Elixir Gaming Technologies, Inc. (EGT) Q1 2010 Earnings Call May 12, 2010 8:30 am ET Executives Traci Mangini – SVP, Corporate Finance Clarence Chung – Chairman and CEO Andy Tsui – Chief Accounting Officer Analysts Paul Sonz – Paul Sonz Partners [Jim Crabb] – No company listed P resentation Operator
Andy will go through the financials in more detail, but here are some of the highlights on our performance. Total gaming participation revenues for the first quarter improved 15% sequentially to a record $2.8 million largely driven by a higher installed gaming machine base and slightly improved consolidated average net win of $107. We continue to adhere to our strict cost controls and as a result cash SG&A was $1.4 million for the first quarter of 2010, below our prior guidance range of $1.5-1.8 million and down 45% from the prior-year period.Adjusted EBITDA which we define as earnings before interest, tax, depreciation, amortization and non-cash expenses was $1.3 million for the first quarter 2010 which represents a sequential gain of 64% from the prior quarter and this is our fourth consecutive quarter attaining positive adjusted EBITDA. I would now like to take this opportunity to highlight some recent operational achievements and corporate developments that provide me confidence in our future success. Our core gaming machine participation operations continue to gain positive momentum. In mid-February 2010 we executed quickly on our December 2009 expansion contract with NagaWorld and placed approximately 110 units out of the total contracted 200 additional machine units. In April we had approximately 40 machines and the remaining approximately 50 gaming machine placements under these contracts are on target for installation before the end of the second quarter 2010. As a result, we anticipate 640 gaming machines in operations at NagaWorld by the end of June 2010 which represents remarkable growth since our first placement at NagaWorld approximately 15 months ago.
Also despite the growing installed machine base during the recent quarters the average net win per unit for our operations at NagaWorld have remained strong. We attribute it to our targeted marketing efforts to build strong customer loyalty, the right machine mix and the benefit of the closure of all Slot Clubs previously operating in the Phnom Pehn area in early 2009. In fact, average net wins for our operations at NagaWorld went over $200 for the months of November and December 2009 and January 2010, and despite the addition of approximately 110 machines in mid-February and 40 machines in April we are pleased to say the net wins held strong at $194 per unit per day for the first quarter and $183 in April. We attribute the slight decline to the decrease in machine placements in the early months of this year and the typical ramped up period associated with new machine placements. The strong results at NagaWorld has resulted in attractive cash flows for the company. As you may recall, under our July 2009 expansion contract we placed 200 additional machine seats for which we pay a commitment fee to NagaWorld of $5.84 million.
For these 200 units we are entitled to collect on a daily basis 100% of the net win per unit per day starting from the first day of operations until we have received the total cumulative amount of $7.3 million which is $5.84 million commitment fee, our share of the net earnings and winnings. As of March 31, 2010 we had collected the full $5.84 million commitment fee in cash from these additional machines representing an impressive payback period of approximately 6 months on our commitment fee.Read the rest of this transcript for free on seekingalpha.com