Multimedia Games' CEO Discusses F3Q 2012 Results - Earnings Call Transcript

Multimedia Games, Inc. (MGAM)

F3Q 2012 Earnings Call

July 31, 2012 9:00 am ET

Executives

Jerome R. Smith – Senior Vice President, Chief Compliance Officer, General Counsel and Corporate Secretary

Patrick J. Ramsey – President, Chief Executive Officer, Director

Adam D. Chibib – Chief Financial Officer, Senior Vice President

Analysts

Todd Eilers – Roth Capital Partners LLC

Steve Altebrando – Sidoti & Company LLC

David O. Ehlers – Las Vegas Investment Advisors

Steven Henry Neren – Brill Securities, Inc.

Presentation

Operator

Good day ladies and gentlemen, and welcome to Multimedia Games Third quarter 2012 Conference Call and Webcast. At this time, all participants are in a listen-only mode. Later we’ll conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder this conference call is being recorded.

I’d now like to hand the conference over to Mr. Jerry Smith. Sir, you may begin

Jerome R. Smith

Thank you. Good morning. I'm Jerry Smith, General Counsel and Chief Compliance Officer of Multimedia Games. Today’s call and webcast contains certain statements about future events and expectations which are characterized as forward-looking statements within the meaning of the applicable securities laws including without limitation the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current belief, assumptions and expectations of our future economic performance taking into account information currently available to us.

Forward-looking statements involve risks and uncertainties that may cause our actual results, performance or financial condition to be materially different from the expectations of such results, performance or financial condition. Please refer to the Risk Factors section in todays and our other recent SEC filings for 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 such as EBITDA, free cash flow, cash generation, net cash position and net capital expenditures, all within the meaning of Regulation G. A reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in the company’s press release and 8-K filed today and posted on our website www.multimediagames.com, in the investor relations section.

Financial and operating metrics provided during today’s call and webcast maybe approximated. Please refer to the company’s financial statements as provided in today’s SEC filings and earnings release for more definitive numbers.

Now I’d like to turn the call over to our President and CEO, Patrick Ramsey.

Patrick J. Ramsey

Thank you Jerry and good morning everyone, thank you for joining us on this call. With me this morning are Jerry Smith, our General Counsel; Adam Chibib, our Chief Financial Officer; and Joaquin Aviles, the Vice President of Technology. Mick Roemer, our Senior Vice President of Sales has joined us telephonically from Las Vegas.

This morning we reported revenue of $40.5 million for our third fiscal quarter of 2012, compared with $33.4 million in the same quarter of 2011, reflecting 21.2% growth. In addition, we reported significant increases in both EBITDA and EPS, as EBITDA grew from $14.8 million last year to $19.2 million this year, reflecting year-over-year growth of 29% and EPS grew from $0.10 last year to $0.25 this year.

We are quite proud of the financial results and we believe that the release this morning demonstrates Multimedia Games’ progress and the success we’ve had in achieving our strategic initiatives.

The stability we have established in our core businesses as well as our ability to grow our company profitably remained evident in our results. As well, we are feeling more confident as we have established our ability to create successful products for entering the new markets against formidable competition.

In fact, we have recently surpassed 10,000 games in our recurring revenue footprint and this critical component of our business has continued to grow each quarter for almost two years. In a moment, I’ll provide comments on the four key strategic initiatives we laid out a year ago, and Adam will provide some detailed perspective on the financial results and guidance.

But first, I’ll like to discuss an important overarching achievement of our team throughout this year. Given the levels of revenue growth and our transition to being a profitable company, we feel we’re making a profound transition in our business, which has some very important implications. Almost all of these implications are very exciting for us, with exceptions of our company prospectively paying significant taxes for the first time in many years, as is evidenced in the earnings guidance we issued for 2013 along with our results today.

There are two commonly known absolutely unavoidable requirements in life and we are all through packed with the other one. In all seriousness, we want to make sure we continue to be clear about this dynamic game business outlook and Adam will talk more about it in a moment.

So let me begin by discussing the key strategic initiatives. Our first initiative has been to increase MGAM’s footprint in the U.S. and to this end we are increasingly successful. As I mentioned, we crossed a major milestone this quarter as our installed base exceeded 10,000 units for the first time in two and half years. This was driven by the introduction of new Class II and Class III games in our core markets as well as new markets.

Read the rest of this transcript for free on seekingalpha.com

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