International Game Technology : Earning Documents

NEWS RELEASE

INTERNATIONAL GAME TECHNOLOGY PLC REPORTS

SECOND QUARTER 2022 RESULTS

• Revenue of $1.02 billion, down 2% as reported and up 3% at constant currency, led by 23% growth in Global Gaming
• Operating income of $228 million; operating income margin of 22% at high end of outlook on substantial increase in Global Gaming profitability and resilience in Global Lottery margin
• Adjusted EBITDA of $409 million, in line with prior year's record level at constant currency as Global Gaming performance offsets Lottery discrete benefits in the prior year; 40% adjusted EBITDA margin remains among the highest in Company history
• Recognized a non-operating expense of $150 million representing the probable loss associated with legal proceedings related to Double Down Interactive LLC and its social gaming business sold in 2017
• Diluted EPS from continuing operations of $(0.02); Adjusted diluted EPS from continuing operations of $0.57, up 78% from the prior year
• Compelling shareholder returns with $135 million deployed for cash dividends and share repurchases year-to-date
• Tightening full-year 2022 revenue outlook to reflect currency movements and perimeter impact from previously announced divestiture; reconfirming operating income margin outlook as fundamentals remain strong

LONDON - August 2, 2022 - International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the second quarter ended June 30, 2022. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the results; access details are provided below.

"Strong customer and player demand for IGT's products and solutions drove some of our strongest profit results ever in the second quarter and first half of the year," said Vince Sadusky, CEO of IGT. "Our business profile is supported by significant recurring revenue streams backed by long-term contracts and resilient end markets, providing a solid foundation on which to grow. We are laser focused on executing our strategic objectives and creating compelling value for our stakeholders."

"Our first half results set us firmly on the path to achieving our 2022 financial targets," said Max Chiara, CFO of IGT. "Rigor on costs and incremental revenue opportunities allow us to maintain our full-year operating income margin outlook despite unfavorable currency movements and macroeconomic challenges. At the same time, we are returning significant capital to shareholders via dividends and share repurchases."

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Overview of Consolidated Second Quarter 2022 Results

	Quarter Ended	Y/Y	Constant
				Currency
All amounts from continuing operations	June 30,	Change
			(%)	Change
	2022	2021	(%)
($ in millions)
GAAP Financials:
Revenue
Global Lottery	648	725	(11)%	(4)%
Global Gaming	330	274	21%	23%
Digital & Betting	43		42	1%	4%
Total revenue	1,021	1,041	(2)%	3%
Operating income (loss)
Global Lottery	230	300	(23)%	(16)%
Global Gaming	57	1	NM	NM
Digital & Betting	8	9	(11)%	(10)%
Corporate support expense	(29)	(26)	(11)%	(26)%
Other(1)	(39)		(40)	3%	2%
Total operating income	228	244	(7)%	1%
Operating income margin	22%	23%
Net cash provided by operating activities	196	249	(21)%
Cash and cash equivalents	673	639	5%
Earnings per share - diluted	$(0.02)	$(0.48)	96%
Non-GAAP Financial Measures:
Adjusted EBITDA
Global Lottery	330	414	(20)%	(13)%
Global Gaming	87	35	145%	150%
Digital & Betting	12	13	(7)%	(6)%
Corporate support expense	(20)		(21)	4%	(14)%
Total Adjusted EBITDA	409	442	(7)%	(1)%
Adjusted EBITDA margin	40%	42%
Adjusted earnings per share - diluted	$0.57	$0.32	78%
Free cash flow	117	176	(34)%
Net debt	5,722	6,312	(9)%

1. Primarily includes purchase price amortization

Note: Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release

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Key Highlights:

• Recently completed acquisition of iSoftBet, a leading iGaming content provider and third-party aggregator, greatly expanding the Company's proprietary content library and providing a world- class game aggregation platform
• Won "Lottery Supplier of the Year" at 2022 SBC Awards North America in July
• Introduced high-performing Money Mania wide area progressive game to commercial gaming jurisdictions following a successful launch in tribal casinos
• Signed agreement with NUSTAR Resort & Casino to deploy IGT ADVANTAGE™ casino management system and a variety of leading games and cabinets
• Announced expanded sports betting partnership with SuperBook® Sports to Tennessee, the fourth state where IGT's PlaySports platform is powering the SuperBook Sports mobile betting app
• Awarded a gold medal sustainability rating from EcoVadis, a leading sustainability rating agency
• Recently released 2021 Sustainability Report which outlines the Company's demonstrated environmental, social, and governance (ESG) performance

Financial Highlights:

Consolidated revenue of $1.02 billion, down 2% as reported, or up 3% at constant currency, from $1.04 billion in the prior year

• Global Lottery revenue of $648 million compared to $725 million in the prior-year period, which included $70 million in prior-year benefits primarily from the closure of gaming halls in Italy
• Global Gaming revenue increases 21%, or 23% at constant currency, to $330 million, driven by strong U.S. & Canada replacement unit demand, higher average selling prices, and increased installed base yields
• Digital & Betting revenue of $43 million, stable with the prior year, as iCasino growth in the U.S. is partially offset by softness in other markets; North America sports betting market gross gaming revenue impacted by lower hold levels

Operating income of $228 million, down 7% as reported, or up 1% at constant currency, from $244 million in the prior-year period

• Global Lottery operating income down, primarily due to about $60 million related to prior-year benefits referenced above
• Global Gaming rises on higher revenue and profit flow through, partially offset by increased supply chain costs
• Digital & Betting operating income of $8 million was relatively stable with the prior year

Adjusted EBITDA of $409 million matches prior year's record level at constant currency; Adjusted EBITDA margin of 40% remains among the highest in Company history

Net interest expense of $75 million compared to $91 million in the prior year, driven by lower average debt balances and interest rates

During the second quarter, the Company recognized a pre-taxnon-operating expense of $150 million ($114 million after tax) representing the probable loss associated with ongoing litigation (Benson v. Double Down Interactive LLC, No. 2:18-cv-00525 (W.D. Wash.)) and associated claims related to Double Down Interactive LLC and its social gaming business sold in 2017 by International Game Technology, a wholly-owned subsidiary of the Company

Income tax benefit of $11 million compared to a provision of $32 million in the prior year, primarily driven by recognition of the non-operating expense mentioned above and foreign exchange losses in the prior year with no tax benefit

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Income from continuing operations of $34 million versus a loss from continuing operations of $39 million in the prior-year period, driven by income tax benefit, gains in foreign exchange, and lower debt retirement costs

Net loss attributable to IGT PLC of $4 million compared to net income of $306 million in the prior year due to gain on sale and income from discontinued operations in the prior-year period

Net loss from continuing operations attributable to IGT PLC per diluted share of $0.02 compared to a net loss from continuing operations attributable to IGT per diluted share of $0.48 in the prior year, on higher net income; adjusted net income per diluted share increased 78% to $0.57

Net debt of $5.7 billion compared to $5.9 billion at December 31, 2021; Net debt leverage of 3.5x was stable compared to December 31, 2021

Cash and Liquidity Update

• Total liquidity of $2.1 billion as of June 30, 2022; $0.7 billion in unrestricted cash and $1.5 billion in additional borrowing capacity
• Executed amendment and extension of revolving credit facilities in July 2022
• • Increased liquidity by $150 million to $1.83 billion and rebalanced EUR/USD mix to match operational exposure
  • Extended maturities to July 2027
  • Lowered interest margin and added ESG provision to allow for further potential reductions
  • Raised annual permitted restricted payments basket from $300 million to $400 million at current credit rating; potential to increase to $550 million

Other Developments

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

• Ex-dividenddate of August 15, 2022
• Record date of August 16, 2022
• Payment date of August 30, 2022

Repurchased 750,000 shares for $15 million in the second quarter at an average price of $20.48 per share; 2.2 million shares repurchased for $54 million on a year-to-date basis at an average price of $24.89 per share

The Company expects to close on the sale of its Italian proximity payments/commercial services business in mid-to-late September

Tightening Full-year Revenue Outlook for Currency Rates and Business Disposition; Introducing Third Quarter 2022 Outlook

Full Year

• Revenue of $4.1 billion - $4.2 billion
• • Lowered high end of range by $100 million
  • Reflecting changes in currency rates and impact from sale of Italian proximity payments/ commercial services business in Q3'22
• Operating income margin of 20% - 22% remains unchanged
• Cash from operations of $850 - $950 million
• • Lowered high end of range by $50 million
  • Primarily driven by a working capital investment in higher inventory levels to proactively manage supply chain disruptions
• Capital expenditures of approximately $350 million, lowered by $50 million to adjust for updated timing of spending
• Free cash flow outlook remains unchanged

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Third Quarter

• Revenue of approximately $1.0 billion - $1.1 billion
• Operating income margin of 18% - 20% includes approximately 150 - 200 basis point impact from project-related expenses

Outlook assumptions

• EUR/USD exchange rate of 1.00 in the second half of 2022
• Impact from sale of Italian proximity payments/commercial services business in mid-to-late September 2022
• Operating income margin includes approximately 150 - 200 basis point impact from project-related and restructuring expenses expected in the second half of 2022

Earnings Conference Call and Webcast

August 2, 2022, at 8:00 a.m. EDT

To register to participate in the conference call, or to listen to the live audio webcast, please visit the "Events Calendar" on IGT's Investor Relations website at www.IGT.com. A replay will be available on the website following the live event.

Comparability of Results

All figures presented in this news release are prepared under U.S. GAAP, unless noted otherwise. Adjusted figures exclude the impact of items such as purchase accounting, impairment charges, restructuring expense, foreign exchange, and certain one-time, primarily transaction-related items. Reconciliations to the most directly comparable U.S. GAAP measures are included in the tables in this news release. Constant currency changes for 2022 are calculated using the same foreign exchange rates as the corresponding 2021 period. Management uses non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate the Company's financial performance. Management believes these non-GAAP financial measures reflect the Company's ongoing business in a manner that allows for meaningful period-to- period comparisons and analysis of business trends. These constant currency changes and non-GAAP financial measures should however be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with U.S. GAAP. Amounts reported in millions are computed based on amounts in thousands. Certain amounts in columns and rows within tables may not foot due to rounding. Percentages and earnings per share amounts presented are calculated from the underlying unrounded amounts.

About IGT

IGT (NYSE:IGT) is a global leader in gaming. We deliver entertaining and responsible gaming experiences for players across all channels and regulated segments, from Lotteries and Gaming Machines to Sports Betting and Digital. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, our solutions deliver unrivaled gaming experiences that engage players and drive growth. We have a well-established local presence and relationships with governments and regulators in more than 100 countries around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has approximately 10,500 employees. For more information, please visit www.IGT.com.

Cautionary Statement Regarding Forward-Looking Statements

This news release may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning International Game Technology PLC and its consolidated subsidiaries (the "Company") and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, dividends, results of operations, or financial condition, or otherwise, based on current beliefs of the management of the Company as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as "aim," "anticipate," "believe," "plan," "could," "would,"

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