IGT reports 15% revenue decline for Q3

"The resilience of our portfolio, particularly in lottery, and benefits from our swift cost reduction initiatives are on full display in our third quarter results," said Marco Sala, CEO of IGT. "Strong player demand and a host of compelling new games, systems, and digital solutions led to a sharp, sequential improvement in our most important markets. We continue to monitor the evolution and impact of the pandemic around the world. With a simplified organization firmly in place, we are creating a leaner, stronger IGT."

"Robust cash flow generation during the quarter and year-to-date periods have enabled us to improve our liquidity and reduce net debt," said Max Chiara, CFO of IGT. "We are on track to achieve our 2020 temporary cost-reduction targets and have identified a number of initiatives that will enable us to deliver over $200 million of structural savings over the next two years. As a result, the improvement in our profitability should support our continued focus on reducing debt."

Key Highlights:

• Delivered $220 million in positive free cash flow in the quarter; generated $610 million in cash from operations and $384 million in free cash flow year-to-date

• Robust player demand drives highest Global Lottery same-store sales growth and Adjusted EBITDA in seven quarter

• Signed 2-year contract extension with New York Lottery

• Recently awarded 7-year contracts with Poland and Nebraska Lotteries following competitive bid processes

• Sharp, sequential improvement in Global Gaming revenue and profit following acute impact of the pandemic in the second quarte

• 41% increase in Digital & Betting revenue; launched full-service, in-house U.S. sports betting trading team in the third quarter and recently established new partnerships with Boyd Gaming and the National Basketball Association (NBA)

• Awarded three spots on Casino Journal's esteemed "Top 20 Most Innovative Gaming Technology Products Awards," the most of any gaming supplier

• Cashless solutions gaining traction as Resort Wallet™ launched at Resorts World Catskills

Financial highlights:

Third quarter 2020 results reflect the continued, global impact of the COVID-19 pandemic, but at a lower level compared to the second quarter

Resilient consolidated revenue of $982 million, down 15% from the prior year

• Global Lottery revenue of $570 million, up 3%, driven by double-digit growth in North America same-store sales
• Global Gaming revenue totals $412 million, down 31% on pandemic-related closures and restrictions; positive sequential trends as casinos re-open and installed base is gradually reactivated

Operating income of $129 million, compared to $154 million in the prior year

• Benefit of disciplined cost-saving actions
• Global Lottery same-store sales growth translates into high profit flow-through
• Contribution from Global Gaming impacted by $36 million higher bad debt and obsolescence charges, primarily due to the protracted pandemic slow-down in business activities

Net interest expense of $101 million compared to $103 million in the prior year

Benefit from income taxes of $27 million, compared to a provision for income taxes of $45 million, driven by lower pre-tax income and the tax impact of significant foreign exchange losses in the third quarter of 2020 versus significant foreign exchange gains in the prior-year period

Net loss attributable to IGT was $128 million; adjusted net income attributable to IGT of $54 million compared to adjusted net income of $43 million in the prior year

• Net loss includes $149 million in non-cash foreign exchange loss, primarily on Euro-denominated debt instruments

Net loss per diluted share of $0.62; adjusted net income per diluted share of $0.26 compared to adjusted net income per diluted share of $0.21 in the prior year

Adjusted EBITDA of $354 million compared to $407 million in the prior-year period

• Benefit from previously mentioned cost-saving actions
• Global Lottery achieves highest segment-level Adjusted EBITDA in seven quarters

Net debt of $7.24 billion compared to $7.38 billion at December 31, 2019; Net debt to LTM adjusted EBITDA of 5.72x up from 4.31x at December 31, 2019, due to pandemic's impact on EBITDA in the first nine months of 2020.


Cash and Liquidity Update

• At September 30, 2020, liquidity totaled $2.55 billion, an improvement from the second quarter level on strong cash flow generation; comprised of $943 million in unrestricted cash and $1.61 billion available under revolving credit facilities