IGT reports record global gaming product sales in 2019

International Game Technology (IGT) reported Tuesday financial results for the fourth quarter and full-year ended December 31, 2019.

While the company achieved record global gaming product sales in 2019, it saw a full-year net loss of $19 million, which includes a $99 million non-cash goodwill impairment charge.

As reported by IGT, its fourth-quarter net loss of $168 million reflects non-cash FX losses and impairment charge, and its adjusted EBITDA of $436 million was driven by higher profits from North America Gaming and International segments.

"We achieved the high end of our profit and cash flow expectations for 2019, led by strong results for our North America Gaming and Italy segments," said Marco Sala, CEO of IGT. "In the full year, we grew global gaming product sales by more than 20% thanks to higher unit shipments and the success of our new games. Global lottery same-store revenue also rose. We are closely monitoring the impact of the Coronavirus outbreak. Apart from this, solid operational performance across products and regions should support continued momentum in 2020."

"2019 marked an important inflection in cash flows for IGT," said Timothy Rishton, Interim CFO of IGT. "Having generated $1.1 billion in cash from operations, we invested in the business, paid down debt, and returned capital to shareholders. We enter 2020 in strong financial condition."

Overview of Consolidated Fourth Quarter 2019 Results 

Consolidated revenue of $1.25 billion, down 1% from the prior year as reported, in line at constant currency

• Strong growth in global gaming and North America lottery product sales
• Higher sports betting contribution from Italy and North America
• Lower service revenues from reduced North American multistate jackpot activity and impact of Italy gaming machine taxes

Operating income of $81 million, up from $41 million in the prior year

• Reduced goodwill impairment
• Beneficial product sales mix
• Lower bad debt expense

Adjusted EBITDA of $436 million, up 5% from the prior-year period as reported, up 6% at constant currency

• Higher profit contributions from North America Gaming & Interactive, International, and Italy segments
• North America Lottery impacted by lower jackpot activity

Interest expense, net was $101 million, down 3% from the prior-year quarter

Income taxes of $13 million, down from $30 million on lower pre-tax income

Net loss attributable to IGT was $168 million; adjusted net income attributable to IGT of $63 million, up from $48 million in the prior year

• Net loss includes non-cash, non-deductible goodwill impairment charge of $99 million, reducing the carrying value of the International segment, in addition to $102 million of non-cash foreign exchange losses
• Adjusted net income increase driven by higher operating income

Net loss per diluted share of $0.82; adjusted net income per diluted share of $0.31 versus $0.24 in the prior year

Net debt of $7.38 billion, an improvement of 5% from $7.76 billion at December 31, 2018

Overview of Consolidated Full Year 2019 Results

Consolidated revenue was $4.79 billion, down 1% from 2018 as reported, up 2% at constant currency

• Significant growth in global gaming product sales, sports betting, and Italy commercial services
• Global service revenue impacted by higher gaming machine taxes in Italy, Illinois lottery contract conclusion, and exceptional North American jackpot activity in the prior year

Operating income of $637 million, down 2% from the prior year as reported, up 3% at constant currency

• Reduced goodwill impairment

Adjusted EBITDA of $1.71 billion, down 1% as reported, up 2% at constant currency

• Strong profit growth from North America Gaming & Interactive and Italy at constant currency

Interest expense, net was $410 million, down from $417 million in the prior year 

Income taxes of $173 million, down from $189 million on lower pre-tax income

Net loss attributable to IGT was $19 million; adjusted net income attributable to IGT of $221 million, up from $201 million in the prior year

• Net loss includes non-cash, non-deductible goodwill impairment charge of $99 million, reducing the carrying value of the International segment
• Adjusted net income increase driven by reduced interest expense and lower income taxes

Net loss per diluted share of $0.09; adjusted net income per diluted share of $1.08 versus $0.99 in the prior year

Capital expenditures of $442 million compared to $533 million in the prior year

Cash from operations totals $1.1 billion, up significantly from $30 million in the prior year, which included $878 million in Italy upfront license fees

Cash and cash equivalents were $663 million as of December 31, 2019, compared to $251 million as of December 31, 2018.

See the full report here.