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PokerTek's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Stocks in this article: PTEK

Now, I’ll turn the call over to Mark.

Mark Roberson

Thanks Tracy. Good morning and thank you all for joining us today. We have a lot to cover, so jump right in. 2011 was a year of strong operational performance for PokerTek. We grew revenues for the year, margins increased to over 70% and we continue to reduce our operating expenses. As we exited Mexico in September due to changing regulations, we refocused our efforts in other markets and took steps to further reduce our expenses. As a result, fourth quarter profitability improved over prior year, despite the reduction in revenue for Mexico and we posted our first full year of EBITDA's profitability.

A key element of our strategy and the strength of PokerTek's business model is the ability to balance growth and license and service fees which generate high margin, predictable recurring revenue with hardware sales which also generate high margins with significantly improved ROI and cash flows. Combined with the focus on targeted product development and controlled operating expenses, PokerTek's financial performance has demonstrated a trend of continued improvement.

Entering 2012 we are focused on increasing market penetration to drive revenue and profitability while positioning ourselves to take advantage of the improving economic and legislative climate for gaming. We have a dominant position in electronic poker where we have limited competition, with superior product and expect to increase market share as we execute in our target markets. The pro four platform for house bank blackjack and specialty games all separates new opportunities for growth and product diversification.

We are continuing to expand blackjack on crew ships and are beginning installations on land based properties. Based on identified demand in non-geo jurisdictions, we're delayed (inaudible) jurisdictions, we're delaying ProCore submission to conserve resources and focus on upcoming installation opportunities while developing new gains for the platform. We successfully completed field trial on Ontario and expect additional placements in 2012. We made changes to our distribution in France and expect to start capitalizing on opportunities in that market as well. We're in the latter stages of the sales cycle with a number of other markets and customers that we're excited about and expect to drive performance in the current year.

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