Multimedia Games CEO Discusses F3Q2011 Results - Earnings Call Transcript

Multimedia Games Inc. ( MGAM)

F3Q2011 Earnings Call

August 4, 2011 9:00 am ET


Uri Clinton – General Counsel

Patrick Ramsey – President and CEO

Adam Chibib – CFO


Steve Altebrando – Sidoti & Company

Todd Eilers – Roth Capital Partners



Good day ladies and gentlemen and welcome to Multimedia Games third quarter 2011 conference call and webcast. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session with instructions following at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

And I will turn the call over to Uri Clinton, General Counsel. Please begin.

Uri Clinton

Thank you. Welcome to today’s call. Today’s call and webcast contains statements about future events and expectations that are characterized as forward-looking statements within the meaning of applicable security 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 condition to be materially different from the expectations of future results, performance or financial condition. Please refer to the Risk Factors section of our recent SEC filings for a description of certain of these risks and uncertainties. The company does not undertake and expressly disclaims 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 Regulation G. A reconciliation of all non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in the company's current report on Form 8-K as filed with the SEC today, and can be found on our website in the Investor Relations section. Financial and operating metrics provided during today's call maybe approximate. Please refer to the company's financial statements as provided in the press release for definitive numbers. Thank you.

And with that, I will turn it over to Patrick Ramsey, our President and CEO.

Patrick Ramsey

Thank you, Uri and good morning, everyone. Thank you for joining us on this call. With me here in Austin are Uri Clinton, General Counsel; Adam Chibib, Chief Financial Officer and Joaquin Aviles, Vice President Technology; Mick Roemer, our Senior Vice President of Sales has joined us telephonically from the State of Washington.

This morning we reported strong financial results our third fiscal quarter with 15% revenue growth representing our highest quarterly year-over-year improvement this year. Our momentum continues as we grew sequentially from $1.4 million in operating income in the second quarter to $2.6 million in this third quarter. Similarly, diluted earnings per share rose sequentially from $0.04 to $0.10.

In addition, our cash position improved significantly and now stands at $49.2 million, driven primarily in the quarter by the receipt of approximately $18 million for the United States Treasury Department, which added to the consistent cash flow we have been generating from operation. For the first time in seven years our cash levels exceed our debt levels.

The top line growth reflects year-over-year improvement in both our gaming operations revenue and our revenue from unit sales, which is clearly the result of so much hard work from our team members and our laser focus on developing new proprietary products and technologies that are increasingly resonating with our customers and their players. I will go through some of our key markets in more details after Adam’s financial overview, but it is important to note that our top line growth continues to be driven by our own products being placed in markets that are core to our long-term strategy and profitability. This growth has been strong enough to counter balance some of the declines we are seeing in markets such as Mexico and Alabama. We are pleased with our third quarter results because there is reflect continued success in what we believe is a critical transition year for our company.

To summarize, our revenues through our first three quarters are up over 5%. Through the first three quarters last year, we had a net loss of $9.4 million, this loss has been reversed and our year-to-date net income for fiscal year 2011 is $2.6 million. Our year-to-date financial results reflect our simplified and focused strategy of selling or placing our own proprietary products in all gaming markets to which we have access. With continued positive feedback for our newest products, a healthy game development pipeline and access to more gaming markets we continue to be optimistic about our future.

Finally, before Adam walks you through our more detailed financial results I want to briefly summarize our recent extension of games that we highlighted in our press release this morning. Overall, we have approximately 5200 games on the floors of the Chickasaw Nation properties, which represent approximately 35% of their current floor share. At three other smaller properties where we have had approximately 600 games representing 50% of each floor the agreements were set to expire next month. We work with our customer to develop a unit placement plan for these facilities that allows us to focus on providing our best proprietary content going forward on a smaller percentage of the floor.

This plan includes establishing a timeline that provides minimal disruption to our business and to the operating properties as well. We look forward to enhancing this very important long-term relationship with our largest customer over the coming years while continuing to expand the markets and customers that we serve.

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