"Our second quarter results reflect the intense impact of global lockdowns caused by the pandemic," said Marco Sala, CEO of IGT. "That said, thanks to strong North America Lottery performance and our swift adoption of cost-saving and avoidance measures, we delivered better cash flow than we expected back in May. Our resilience is a direct consequence of the diversity of our global portfolio of products and solutions. The improving trends we are currently seeing are encouraging, but we remain prudent with our planning. Our new organizational structure enhances our readiness to adapt to changes in market conditions."
"Cash generation and liquidity remain our top financial priority," said Max Chiara, CFO of IGT. "The proactive efficiency initiatives and focused capital markets activity we executed in the quarter have us tracking ahead of plan on all key measures and we expect to deliver positive free cash flow this fiscal year. We have the resources we need to navigate the impact COVID-19 is having on our business and we are making important, strategic decisions to enhance our operational flexibility. This includes over $200 million in structural and discretionary cost savings compared to pre-pandemic levels."
Second quarter 2020 results reflect the impact of global COVID-19 restrictions. Revenue was down across all business segments and all primary revenue streams except for digital activities, where revenue increased 35%. Progressive easing of restrictions during the quarter and cost-saving initiatives helped mitigate impact.
Financial highlights:
Consolidated revenue of $637 million, down 48% from the prior year
- Global gaming revenue declined 72%, driven by the closure of casinos and gaming halls, fewer unit shipments, and lower systems and software sales compared to the prior year
- Global lottery revenue down 26% on reduced traffic to points of sale and temporary game shutdowns in Italy
- Gaming and lottery trends improved each month as venues re-opened and restrictions eased
Operating loss of $94 million, down from income of $224 million in the prior year
- Lower profit contribution from reduced business volumes
- Includes $43 million in restructuring expense
- Oklahoma strategic transaction and high-margin poker and systems sales embedded in the prior year
- Accelerating benefit from actions taken to reduce costs
Net interest expense of $96 million compared to $104 million in the prior year
- Capital market transactions drive lower cost of debt
Benefit from income taxes of $11 million, compared to a provision of $63 million, driven by lower pre-tax income
Net loss attributable to IGT was $280 million; adjusted net loss attributable to IGT of $121 million versus adjusted net income of $91 million in the prior year
- Reflects operating loss and higher foreign exchange and debt extinguishment losses in the current year
Net loss per diluted share of $1.37; adjusted net loss per diluted share of $0.59 compared to adjusted net income of $0.44 in the prior year
Adjusted EBITDA of $168 million compared to $454 million in the prior-year period
Net debt of $7.29 billion improved $93 million from $7.38 billion at December 31, 2019; Net debt to LTM adjusted EBITDA of 5.52x, up from 4.31x at December 31, 2019, primarily due to lower EBITDA in the first half of 2020
Cash and Liquidity Update
- Preserving cash and liquidity is the top financial priority
- At June 30, 2020, liquidity totalled $2.3 billion, comprised of $1.3 billion in unrestricted cash and $1.0 billion available under revolving credit facilities
