Rating Action: Moody’s affirms International Game Technology’s Ba3 CFR, changes outlook to stable from negativeGlobal Credit Research – 15 Mar 2021New York, March 15, 2021 — Moody’s Investors Service (“Moody’s”) today affirmed International Game Technology PLC’s (“IGT”) Ba3 Corporate Family Rating, Ba3-PD Probability of Default Rating, and existing Ba3 rated senior secured notes. The company’s Speculative Grade Liquidity rating remains SGL-3 and the outlook was changed to stable from negative.The change in outlook to stable from negative reflects the recovery in the company’s gaming operations as the number of gaming facilities open has favorably increased revenue and operating income for the company, following the Q2 2020 closures. While sequential improvement has been displayed, Moody’s anticipates gaming activity levels will remain below pre-pandemic levels until at least 2022 while lottery is likely to continue to be more resilient. Moody’s projects that earnings growth will reduce IGT’s debt-to-EBITDA leverage to a 5x range over the next year. The outlook change also reflects that the company’s good cost discipline and dividend suspension are sustaining positive free cash flow.Affirmations:..Issuer: International Game Technology….Senior Secured Regular Bond/Debenture , Affirmed Ba3 (LGD3)..Issuer: International Game Technology PLC…. Probability of Default Rating, Affirmed Ba3-PD…. Corporate Family Rating, Affirmed Ba3….Senior Secured Regular Bond/Debenture, Affirmed Ba3 (LGD3)Outlook Actions:..Issuer: International Game Technology….Outlook, Changed To Stable From Negative..Issuer: International Game Technology PLC….Outlook, Changed To Stable From NegativeRATINGS RATIONALEInternational Game Technology PLC’s Ba3 CFR reflects the meaningful revenue and earnings decline from efforts to contain the coronavirus and the potential for a slow recovery as customer facilities have largely re-opened and gaming conditions improve. Revenues are largely tied to the volume of gaming machine play and lotteries. Gaming is cyclical and dependent on discretionary consumer spending while lottery is more resilient. The company can reduce spending on game development and capital expenditures when revenue weakens, but the need to retain a skilled workforce to maintain competitive technology contributes to high operating leverage. The credit profile benefits from IGT’s large and relatively stable revenue base during normal operating periods, with more than 80% achieved on a recurring basis, and high barriers to entry. Further support is provided by the company’s vast gaming-related software library and multiple delivery platforms, as well as potential growth opportunities in IGT’s digital, mobile gaming, sports betting, and lottery products. IGT, through its joint venture with minority partners, is concessionaire of the world’s largest instant ticket lottery (Italy) and Italy’s draw based lottery and holds facility management contracts with some of the largest lotteries in the US. IGT is constrained by its material exposure to soft slot replacement demand trends in the US as well as significant revenue concentration coming from its Italian operations.The company’s speculative-grade liquidity rating of SGL-3 signifies adequate liquidity. As of the year ended December 31, 2020, IGT had cash of approximately $907 million, with undrawn capacity of $1.75 billion on its revolving credit facility that expires in July 2024. Moody’s estimates the company could maintain sufficient internal cash sources after maintenance capital expenditures to meet required annual amortization and interest requirements assuming a sizeable decline in annual EBITDA. The company amended its financial covenants and is now subject to a minimum liquidity covenant of $500 million (cash and undrawn committed revolver) through June 2021. Beginning with the quarter ended September 2021, the company will be subject to a 6.25x net leverage covenant which we expect the company to comply with.The coronavirus outbreak, the government measures put in place to contain it, and the weak global economic outlook continue to disrupt economies and credit markets across sectors and regions. Moody’s analysis has considered the effect on the performance of IGT from the current weak US economic activity and a gradual recovery for the coming year. Although an economic recovery is underway, it is tenuous, and its continuation will be closely tied to containment of the virus. As a result, the degree of uncertainty around our forecasts is unusually high. Moody’s regards the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. The gaming and related sectors have been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in IGT’s credit profile, including its exposure to travel disruptions and discretionary consumer spending have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and IGT remains vulnerable to the outbreak continuing to spread. From a governance and financial policy perspective, Moody’s anticipates that the company will look to manage leverage down from the current 6.39x net level (company calculation) to the pre-pandemic level of the low 4x range on a net basis, over time. Moody’s expects the company to use proceeds from the sale of the Italian B2C gaming business to reduce debt. The company’s common dividend is also suspended until at least Q4 2021.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSThe stable outlook considers the partial recovery in the company’s business exhibited in Q3 and Q4 2020, and the expectation for continued sequential improvement in 2021, notably in the gaming segment. The stable outlook also incorporates the good liquidity profile and the expectation for leverage to continue to come down from current elevated levels as the gaming business recovers and debt is reduced. IGT remains vulnerable to travel disruptions and unfavorable sudden shifts in discretionary consumer spending and the uncertainty regarding the pace at which consumer spending at reopened gaming properties will recover.Ratings could be downgraded if liquidity deteriorates or if Moody’s anticipates IGT’s earnings declines to be deeper or more prolonged because of actions to contain the spread of the virus or reductions in discretionary consumer spending. Leverage sustained over 5.5x could result in a downgrade.The ratings could be upgraded if customer facilities remain open and earnings recover such that positive free cash flow and reinvestment flexibility is restored and debt-to-EBITDA is sustained below 4.5x. Consistent and meaningfully positive FCF while maintaining good reinvestment levels would also be required for an upgrade.International Game Technology PLC is a global leader in gaming, from Gaming Machines and Lotteries to Interactive Gaming and Sports Betting. The publicly traded company operates under two business segments: Global Lottery and Global Gaming. The company is publicly traded and consolidated revenue for the last twelve-month period ended September 30, 2020 was approximately $3.8 billion. International Game Technology has corporate headquarters in London, and operating headquarters in Rome, Italy; Providence, Rhode Island; and Las Vegas, Nevada.The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1037985. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. 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Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Adam McLaren Vice President – Senior Analyst Corporate Finance Group Moody’s Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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