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International Game Technology PLC(IGT) - 2025 Q1 - Quarterly Report

Forward-Looking Statements This section provides cautionary forward-looking statements on future plans and financial performance, including the proposed IGT Gaming & Digital sale, noting potential deviations from expectations - The report includes forward-looking statements concerning future plans, strategies, growth, and financial conditions, which are subject to significant risks and uncertainties7 - A major subject of these forward-looking statements is the proposed sale of the IGT Gaming & Digital business to a buyer owned by Apollo Funds7 - Factors that could cause actual results to differ include macroeconomic uncertainty, trade restrictions, currency fluctuations, and other risks detailed in the company's Form 20-F7 PART I: FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's discussion, market risk disclosures, and internal controls for the first quarter Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Q1 2025, including balance sheets, income, and cash flows, with the IGT Gaming business classified as discontinued operations Financial Statements Overview The company's Q1 2025 financial overview shows total assets of $10.34 billion, a revenue decline to $583 million, and increased net cash from operations Key Financial Data (Q1 2025 vs Q1 2024) | Metric | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Statement of Operations ($ in millions) | | | | Total Revenue (Continuing Ops) | $583 | $661 | | Operating Income (Continuing Ops) | $138 | $219 | | Net Income Attributable to IGT PLC | $27 | $82 | | Diluted EPS Attributable to IGT PLC | $0.13 | $0.40 | | Balance Sheet ($ in millions) | March 31, 2025 | Dec 31, 2024 | | Total Assets | $10,340 | $10,278 | | Total Liabilities | $8,346 | $8,217 | | Total Shareholders' Equity | $1,994 | $2,061 | | Cash Flow ($ in millions) | Q1 2025 | Q1 2024 | | Net Cash from Operating Activities | $224 | $120 | Note 3. Discontinued Operations and Assets Held for Sale IGT agreed to sell its Gaming business for $4.05 billion, classifying it as discontinued operations with $4.81 billion in assets held for sale - IGT agreed to sell its IGT Gaming business for approximately $4.05 billion in cash to a buyer owned by Apollo Funds. The deal is expected to close by the end of Q3 202532 Assets and Liabilities Held for Sale (as of March 31, 2025) | Category | Amount ($ in millions) | | :--- | :--- | | Assets held for sale | 4,806 | | Liabilities held for sale | 1,003 | Income from Discontinued Operations | Period | Income from Discontinued Operations, Net of Tax ($ in millions) | | :--- | :--- | | Q1 2025 | 52 | | Q1 2024 | 13 | Note 4. Revenue Recognition Total revenue from continuing operations decreased to $583 million in Q1 2025, driven by declines in both service revenue and product sales Disaggregation of Revenue (Continuing Operations) | Revenue Source ($ in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Service revenue | 557 | 619 | | Product sales | 26 | 42 | | Total revenue | 583 | 661 | - At March 31, 2025, the transaction price allocated to unsatisfied performance obligations for contracts longer than one year is approximately $871 million44 Note 9. Debt Total debt increased to $5.68 billion as of March 31, 2025, following a new €1 billion term loan facility agreement Total Debt Summary | Date | Total Debt ($ in millions) | Fair Value ($ in millions) | | :--- | :--- | :--- | | March 31, 2025 | 5,679 | 5,662 | | December 31, 2024 | 5,361 | 5,346 | - On March 14, 2025, the company entered into a new €1 billion senior facilities agreement (the "2030 Facilities"), consisting of two €500 million tranches. Facility A was utilized on March 24, 202557 Note 12. Shareholders' Equity The company declared and paid a quarterly cash dividend of $0.20 per share in Q1 2025, with another declared for June 2025 - In Q1 2025, the Board declared a quarterly cash dividend of $0.20 per share, paid on March 25, 202570 - On May 8, 2025, the Board declared another quarterly cash dividend of $0.20 per share, payable on June 12, 202570 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results for continuing lottery operations, detailing revenue decline, operating margins, and liquidity changes Business Overview The company is transitioning to a pure-play lottery business following the pending $4.05 billion sale of its IGT Gaming segment - Following the pending sale of IGT Gaming, the company operates as a pure-play lottery business, providing lottery management services and systems globally838486 - The sale of IGT Gaming to an entity owned by Apollo Funds for $4.05 billion cash is expected to close by the end of Q3 202585 Results of Operations Total revenue from continuing operations decreased by 12% to $583 million in Q1 2025, primarily due to lower LMA incentive revenue and reduced jackpot activity Revenue from Continuing Operations (Q1 2025 vs Q1 2024) | ($ in millions) | 2025 | 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Service revenue | 557 | 619 | (62) | -10% | | Product sales | 26 | 42 | (17) | -39% | | Total revenue | 583 | 661 | (78) | -12% | - The revenue decline was driven by a $32 million reduction in LMA incentive revenue and a 46.1% drop in same-store sales for U.S. multi-state jackpot games94 Operating Margin (Continuing Operations) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Income ($ in millions) | $138 | $219 | | Operating Margin (%) | 24% | 33% | Liquidity and Capital Resources Total liquidity increased to $2.15 billion at March 31, 2025, with net cash from continuing operating activities rising to $168 million Total Liquidity | ($ in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Revolving Credit Facilities | 1,519 | 1,364 | | Cash and cash equivalents | 631 | 584 | | Total Liquidity | 2,150 | 1,948 | - Net cash provided by operating activities from continuing operations increased to $168 million in Q1 2025 from $65 million in Q1 2024, primarily due to favorable timing of tax and interest payments116 - Net cash used for investing activities from continuing operations increased to $78 million from $37 million YoY, mainly due to a $42 million increase in capital expenditures117 Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its market risk disclosures since its 2024 Form 20-F filing - There have been no material changes to the disclosure under "Part I, Item 11. Quantitative and Qualitative Disclosures About Market Risk" included in the 2024 Form 20-F123 Controls and Procedures The company reports no material changes in its internal control over financial reporting during the first quarter of 2025 - No changes in internal control over financial reporting occurred during Q1 2025 that have materially affected, or are likely to materially affect, the company's internal controls124 PART II: OTHER INFORMATION This section covers legal proceedings, risk factors, and details on unregistered sales of equity securities and use of proceeds Legal Proceedings The company confirms involvement in various legal proceedings with no material developments since the 2024 Annual Report on Form 20-F - The company is party to various legal proceedings in the ordinary course of business125 - There have been no material developments to the litigation disclosed in the Annual Report on Form 20-F filed on February 25, 2025126 Risk Factors The company states that there have been no material changes to its risk factors since its 2024 Form 20-F filing - There have been no material changes to the risk factors disclosed in the 2024 Form 20-F127 Unregistered Sales of Equity Securities and Use of Proceeds No common stock repurchases occurred in Q1 2025, with $156 million repurchased under the $300 million program since inception - No repurchases of common stock were made during the first quarter ended March 31, 2025128 - The company has a $300 million share repurchase program authorized in November 2021. Since inception through March 31, 2025, $156 million (6.9 million shares) has been repurchased129