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Bally
Technologies, Inc. (BYI)
--
WIDE-AREA PROGRESSIVE INSTALLED BASE GROWS 94 PERCENT AND SETS
RECORD QUARTERLY REVENUE; CASH CONNECTION(TM) INSTALLED BASE INCREASES TO
1,216 UNITS
--
GAMING EQUIPMENT REVENUES INCREASE 28 PERCENT
--
BOARD OF DIRECTORS APPROVES NEW $150 MILLION SHARE REPURCHASE
PROGRAM; COMPANY REPURCHASED $67 MILLION WORTH OF STOCK SINCE JUNE 30,
2012
--
INCREASES FISCAL 2013 DILUTED EPS GUIDANCE TO $3.05 TO $3.35
Bally
Technologies, Inc. (BYI), a leader in slots, video
machines, casino management, interactive applications, and networked and
server-based systems for the global gaming industry, today announced
record first quarter diluted earnings per share ("Diluted EPS") of $0.77
and revenue of $235 million for the three months ended September 30,
2012.
"Our first quarter fiscal 2013 results continue to reflect the success
of our expanded game studios, our new technology platform, and our
successful execution on a number of other initiatives, including the
entrance into new markets," said Richard M. Haddrill, the Company’s
Chief Executive Officer. "We expect continued growth from each of our
businesses as both our visibility and our customer partnerships are at
remarkable levels, and we continue to identify new growth opportunities.
Further, the Bally showing earlier this month at the Global Gaming Expo
(’G2E’) was the best in our company’s history."
"This week, the Company’s Board of Directors authorized a new $150
million share repurchase program, replacing our existing program under
which we had repurchased approximately $127 million of common stock,
including $67 million of stock repurchased at an average price of $44.22
per share during the first quarter," said Neil Davidson, the Company’s
Chief Financial Officer. "The new repurchase program allows us to
continue to support our capital-deployment strategy and reflects our
continued confidence in Bally’s long-term growth plan and ability to
consistently generate free cash flow."
Additionally, the Company’s leverage ratio remains comfortably below 2.0
times, which leaves the Company’s share repurchases unrestricted under
the terms of its credit agreement. This quarter represented the 20th
consecutive quarter the Company has repurchased its common stock.
"The first quarter was momentous as we shipped our first Video Lottery
Terminal (’VLT’) units to the Atlantic Lottery Corporation, as well as
initial Video Gaming Terminal (’VGT’) units in Illinois," said Ramesh
Srinivasan, the Company’s President and Chief Operating Officer. "We are
pleased with the feedback we received from customers earlier this month
at G2E, where we showcased a significantly expanded game library and
premium titles, such as NASCAR(R)
and Pawn
Stars(TM), and additional content for the Elite
Bonusing Suite(TM). We remain confident in our growing for-sale content
and in the performance of our wide-area progressive (’WAP’) products
including GREASE(TM)
and Michael
Jackson King of Pop(TM), and now our newest title, Betty
Boop’s(TM) Fortune Teller, which yet again drove record quarterly
gaming operations revenues and gross margin."
First Quarter Fiscal Year 2013 Highlights
Three Months Ended September 30,
------------------------------------------------
2012 % Rev 2011 % Rev
----------- ---------- ----------- ------------
(dollars in millions, except per share amounts)
Revenues:
Gaming Equipment $ 82.7 35 % $ 64.4 33 %
Gaming Operations 101.2 43 % 85.0 44 %
Systems 51.3 22 % 45.6 23 %
----------- -----------
Total revenues $ 235.2 100 % $ 195.0 100 %
Gross Margin:
Gaming Equipment (1) $ 39.2 47 % $ 28.4 44 %
Gaming Operations 70.1 69 % 60.7 71 %
Systems (1) 39.5 77 % 34.5 76 %
----------- -----------
Total gross margin $ 148.8 63 % $ 123.6 63 %
Selling, general and administrative $ 64.5 27 % $ 57.2 29 %
Research and development costs 25.1 11 % 23.4 12 %
Depreciation and amortization 5.6 2 % 5.6 3 %
----------- -----------
Operating income $ 53.6 23 % $ 37.4 19 %
==== ===== ==== =====
Adjusted EBITDA $ 78.8 $ 59.1
==== ===== ==== =====
Diluted EPS $ 0.77 $ 0.45
==== ===== ==== =====
(1)Gross Margin from Gaming Equipment and Systems excludes
amortization related to certain intangibles, including core
technology and license rights, which are included in depreciation
and amortization.
Three Months Ended
September 30,
------------------
2012 2011
----------- -----------
Operating Statistics
New gaming devices 4,608 3,399
New unit Average Selling Price ("ASP") $ 16,853 $ 16,624
As of September 30,
--------------------
2012 2011
------ ----------
End-of-period installed base:
Linked progressive systems 2,251 1,181
Rental and daily-fee games 14,971 14,466
Lottery systems 12,040 8,418
Centrally determined systems 39,192 48,125
Highlights of Certain Results for the Three Months Ended September
30, 2012
Overall
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Total revenue increased 21 percent to a first-quarter record $235
million as compared with $195 million last year.
--
Adjusted EBITDA (earnings before interest, taxes, depreciation and
amortization, including share-based compensation), a non-GAAP
financial measure, increased 33 percent to a first-quarter record $79
million as compared with $59 million last year.
--
Selling, general and administrative expenses ("SG&A") declined to 27
percent of total revenues from 29 percent last year. SG&A increased $7
million primarily due to an increase in payroll to support key new
markets.
--
Research and development expenses ("R&D") decreased to 11 percent of
total revenues compared to 12 percent last year, with revenues
continuing to grow faster than R&D expense growth.
--
Operating income increased 43 percent to a first-quarter record $54
million compared with $37 million last year. Operating margin
increased to 23 percent from 19 percent last year.
--
Diluted EPS increased 71 percent to a first-quarter record $0.77 from
$0.45 last year.
Gaming Equipment
--
Revenues increased 28 percent to $83 million as compared with $64
million last year, driven by higher domestic replacement sales, the
shipment of 670 units to the Atlantic Lottery Corporation, and initial
shipments into the Illinois VGT market.
--
ASP of new gaming devices, including lower-ASP VLTs and VGTs,
increased slightly to $16,853 per unit from $16,624 last year,
primarily as a result of the mix of Pro
Series(TM) cabinets sold in the quarter.
--
New-unit sales to international customers were 16 percent of total
new-unit shipments.
--
Gross margin increased to 47 percent from 44 percent last year,
primarily due to mix and cost reductions on certain models of the Pro
Series line of cabinets.
Gaming Operations
--
Revenues increased 19 percent to a record $101 million as compared
with $85 million last year, driven primarily by 94 percent growth in
the installed base of WAP games, as well as previously placed games at
Resorts World Casino New York City which opened in late calendar 2011.
--
Gross margin decreased to 69 percent from 71 percent last year,
primarily due to higher jackpot expense.
Systems
--
Revenues increased 13 percent to $51 million as compared with $46
million last year.
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Maintenance revenues increased 17 percent to a record $21 million as
compared with $18 million last year.
--
Gross margin increased to 77 percent from 76 percent last year,
primarily as a result of the change in mix of products. Specifically,
hardware sales were 26 percent of systems revenues, and software and
service sales were 34 percent, as compared to 28 percent for hardware
and 33 percent for software and services in the same period last year.
Fiscal 2013 Business Update
The Company increased its fiscal 2013 guidance for Diluted EPS to a
range of $3.05 to $3.35.
The Company has provided this range of earnings guidance for fiscal 2013
to give investors general information on the overall direction of its
business at this time. The guidance provided is subject to numerous
uncertainties, including, among others, overall economic and
capital-market conditions, the market for gaming devices and systems,
changes in gaming legislation, the timing of new jurisdictions and
casino openings, the timing and completion of new systems installations,
competitive product introductions, complex revenue-recognition
rules related to the Company’s business, and assumptions about the
Company’s new product introductions and regulatory approvals. The
Company does not intend and undertakes no obligation to update its
forward-looking statements, including forecasts, potential opportunities
for growth in new and existing markets, and future prospects for
proposed new products. Accordingly, the Company does not intend to
update guidance during the quarter. Additional information about the
factors that could potentially affect the Company’s financial results
included in today’s press release can be found in the Company’s Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q.
New Share Repurchase Program
This week the Company’s Board of Directors approved a new $150 million
share repurchase program. The shares may be repurchased in such amounts
as management deems appropriate in light of prevailing market and
economic conditions, alternative uses of capital, restrictions under the
Company’s debt obligations, regulatory requirements, and other factors.
In implementing its repurchase program, the Company may utilize a
variety of methods, which may include open market purchases, privately
negotiated transactions, block trades, accelerated share repurchase
transactions, or any combination thereof.
Purchases may be made on a case-by-case basis or on a non-discretionary
basis in a manner designed to comply with the requirements of Rule
10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934.
This program does not obligate the Company to acquire any particular
amount of common stock. The program may be suspended, modified, or
discontinued at any time at the discretion of the Company’s Board of
Directors and has no set expiration date.
Bally and IGT Settle Patent Litigation
Bally and International Game Technology (IGT) announced today they
have entered into a Settlement and License Agreement that will end their
pending patent litigation in the case styled IGT v. Bally Gaming Int’l,
Inc., Civil Action No. 1:06-cv-00282-SLR (D. Del.). As part of the
settlement agreement, Bally Technologies will obtain a patent license to
IGT’s bonusing portfolio under confidential terms and will dismiss its
counterclaims with prejudice.
Non-GAAP Financial Measures
The following table reconciles the Company’s net income attributable to
Bally Technologies, Inc., as determined in accordance with generally
accepted accounting principles ("GAAP"), to Adjusted EBITDA:
Three Months Ended
September 30,
------------------------
2012 2011
----------- -----------
(in 000s)
Income from continuing operations, net of tax $ 32,532 $ 20,392
Interest expense, net 3,473 3,273
Income tax expense 18,429 11,853
Depreciation and amortization 21,319 20,209
Share-based compensation 3,021 3,392
----------- -----------
Adjusted EBITDA $ 78,774 $ 59,119
=== ====== === ======
Adjusted EBITDA is a supplemental non-GAAP financial measure used by the
Company’s management and by some industry analysts to evaluate the
Company’s ability to service debt, and is used by some investors and
financial analysts in the gaming industry in measuring and comparing
Bally’s leverage, liquidity, and operating performance to other gaming
companies. Adjusted EBITDA should not be considered an alternative to
operating income or net cash from operations as determined in accordance
with GAAP. Not all companies calculate Adjusted EBITDA the same way, and
the Company’s presentation may be different from those presented by
other companies.
Earnings Conference Call and Webcast
As previously announced, the Company is hosting a conference call and
webcast today at 4:30 p.m. EDT (1:30 p.m. PDT). The conference-call
dial-in number is 888-396-2384 or 617-847-8711 (International); passcode
"Bally". The webcast can be accessed by visiting BallyTech.com
and selecting "Investor Relations." Interested parties should initiate
the call and webcast process at least five minutes prior to the
beginning of the presentation. For those who miss this event, an
archived version will be available at BallyTech.com
until November 25, 2012.
About Bally Technologies, Inc.
With a history dating back to 1932, Las Vegas-based Bally Technologies
designs, manufactures, operates, and distributes advanced
technology-based gaming devices and systems worldwide, as well as
interactive and mobile solutions. Bally’s product line includes
reel-spinning slot machines, video slot machines, wide-area
progressives, and Class II, lottery, and central determination games and
platforms. Bally also offers an array of casino management, slot
accounting, bonusing, cashless, and table-management solutions.
Additional Company information, including the Company’s investor
presentation, can be found at BallyTech.com.
Connect with Bally on Facebook,
Twitter,
YouTube
and LinkedIn.
This news release may contain "forward-looking" statements within the
meaning of the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, and is subject to the safe harbors
created thereby. Forward looking-statements are subject to change and
involve risks and uncertainties that could significantly affect future
results, including those risks detailed from time to time in the
Company’s filings with the Securities and Exchange Commission. Although
the Company believes any expectations expressed in any forward-looking
statements are reasonable, future results may differ materially from
those expressed in any forward-looking statements. The Company
undertakes no obligation to update the information in this press release
except as required by law and represents that the information speaks
only as of today’s date.
-- BALLY TECHNOLOGIES, INC. --
Michael Jackson -- (C)2012 Triumph International, Inc. under license from
Bravado Merchandising. All rights reserved. GREASE -- (C)2012 Paramount
Pictures. All Rights Reserved. NASCAR -- NASCAR(R) is a registered
trademark of the National Association for Stock Car Auto Racing, Inc.
NASCAR(R) is a registered trademark of NASCAR, Inc.; Pawn Stars -- (C)2012
A&E Television Networks, LLC. All rights reserved. Pawn Stars, HISTORY,
the "H" and their associated logos are trademarks of A&E Television
Networks, LLC. Gold & Silver and its associated logos are trademarks of
Gold & Silver Coin Shop, Inc. All rights reserved. Betty Boop (C)2012 King
Features Syndicate, Inc.(TM) Hearst Holding, Inc. www.BettyBoop.com
BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
Three Months Ended
September 30,
-----------------------------------
2012 2011
----------------- -----------------
(in 000s, except per share amounts)
Revenues:
Gaming equipment and systems $ 134,011 $ 110,013
Gaming operations 101,140 84,954
--------------- ---------------
235,151 194,967
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Costs and expenses:
Cost of gaming equipment and systems (1) 55,354 47,101
Cost of gaming operations 30,993 24,232
Selling, general and administrative 64,516 57,222
Research and development costs 25,095 23,386
Depreciation and amortization 5,604 5,635
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181,562 157,576
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Operating income 53,589 37,391
Other income (expense):
Interest income 1,144 1,324
Interest expense (4,617 ) (4,597 )
Other, net (743 ) (1,856 )
---------------- ----------------
Income from operations before income taxes 49,373 32,262
Income tax expense (18,429 ) (11,853 )
---------------- ----------------
Net income 30,944 20,409
Less net income (loss) attributable to noncontrolling interests (1,588 ) 17
---------------- ---------------
Net income attributable to Bally Technologies, Inc. $ 32,532 $ 20,392
====== ======= ====== =======
Basic and Diluted earnings per share attributable to Bally
Technologies, Inc.:
Basic earnings per share $ 0.80 $ 0.47
====== ======= ====== =======
Diluted earnings per share $ 0.77 $ 0.45
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Weighted average shares outstanding:
Basic 40,868 43,708
=============== ===============
Diluted 42,115 45,567
=============== ===============
(1) Cost of gaming equipment and systems excludes amortization
related to certain intangibles, including core technology and
license rights, which are included in depreciation and
amortization.
September 30, June 30,
2012 2012
----------- --------------
(in 000s, except share amounts)
ASSETS
Current assets:
Cash and cash equivalents $ 55,811 $ 32,673
Restricted cash 12,827 13,645
Accounts and notes receivable, net of allowances for doubtful 274,081 264,842
accounts of $16,674 and $14,073
Inventories 70,960 75,066
Prepaid and refundable income tax 14,035 13,755
Deferred income tax assets 41,695 42,822
Deferred cost of revenue 20,319 17,615
Prepaid assets 16,477 13,061
Other current assets 3,491 6,980
----------- -------------
Total current assets 509,696 480,459
Restricted long-term investments 10,887 12,171
Long-term accounts and notes receivables, net of allowances for 45,348 55,786
doubtful accounts of $3,695 and $3,029
Property, plant and equipment, net of accumulated depreciation of 32,763 30,667
$57,949 and $58,823
Leased gaming equipment, net of accumulated depreciation of $192,556 124,912 121,151
and $185,846
Goodwill 172,095 171,971
Intangible assets, net 37,046 39,166
Deferred income tax assets 7,892 7,409
Income tax receivable 12,041 12,041
Deferred cost of revenue 14,627 16,542
Other assets, net 22,083 23,104
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Total assets $ 989,390 $ 970,467
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LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 33,549 $ 41,414
Accrued and other liabilities 83,720 85,310
Jackpot liabilities 9,248 11,682
Deferred revenue 54,560 46,314
Income tax payable 14,000 12,226
Current maturities of long-term debt 19,034 17,091
----------- -------------
Total current liabilities 214,111 214,037
Long-term debt, net of current maturities 538,750 494,375
Deferred revenue 23,699 26,715
Other income tax liability 14,210 13,922
Other liabilities 25,833 23,943
----------- -------------
Total liabilities 816,603 772,992
Commitments and contingencies
Stockholders’ equity:
Special stock, 10,000,000 shares authorized: Series E, $100 12 12
liquidation value;
115 shares issued and outstanding
Common stock, $.10 par value; 100,000,000 shares authorized; 6,340 6,309
63,481,000 and
63,150,000 shares issued and 40,894,000 and
42,102,000 outstanding
Treasury stock at cost, 22,587,000 and 21,048,000 shares (858,709 ) (790,633 )
Additional paid-in capital 500,904 489,002
Accumulated other comprehensive loss (12,966 ) (13,477 )
Retained earnings 537,427 504,895
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Total Bally Technologies, Inc. stockholders’ equity 173,008 196,108
Noncontrolling interests (221 ) 1,367
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Total stockholders’ equity 172,787 197,475
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Total liabilities and stockholders’ equity $ 989,390 $ 970,467
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Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50455114&lang=en
SOURCE: Bally Technologies, Inc.
Bally Technologies, Inc.
Laura Olson-Reyes, 702-584-7742
Senior Director, Marketing & Corporate Communications
Lolson-reyes@ballytech.com
Michael Carlotti, 702-584-7995
Vice President of Treasury and Investor Relations
mcarlotti@ballytech.com
Mike Trask, 702-584-7451
Mobile: 702-330-6679
Corporate Communications Manager
MTrask@ballytech.com
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