PokerTek Inc. (PTEK)
Q1 2012 Earnings Call
May 01, 2012 11:00 AM ET
Tracy Egan – VP, Marketing
Mark Roberson – CEO and CFO
James Crawford – President
Thomas Pierce – Feltl & Company
Previous Statements by PTEK
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» PokerTek's CEO Discusses Q1 2011 Results - Earnings Call Transcript
Good day ladies and gentlemen and welcome to the Q1 2011 PokerTek Inc. Earnings Conference Call. My name is Rachel and I will be your operator for today. At this time all participants are in a listen-only mode. (Operator Instructions).
I would now like to turn the conference to Ms. Tracy Egan, Vice President of Marketing. Please proceed.
Thank you and good morning. Welcome to PokerTek's investor conference call for the quarter ended March 31st, 2012. The purpose of today's call is to provide our investors and other interested parties with information about the Company’s operating results and to communicate other business developments.
Joining us today are Mark Roberson, Chief Executive Officer and Chief Financial Officer, and James Crawford, President. Today’s call is being simultaneously web cast and will be also be archived for replay purposes.
Before we get started, I would like to remind you that certain comments about future expectations, plans and prospects for the company constitute forward-looking statements under federal securities laws. Actual results may differ materially from these expectations and we undertake no obligation to update those expectations.
We will also be discussing certain financial measures such as earnings before interest, taxes, depreciation, amortization and share-based compensation which represent a non-GAAP financial measure. A reconciliation to the GAAP financial statements can be found in today’s press release, and we also ask that you refer to our public filings with the SEC for additional information.
Now, I’ll turn the call over to Mark.
Thanks Tracy. Good morning and thank you for joining us today. Obviously we are pleased to start the New Year with strong EBITDA and cash flow performance of as well as posting our first quarter of positive earnings-per-share on GAAP basis.
On our year end conference call we discussed several steps we had taken to refocus our sales efforts and further reduce overhead. For Q1 our gross margins improved to 77% and our operating expenses declined by 26% from the first-quarter of 2011. As a result PokerTek increased its cash position and strengthened its balance sheet better positioning the company for growth.
Entering 2012 we are focused on ramping up market penetration for both local PokerPro and ProCore. We have clear lead with PokerPro which is the dominant product in its category and we have opportunities tied up to drive market penetration more aggressively over the next several quarters. The ProCore platform which expand our reach into the market for house bank blackjack and other specialty games continues to perform well and it's creating new opportunities for diversification and growth.
Achieving a profitable quarter is an important milestone and worthy of a few moments of celebration however our focus not on the quarterly ups and downs but instead on growing more meaningfully over the next several years. In this industry the sales and regulatory cycle can be arduous and opportunities take time. We have worked hard over the past several years to solidify PokerPro's market position, to develop the ProCore platform, to streamline their operations and to focus our sales and marketing efforts. I'm excited about the progress and expect to see increased growth in our gaining positions as we proceed through 2012.
James will now provide some highlights regarding our current marketing initiatives and opportunities.
Thanks Mark. Q1 was a busy one as we began planning several new PokerPro projects which we expect to install over the next several months and we continue to roll out the ProCore platform. We installed 54 additional ProCore positions in the quarter if which 48 were added as kind of a crew shifts. This brings the total number of ProCore player positions on Carnival to 132 positions on eight ships. As we continue to roll out ProCore to additional ships player adoption from both casual and experienced blackjack players continues to be excellent. We are working closely with Carnival to enhance the product, add promotional features and deepen our integration with their slot systems to enhance the player experience and further integrate our products with Carnival's goals and strategies.
We also installed in our first ProCore table in France at the casino in Toulouse and expect to expand the roll out to more land based properties. PokerPro was already installed at the property in Toulouse and the players have quickly embraced the ProCore blackjack. We also added 10 more PokerPro positions at another property in France in the quarter. We changed our distribution strategy in France at the beginning of Q1 signing up a new independent representative to help drive sales in the market.
Based on the feedback we expect the second half of the year to be busy as new capital budgets are approved for the operators there. We previously announced that PokerPro field trial was successfully completed and the product approved in Ontario. The field trial was at OLG's Western Fair Property where we originally installed 20 positions, then added 10 more on the exceptional results. We expect to build on the success of this initial installation and are currently planning projects to install PokerPro at four additional sites.
We expect the contract to be completed and tables added over the next few months. Additionally we recently submitted ProCore blackjack for approval in Ontario. We look forward to beginning field travel with that product soon as well.