Bally Technologies, Inc. (NYSE: BYI)
- TOTAL REVENUE INCREASES TO A FIRST QUARTER RECORD OF $321 MILLION, UP 29 PERCENT FROM PRIOR YEAR
- ACHIEVES QUARTERLY ELECTRONIC GAMING MACHINE UNIT SALES OF 4,744, UP 19 PERCENT FROM PRIOR YEAR
- GAMING OPERATIONS REVENUE SETS AN ALL-TIME QUARTERLY RECORD OF $106 MILLION
|First Quarter Fiscal Year 2015 Highlights|
|Three Months Ended September 30,|
|(in millions, except per share amounts)|
|Electronic Gaming Machines ("EGM")||$||94.2||30%||$||71.3||29%|
|Gross Margin: (1)|
|Total gross margin||$||211.8||66%||$||164.2||66%|
|Selling, general and administrative||$||93.2||29%||$||72.4||29%|
|Research and development costs||34.4||11%||29.5||12%|
|Depreciation and amortization||21.8||7%||5.3||2%|
|GAAP Diluted EPS||$||0.75||$||0.97|
|Non-GAAP Measures: (2)|
|Adjusted Operating Income||$||87.2||27%||$||62.2||25%|
|(1)||Gross Margin excludes amortization related to intangible assets which are included in depreciation and amortization ("D&A").|
|(2)||Adjusted Operating Income, Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, including share-based compensation and restructuring and acquisition-related costs), and Adjusted EPS are Non-GAAP financial measures. Reconciliation between GAAP and Non-GAAP measures can be found at the end of this news release.|
|(3)||Results for the three months ended September 30, 2014 include SHFL entertainment, Inc. ("SHFL") and Dragonplay Ltd ("Dragonplay").|
|As of September 30,|
|End-of-period installed base:|
|Linked progressive systems||2,378||2,522|
|Rental and daily-fee games||15,496||14,533|
|Lottery systems (1)||12,591||11,907|
|Centrally determined systems||29,311||33,711|
|Proprietary Table Games ("PTG")||3,065||NA|
|Table game progressive units, table game side bets, and add-ons||5,761||NA|
|(1)||Excludes 703 and 727 third-party Electronic Table System ("ETS") seats operating as of September 30, 2014 and 2013, respectively.|
|Three Months EndedSeptember 30,|
|Operating Statistics||UnitsSold||Average SellingPrice ("ASP")||UnitsSold||ASP|
- Total revenue increased 29 percent to a first quarter record of $321 million as compared with $249 million last year.
- Adjusted EBITDA increased 34 percent to a first quarter record of $116 million as compared with $87 million last year.
- Selling, general and administrative expenses ("SG&A") remained constant at 29 percent of total revenues and includes $8 million of one-time acquisition-related costs. After adjusting for these one-time costs, SG&A was 26 percent of total revenues in the current period, down from 27 percent when adjusted for $5 million of one-time acquisition-related costs last year.
- Research and development expenses ("R&D") decreased to 11 percent of total revenue versus 12 percent last year.
- Operating income increased to $62 million as compared with $57 million last year. Adjusted Operating Income increased by 40 percent to a first quarter record of $87 million. Adjusted operating margin increased to 27 percent from 25 percent last year.
- GAAP Diluted EPS was $0.75 as compared with $0.97 last year. Adjusted EPS increased 22 percent to a first quarter record of $1.17.
- Revenues increased 32 percent to $94 million as compared with $71 million last year, primarily driven by the increase in unit sales in Australia coupled with an increase in ASP.
- ASP of new electronic gaming devices increased 9 percent to $17,767 per unit from $16,307 last year, primarily due to the increase in Australia sales volume and an increase in the sale of the Pro Wave premium cabinet.
- New-unit sales to international customers were 44 percent of total new-unit shipments as compared to 20 percent in the prior year period.
- Gross margin increased to 52 percent from 50 percent last year, primarily due to the sale of higher margin Pro Wave cabinets and geographic mix.
- Revenues increased to a record $106 million as compared with $102 million last year, driven by continued placement of premium games, record wide-area progressive ("WAP") revenue, and the inclusion of 2,242 leased ETS seats.
- Gross margin decreased to 68 percent from 70 percent last year, primarily due to the inclusion of lower margin leased ETS seats.
- Revenues were $74 million as compared with $76 million last year, decreasing primarily due to a large system installation recognized in the prior period offset by the inclusion of revenues from the acquisition of Dragonplay during the current period.
- Maintenance revenues decreased 8 percent to $23 million as compared with $25 million last year.
- Gross margin decreased to 72 percent from 75 percent last year, primarily as a result of the change in mix of products. Specifically, hardware sales were 33 percent of systems revenues, and software and service sales were 36 percent, as compared to 30 percent for hardware sales and 37 percent for software and services sales in the same period last year.
- Revenues were $46 million, with Utility products revenue of $31 million and PTG revenue of $15 million.
|Three Months Ended|
|Net income attributable to Bally Technologies, Inc.||$||28.8||$||37.8|
|Interest expense, net||16.7||2.0|
|Income tax expense||16.2||16.2|
|Depreciation and amortization||41.7||22.0|
|Restructuring and acquisition-related costs||9.0||5.2|
The components of restructuring charges are related primarily to executive transition costs, inventory, and fixed assets write-offs and non-cancelable lease costs related to excess facilities. Acquisition-related costs include financial advisory, legal, and debt fees; accounting, consulting, and professional fees associated with due diligence, valuation and integration; severance; and adjustments related to step-up in inventory basis and amortization of purchased intangible assets.The following tables reconcile the Company's GAAP to Non-GAAP Financial Measures:
|Three Months Ended September 30, 2014|
|Revenues||GrossMargin (1)||SG&AExpenses||D&A||OperatingIncome||NetIncome (2)||EPS|
|(in millions, except per share data)|
|Amortization of purchasedintangibles||—||—||—||(15.8)||15.8||10.2||0.27|
|Restructuring and acquisition-related costs||—||0.7||(8.3)||—||9.0||5.8||0.15|
|Adjusted Non-GAAP Measures||$||320.8||$||212.5||$||84.9||$||6.0||$||87.2||$||44.8||$||1.17|
|(1)||Gross Margin excludes amortization related to intangible assets which are included in depreciation and amortization.|
|(2)||Adjustments are tax affected at 35.5%.|
|Three Months Ended September 30, 2013|
|(in millions, except per share data)|
|One-time tax benefit||—||—||—||—||—||(3.6)||(0.09)|
|Adjusted Non-GAAP Measures||$||249.3||$||164.2||$||67.2||$||5.3||$||62.2||$||37.6||$||0.96|
|(1)||Adjustments are tax affected at 35.5%.|
About Bally Technologies, Inc.Founded in 1932, Bally Technologies, Inc. (NYSE: BYI) provides the global gaming industry with innovative games, table game products, systems, mobile, and iGaming solutions that drive revenue and provide operating efficiencies for gaming operators. For more information, please contact Mike Trask, Senior Manager, Marketing & Corporate Communications, at 702-532-7451, or visit http://www.ballytech.com. Connect with Bally on Facebook, Twitter, YouTube, LinkedIn and Pinterest. This press release may contain "forward looking" statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and is subject to the safe harbors created thereby. Forward looking statements may be typically identified by such words as "may," "will," "should," "would," "expect," "anticipate," "plan," "likely," "believe," "estimate," "project," "intend," and other similar expressions among others. Although we believe the expectations reflected in any forward looking statements are reasonable, they involve known and unknown risks and uncertainties, are not guarantees of future performance, and actual results, performance or achievements may differ materially from any future results, performance or achievements expressed or implied by such forward looking statements and any or all of our forward looking statements may prove to be incorrect. Consequently, no forward looking statements may be guaranteed and there can be no assurance that the actual results or developments anticipated by such forward looking statements will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company or its business or operations. Factors which could cause our actual results to differ from those projected or contemplated in any such forward looking statements include, but are not limited to, the following factors: (1) the risk that the conditions to the closing of the merger (the "Merger") contemplated by the Agreement and Plan of Merger, dated as of August 1, 2014, by and among the Company, Scientific Games Corporation ("Scientific Games"), Scientific Games Nevada, Inc. and Scientific Games International, Inc. (the "Merger Agreement") are not satisfied (including a failure of the stockholders of the Company to approve, on a timely basis or otherwise, the Merger and the risk that regulatory approvals required for the Merger are not obtained, on a timely basis or otherwise, or are obtained subject to conditions that are not anticipated); (2) litigation relating to the Merger; (3) uncertainties as to the timing of the consummation of the Merger and the ability of each of the Company and Scientific Games to consummate the Merger; (4) risks that the proposed transaction disrupts the current plans and operations of the Company; (5) the ability of the Company to retain and hire key personnel; (6) competitive responses to the proposed Merger; (7) unexpected costs, charges or expenses resulting from the Merger; (8) the failure by Scientific Games to obtain the necessary debt financing arrangements set forth in the commitment letter received in connection with the Merger; (9) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger; and (10) legislative, regulatory and economic developments. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the risk factors included in the Company's most recent Annual Report on Form 10-K for the year ended June 30, 2014, and our more recent reports filed with the Securities and Exchange Commission. The Company can give no assurance that the conditions to the Merger will be satisfied. Except as required by applicable law, the Company undertakes no obligation to revise or update the information in this press release, or to make any other forward looking statements, whether as a result of new information, future events or otherwise, except as required by law and represents that the information speaks only as of today's date. — BALLY TECHNOLOGIES, INC. —
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|BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013|
|Three Months Ended|
|(in 000s, except per share amounts)|
|Gaming equipment and systems||$||186,228||$||147,387|
|Product lease, operation and royalty||134,577||101,902|
|Costs and expenses:|
|Cost of gaming equipment and systems (1)||71,257||54,506|
|Cost of product lease, operation and royalty (1)||37,718||30,619|
|Selling, general and administrative||93,170||72,427|
|Research and development costs||34,425||29,504|
|Depreciation and amortization||21,793||5,265|
|Other income (expense):|
|Income from operations before income taxes||45,292||54,122|
|Income tax expense||(16,248||)||(16,172||)|
|Less net income attributable to noncontrolling interests||199||166|
|Net income attributable to Bally Technologies, Inc.||$||28,845||$||37,784|
|Basic and Diluted earnings per share attributable to Bally Technologies, Inc.:|
|Basic earnings per share||$||0.76||$||0.98|
|Diluted earnings per share||$||0.75||$||0.97|
|Weighted average shares outstanding:|
|(1)||Cost of gaming equipment and systems and product lease, operation and royalty exclude amortization related to intangible assets which are included in depreciation and amortization.|
|BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2014 AND JUNE 30, 2014|
|September 30,2014||June 30, 2014|
|(in 000s, except par value amount)|
|Cash and cash equivalents||$||74,417||$||77,439|
|Accounts and notes receivable, net of allowances for doubtful accounts of $16,541 and $14,806||289,851||314,119|
|Prepaid and refundable income tax||19,105||21,938|
|Deferred income tax assets||37,504||36,934|
|Deferred cost of revenue||12,541||15,723|
|Other current assets||14,885||6,013|
|Total current assets||582,878||593,434|
|Restricted long-term investments||19,247||93,977|
|Long-term accounts and notes receivables, net of allowances for doubtful accounts of $909 and $929||43,579||50,329|
|Property, plant and equipment, net of accumulated depreciation of $76,996 and $74,158||70,104||70,218|
|Leased gaming equipment, net of accumulated depreciation of $240,447 and $248,086||121,980||131,504|
|Intangible assets, net||515,942||508,245|
|Deferred income tax assets||2,072||3,892|
|Income tax receivable||—||457|
|Deferred cost of revenue||2,716||6,989|
|Other assets, net||59,135||56,389|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accrued and other liabilities||95,285||115,010|
|Income tax payable||8,475||5,554|
|Current maturities of long-term debt||38,399||38,465|
|Total current liabilities||231,434||251,567|
|Long-term debt, net of current maturities||1,842,671||1,886,953|
|Other income tax liability||10,218||10,355|
|Deferred income tax liabilities||113,700||110,899|
|Commitments and contingencies|
|Common stock, $.10 par value; 100,000 shares authorized; 66,145 and 66,047 shares issued and 38,345 and 38,694 outstanding||6,607||6,595|
|Treasury stock at cost, 27,800 and 27,353 shares||(1,161,893||)||(1,134,407||)|
|Additional paid-in capital||604,188||593,427|
|Accumulated other comprehensive loss||(34,241||)||(5,423||)|
|Total Bally Technologies, Inc. stockholders' equity||188,445||205,131|
|Total stockholders' equity||189,434||205,921|
|Total liabilities and stockholders' equity||$||2,434,328||$||2,518,811|