Multimedia Games, Inc. (MGAM)
F3Q10 (Qtr End 06/30/10) Earnings Conference Call
August 5, 2010 9:00 AM ET
Uri Clinton – General Counsel
Patrick Ramsey – Interim President and CEO
Adam Chibib – CFO
Todd Eilers – Roth Capital Partners
Previous Statements by MGAM
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» Multimedia Games, Inc. F3Q09 (Qtr End 06/30/09) Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the Multimedia Games, Inc. third quarter 2010 conference call. At this time, all participants are in listen-only mode. Later, we will conduct the question-and-answer session, and instructions will follow at that time. (Operator Instructions).
As a reminder, this conference is being recorded.
I would like to introduce your host for today’s conference, Mr. Uri Clinton, General Counsel. Sir, you may begin.
Thank you, Chuck. Today’s call and webcast contains statements about future events and expectations that are characterized as forward-looking statements within the meaning of applicable securities laws. These statements are based on management's beliefs, assumptions and expectations of our future economic performance, taking into account information currently available to them.
Forward-looking statements involve risk and uncertainties that may cause actual results, performance or financial conditions to be materially different from the expectations of future results, performance or financial conditions. Please refer to the Risk Factors section in our recent SEC filings for a description of certain of these risk and uncertainties.
The company does not undertake and expressly disclaim any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable law.
Today's call and webcast may include non-GAAP financial measures within the meaning of the Regulation G. A reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in company’s current report on Form 8-K as filed with the SEC today. It can be found our website,
, in the Investor Relations section.
Now, I’ll turn the call over to Patrick Ramsey, our Interim President and CEO.
Thank you, Uri, and good morning, everyone. Thank you for joining us on this call. With me here in the office are Uri Clinton, General Counsel; Adam Chibib, our Chief Financial Officer; Ginny Shanks, Chief Marketing Officer; Joaquin Aviles, our Head of Technology; and Mick Roemer, our Senior Vice President of Sales.
Before Adam and I walk you through the details on our third quarter results, and as I did in the last call, I want to quickly summarize the paragraph of this morning’s release. The strategic review process is still ongoing and we’ll therefore not be making any comments regarding this process on today’s call.
This morning, we reported third quarter revenues of $29.1 million and a diluted earnings per share of $0.01, inclusive of a benefit totaling $0.09 per share related to the cumulative catch up adjustment for change in method for depreciating certain game licenses.
The third quarter would not have been a profitable one for us had it not been for the benefit, but given where we are in the turnaround of this business. We’re pleased with the results and I say that for a few reasons.
First, once again we had a quarter where we were able to improve our balance sheet and generate significant cash flow. This is obviously critical to building a sustainable business model for which we can grow and it is important to note that we have reduced our net debt position and have had positive cash flow each quarter consistent for over a year now.
Second, we continue to gain momentum on our proprietary product development for both Class II and Class III markets. It is exciting to see some of our own new products performing well in the limited markets where we can deploy them and it will be even more exciting to see them go into the commercial markets where we recently received licenses such as Louisiana and Mississippi.
Third, we continue to strengthen our relationships with our major customers in each of the markets in which operate are partnering with them to provide the right products that appeal for their customers.
And, finally, and I certainly don’t want to downplay this by saving it last, but we’re all pleased with the continued progress we are making on all of our strategic initiatives that we laid out. There had been significant headwinds from almost a complete closure of a major market to challenging macroeconomic in that market condition to some other road blocks, and frankly, we just had to list out of the way to begin taking things in the right direction.
Despite all this, we’re certainly a healthier today than we were two years ago. I can assure you that the management of this company understand that sustaining top line growth and profitability are critical keys to our transition and we’re keenly focused on these metrics as well.
I will now turn the call over to Adam Chibib, our Chief Financial Officer, who will provide a more detailed financial result. Adam?
Adam Chibib: Thank you, Pat. This is our sixth consecutive quarter of increase in cash balances and decreased net debt and our fifth consecutive quarter of positive free cash flow.
Our fiscal third quarter-end cash balances totaled $30.8 million, up $9.6 million or approximately 45% from our fiscal second quarter. The company generated free cash flow, which we define as cash flow from operating activities, less net capital expenditures of approximately $6.6 million for the quarter and $25.3 million for the nine months ended June 30