International Game Technology PLC(IGT) - 2025 Q2 - Quarterly Report

Forward-Looking Statements This section outlines the company's forward-looking statements regarding future plans, strategies, and financial performance, along with associated risks - Forward-looking statements cover future plans, strategies, expected growth, transactions (including IGT Gaming sale impacts), trends, financial condition, and measures like revenue, operating income, and capital expenditures[7] - Key risk factors include macroeconomic, regulatory, and political uncertainty, foreign currency exchange rate fluctuations, changes in interest and inflation rates, and impacts from increased U.S. national deficits[7] PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis of Brightstar Lottery PLC's financial condition and results of operations Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements of Brightstar Lottery PLC, including the Balance Sheets, Statements of Operations, Comprehensive Income, Cash Flows, and Shareholders' Equity, along with accompanying notes, for the periods ended June 30, 2025 and December 31, 2024 (for balance sheet) and June 30, 2025 and 2024 (for income and cash flow statements) Condensed Consolidated Balance Sheets This section presents the company's financial position at specific dates, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (Selected Items): | Metric | June 30, 2025 ($ millions) | December 31, 2024 ($ millions) | Change ($ millions) | | :--------------------------------- | :-------------------------- | :----------------------------- | :------------------ | | Cash and cash equivalents | 1,309 | 584 | 725 | | Assets held for sale | 4,957 | 4,765 | 192 | | Total current assets | 7,057 | 6,165 | 892 | | Total assets | 11,238 | 10,278 | 960 | | Current portion of long-term debt | 1,861 | 208 | 1,653 | | Liabilities held for sale | 981 | 1,142 | (161) | | Total current liabilities | 4,126 | 2,687 | 1,439 | | Total liabilities | 9,226 | 8,217 | 1,009 | | Total shareholders' equity | 2,012 | 2,061 | (49) | Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net income or loss over specific periods Condensed Consolidated Statements of Operations (Selected Items): | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | | :------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Total revenue | 631 | 613 | 1,214 | 1,274 | | Total operating expenses | 492 | 434 | 937 | 877 | | Operating income | 139 | 179 | 277 | 397 | | Total non-operating expenses | 149 | 52 | 231 | 97 | | (Loss) income from continuing operations before taxes | (10) | 127 | 46 | 300 | | Provision for income taxes | 50 | 43 | 97 | 100 | | (Loss) income from continuing operations | (60) | 84 | (52) | 200 | | Income from discontinued operations, net of tax | 40 | — | 92 | 13 | | Net (loss) income | (20) | 85 | 40 | 213 | | Net (loss) income attributable to Brightstar Lottery PLC | (58) | 42 | (31) | 123 | - Net (loss) income attributable to Brightstar Lottery PLC per common share - basic for the three months ended June 30, 2025, was ($0.29), a decrease from $0.21 in the prior year; for the six months, it was ($0.15), down from $0.61[14] Condensed Consolidated Statements of Comprehensive Income This section presents the company's comprehensive income, including net income and other comprehensive income items Condensed Consolidated Statements of Comprehensive Income (Selected Items): | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | | :------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net (loss) income | (20) | 85 | 40 | 213 | | Foreign currency translation adjustments, net of tax | 17 | 1 | 29 | (9) | | Unrealized (loss) gain on hedges, net of tax | (5) | — | (7) | 2 | | Other comprehensive income (loss), net of tax | 13 | 1 | 22 | (8) | | Comprehensive (loss) income | (8) | 86 | 62 | 205 | | Comprehensive (loss) income attributable to Brightstar Lottery PLC | (65) | 45 | (42) | 135 | Condensed Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Selected Items): | Metric | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | | :------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------ | | Net cash provided by operating activities from continuing operations | 433 | 315 | 118 | | Net cash provided by operating activities from discontinued operations | 101 | 148 | (47) | | Net cash provided by operating activities | 534 | 463 | 71 | | Net cash used in investing activities from continuing operations | (175) | (76) | (99) | | Net cash used in investing activities from discontinued operations | (85) | (104) | 19 | | Net cash used in investing activities | (260) | (180) | (80) | | Net cash provided by (used in) financing activities from continuing operations | 581 | (413) | 994 | | Net cash used in financing activities from discontinued operations | (143) | (20) | (123) | | Net cash provided by (used in) financing activities | 438 | (433) | 871 | | Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents | 712 | (149) | 861 | | Cash and cash equivalents and restricted cash and cash equivalents at the end of the period | 1,546 | 559 | 987 | Condensed Consolidated Statements of Shareholders' Equity This section presents changes in the company's equity accounts, including net income, dividends, and other comprehensive income Condensed Consolidated Statements of Shareholders' Equity (Selected Items): | Metric | December 31, 2024 ($ millions) | March 31, 2025 ($ millions) | June 30, 2025 ($ millions) | | :--------------------------------------- | :----------------------------- | :-------------------------- | :-------------------------- | | Total Brightstar Lottery PLC's Equity | 1,652 | 1,642 | 1,531 | | Non-controlling Interests | 409 | 353 | 481 | | Total Shareholders' Equity | 2,061 | 1,994 | 2,012 | | Net (loss) income attributable to Brightstar Lottery PLC (Q2 2025) | N/A | N/A | (58) | | Dividends declared (Q2 2025) | N/A | N/A | (41) | | Capital increase - non-controlling interests (Q2 2025) | N/A | N/A | 180 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering business description, accounting policies, discontinued operations, revenue, and other financial items 1. Description of Business This section outlines the company's business activities and recent strategic changes - The company changed its corporate name from International Game Technology PLC to Brightstar Lottery PLC in July 2025[24] - Brightstar Lottery is now a pure-play global lottery company, focusing on lottery operations, retail and digital solutions, and award-winning lottery games[25] - The sale of the Gaming & Digital business (IGT Gaming) to Apollo Funds was completed on July 1, 2025[26] 2. Summary of Significant Accounting Policies This section details the key accounting principles and methods used in preparing the financial statements - Financial statements are prepared in accordance with GAAP for interim financial information, with amounts stated in millions of U.S. dollars[27][28] - IGT Gaming's financial results are reflected as discontinued operations and its assets/liabilities as held for sale for all periods presented, with retrospective reclassifications[29] - ASU No. 2023-09, enhancing income tax disclosures, will be applied prospectively from December 31, 2025[33] 3. Discontinued Operations and Assets Held for Sale This section provides details on the financial impact and classification of the IGT Gaming business as a discontinued operation - IGT Gaming is presented as a discontinued operation and its assets/liabilities as held for sale due to the strategic shift from the transaction[35] IGT Gaming Assets and Liabilities Held for Sale: | Category | June 30, 2025 ($ millions) | December 31, 2024 ($ millions) | | :---------------------------------------------------------------- | :-------------------------- | :----------------------------- | | Assets held for sale | 4,957 | 4,765 | | Liabilities held for sale | 981 | 1,142 | Summarized Statement of Operations for IGT Gaming Discontinued Operations: | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | | :------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Total revenue | 402 | 436 | 796 | 842 | | Income from discontinued operations, net of tax | 40 | — | 92 | 13 | - Brightstar will provide transition services (IT, HR, back-office) and license intellectual property to IGT Gaming for up to two years post-transaction[37][38] 4. Revenue Recognition This section details the company's revenue streams and how revenue is recognized from contracts with customers Disaggregation of Revenue: | Revenue Type | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | | :------------------------------------ | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Service revenue | 588 | 586 | 1,146 | 1,205 | | Product sales | 42 | 27 | 68 | 69 | | Total revenue | 631 | 613 | 1,214 | 1,274 | - Contract assets were $52 million at June 30, 2025, and contract liabilities were $53 million; $19 million of revenue recognized in the six months ended June 30, 2025, was from beginning-of-period contract liabilities[41][42][43] - Approximately $863 million in transaction price is allocated to unsatisfied performance obligations for contracts greater than one year, with 28% expected to be recognized within 12 months[44] 5. Trade and Other Receivables This section provides a breakdown of the company's trade and other receivables, net of allowances Trade and Other Receivables, net: | Metric | June 30, 2025 ($ millions) | December 31, 2024 ($ millions) | | :-------------------------------- | :-------------------------- | :----------------------------- | | Trade and other receivables, gross | 429 | 469 | | Allowance for credit losses | (1) | (1) | | Trade and other receivables, net | 428 | 468 | - The company factored $217 million in trade receivables during the six months ended June 30, 2025, with cash received reflected as operating activities[47] 6. Inventories, net This section details the composition of the company's inventories, net of reserves Inventories, net: | Metric | June 30, 2025 ($ millions) | December 31, 2024 ($ millions) | | :-------------------------- | :-------------------------- | :----------------------------- | | Raw materials | 26 | 25 | | Work in progress | 3 | 3 | | Finished goods | 90 | 87 | | Inventories, gross | 119 | 114 | | Excess and obsolescence reserve | (2) | (2) | | Inventories, net | 117 | 113 | 7. Leases This section provides information on the company's lease assets, liabilities, and associated expenses Lease Assets and Liabilities: | Metric | June 30, 2025 ($ millions) | December 31, 2024 ($ millions) | | :-------------------------------- | :-------------------------- | :----------------------------- | | Operating ROU asset | 99 | 102 | | Finance ROU asset, net | 17 | 16 | | Total lease assets | 117 | 118 | | Operating lease liability, current | 25 | 24 | | Finance lease liability, current | 8 | 7 | | Operating lease liability, non-current | 79 | 83 | | Finance lease liability, non-current | 14 | 14 | | Total lease liabilities | 127 | 128 | Components of Lease Expense (Six Months Ended June 30): | Metric | 2025 ($ millions) | 2024 ($ millions) | | :---------------------- | :---------------- | :---------------- | | Operating lease costs | 16 | 15 | | Finance lease costs | 3 | 3 | | Short-term lease costs | 12 | 12 | | Variable lease costs | 7 | 7 | - Weighted-average remaining lease terms for operating leases were 2.51 years and for finance leases were 3.06 years at June 30, 2025[51] 8. Restructuring This section details the company's restructuring activities, including plans, expenses, and liabilities - Phase 2 of the OPtiMa 3.0 restructuring plan commenced in Q2 2025, focusing on realigning and optimizing general and administrative activities[54] Consolidated Restructuring Expense: | Metric | 3 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2025 ($ millions) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Severance and Related Employee Costs | 21 | 21 | | Total | 21 | 21 | Rollforward of Restructuring Liability (Six Months Ended June 30, 2025): | Plan | Balance at beginning of period ($ millions) | Restructuring expense, net ($ millions) | Cash payments ($ millions) | Balance at end of period ($ millions) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------- | :-------------------------- | | OPtiMa 3.0 Plan Phase 1 | 29 | — | (13) | 18 | | OPtiMa 3.0 Plan Phase 2 | — | 23 | — | 23 | | 2021 Italian Workforce Redundancies | 16 | — | (2) | 16 | | Total | 46 | 23 | (15) | 56 | 9. Debt This section provides information on the company's debt obligations, including types, amounts, and related interest expenses Debt Obligations (Selected Items): | Metric | June 30, 2025 ($ millions) | December 31, 2024 ($ millions) | | :-------------------------------- | :-------------------------- | :----------------------------- | | Senior Secured Notes | 2,658 | 4,050 | | Euro Term Loan Facilities | 1,631 | 619 | | Revolving Credit Facility | 400 | 485 | | Long-term debt, less current portion | 4,688 | 5,153 | | Current portion of long-term debt | 1,861 | 208 | | Total debt | 6,549 | 5,361 | - The company entered into a new €1 billion senior facilities agreement (2030 Facilities) in March 2025, with Facility A for general corporate purposes and Facility B for the Italian Lotto license upfront fee[59][60] Interest Expense, net (Six Months Ended June 30): | Metric | 2025 ($ millions) | 2024 ($ millions) | | :---------------------- | :---------------- | :---------------- | | Interest expense, net | 94 | 106 | - The 2030 Facilities Agreement limits annual dividends and share repurchases to $400 million or $550 million based on public debt ratings, with the limit eliminated if ratings are higher[62] 10. Commitments and Contingencies This section outlines the company's legal, regulatory, and administrative proceedings and related financial provisions - The company is subject to various legal, regulatory, and administrative proceedings, including claims, injunctions, and ethics inquiries[66][67] - Provisions for all legal proceedings were $4 million at June 30, 2025[68] 11. Income Taxes This section provides details on the company's income tax provision, effective tax rates, and uncertain tax positions Income Taxes (Selected Items): | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | | :------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | (Loss) income before provision for income taxes | (10) | 127 | 46 | 300 | | Provision for income taxes | 50 | 43 | 97 | 100 | | Effective income tax rate | (482.6)% | 33.6% | 212.9% | 33.3% | - The effective tax rates for 2025 were significantly impacted by operating losses in jurisdictions without tax benefits, foreign rate differentials, and international tax provisions[69] - Reserves for uncertain tax positions were $17 million, and accrued interest and penalties were $29 million at June 30, 2025[71] - The "One Big Beautiful Bill Act" (OBBBA) was enacted in the U.S. on July 4, 2025, introducing significant tax measures, the impact of which is currently being assessed[73] 12. Shareholders' Equity This section details changes in shareholders' equity, including dividends and accumulated other comprehensive income - A quarterly cash dividend of $0.20 per share was paid on June 12, 2025[74] - A special cash dividend of $3.00 per share (approx. $609 million) was declared on July 1, 2025, payable on July 29, 2025[75] - A quarterly cash dividend of $0.20 per share (approx. $41 million) was declared on July 24, 2025, payable on August 26, 2025[75] Accumulated Other Comprehensive Income (AOCI) Attributable to Brightstar Lottery PLC: | Metric | December 31, 2024 ($ millions) | June 30, 2025 ($ millions) | | :------------------------------------------------- | :----------------------------- | :-------------------------- | | Balance | 516 | 505 | 13. Earnings Per Share This section presents the company's basic and diluted earnings per share calculations Earnings Per Share (Selected Items): | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net (loss) income from continuing operations attributable to Brightstar Lottery PLC per common share - basic | (0.47) | 0.21 | (0.59) | 0.57 | | Net (loss) income attributable to Brightstar Lottery PLC per common share - basic | (0.29) | 0.21 | (0.15) | 0.61 | | Weighted-average shares - basic (millions) | 203 | 201 | 203 | 201 | - Stock options and unvested restricted stock awards were excluded from diluted EPS computation in periods of net loss due to their antidilutive effect[78] 14. Segment Information This section describes the company's operating segments and how performance is evaluated - The company operates as a single segment, a pure-play lottery business, providing sales, operations, product development, technology, and support to lottery customers worldwide[79] - The CODM uses net income from continuing operations to evaluate capital allocation strategy, including reinvestment, debt repayment, dividends, or acquisitions[80] 15. Related Parties This section discloses transactions and relationships with related parties - Enrico Drago, a former CEO of PlayDigital and Board member, had his synthetic equity award modified multiple times, including changes to valuation methodology and accelerated vesting upon the IGT Gaming sale[83][84][85] 16. Subsequent Event This section reports significant events that occurred after the balance sheet date but before the financial statements were issued - The sale of IGT Gaming was completed on July 1, 2025, with estimated proceeds of $4.1 billion to $4.2 billion and an expected gain in Q3 2025[86] - Proceeds from the IGT Gaming sale are allocated as follows: $2.0 billion for debt reductions, $1.1 billion for shareholder returns (special dividend and share repurchase), $500 million for Italy Lotto license payments, and $400 million for general corporate purposes[90] - The company redeemed $750 million of 4.125% Senior Secured U.S. Dollar Notes due April 2026 and $879 million of 3.500% Senior Secured Euro Notes due June 2026, and prepaid $351 million and $53 million of Term Loan Facilities and Revolving Credit Facilities, respectively[87] - A new $500 million share repurchase program was authorized on July 1, 2025, replacing the prior program[89] - Brightstar Lottery was awarded the Italy Lotto License, effective December 1, 2025, with the first €500 million installment paid on July 17, 2025[91] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Brightstar Lottery PLC's financial condition and results of operations for the three and six months ended June 30, 2025 and 2024. It discusses business overview, key factors affecting operations, critical accounting estimates, and detailed analysis of revenues, costs, margins, and cash flows, with IGT Gaming presented as discontinued operations Business Overview This section provides an overview of Brightstar Lottery's business model and strategic direction - Brightstar Lottery is a pure-play global lottery company, providing integrated lottery solutions, including lottery management services, instant lottery systems, and iLottery platforms[95][96] - The financial results of IGT Gaming are presented as discontinued operations, and its assets and liabilities as held for sale, reflecting the company's transition to a pure-play lottery business[98] Key Factors Affecting Operations and Financial Condition This section discusses the significant external and internal factors influencing the company's performance and financial health - Global operations are affected by macroeconomic factors such as tightening monetary policy, increased U.S. national deficits, changing inflation rates, foreign exchange rate fluctuations, and geopolitical conflicts[99] - These events did not have a material impact on the company's supply chain or results of operations during the six months ended June 30, 2025, but future impacts are unknown[99] Critical Accounting Estimates This section highlights the accounting estimates that require significant judgment and can materially impact financial reporting - Financial statements rely on estimates, judgments, and assumptions, which are based on historical experience and reasonable assumptions[100] - No material changes to critical accounting estimates were made from the 2024 Form 20-F[100] Results of Operations This section analyzes Brightstar Lottery PLC's financial performance, detailing revenues, costs, gross margins, operating expenses, and non-operating items for the periods presented Revenues and Key Performance Indicators This section provides an analysis of the company's revenue streams and key metrics driving performance Total Revenue: | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | Change (%) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | Change (%) | | :---------------- | :--------------------------------------- | :--------------------------------------- | :------------------ | :--------- | :--------------------------------------- | :--------------------------------------- | :------------------ | :--------- | | Total revenue | 631 | 613 | 18 | +3 | 1,214 | 1,274 | (60) | -5 | - Q2 2025 revenue increase was driven by product sales and higher instant ticket and draw-game same-store sales in Italy (+3.7%) and Rest of World (+8.4%), offset by reduced LMA incentive revenue and lower U.S. MSJP activity (-34.5%)[102][106][108] - H1 2025 revenue decrease was primarily due to a $52 million reduction in LMA incentive revenue and a 41.2% drop in U.S. MSJP same-store sales, partially offset by instant and draw game revenues in Italy (+1.4%) and Rest of World (+6.8%)[103][108][111] Cost of Revenue This section analyzes the costs directly associated with generating the company's revenues Cost of Revenue: | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | Change (%) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | Change (%) | | :---------------- | :--------------------------------------- | :--------------------------------------- | :------------------ | :--------- | :--------------------------------------- | :--------------------------------------- | :------------------ | :--------- | | Cost of services | 321 | 304 | 17 | +6 | 626 | 608 | 18 | +3 | | Cost of product sales | 35 | 22 | 13 | +61 | 57 | 48 | 10 | +20 | - Q2 2025 cost of services increased due to higher point-of-sale consumables, postage & freight, marketing, and depreciation; cost of product sales increased in line with product sales[114] - H1 2025 cost of services increased due to a 420 basis point rise in cost of services as a percentage of service revenue, driven by higher depreciation, payroll, and licensing costs; cost of product sales increased due to changes in product mix[115][116] Gross Margins This section examines the company's profitability after accounting for the cost of revenue Gross Margins: | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (bps) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (bps) | | :-------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Service gross margin % | 45% | 48% | (280) | 45% | 50% | (420) | | Product gross margin % | 17% | 18% | (100) | 16% | 31% | (1480) | - Service gross margin decline was mainly due to reduced LMA incentive revenues, which impact revenue without a corresponding cost reduction[117] - Product gross margin for six months declined due to reduced product sales and a less favorable product mix, specifically a decrease in higher-margin systems/software sales and an increase in lower-margin ticket printing sales[118] Operating expenses This section analyzes the company's selling, general, administrative, research and development, and other operating costs Operating Expenses (Selected Items): | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | Change (%) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | Change (%) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------ | :--------- | :--------------------------------------- | :--------------------------------------- | :------------------ | :--------- | | Selling, general and administrative | 100 | 96 | 4 | +4 | 204 | 198 | 6 | +3 | | Research and development | 12 | 11 | 1 | +9 | 23 | 22 | 1 | +5 | | Restructuring | 21 | — | 21 | >+200 | 21 | — | 21 | >+200 | | Other operating expense, net | 3 | 1 | 2 | >+200 | 5 | 1 | 4 | >+200 | - Restructuring costs increased significantly due to the initiation of Phase 2 of the OPtiMa 3.0 plan, primarily severance and related employee costs[121] - Other operating expenses increased due to professional advisory fees and costs related to rebranding the Lottery business as part of separation activities[122] Operating Margins This section evaluates the company's profitability from its core operations before non-operating items Operating Income and Margin: | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | Change (bps) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | Change (bps) | | :---------------- | :--------------------------------------- | :--------------------------------------- | :------------------ | :----------- | :--------------------------------------- | :--------------------------------------- | :------------------ | :----------- | | Operating income | 139 | 179 | (40) | N/A | 277 | 397 | (120) | N/A | | Operating margin | 22% | 29% | (700) | N/A | 23% | 31% | (800) | N/A | - The decrease in operating margin was primarily due to the reduction in LMA incentive revenues without associated cost reductions and higher costs from Phase 2 of the OPtiMa 3.0 restructuring plan[123] Non-operating expenses This section details expenses and income not directly related to the company's primary business operations Non-Operating Expenses (Selected Items): | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | Change (%) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | Change (%) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------ | :--------- | :--------------------------------------- | :--------------------------------------- | :------------------ | :--------- | | Interest expense, net | 49 | 53 | (4) | -8 | 94 | 106 | (12) | -11 | | Foreign exchange loss (gain), net | 99 | (4) | 103 | >+200 | 131 | (16) | 147 | >+200 | | Other non-operating expense, net | 2 | 3 | (1) | -44 | 5 | 7 | (2) | -23 | | Provision for income taxes | 50 | 43 | 7 | +16 | 97 | 100 | (3) | -3 | - Foreign exchange loss significantly increased due to fluctuations in the Euro to U.S. dollar exchange rate on internal and external debt[124] - The increase in the effective tax rate for both periods was primarily related to a significant increase in non-deductible foreign exchange losses in the Parent[124][125] Income from discontinued operations This section reports the net income or loss generated by the IGT Gaming business, classified as discontinued operations Income from Discontinued Operations, net of tax: | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | Change (%) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | Change ($ millions) | Change (%) | | :------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Income from discontinued operations, net of tax | 40 | — | 39 | >+200 | 92 | 13 | 79 | >+200 | - The increase in income from discontinued operations was primarily due to lower depreciation and amortization while held for sale, despite a decline in IGT Gaming revenues and increased operating expenses from write-offs and litigation settlements[126] Liquidity and Capital Resources This section discusses Brightstar Lottery PLC's sources and uses of cash, including operating, investing, and financing activities, and its overall liquidity position and capital management strategies Overview This section provides a general overview of the company's liquidity position and capital management strategy - Primary liquidity sources are cash flows from operations and financing activities, expected to be sufficient for short and long-term obligations[127][128] Total Available Liquidity: | Metric | June 30, 2025 ($ millions) | December 31, 2024 ($ millions) | Change ($ millions) | | :-------------------------- | :-------------------------- | :----------------------------- | :------------------ | | Revolving Credit Facilities | 1,582 | 1,364 | 218 | | Cash and cash equivalents | 1,309 | 584 | 725 | | Total Liquidity | 2,891 | 1,948 | 943 | - At June 30, 2025, approximately 35% of the company's debt portfolio was exposed to interest rate fluctuations[132] Cash and Cash Equivalents by Currency (June 30, 2025): | Currency | Amount ($ millions) | Percentage (%) | | :------------- | :------------------ | :------------- | | Euros | 1,132 | 86 | | U.S. dollars | 80 | 6 | | Other currencies | 97 | 7 | | Total | 1,309 | 100 | Cash Flow Summary This section summarizes the cash flows from continuing and discontinued operations across operating, investing, and financing activities Cash Flow Summary (Continuing Operations, Six Months Ended June 30): | Metric | 2025 ($ millions) | 2024 ($ millions) | Change ($ millions) | | :------------------------------------------------- | :---------------- | :---------------- | :------------------ | | Net cash provided by operating activities from continuing operations | 433 | 315 | 118 | | Net cash used in investing activities from continuing operations | (175) | (76) | (99) | | Net cash provided by (used in) financing activities from continuing operations | 581 | (413) | 994 | - The increase in operating cash flow was driven by $86 million favorability in income tax and interest payment timing and a $59 million increase in cash collections[137] - Investing cash flow increased due to a $100 million increase in capital expenditures for systems, equipment, and other assets in California, Colorado, and Kentucky[138] - Financing cash flow improved due to $851 million net increase from debt proceeds exceeding payments (2030 Facilities Agreement) and a $175 million increase in capital contributions from non-controlling interests[139] Cash Flow Summary (Discontinued Operations, Six Months Ended June 30): | Metric | 2025 ($ millions) | 2024 ($ millions) | Change ($ millions) | | :------------------------------------------------- | :---------------- | :---------------- | :------------------ | | Net cash provided by operating activities from discontinued operations | 101 | 148 | (47) | | Net cash used in investing activities from discontinued operations | (85) | (104) | 19 | | Net cash used in financing activities from discontinued operations | (143) | (20) | (123) | Dividends This section provides details on the company's dividend payments and declarations Dividends Paid/Declared: | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Dividends paid/declared per share | $0.20 | $0.20 | $0.40 | $0.40 | | Total dividends paid/declared ($ millions) | 41 | 40 | 81 | 80 | - A special cash dividend of $3.00 per share (approx. $609 million) was declared on July 1, 2025, payable on July 29, 2025[142] - A quarterly cash dividend of $0.20 per share (approx. $41 million) was declared on July 24, 2025, payable on August 26, 2025[143] U.S. federal income tax considerations for U.S. shareholders of ordinary shares This section discusses the U.S. federal income tax implications of dividends for U.S. shareholders - The special dividend and other dividends paid in the current fiscal year are expected to be treated as a nontaxable return of capital for U.S. income tax purposes, to the extent of a shareholder's tax basis[146] - The calculation of E&P is a full-year determination, and actual E&P may differ from preliminary estimates, potentially changing the tax consequences for U.S. shareholders[147] - IRS Form 8937 has been posted to assist investors with U.S. tax reporting for the June 12, 2025, and July 29, 2025, cash distributions[146] Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to the disclosures regarding quantitative and qualitative aspects of market risk from the company's 2024 Form 20-F - No material changes to market risk disclosures since the 2024 Form 20-F[148] Item 4. Controls and Procedures There have been no changes in internal control over financial reporting during the six months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting - No material changes in internal control over financial reporting during the six months ended June 30, 2025[149] PART II. OTHER INFORMATION This section provides additional disclosures on legal proceedings, risk factors, and equity security transactions, supplementing the financial information presented in Part I Item 1. Legal Proceedings The company is routinely involved in legal, regulatory, and administrative proceedings, including claims, injunctions, and ethics inquiries. There have been no material developments to the litigation disclosed in the Annual Report on Form 20-F - The company is party to various legal, regulatory, or administrative proceedings in the ordinary course of business[150] - No material developments to previously disclosed litigation have occurred[151] Item 1A. Risk Factors There have been no material changes to the risk factors disclosed in the company's 2024 Form 20-F - No material changes to risk factors since the 2024 Form 20-F[152] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No common stock repurchases were made during Q2 2025. However, on July 1, 2025, the Board authorized a new $500 million share repurchase program, replacing the prior program, and the company intends to enter into an accelerated share repurchase agreement for up to $250 million under this new program - No common stock repurchases were made during the second quarter ended June 30, 2025[153] - A new $500 million share repurchase program was authorized on July 1, 2025, replacing the prior program and having the full authorization remaining[154] - The company intends to enter into an accelerated share repurchase agreement for up to $250 million under the new program[155] Signature This section contains the official signature block for the financial report