News Room Details

• Q3'24 revenue of $587 million reflects sustained momentum in Italy and improved U.S. instant ticket and draw game wagers
• Operating income of $110 million includes $38 million restructuring charge associated with proactively optimizing general & administrative and operating activities following transformational actions over the last several years
• Adjusted EBITDA of $264 million and Adjusted EBITDA margin of 44.9% highlight attractive profit profile of pure play lottery business
• Year-to-date cash from operations of $724 million, with $489 million from continuing operations; continuing operations represents over 85% of year-to-date consolidated free cash flow
• Introducing Q4'24 and FY'24 outlook for continuing operations

LONDON, Nov. 12, 2024 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the third quarter ended September 30, 2024. This quarter marks the first reporting period where the results of the Gaming & Digital business are classified as discontinued operations. The sale of Gaming & Digital was announced on July 26, 2024, in a transaction expected to close by the end of the third quarter of 2025. Today, at 8:00 a.m. EST, management will host a conference call and webcast to present the results; access details are provided below.

"Our third-quarter and year-to-date performance underscores the strength and resilience of our business model marked by our scale, attractive margin structure, and strong cash generation," said Vince Sadusky, CEO of IGT. "Over the first nine months, we generated $1.9 billion in revenue, led by steady Italy growth and improved third quarter trends in the U.S. We are excited to build upon a solid foundation as we transform into a leaner, more focused global lottery pure play and capitalize on attractive industry dynamics."

"Sustained cash flow generation in the first nine months was predominantly driven by continuing operations," said Max Chiara, CFO of IGT. "The value of IGT is enhanced on a go-forward basis by a low pro forma leverage profile and by the launch of a cost optimization initiative as we look to right size the organization while supporting long-term growth initiatives."

Overview of Consolidated Third Quarter 2024 Results

Key Highlights:

• Announced sale of Gaming & Digital business to funds managed by affiliates of Apollo Global Management, Inc. for $4.05 billion in cash
• Executed 10-year facilities management contract extension with North Carolina Education Lottery
• Awarded three-year primary instant ticket printing contract with Portugal's national lottery, following a competitive procurement process
• Strengthened partnership with La Française des Jeux, operator of the French national lottery, with signing of three-year instant ticket printing contract
• Successfully issued €500M 4.25% Senior Secured Notes due 2030; subsequent call of $500M 6.50% Notes due 2025

Third Quarter 2024 Financial Highlights:

Revenue of $587 million compared to $601 million in the prior-year period

• Elevated U.S. multi-state jackpot activity in the prior year
• 2.7% Italy same-store sales growth and improvement in U.S. instant ticket and draw game trends, partially offset by customer allowance
• Increased other service revenue related to non-wager-based service contracts in Europe
• Multi-year central system software license and higher terminal sales in the prior year, partially offset by higher instant ticket printing in the current year

Gross profit of $263 million versus $278 million in the prior year

• High profit flow-through from U.S. multi-state jackpot activity in the prior year, partially offset by positive geographic mix in the current year
• Stronger terminal sales and more favorable product mix in the prior year

Selling, general, and administrative expenses of $101 million compared to $106 million in the prior-year period with the improvement primarily related to lower legal costs

Research and development of $12 million versus $9 million in the prior year related to increased investment in growth initiatives

Operating income of $110 million versus $163 million in the prior year, primarily driven by a $38 million restructuring charge associated with OPtiMa 3.0, a program focused on optimizing general & administrative and operating activities following transformational actions over the last several years (see "Other Developments" section for further details)

Adjusted EBITDA of $264 million compared to $279 million in the prior-year period; Adjusted EBITDA margin of 44.9% versus 46.4% in the prior year

• High profit flow-through from elevated U.S. multi-state jackpot sales in prior year partially offset by positive geographic mix in the current year
• Higher terminal sales and beneficial product mix in prior year
• Lower legal costs in the current year
• Investment in growth initiatives

Net interest expense of $53 million in line with $54 million in the prior year

Foreign exchange loss of $39 million, compared to a gain of $36 million in the prior year, primarily due to non-cash impact of fluctuations in the EUR/USD exchange rate on debt and loss on a foreign currency hedge related to issuance of EUR debt

Other non-operating expense, net, of $2 million versus $3 million in the prior year

Income tax provision of $61 million, compared to $65 million in the prior year, primarily related to non-deductible foreign exchange losses and restructuring costs

Net income of $43 million versus $123 million in the prior-year period

Diluted loss per share from continuing operations of $0.39 compared to diluted earnings per share from continuing operations of $0.23 in the prior year primarily driven by the after-tax impact of foreign currency losses versus foreign currency gains in the prior year ($0.42 per share) and restructuring costs ($0.13 per share); adjusted diluted loss per share from continuing operations of $0.02 compared to adjusted diluted earnings per share from continuing operations of $0.04 in the prior year driven by lower operating income, partially offset by a higher effective tax rate

Nine Months Ended September 30, 2024 Financial Highlights:

Revenue of $1.86 billion compared to $1.85 billion in the prior year

• Elevated U.S. multi-state jackpot activity in the prior year
• 3.1% Italy same-store sales growth
• Increased other service revenue related to non-wager-based service contracts in Europe
• Higher instant ticket printing services in the current year

Operating income of $507 million versus $555 million in the prior year, primarily driven by a $38 million restructuring charge associated with OPtiMa 3.0, a program focused on optimizing general & administrative and operating activities following transformational actions over the last several years (see "Other Developments" section for further details)

Adjusted EBITDA of $880 million compared to $898 million in the prior-year period; Adjusted EBITDA margin of 47.3% versus 48.6% in the prior year

• High profit flow-through from elevated U.S. multi-state jackpot sales in prior year
• Higher-margin product sales mix in prior year
• Continued cost management discipline and lower legal costs in the current year
• Investment in growth initiatives

Diluted earnings per share from continuing operations of $0.17 compared to $0.38 in the prior-year period, primarily driven by the after-tax impact of foreign currency losses versus foreign currency gains in the prior year ($0.16 per share) and restructuring costs ($0.12 per share); adjusted diluted earnings per share from continuing operations of $0.46 compared to $0.41 in the prior year driven by a reduced effective tax rate

Year-to-date cash from operations of $724 million, $489 million from continuing operations; free cash flow from continuing operations of $385 million

Net debt of $5.2 billion in line with balance at December 31, 2023; pro forma net debt leverage of 2.6x aligns Adjusted EBITDA from continuing operations with the committed $2 billion debt reduction upon closing the sale of the Gaming & Digital business

Cash and Liquidity Update
Total liquidity of $1.9 billion as of September 30, 2024; $0.5 billion in unrestricted cash and $1.4 billion in additional borrowing capacity from undrawn credit facilities

Other Developments
Initiated OPtiMa 3.0, a multi-year program aimed at optimizing the Company's general & administrative and operating activities following transformational actions over the last several years, and to position the Company for success as a global lottery pure play

• Immediately addresses stranded corporate costs associated with the sale of Gaming & Digital business
• $40 million of annualized cost savings expected by the end of 2026; approximately 50% of those savings expected to be realized by the end of 2025
• $38 million restructuring charge, $27 million after tax, incurred in the third quarter of 2024, primarily related to the planned reduction of approximately 3% of the Company's global workforce

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

• Record date of November 26, 2024
• Payment date of December 10, 2024

Introducing Fourth Quarter and Full Year 2024 Outlook
Fourth Quarter

• Revenue of $640 - $690 million
• Adjusted EBITDA of $280 - $300 million

Full Year

• Revenue of $2.50 - $2.55 billion
• Adjusted EBITDA of $1.16 - $1.18 billion

The Company has provided select recast historical income statement, cash flow, and KPI data (both on a U.S. GAAP and non-GAAP basis) in the body of this news release to show the impact of Gaming & Digital as discontinued operations.

Earnings Conference Call and Webcast
November 12, 2024, at 8:00 a.m. EST

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 2024 are calculated using the same foreign exchange rates as the corresponding 2023 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 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, including with respect to the proposed sale of the Gaming & Digital business to funds managed by affiliates of Apollo Global Management, Inc. (the "Buyer"). These statements may discuss goals, intentions, and expectations as to future plans and strategies, transactions, including the sale of Gaming & Digital to the Buyer, trends, events, dividends, results of operations, and/or financial condition or measures, including our expectations on the future release of revenue, Adjusted EBITDA, and any other future financial performance guidance for continuing operations, 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, 2023 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) from continuing operations (a GAAP measure) before income taxes, interest expense, net, foreign exchange gain (loss), net, other non-operating expenses (e.g., 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.

Adjusted EBITDA margin represents Adjusted EBITDA divided by revenue

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., 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. Cash and cash equivalents, including cash and cash equivalents 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. 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 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.

Outlook for Fiscal 2024 and Guidance Policy
The Company's updated guidance for fiscal 2024 is:

• Total revenue of approximately $2.50 - $2.55 billion
• Adjusted EBITDA of $1.16 - $1.18 billion

The Company provides guidance of select information related to its financial and operating performance, and such measures may differ from year to year. The guidance is only an estimate of what the Company believes is realizable as of the date of this release. Actual results will vary from the guidance and the variations may be material. The Company undertakes no intent or obligation to publicly update or revise any of these projections, whether as a result of new information, future events or otherwise, except as required by law.

A reconciliation of the Company's forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure cannot be provided without unreasonable effort. This is due to the inherent difficulty of accurately forecasting the occurrence and financial impact of the adjusting items necessary for such a reconciliation to be prepared, for example, the provision for income taxes or net foreign exchange gain/loss, as such items have not yet occurred, are out of the Company's control, or cannot be reasonably predicted.

Contact:
Phil O'Shaughnessy, Global Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
Matteo Selva, Italian media inquiries, +39 366 6803635
James Hurley, Investor Relations, +1 (401) 392-7190 

Recast Historical Financial Information

Recast data reflects the treatment of IGT's Gaming & Digital businesses as discontinued operations and revised revenue and KPI components.