LOTTERY		Q4'20			Q4'19			Y/Y Change (%)		Constant Currency Change (%) (1)		FY'20			FY'19			Y/Y Change (%)		Constant Currency Change (%) (1)
Revenue
Service
Operating and facilities management contracts		549			527			4%		1%		1,944			2,126			(9)%		(10)%
Upfront license fee amortization		(52)			(49)			(8)%		—%		(200)			(196)			(2)%		—%
Operating and facilities management contracts, net		497			479			4%		1%		1,744			1,931			(10)%		(11)%
Other		86			66			32%		24%		299			252			18%		17%
Total service revenue		583			544			7%		4%		2,043			2,183			(6)%		(7)%
Product sales		47			24			100%		97%		121			110			10%		10%
Total revenue		630			568			11%		8%		2,164			2,293			(6)%		(6)%
Operating income		195			154			26%		21%		642			697			(8)%		(10)%
Adjusted EBITDA(1)		313			268			17%		12%		1,086			1,136			(4)%		(6)%
		Q4'20 Constant Currency Change (%) (1)			Q4'19 Constant Currency Change (%) (1)							FY'20 Constant Currency Change (%) (1)			FY'19 Constant Currency Change (%) (1)
Global same-store sales growth (%)
Instant ticket & draw games		8.2%			3.2%							1.6%			4.1%
Multi-jurisdiction jackpots		4.5%			(49.4)%							(17.0)%			(18.3)%
Total		7.9%			(4.6)%							0.1%			1.7%
North America and Rest of world same-store sales growth (%)
Instant ticket & draw games		10.7%			4.7%							7.3%			5.2%
Multi-jurisdiction jackpots		4.5%			(49.4)%							(17.0)%			(18.3)%
Total		10.1%			(5.5)%							4.7%			2.0%
Italy same-store sales growth (%)
Instant ticket & draw games		0.4%			(1.3)%							(16.1)%			0.8%
(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		Q4'20			Q4'19			Y/Y Change (%)		Constant Currency Change (%) (1)		FY'20			FY'19			Y/Y Change (%)		Constant Currency Change (%) (1)
Revenue
Service
Terminal		85			133			(36)%		(36)%		297			568			(48)%		(47)%
Systems, software, and other		81			80			1%		—%		299			350			(14)%		(14)%
Total service revenue		166			213			(22)%		(22)%		597			918			(35)%		(35)%
Product sales
Terminal		59			188			(69)%		(69)%		205			581			(65)%		(65)%
Other		30			75			(60)%		(61)%		149			240			(38)%		(38)%
Total product sales revenue		89			263			(66)%		(67)%		355			821			(57)%		(57)%
Total revenue		255			476			(46)%		(47)%		951			1,739			(45)%		(45)%
Operating (loss) income		(39)			59			NA		NA		(206)			180			NA		NA
Adjusted EBITDA(1)		(2)			115			NA		NA		(16)			397			NA		NA
Installed base units
Casino		48,232			50,834			(5)%				48,232			50,834			(5)%
Casino - L/T lease (2)		1,068			—			NA				1,068			—			NA
Total installed base units		49,300			50,834			(3)%				49,300			50,834			(3)%
Installed base units (by geography)
US & Canada		34,275			35,977			(5)%				34,275			35,977			(5)%
Rest of world		15,025			14,857			1%				15,025			14,857			1%
Total installed base units		49,300			50,834			(3)%				49,300			50,834			(3)%
Yields (by geography)(3), in absolute $
US & Canada		$27.88			$40.29			(31)%				$24.34			$40.31			(40)%
Rest of world		$3.33			$7.75			(57)%				$3.67			$8.50			(57)%
Total yields		$20.32			$31.08			(35)%				$18.06			$31.45			(43)%
Global machine units sold
New/expansion		666			1,811			(63)%				3,046			5,814			(48)%
Replacement		3,662			11,808			(69)%				11,616			36,262			(68)%
Total machine units sold		4,328			13,619			(68)%				14,662			42,076			(65)%
US & Canada machine units sold
New/expansion		668			1,405			(52)%				2,753			4,116			(33)%
Replacement		2,636			5,986			(56)%				8,009			16,903			(53)%
Total machine units sold		3,304			7,391			(55)%				10,762			21,019			(49)%
Rest of world machine units sold
New/expansion		(2)			406			NA				293			1,698			(83)%
Replacement		1,026			5,822			(82)%				3,607			19,359			(81)%
Total  machine units sold		1,024			6,228			(84)%				3,900			21,057			(81)%
(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)		Q4'20			Q4'19			Y/Y Change (%)		Constant Currency Change (%) (1)		FY'20			FY'19			Y/Y Change (%)		Constant Currency Change (%) (1)
Average selling price (ASP), in absolute $
US & Canada		14,200			14,900			(5)%				14,200			15,100			(6)%
Rest of world		10,400			11,900			(13)%				12,400			11,700			6%
Total ASP		13,300			13,500			(1)%				13,800			13,400			3%
Gaming systems revenue		38			58			(35)%				136			213			(36)%
CONSOLIDATED
Revenue (by geography)
US & Canada		489			580			(16)%		(16)%		1,748			2,236			(22)%		(22)%
Italy		266			237			12%		4%		862			949			(9)%		(12)%
Rest of world		131			228			(43)%		(44)%		505			846			(40)%		(40)%
Total revenue		885			1,044			(15)%		(17)%		3,115			4,032			(23)%		(23)%
Digital & Betting Revenue (2)		47			45			4%		2%		170			130			31%		31%
(1) Non-GAAP measure; see disclaimer on page 6 and reconciliations to the most directly comparable GAAP measure in Appendix for further details
(2) Included within consolidated revenue
DISCONTINUED OPERATIONS - ITALY B2C KPIs		Q4'20			Q4'19			Y/Y Change (%)		Constant Currency Change (%) (1)		FY'20			FY'19			Y/Y Change (%)		Constant Currency Change (%) (1)
Italy installed base units
VLT - Operator		10,774			11,020			(2)%				10,774			11,020			(2)%
AWP		36,168			40,892			(12)%				36,168			40,892			(12)%
Total Italy installed base units		46,942			51,912			(10)%				46,942			51,912			(10)%
Italy wagers (€)
VLT		228			1,414					(84)%		2,062			5,669					(64)%
AWP		239			958					(75)%		1,719			3,690					(53)%
Italy sports betting wagers (€)		233			298					(22)%		767			1,050					(27)%
Italy sports betting payout (%)		82.9%			83.3%					—%		82.4%			83.1%					(1)%
(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 thousands, except per share amounts) Unaudited
	For the three months ended December 31,						For the year ended December 31,
	2020			2019			2020			2019
Service revenue	748,932			756,653			2,639,558			3,100,868
Product sales	136,193			286,875			475,898			930,889
Total revenue	885,125			1,043,528			3,115,456			4,031,757
Cost of services	439,816			445,158			1,633,899			1,777,225
Cost of product sales	103,096			157,254			345,800			558,011
Selling, general and administrative	195,895			229,163			706,895			849,620
Research and development	50,837			65,936			190,948			266,241
Restructuring	(1,910)			3,002			45,045			24,855
Goodwill impairment	—			99,000			296,000			99,000
Other operating expense (income), net	1,282			3,632			4,334			(21,111)
Total operating expenses	789,016			1,003,145			3,222,921			3,553,841
Operating income (loss)	96,109			40,383			(107,465)			477,916
Interest expense, net	(100,799)			(101,391)			(397,916)			(410,875)
Foreign exchange (loss) gain, net	(155,449)			(101,742)			(308,898)			39,874
Other income (expense), net	990			(3,954)			(33,428)			21,092
Total non-operating expenses	(255,258)			(207,087)			(740,242)			(349,909)
(Loss) income from continuing operations before provision for income taxes	(159,149)			(166,704)			(847,707)			128,007
Provision for income taxes	72,747			2,270			27,698			130,757
Loss from continuing operations	(231,896)			(168,974)			(875,405)			(2,750)
Income from discontinued operations, net of tax	11,751			30,589			36,681			114,408
Net (loss) income	(220,145)			(138,385)			(838,724)			111,658
Less: Net income attributable to non-controlling interests from continuing operations	23,830			27,877			63,926			126,144
Less: Net (loss) income attributable to non-controlling interests from discontinued operations	(1,979)			1,436			(4,760)			4,539
Net loss attributable to IGT PLC	(241,996)			(167,698)			(897,890)			(19,025)
Net loss from continuing operations attributable to IGT PLC per common share - basic and diluted	(1.25)			(0.96)			(4.59)			(0.63)
Net loss attributable to IGT PLC per common share - basic and diluted	(1.18)			(0.82)			(4.39)			(0.09)
Weighted-average shares - basic and diluted	204,857			204,435			204,725			204,373

 

International Game Technology PLC
Consolidated Balance Sheets
($ thousands)
Unaudited
	December 31,			December 31,
	2020			2019
Assets
Current assets:
Cash and cash equivalents	907,015			654,628
Restricted cash and cash equivalents	199,246			220,962
Trade and other receivables, net	846,128			875,263
Inventories	169,207			161,790
Other current assets	479,649			513,015
Assets held for sale	838,840			208,379
Total current assets	3,440,085			2,634,037
Systems, equipment and other assets related to contracts, net	1,068,121			1,205,592
Property, plant and equipment, net	131,602			146,055
Operating lease right-of-use assets	288,196			296,751
Goodwill	4,713,489			4,931,235
Intangible assets, net	1,577,354			1,749,614
Other non-current assets	1,773,641			1,917,751
Assets held for sale	—			763,555
Total non-current assets	9,552,403			11,010,553
Total assets	12,992,488			13,644,590
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	1,126,043			1,059,033
Current portion of long-term debt	392,672			462,155
Short-term borrowings	480			3,193
Other current liabilities	846,273			758,818
Liabilities held for sale	249,573			185,152
Total current liabilities	2,615,041			2,468,351
Long-term debt, less current portion	7,857,086			7,600,169
Deferred income taxes	333,010			393,040
Operating lease liabilities	266,227			272,350
Other non-current liabilities	359,961			395,866
Liabilities held for sale	—			29,836
Total non-current liabilities	8,816,284			8,691,261
Total liabilities	11,431,325			11,159,612
Commitments and contingencies
IGT PLC's shareholders' equity	776,737			1,658,262
Non-controlling interests	784,426			826,716
Total shareholders' equity	1,561,163			2,484,978
Total liabilities and shareholders' equity	12,992,488			13,644,590

 

International Game Technology PLC
Consolidated Statements of Cash Flows
($ thousands)
Unaudited
	For the three months ended				For the year ended
	December 31,				December 31,
	2020		2019		2020		2019
Cash flows from operating activities
Net (loss) income	(220,145)		(138,385)		(838,724)		111,658
Less: Income from discontinued operations, net of tax	11,751		30,589		36,681		114,408
Adjustments to reconcile net (loss) income from continuing operations to net cash provided by operating activities from continuing operations:
Foreign exchange loss (gain), net	155,449		101,742		308,898		(39,874)
Depreciation	89,992		103,867		354,854		385,987
Amortization of upfront license fees	54,856		51,109		210,432		205,739
Amortization	50,900		57,902		211,340		227,956
Deferred income taxes	28,313		(70,883)		(78,207)		(68,293)
Debt issuance cost amortization	5,579		5,432		21,327		22,436
Stock-based compensation	3,826		6,468		(6,877)		26,514
Goodwill impairment	—		99,000		296,000		99,000
(Gain) loss on extinguishment of debt	(2)		—		28,265		11,964
(Gain) loss on sale of assets	(482)		610		(27)		(64,714)
Other non-cash items, net	(1,175)		1,980		(1,675)		18,942
Changes in operating assets and liabilities, excluding the effects of dispositions and acquisitions:
Accounts payable	49,287		21,499		4,595		28,247
Inventories	26,063		60,597		16,628		84,472
Trade and other receivables	(95,495)		(55,464)		73,578		(49,267)
Other assets and liabilities	115,815		63,575		31,076		20,981
Net cash provided by operating activities from continuing operations	251,030		278,460		594,802		907,340
Net cash provided by operating activities from discontinued operations	4,287		25,970		270,829		185,795
Net cash provided by operating activities	255,317		304,430		865,631		1,093,135
Cash flows from investing activities
Capital expenditures	(50,210)		(92,142)		(254,689)		(377,248)
Proceeds from sale of assets	2,929		23,300		9,251		123,855
Other	(286)		(274)		12,151		5,851
Net cash used in investing activities from continuing operations	(47,567)		(69,116)		(233,287)		(247,542)
Net cash used in investing activities from discontinued operations	(14,051)		(17,226)		(35,284)		(64,648)
Net cash used in investing activities	(61,618)		(86,342)		(268,571)		(312,190)
Cash flows from financing activities
Principal payments on long-term debt	(175,000)		—		(988,379)		(1,264,647)
Net (payments of) receipts from financial liabilities	(28,560)		(35,077)		67,138		(34,324)
Payments of debt issuance costs	(105)		(1,143)		(21,584)		(25,930)
Payments in connection with the extinguishment of debt	—		(91)		(25,000)		(8,689)
Proceeds from long-term debt	—		—		750,000		1,397,025
Net proceeds from (payments of) short-term borrowings	475		2,452		(7,135)		(32,067)
Dividends paid	—		(40,887)		(40,887)		(163,503)
Return of capital - non-controlling interests	(32,309)		(18,404)		(32,309)		(98,788)
Dividends paid - non-controlling interests	(497)		(971)		(136,389)		(136,655)
Capital increase - non-controlling interests	4,778		130		8,112		1,499
Other	(2,828)		(2,397)		(11,426)		(10,195)
Net cash used in financing activities	(234,046)		(96,388)		(437,859)		(376,274)
Net (decrease) increase in cash and cash equivalents and restricted cash and cash equivalents	(40,347)		121,700		159,201		404,671
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents	29,971		8,893		75,770		(22,197)
Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period	1,139,598		763,658		894,251		511,777
Cash and cash equivalents and restricted cash and cash equivalents at the end of the period	1,129,222		894,251		1,129,222		894,251
Less: Cash and cash equivalents and restricted cash and cash equivalents of discontinued operations	22,961		18,661		22,961		18,661
Cash and cash equivalents and restricted cash and cash equivalents at the end of the period of continuing operations	1,106,261		875,590		1,106,261		875,590
Supplemental Cash Flow Information:
Interest paid	(37,433)		(28,175)		(409,560)		(400,022)
Income taxes paid	(50,761)		(77,495)		(89,006)		(196,831)

 

International Game Technology PLC
Net Debt
($ thousands)
Unaudited
		December 31,			December 31,
		2020			2019
6.250% Senior Secured U.S. Dollar Notes due February 2022		1,003,822			1,491,328
4.750% Senior Secured Euro Notes due February 2023		1,038,052			948,382
5.350% Senior Secured U.S. Dollar Notes due October 2023		60,791			60,885
3.500% Senior Secured Euro Notes due July 2024		609,742			557,331
6.500% Senior Secured U.S. Dollar Notes due February 2025		1,091,641			1,089,959
3.500% Senior Secured Euro Notes due June 2026		913,330			835,105
6.250% Senior Secured U.S. Dollar Notes due January 2027		744,155			743,387
2.375% Senior Secured Euro Notes due April 2028		608,400			556,403
5.250% Senior Secured U.S. Dollar Notes due January 2029		743,125			—
Senior Secured Notes		6,813,058			6,282,780
Euro Term Loan Facility due January 2023		1,044,028			1,317,389
Long-term debt, less current portion		7,857,086			7,600,169
4.750% Senior Secured Euro Notes due March 2020		—			434,789
5.500% Senior Secured U.S. Dollar Notes due June 2020		—			27,366
Euro Term Loan Facility due January 2023		392,672			—
Current portion of long-term debt		392,672			462,155
Short-term borrowings		480			3,193
Total debt		8,250,238			8,065,517
Less: Cash and cash equivalents		907,015			654,628
Less: Debt issuance costs, net - Revolving Credit Facilities due July 2024		23,937			20,464
Net debt		7,319,286			7,390,425
Note: Net debt is a non-GAAP financial measure

 

International Game Technology PLC
Reconciliation of Non-GAAP Financial Measures
($ thousands)
Unaudited
		For the three months ended December 31, 2020
		Global Lottery			Global Gaming			Business Segment Total			Corporate and Other			Total IGT PLC
Loss from continuing operations														(231,896)
Provision for income taxes														72,747
Interest expense, net														100,799
Foreign exchange loss, net														155,449
Other non-operating income, net														(990)
Operating income (loss)		194,725			(38,763)			155,962			(59,853)			96,109
Depreciation		54,000			35,801			89,801			191			89,992
Amortization - service revenue (1)		54,856			—			54,856			—			54,856
Amortization - non-purchase accounting		8,347			2,152			10,499			796			11,295
Amortization - purchase accounting		—			—			—			39,605			39,605
Restructuring		67			(1,819)			(1,752)			(158)			(1,910)
Stock-based compensation		839			745			1,584			2,242			3,826
Other (2)		—			3			3			1,281			1,284
Adjusted EBITDA		312,834			(1,881)			310,953			(15,896)			295,057
Income from discontinued operations														11,751
Benefit from income taxes														(3,517)
Interest expense, net														5
Depreciation														8,347
Amortization														9,172
EBITDA - discontinued operations														25,758
Adjusted EBITDA - combined														320,815
Cash flows from operating activities - continuing operations														251,030
Capital expenditures														(50,210)
Free Cash Flow														200,820
Cash flows from operating activities - discontinued operations														4,287
Cash flows from investing activities - discontinued operations														(14,051)
Free Cash Flow - discontinued operations														(9,764)
Free Cash Flow - combined														191,056
(1) Includes amortization of upfront license fees
(2) Primarily includes transaction-related costs

 

International Game Technology PLC
Reconciliation of Non-GAAP Financial Measures
($ thousands)
Unaudited
		For the three months ended December 31, 2019
		Global Lottery			Global Gaming			Business Segment Total			Corporate and Other			Total IGT PLC
Loss from continuing operations														(168,974)
Provision for income taxes														2,270
Interest expense, net														101,391
Foreign exchange loss, net														101,742
Other non-operating expense, net														3,954
Operating income (loss)		153,946			58,927			212,873			(172,490)			40,383
Goodwill impairment		—			—			—			99,000			99,000
Depreciation		52,622			50,481			103,103			764			103,867
Amortization - service revenue (1)		51,109			—			51,109			—			51,109
Amortization - non-purchase accounting		6,828			2,290			9,118			826			9,944
Amortization - purchase accounting		—			—			—			47,958			47,958
Restructuring		1,166			1,404			2,570			432			3,002
Stock-based compensation		1,815			2,273			4,088			2,380			6,468
Other (2)		565			—			565			3,000			3,565
Adjusted EBITDA		268,051			115,375			383,426			(18,130)			365,296
Income from discontinued operations														30,589
Provision for income taxes														10,318
Interest income, net														(744)
Depreciation														15,105
Amortization														14,130
EBITDA - discontinued operations														69,398
Adjusted EBITDA - combined														434,694
Cash flows from operating activities - continuing operations														278,460
Capital expenditures														(92,142)
Free Cash Flow														186,318
Cash flows from operating activities - discontinued operations														25,970
Cash flows from investing activities - discontinued operations														(17,226)
Free Cash Flow - discontinued operations														8,744
Free Cash Flow - combined														195,062
(1) Includes amortization of upfront license fees
(2) Primarily includes transaction-related costs

 

International Game Technology PLC
Reconciliation of Non-GAAP Financial Measures
($ thousands)
Unaudited
		For the year ended December 31, 2020
		Global Lottery			Global Gaming			Business Segment Total			Corporate and Other			Total IGT PLC
Loss from continuing operations														(875,405)
Provision for income taxes														27,698
Interest expense, net														397,916
Foreign exchange loss, net														308,898
Other non-operating expense, net														33,428
Operating income (loss)		641,930			(205,657)			436,273			(543,738)			(107,465)
Goodwill impairment		—			—			—			296,000			296,000
Depreciation		201,054			152,508			353,562			1,292			354,854
Amortization - service revenue (1)		210,432			—			210,432			—			210,432
Amortization - non-purchase accounting		30,353			7,611			37,964			3,264			41,228
Amortization - purchase accounting		—			—			—			170,112			170,112
Restructuring		5,399			33,612			39,011			6,034			45,045
Stock-based compensation		(2,874)			(4,318)			(7,192)			315			(6,877)
Other (2)		—			3			3			4,235			4,238
Adjusted EBITDA		1,086,294			(16,241)			1,070,053			(62,486)			1,007,567
Income from discontinued operations														36,681
Provision for income taxes														6,726
Interest expense, net														172
Depreciation														44,310
Amortization														50,314
EBITDA - discontinued operations														138,203
Adjusted EBITDA - combined														1,145,770
Cash flows from operating activities - continuing operations														594,802
Capital expenditures														(254,689)
Free Cash Flow														340,113
Cash flows from operating activities - discontinued operations														270,829
Cash flows from investing activities - discontinued operations														(35,284)
Free Cash Flow - discontinued operations														235,545
Free Cash Flow - combined														575,658
(1) Includes amortization of upfront license fees
(2) Primarily includes transaction-related costs

 

International Game Technology PLC
Reconciliation of Non-GAAP Financial Measures
($ thousands)
Unaudited
		For the year ended December 31, 2019
		Global Lottery			Global Gaming			Business Segment Total			Corporate and Other			Total IGT PLC
Loss from continuing operations														(2,750)
Provision for income taxes														130,757
Interest expense, net														410,875
Foreign exchange gain, net														(39,874)
Other non-operating income, net														(21,092)
Operating income (loss)		697,267			179,548			876,815			(398,899)			477,916
Goodwill impairment		—			—			—			99,000			99,000
Depreciation		200,083			182,799			382,882			3,105			385,987
Amortization - service revenue (1)		205,739			—			205,739			—			205,739
Amortization - non-purchase accounting		25,002			8,150			33,152			3,180			36,332
Amortization - purchase accounting		—			—			—			191,624			191,624
Restructuring		2,169			18,362			20,531			4,324			24,855
Stock-based compensation		5,669			7,361			13,030			13,484			26,514
Other (2)		566			431			997			5,298			6,295
Adjusted EBITDA		1,136,495			396,651			1,533,146			(78,884)			1,454,262
Income from discontinued operations														114,408
Provision for income taxes														42,352
Interest income, net														(747)
Depreciation														48,277
Amortization														51,237
EBITDA - discontinued operations														255,527
Adjusted EBITDA - combined														1,709,789
Cash flows from operating activities - continuing operations														907,340
Capital expenditures														(377,248)
Free Cash Flow														530,092
Cash flows from operating activities - discontinued operations														185,795
Cash flows from investing activities - discontinued operations														(64,648)
Free Cash Flow - discontinued operations														121,147
Free Cash Flow - combined														651,239
(1) Includes amortization of upfront license fees
(2) Primarily includes transaction-related costs

 

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SOURCE International Game Technology PLC

FAQ

What were IGT's total revenues for Q4 2020?

IGT reported total revenues of $885 million for Q4 2020.

How did IGT's Global Lottery perform in 2020?

Global Lottery revenue increased by 11% in Q4 2020, although total revenue for the year was down 6%.

What is the net loss reported by IGT for the full year 2020?

IGT reported a net loss of $898 million for the full year 2020.

How much cash did IGT generate from operating activities in 2020?

IGT generated $866 million in cash from operating activities during 2020.

What measures is IGT taking to improve shareholder value?

IGT is undergoing a strategic reorganization to enhance core competencies and drive operational efficiencies.