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WMS Industries' CEO Discusses F4Q12 Results - Earnings Call Transcript

Stocks in this article: WMS

The forward-looking statements made on this call and webcast, the archived version of the webcast, and in any transcripts of this call are made only as of this date, August 6, 2012.

On the call today are Brian Gamache, Chairman and Chief Executive Officer; Orrin Edidin, President; and Scott Schweinfurth, CFO.

Now, let me turn the call over to Brian.

Brian Gamache

Thanks, Bill, good afternoon, everyone. WMS’ fiscal fourth quarter results demonstrate ongoing operating progress, as well as success with our product plan and organizational goals we’ve set in place a year ago. Although the operating environment remained challenging throughout fiscal ‘12, in each quarter we generated improvements in our operating financial metrics.

While we have more work to do, our success throughout the year was very strong indicator. We have the right strategies in place to drive gains in product sales ship share and our installed participation base. For the June 2012 quarter, WMS generated a total of $196 million, a quarterly sequential increase of $20 million or 11% from the March quarter. This increase was led by new unit shipments to the U.S. and Canada.

We reached a three-year quarterly high of 4,672 new gaming machines aided by just over 3,900 replacement units, the second highest quarterly number of replacement units we have ever shipped to these customers. We believe this solid demand reflects the improved performance of our newest products.

Second, our ongoing preliminary [ph] strategic sourcing and lean sigma initiatives coupled with higher gross margin on other product sales revenues contribute to the significant improvements in product sales margin more than offsetting lower ASPs on a year-over-year basis.

Gross margin on product sales rose by nearly a 1,000 basis points year-over-year and on more significantly, increased 280 basis points over the March 2012 quarter to reach 55%, a new all-time high for WMS. For sometime this has been our goal and its achievement marks another milestone and we believe there is still potential for additional margin improvement long-term.

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