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IGT generates $1.06 billion in revenue during Q1

9 May 2023

(PRESS RELEASE) -- International Game Technology PLC today reported financial results for the first quarter ended 31 March 2023.

"Our first quarter results exceeded expectations and put us firmly on track to achieve our full-year outlook," said Vince Sadusky, CEO of IGT. "Compelling innovation and sustained strength in customer and player demand are fueling momentum across our Global Lottery, Global Gaming, and PlayDigital segments. This is clear in the excellent key performance indicators achieved in the quarter. We believe the focused execution of our strategy to Grow, Innovate, and Optimize should create significant value as we progress toward our 2025 goals."

"The strong start to the year includes significant cash flow generation and further improvement in our credit profile," said Max Chiara, CFO of IGT. "The continued improvement in net debt leverage reinforces our conviction in accomplishing the lower end of the 2.5x - 3.5x target range by 2025. We are focused on enhancing our financial flexibility, being operationally agile, and remaining disciplined with costs, all of which should enable the achievement of our 2025 margin and cash flow targets even in the current uncertain macroeconomic context."

Key Highlights:

  • Global Lottery same-store sales rose 8%; Italy up over 10% on new games and portfolio optimization strategies; elevated jackpot activity contributed to 7% growth in North America and Rest of world

  • Won several awards including "Lottery Product of the Year" at International Gaming Awards, "Casino Supplier of the Year" at Global Gaming Awards London, and "Best Slot Machine" and "Best Diversity and Inclusion Employer" at European Casino Awards

  • Recognized with top honors at EKG slot awards including "Most Improved Supplier - Premium," "Top Performing New Mechanical Reel Cabinet" for innovative new DiamondRS™ cabinet, "Top Performing Video Poker Game" for Ultimate X Poker™, and "Top Performing Third-Party IP-Branded Game" for Wheel of Fortune® High Roller™

  • Growth in cashless gaming leadership continues with signing of multi-year agreement with Graton Resort & Casino to enable cashless gaming through award-winning Resort Wallet™ and IGTPay solutions

  • Extended sports betting momentum through strategic agreements with Betfred, Treasure Bay Casino and Hotel, UBetOhio, Santa Ana Star Casino Hotel, and BetSkybox; recently signed three-year contract extension in Rhode Island

  • Achieved improved ESG score in 2022 S&P Global Corporate Sustainability Assessment and increased global environmental score from CDP

Financial Highlights:

Consolidated revenue of $1.06 billion, up 1% or 3% at constant currency, compared to $1.05 billion in the prior year; at constant currency and net of the Italy commercial services sale in September 2022, revenue increased 10%

  • Global Lottery revenue of $624 million was down 8% year-over-year due to the sale of Italy commercial services business; at constant currency and net of the Italy commercial services sale, revenue rose 4% primarily driven by strong same-store sales, led by Italy and elevated U.S. multi-jurisdictional jackpot activity

  • Global Gaming revenue rose 17%, 19% at constant currency, to $381 million, as demand for compelling products drove double-digit increases in both service and product sale revenue streams, with record first quarter unit shipments and average selling prices, installed base growth, and higher yields

  • PlayDigital revenue increased 17%, 20% at constant currency, to $55 million, primarily driven by iCasino with contributions from the iSoftBet acquisition and organic growth, partially offset by higher jackpot expense

Operating income of $255 million increased 1%, or 3% at constant currency, from $252 million in the prior year

  • Global Lottery operating income of $240 million, down 5% and 3% at constant currency due to the sale of Italy commercial services business; strong 38% operating income margin driven by high profit flow-through of same-store sales growth, including elevated jackpot activity, and positive geographic mix

  • Global Gaming operating income of $69 million increased 34% on strong installed base productivity and operating leverage on a leaner cost structure

  • PlayDigital operating income of $14 million, up 9% as reported and 15% at constant currency; operating income margin modestly better than Q4'22 despite significantly higher jackpot expense

  • Corporate support and other expense of $68 million, up from $64 million in the prior year, driven by higher amortization expense resulting from changes in currency rates

Adjusted EBITDA of $449 million versus $433 million in the prior-year period, primarily as a result of the operating income dynamics above and higher depreciation and amortization; Adjusted EBITDA margin expands 110 basis points to 42.3% on higher Global Lottery and Global Gaming margins

Net interest expense of $70 million compared to $76 million in the prior year, primarily driven by lower average debt balances

Foreign exchange loss of $26 million, compared to foreign exchange gain of $3 million in the prior year, primarily reflecting the impact of fluctuations in the EUR/USD exchange rate on debt

Income tax provision of $87 million compared to $65 million in the prior year, primarily driven by incremental valuation allowances on deferred tax assets, partially offset by lower pre-tax income

Net income of $67 million versus $117 million in the prior-year period

Diluted earnings per share of $0.11 versus $0.39 in the prior year primarily reflects foreign currency gains/losses and related tax impact; Adjusted diluted earnings per share of $0.49 versus $0.60

Net debt of $5.1 billion compared to $5.2 billion at December 31, 2022; Net debt leverage of 3.0x, down from 3.1x at December 31, 2022

Cash and Liquidity Update:

Total liquidity of $2.1 billion as of March 31, 2023; $0.7 billion in unrestricted cash and $1.4 billion in additional borrowing capacity from undrawn credit facilities

Successfully completed full redemption of 5.35% Notes due 2023 and partial make-whole redemption of certain Senior Secured Notes, repurchasing $200 million of 6.50% Notes due 2025 and €188 million of 3.50% Notes due 2024

Other Developments:

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

  • Ex-dividend date of May 24, 2023
  • Record date of May 25, 2023
  • Payment date of June 8, 2023

Introducing Second Quarter 2023 Expectations; Reaffirming Full-Year 2023 Outlook Range:

Second Quarter:
  • Revenue of approximately $1.0 billion
  • Operating income margin of 22% - 24%

Full Year:
  • Revenue of $4.1 billion - $4.3 billion
  • Operating income margin of 21% - 23%
  • Cash from operations of $900 million - $1,000 million
  • Capital expenditures of $400 million - $450 million
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