Bally Technologies, Inc. (NYSE: BYI):
- FOURTH QUARTER REVENUE UP 15 PERCENT
TO A RECORD $246 MILLION WITH NON-GAAP EPS OF $0.78
- WIDE-AREA PROGRESSIVE INSTALLED BASE
GROWS 72 PERCENT AND SETS RECORD QUARTERLY REVENUE; CASH
CONNECTION™ INSTALLED BASE INCREASES TO 625 UNITS
- COMPANY REPURCHASES $106 MILLION
WORTH OF STOCK SINCE MARCH 31, 2012
- INITIATES FISCAL 2013 DILUTED EPS
GUIDANCE OF $2.95 TO $3.30
Bally Technologies, Inc. (NYSE: BYI), a leader in slots,
video machines, casino management, interactive applications, and
networked and server-based systems for the global gaming industry,
announced today quarterly non-GAAP EPS of $0.78 on record revenue
of $246 million for the three months ended June 30, 2012. Non-GAAP
EPS was $2.45 on record revenue of $880 million for the year ended
June 30, 2012. Diluted earnings per share from continuing
operations (“Diluted EPS”) was $0.61 and $2.28 for the three months
and year ended June 30, 2012.
“Our fourth quarter and fiscal 2012 results validate our
leadership position in gaming technology innovation,” said Richard
M. Haddrill, the Company’s Chief Executive Officer. “This
innovation leadership and visibility into further growth
opportunities for all of our businesses for fiscal 2013 and beyond
is tremendously encouraging.”
“During our fourth quarter we established a number of company
records for revenues and profitability, prudently accrued $10
million for several legal matters, and purchased another $73
million of our common stock, bringing the total during fiscal 2012
to 3.9 million shares for $155 million at $40.06 per share,” said
Neil Davidson, the Company’s Chief Financial Officer. “Since June
30, 2012, we purchased an additional $33 million worth of
stock.”
As of today, the Company has approximately $58 million available
under its Board-authorized share repurchase plan. 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 19th
consecutive quarter the Company has repurchased shares.
“We increased the Cash Connection wide-area progressive (“WAP”)
installed base by almost 500 units in the fourth quarter including
additional installations of GREASE™ and the recently launched
Michael Jackson King of Pop™ to much-deserved excitement from the
marketplace,” said Ramesh Srinivasan, the Company’s President and
Chief Operating Officer. “Total new gaming devices sold was the
strongest it has been in 13 quarters, and in late July we went live
with our first VLTs in Italy. We are particularly excited about
this October’s Global Gaming Expo, where we will showcase new
branded WAP titles, additional content for the Elite Bonusing
Suite™, and several new titles for sale and rental on the ALPHA 2™
platform.”
Fiscal Year 2012 Highlights
Three Months
Ended June 30, Year Ended June 30,
2012
%Rev
2011
%Rev
2012
%Rev
2011
%Rev
(dollars in millions, except per share amounts)
Revenues: Gaming
Equipment $ 96.8 39 % $ 72.7 34 %
$
310.7 35 % $ 246.6 33 % Gaming Operations 93.7 38 % 82.3 39
% 357.4 41 % 318.6 42 % Systems 55.3 23 % 58.7 27 %
211.7 24 % 193.0 25 % Total revenues $ 245.8 100 % $ 213.7
100 %
$
879.8 100 % $ 758.2 100 %
Gross Margin: Gaming
Equipment (1) $ 44.8 46 % $ 30.9 43 %
$
139.8 45 % $ 112.1 45 % Gaming Operations 67.1 72 % 59.3 72 % 257.7
72 % 229.8 72 % Systems (1) 40.9 74 % 42.9 73 % 155.9
74 % 142.6 74 % Total gross margin $ 152.8 62 % $ 133.1 62 %
$
553.4 63 % $ 484.5 64 % Selling, general and administrative
(2) $ 62.7 26 % $ 60.6 28 %
$
245.0 28 % $ 225.0 30 % Research and development costs 25.6 10 %
23.3 11 % 96.2 11 % 88.1 12 % Loss contingency accrual 10.0 4 % — —
10.0 1 % — — Depreciation and amortization 5.7 2 % 5.3 2 %
22.8 3 % 19.9 3 % Operating income $ 48.8 20 % $ 43.9 21 % $
179.4 20 % $ 151.5 20 % Adjusted EBITDA $ 81.8 $ 67.0 $
282.5 $ 242.9 Diluted EPS $ 0.61 $ 0.51 $ 2.28 $ 1.82
Non-GAAP EPS
$ 0.78 $ 0.51 $ 2.45 $ 1.82
(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.
(2) Selling, general and
administrative expenses for the year ended June 30, 2012 includes a
$1.8 million impairment on notes receivable related to development
financing.
Three Months
Ended Year Ended June 30, June 30,
2012 2011 2012 2011 Operating
Statistics New gaming devices 5,322 3,829 16,504 13,537 New unit
Average Selling Price (“ASP”) $ 17,182 $ 16,719 $ 17,044 $ 15,832
As of June 30, 2012 2011 End-of-period
installed base: Linked progressive systems 1,792 1,059 Rental and
daily-fee games 14,890 14,315 Lottery systems 11,718 8,350
Centrally determined systems 47,633 50,754
Highlights of Certain Results for the Three Months Ended June
30, 2012
Overall
- Total revenue increased 15 percent to a
record $246 million as compared with $214 million last year.
- Adjusted EBITDA (earnings before
interest, taxes, depreciation and amortization, including
share-based compensation), a non-GAAP financial measure, increased
22 percent to a record $82 million as compared with $67 million
last year.
- Selling, general and administrative
expenses (“SG&A”) declined to 26 percent of total revenues from
28 percent last year. SG&A increased $2 million primarily due
to an increase in payroll to support key new markets.
- Research and development expenses
(“R&D”) decreased to 10 percent of total revenues compared to
11 percent last year, with revenues continuing to grow faster than
R&D expense growth, as past R&D efforts continue to pay off
with increased product acceptance among our customer base.
Operating income increased 11 percent to $49 million compared with
$44 million last year. Operating margin decreased to 20 percent
from 21 percent last year. The current period includes a loss
contingency of $10 million related to the potential outcome of
certain legal matters.
- Non-GAAP EPS increased 53 percent to
$0.78 from $0.51 last year. Diluted EPS increased 20 percent to
$0.61 from $0.51 last year.
Gaming Equipment
- Revenues increased 33 percent to $97
million as compared with $73 million last year, driven by higher
unit sales from both replacement and new casino openings and an
increase in ASP.
- ASP of new gaming devices increased 3
percent to $17,182 per unit from $16,719 last year, primarily as a
result of the mix of Pro Series™ cabinets sold in the quarter.
- New-unit sales to international
customers were 22 percent of total new-unit shipments.
- Gross margin increased to 46 percent
from 43 percent last year, primarily due to mix and cost reductions
on certain models of the Pro Series line of cabinets.
Gaming Operations
- Revenues increased 14 percent to a
record $94 million as compared with $82 million last year, driven
primarily by 72 percent growth in the installed base of WAP games,
as well as the placement of games at Resorts World Casino New York
City which opened in late calendar 2011.
- Gross margin remained constant at 72
percent.
Systems
- Revenues decreased 6 percent to $55
million as compared with $59 million last year.
- Maintenance revenues increased 15
percent to $20 million as compared with $17 million last year.
- Gross margin increased to 74 percent
from 73 percent last year, primarily as a result of the change in
mix of products. Specifically, hardware sales were 29 percent of
systems revenues, and software and service sales were 35 percent,
as compared to 42 percent for hardware and 29 percent for software
and services in the same period last year.
Highlights of Certain Results for the Fiscal Year Ended June
30, 2012
Overall
- Total revenue increased 16 percent to a
record $880 million as compared with $758 million last year.
- Adjusted EBITDA increased 16 percent to
a record $282 million as compared with $243 million last year.
- SG&A declined to 28 percent of
total revenues from 30 percent last year. SG&A increased $20
million primarily due to increases in payroll, regulatory, and
other infrastructure expenses to support key new markets and
includes a $1.8 million impairment on notes receivable related to
development financing.
- R&D decreased to 11 percent of
total revenues as compared with 12 percent last year, with revenues
growing faster than R&D expense growth, as past R&D efforts
begin to pay off with increased product acceptance among our
customer base.
- Operating income increased 18 percent
to a record $179 million compared with $152 million last year.
Operating margin remained constant at 20 percent. The current
period includes a loss contingency of $10 million related to the
potential outcome of certain legal matters.
- Non-GAAP EPS increased 35 percent to
$2.45 from $1.82 last year. Diluted EPS increased 25 percent to
$2.28 from $1.82 last year.
Gaming Equipment
- Revenues increased 26 percent to $311
million as compared with $247 million last year, driven by higher
unit sales and ASP.
- ASP of new gaming devices increased 8
percent to a record $17,044 per unit from $15,832 last year,
primarily as a result of the mix of Pro Series cabinets sold in the
year and an increase in ASP from international sales.
- New-unit sales to international
customers were 26 percent of total new-unit shipments.
- Gross margin remained constant at 45
percent.
Gaming Operations
- Revenues increased 12 percent to a
record $357 million as compared with $319 million last year, driven
by 72 percent growth in the installed base of WAP games, as well as
the placement of games at Resorts World Casino New York City which
opened in late 2011.
- Gross margin remained constant at 72
percent.
Systems
- Revenues increased 10 percent to $212
million as compared with $193 million last year.
- Maintenance revenues increased 15
percent to a record $75 million as compared with $65 million last
year.
- Gross margin remained constant at 74
percent.
Fiscal 2013 Business Update
The Company initiates fiscal 2013 guidance for Diluted EPS of
$2.95 to $3.30. This guidance anticipates continued year-over-year
growth in each of game sales, gaming operations, and system
revenues. The Company currently anticipates an increase in the
placement of its premium games, particularly WAP, an increase in
the number of gaming devices sold with continued margin
improvements on game sales, and continued growth in its systems
business. This guidance assumes an effective tax rate between 38
percent and 39 percent compared to 38.6 percent in fiscal 2012.
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.
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 Year Ended
June 30, June 30, 2012 2011
2012 2011 (in 000s) Income from
continuing operations, net of tax $ 26,521 $ 25,456 $ 101,148 $
98,666 Loss contingency accrual 10,000 — 10,000 — Loss on
extinguishment of debt — 4,119 —
4,119 Interest expense, net 2,620 1,755 12,157 7,024 Income tax
expense 19,295 12,899 63,549 45,182 Depreciation and amortization
20,128 19,497 81,453 74,980 Share-based compensation 3,186 3,307
14,172 12,907 Adjusted EBITDA $ 81,750 $ 67,033 $ 282,479 $ 242,878
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.
The following table reconciles the Company’s Diluted EPS, as
determined in accordance with GAAP, to non-GAAP EPS:
Three Months Ended Year
Ended June 30, June 30, 2012
2011 2012 2011 Diluted
EPS $ 0.61 $ 0.51 $ 2.28 $
1.82 Loss contingency accrual, net of tax 0.17 —
0.17 — Non-GAAP EPS $ 0.78 $ 0.51
$ 2.45 $ 1.82
Non-GAAP EPS is a supplemental non-GAAP financial measure that
the Company’s management believes more accurately reflects the
Company’s operating results for the periods presented. Non-GAAP EPS
should not be considered an alternative to Diluted EPS as
determined in accordance with GAAP.
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 866-783-2137 or 857-350-1596
(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 September 16, 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 − ©2012 Triumph International, Inc. under
license from Bravado Merchandising. All rights reserved. GREASE −
©2012 Paramount Pictures. All Rights Reserved.
BALLY TECHNOLOGIES, INC. AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONSFOR THE THREE MONTHS AND YEAR ENDED JUNE 30, 2012
AND 2011
Three Months Ended
June 30, Year Ended June 30, 2012 2011
2012 2011 (in 000’s, except per share amounts)
Revenues: Gaming equipment and systems $ 152,080 $ 131,398 $
522,342 $ 439,534 Gaming operations 93,715 82,282 357,417
318,621 245,795 213,680 879,759 758,155
Costs and expenses: Cost of gaming equipment and
systems (1) 66,416 57,574 226,636 184,836 Cost of gaming operations
26,573 23,000 99,680 88,820 Selling, general and administrative
62,753 60,672 245,043 225,033 Research and development costs 25,581
23,254 96,182 88,086 Loss contingency accrual 10,000 —
10,000
— Depreciation and amortization 5,686 5,266 22,775
19,845 197,009 169,766 700,316 606,620
Operating income 48,786 43,914 179,443 151,535 Other income
(expense): Interest income 1,526 1,344 5,221 4,960 Interest expense
(4,146 ) (3,099 ) (17,378 ) (11,984 ) Loss on extinguishment of
debt — (4,119 ) —
(4,119
)
Other, net (568 ) 371 (2,827 ) 3,001 Income from
continuing operations before income taxes 45,598 38,411 164,459
143,393 Income tax expense (19,295 ) (12,899 ) (63,549 )
(45,182 ) Income from continuing operations 26,303 25,512 100,910
98,211 Loss on sale of discontinued operations, net of tax — — —
(403 ) Net income 26,303 25,512 100,910 97,808 Less
net income (loss) attributable to non-controlling interests (218 )
56 (238 )
(455
)
Net income attributable to Bally Technologies, Inc. $ 26,521 $
25,456 $ 101,148 $ 98,263 Basic earnings per share
attributable to Bally Technologies, Inc.: Income from continuing
operations $ 0.63 $ 0.53 $ 2.35 $ 1.90 Loss on sale of discontinued
operations — — — (0.01 ) Basic earnings per share $
0.63 $ 0.53 $ 2.35
$ 1.89 Diluted earnings per share attributable to
Bally Technologies, Inc.: Income from continuing operations $ 0.61
$ 0.51 $ 2.28 $ 1.82 Loss on sale of discontinued operations — — —
(0.01 ) Diluted earnings per share $ 0.61 $ 0.51 $ 2.28
$ 1.81 Weighted average shares outstanding:
Basic 42,238 47,865 42,985 51,960 Diluted
43,607 50,093 44,420 54,420 Amounts
attributable to Bally Technologies, Inc.: Income from continuing
operations, net of tax $ 26,521 $ 25,456 $ 101,148 98,666 Loss on
sale of discontinued operations, net of tax — — —
(403 ) Net income $ 26,521 $ 25,456 $ 101,148 98,263
(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.
BALLY TECHNOLOGIES, INC. AND
SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE
SHEETS
AS OF JUNE 30, 2012 AND 2011
June 30,2012
June 30,2011
(in 000s, exceptshare
amounts)
ASSETS Current assets: Cash and cash equivalents $ 32,673 $
66,425 Restricted cash 13,645 8,419 Accounts and notes receivable,
net of allowances for doubtful accounts of $14,073 and $11,059
264,842 235,246 Inventories 75,066 68,634 Prepaid and refundable
income tax 13,755 36,332 Deferred income tax assets 42,822 29,318
Deferred cost of revenue 17,615 13,795 Prepaid assets 13,061 10,524
Other current assets 6,980 4,984 Total
current assets 480,459 473,677 Restricted long-term investments
12,171 12,485 Long-term accounts and notes receivables, net of
allowances for doubtful accounts of $3,029 and $507 55,786 46,659
Property, plant and equipment, net 30,667 33,266 Leased gaming
equipment, net 121,151 96,691 Goodwill 171,971 162,110 Intangible
assets, net 39,166 34,865 Deferred income tax assets 7,409 12,120
Income tax receivable 12,041 10,972 Deferred cost of revenue 16,542
23,193 Other assets, net 23,104 21,356
Total assets $ 970,467 $ 927,394
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $
41,414 $ 38,411 Accrued and other liabilities 79,156 58,295
Customer deposits 6,154 4,930 Jackpot liabilities 11,682 11,894
Deferred revenue 46,314 28,900 Income tax payable 12,226 3,033
Current maturities of long-term debt 17,091
15,153 Total current liabilities 214,037 160,616 Long-term
debt, net of current maturities 494,375 500,250 Deferred revenue
26,715 34,788 Other income tax liability 13,922 9,321 Other
liabilities 23,943 7,827 Total
liabilities 772,992 712,802 Commitments and contingencies
Stockholders’ equity: Special stock, 10,000,000 shares authorized:
Series E, $100 liquidation value; 115 shares issued and outstanding
12 12
Common stock, $.10 par value; 100,000,000
shares authorized; 63,150,000 and 61,541,000 shares issuedand
42,102,000 and 44,397,000 outstanding
6,309 6,149 Treasury stock at cost, 21,048,000 and 17,144,000
shares (790,633 ) (634,268 ) Additional paid-in capital 489,002
442,713 Accumulated other comprehensive loss (13,477 ) (3,064 )
Retained earnings 504,895 401,363 Total
Bally Technologies, Inc. stockholders’ equity 196,108 212,905
Noncontrolling interests 1,367 1,687
Total stockholders’ equity 197,475 214,592
Total liabilities and stockholders’ equity $ 970,467
$ 927,394