EX-99.1 2 a13-4246_1ex99d1.htm EX-99.1

Exhibit 99.1

 

GRAPHIC

 

 

 

 

 

 

 

Investor Contact: Michael J. Carlotti

 

Media Contact: Laura Olson-Reyes

(702) 584-7995

 

(702) 584-7742

mcarlotti@ballytech.com

 

lolson-reyes@ballytech.com

 

 

 

BALLY TECHNOLOGIES, INC. REPORTS RECORD SECOND-QUARTER
FISCAL 2013 DILUTED EPS OF $0.80, UP 48 PERCENT FROM PRIOR YEAR

 

 

-                   WIDE-AREA PROGRESSIVE INSTALLED BASE GROWS 87 PERCENT AND SETS RECORD QUARTERLY REVENUE

 

-                   SYSTEMS MAINTENANCE REVENUE INCREASES 28 PERCENT AND SETS RECORD QUARTERLY REVENUE OF $23 MILLION

 

-                   INCREASES FISCAL 2013 DILUTED EPS GUIDANCE TO $3.20 TO $3.40

 

LAS VEGAS, January 31, 2013 — Bally Technologies, Inc. (NYSE: BYI), a leader in slots, video machines, casino management, interactive applications, and networked and server-based systems for the global gaming industry, today announced record second-quarter diluted earnings per share (“Diluted EPS”) of $0.80 and record second-quarter revenue of $238 million for the three months ended December 31, 2012.

 

“Our second quarter fiscal 2013 demonstrated continued momentum in all major business areas,” said Ramesh Srinivasan, the Company’s President and Chief Executive Officer.  “We are excited about our scheduled product launches over the next few months, including new wide-area progressive (‘WAP’) games featuring Hot Shot Progressive® and NASCAR®, as well as the recently released Pawn Stars™ premium daily-fee game.  The Elite Bonusing Suite™ is gaining further traction with additional customer purchases in the second quarter.  Finally, traditional domestic replacement sales were up year-over-year for the seventh consecutive quarter, based on continued acceptance of our growing library of game content and our increasing presence in video lottery.  I am happy with Bally’s trajectory and the steadily increasing visibility we have into our near- and long-term future growth.”

 

“Operating margins increased to 24 percent, reflecting our ability to leverage infrastructure and continue to realize efficiencies in our supply chain,” said Neil Davidson, the Company’s Chief Financial Officer.  “Further, we continued to build revenues that are recurring in nature as we set records in both WAP and systems maintenance revenues.  We are thoughtfully allocating capital to invest in our growth and to enhance shareholder value.  This quarter represents the 21st quarter in a row that we have repurchased stock.  During the second quarter, we purchased 530,000 shares of common stock for $24 million at $45.43 per share.”

 

As of today, the Company has approximately $126 million available under its Board-authorized share repurchase plan.  Additionally, the Company’s leverage ratio remains below 2.0 times, which leaves the Company’s share repurchases unrestricted under the terms of its credit agreement.

 


 

Bally Technologies, Inc. Reports Record Second-Quarter Diluted EPS of $0.80         Page - 2 of 7

 

 

Second Quarter Fiscal Year 2013 Highlights

 

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

 

2012

 

%
Rev

 

2011

 

%
Rev

 

2012

 

%
Rev

 

2011

 

%
Rev

 

 

 

(dollars in millions, except per share amounts)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gaming Equipment

 

$

82.6

 

35

%

$

70.2

 

33

%

$

165.3

 

35

%

$

134.6

 

33

%

Gaming Operations

 

99.0

 

41

%

86.2

 

41

%

200.2

 

42

%

171.2

 

42

%

Systems

 

56.7

 

24

%

54.0

 

26

%

108.0

 

23

%

99.6

 

25

%

Total revenues

 

$

238.3

 

100

%

$

210.4

 

100

%

$

473.5

 

100

%

$

405.4

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gaming Equipment (1)

 

$

43.9

 

53

%

$

30.0

 

43

%

$

83.1

 

50

%

$

58.4

 

43

%

Gaming Operations

 

69.7

 

70

%

62.4

 

72

%

139.8

 

70

%

123.1

 

72

%

Systems (1) 

 

43.2

 

76

%

40.1

 

74

%

82.7

 

76

%

74.6

 

75

%

Total gross margin

 

$

156.8

 

66

%

$

132.5

 

63

%

$

305.6

 

65

%

$

256.1

 

63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

$

67.9

 

28

%

$

61.3

 

29

%

$

132.4

 

28

%

$

118.5

 

29

%

Research and development costs

 

26.6

 

11

%

22.4

 

11

%

51.7

 

11

%

45.8

 

11

%

Depreciation and amortization

 

5.7

 

3

%

5.8

 

3

%

11.3

 

3

%

11.4

 

3

%

Operating income

 

$

56.6

 

24

%

$

43.0

 

20

%

$

110.2

 

23

%

$

80.4

 

20

%

Adjusted EBITDA

 

$

81.1

 

 

 

$

67.2

 

 

 

$

159.9

 

 

 

$

126.3

 

 

 

Diluted EPS

 

$

0.80

 

 

 

$

0.54

 

 

 

$

1.57

 

 

 

$

0.99

 

 

 

 

(1)          Gross Margin from Gaming Equipment and Systems excludes amortization related to certain intangibles, including core technology and license rights, which are included in depreciation and amortization.

 

 

 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

Operating Statistics

 

 

 

 

 

 

 

 

 

New gaming devices

 

4,565

 

3,636

 

9,173

 

7,035

 

New unit Average Selling Price (“ASP”)

 

$

16,553

 

$

17,201

 

$

16,704

 

$

16,922

 

 

 

 

As of December 31,

 

 

 

2012

 

2011

 

End-of-period installed base:

 

 

 

 

 

Linked progressive systems

 

2,320

 

1,263

 

Rental and daily-fee games

 

14,962

 

14,624

 

Lottery systems

 

12,222

 

10,832

 

Centrally determined systems

 

37,120

 

47,461

 

 

 

Highlights of Certain Results for the Three Months Ended December 31, 2012

 

Overall

 

·                  Total revenue increased 13 percent to a second-quarter record $238 million as compared with $210 million last year.

·                  Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, including share-based compensation), a non-GAAP financial measure, increased 21 percent to a second-quarter record $81 million as compared with $67 million last year.

·                  Selling, general and administrative expenses (“SG&A”) declined to 28 percent of total revenues from 29 percent last year.

 


 

Bally Technologies, Inc. Reports Record Second-Quarter Diluted EPS of $0.80         Page - 3 of 7

 

·                  Research and development expenses (“R&D”) remained constant at 11 percent of total revenues.

·                  Operating income increased 32 percent to $57 million compared with $43 million last year.  Operating margin increased to 24 percent from 20 percent last year.

·                  Diluted EPS increased 48 percent to a second-quarter record $0.80 from $0.54 last year.

 

Gaming Equipment

 

·                  Revenues increased 18 percent to $83 million as compared with $70 million last year, driven by higher domestic replacement sales, the shipment of 568 Canadian Video Lottery Terminals (“VLT”), and the shipments of units into the Illinois Video Gaming Terminal (“VGT”) market.

·                  ASP of new gaming devices decreased 4 percent to $16,553 per unit from $17,201 last year, primarily as a result of a higher mix of lower-ASP VLT and VGT units sold in the quarter.

·                  New-unit sales to international customers were 17 percent of total new-unit shipments.

·                  Gross margin increased to 53 percent from 43 percent last year, due to continued cost reductions on the Pro Series™ line of cabinets and sales mix, a reduction in cost due to a customer contract election, and an increase in conversion kit revenue.

 

Gaming Operations

 

·                  Revenues increased 15 percent to a second-quarter record $99 million as compared with $86 million last year, driven primarily by 87 percent growth in the installed base of WAP games.

·                  Gross margin decreased to 70 percent from 72 percent last year, primarily due to higher jackpot expense.

 

Systems

 

·                  Revenues increased 5 percent to $57 million as compared with $54 million last year.

·                  Maintenance revenues increased 28 percent to a record $23 million as compared with $18 million last year.

·                  Gross margin increased to 76 percent from 74 percent last year, primarily as a result of the change in mix of products.  Specifically, hardware sales were 27 percent of systems revenues, and software and service sales were 32 percent, as compared to 33 percent for hardware and 33 percent for software and services in the same period last year.

 

Highlights of Certain Results for the Six Months Ended December 31, 2012

 

Overall

 

·                  Total revenue increased 17 percent to a record $473 million as compared with $405 million last year.

·                  Adjusted EBITDA increased 27 percent to a record $160 million as compared with $126 million last year.

·                  SG&A declined to 28 percent of total revenues from 29 percent last year.

·                  R&D remained constant at 11 percent of total revenues.

·                  Operating income increased 37 percent to a record $110 million compared with $80 million last year.  Operating margin increased to 23 percent from 20 percent last year.

·                  Diluted EPS increased 59 percent to a record $1.57 from $0.99 last year.

 

Gaming Equipment

 

·                  Revenues increased 23 percent to $165 million as compared with $135 million last year, driven by higher domestic replacement sales, Canadian VLT shipments, and shipments into the Illinois VGT market.

·                  ASP of new gaming devices decreased 1 percent to $16,704 per unit from $16,922 last year, primarily as a result of a higher mix of lower-ASP VLT and VGT units sold.

·                  New-unit sales to international customers were 17 percent of total new-unit shipments.

·                  Gross margin increased to 50 percent from 43 percent last year, primarily due to mix and cost reductions on certain models of the Pro Series line of cabinets and sales mix.

 

Gaming Operations

 

·                  Revenues increased 17 percent to a record $200 million as compared with $171 million last year, driven by 87

 


 

Bally Technologies, Inc. Reports Record Second-Quarter Diluted EPS of $0.80         Page - 4 of 7

 

percent growth in the installed base of WAP games, as well as previously placed games at Resorts World Casino New York City which opened in late calendar 2011.

·                  Gross margin decreased to 70 percent from 72 percent last year, primarily due to higher jackpot expense.

 

Systems

 

·                  Revenues increased 8 percent to $108 million as compared with $100 million last year.

·                  Maintenance revenues increased 22 percent to a record $44 million as compared with $36 million last year.

·                  Gross margin increased to 76 percent from 75 percent last year, primarily as a result of the change in mix of products. Specifically, hardware sales were 26 percent of systems revenues, and software and service sales were 33 percent, as compared to 31 percent for hardware and 33 percent for software and services in the same period last year.

 

Fiscal 2013 Business Update

 

The Company increased its fiscal 2013 guidance for Diluted EPS to a range of $3.20 to $3.40.  This guidance assumes an effective tax rate between 36 percent and 37 percent for the fiscal year.

 

The Company has provided this range of earnings guidance for fiscal 2013 to give investors general information on the overall direction of its business at this time. The guidance provided is subject to numerous uncertainties, including, among others, overall economic and capital-market conditions, the market for gaming devices and systems, changes in gaming legislation, the timing of new jurisdictions and casino openings, the timing and completion of new systems installations, competitive product introductions, complex revenue-recognition rules related to the Company’s business, and assumptions about the Company’s new product introductions and regulatory approvals.  The Company does not intend and undertakes no obligation to update its forward-looking statements, including forecasts, potential opportunities for growth in new and existing markets, and future prospects for proposed new products.  Accordingly, the Company does not intend to update guidance during the quarter.  Additional information about the factors that could potentially affect the Company’s financial results included in today’s press release can be found in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

 

Non-GAAP Financial Measures

 

The following table reconciles the Company’s net income attributable to Bally Technologies, Inc., as determined in accordance with generally accepted accounting principles (“GAAP”), to Adjusted EBITDA:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

(in 000s)

 

Income from continuing operations, net of tax

 

$

33,126

 

$

24,268

 

$

65,658

 

$

44,660

 

Interest expense, net

 

3,135

 

3,339

 

6,608

 

6,612

 

Income tax expense

 

19,389

 

14,688

 

37,818

 

26,541

 

Depreciation and amortization

 

22,339

 

20,984

 

43,658

 

41,193

 

Share-based compensation

 

3,136

 

3,890

 

6,157

 

7,282

 

Adjusted EBITDA

 

$

81,125

 

$

67,169

 

$

159,899

 

$

126,288

 

 

Adjusted EBITDA is a supplemental non-GAAP financial measure used by the Company’s management and by some industry analysts to evaluate the Company’s ability to service debt, and is used by some investors and financial analysts in the gaming industry in measuring and comparing Bally’s leverage, liquidity, and operating performance to other gaming companies.  Adjusted EBITDA should not be considered an alternative to operating income or net cash from operations as determined in accordance with GAAP.  Not all companies calculate Adjusted EBITDA the same way, and the Company’s presentation may be different from those presented by other companies.

 

Earnings Conference Call and Webcast

 

As previously announced, the Company is hosting a conference call and webcast today at 4:30 p.m. EST (1:30 p.m. PST). The conference-call dial-in number is 877-261-8990 or 847-619-6441 (International); passcode “Bally”.  The webcast can be accessed by visiting BallyTech.com and selecting “Investor Relations.” Interested parties should initiate the call and webcast

 


 

Bally Technologies, Inc. Reports Record Second-Quarter Diluted EPS of $0.80         Page - 5 of 7

 

process at least five minutes prior to the beginning of the presentation. For those who miss this event, an archived version will be available at BallyTech.com until March 2, 2013.

 

 

About Bally Technologies, Inc.

 

With a history dating back to 1932, Las Vegas-based Bally Technologies designs, manufactures, operates, and distributes advanced technology-based gaming devices and systems worldwide, as well as interactive and mobile solutions.  Bally’s product line includes reel-spinning slot machines, video slot machines, wide-area progressives, and Class II, lottery, and central determination games and platforms.  Bally also offers an array of casino management, slot accounting, bonusing, cashless, and table-management solutions.  Additional Company information, including the Company’s investor presentation, can be found at BallyTech.com. Connect with Bally on Facebook, Twitter, YouTube and LinkedIn.

 

This news 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 are subject to change and involve risks and uncertainties that could significantly affect future results, including those risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.  Although the Company believes any expectations expressed in any forward-looking statements are reasonable, future results may differ materially from those expressed in any forward-looking statements. The Company undertakes no obligation to update the information in this press release except as required by law and represents that the information speaks only as of today’s date.

 

 

— BALLY TECHNOLOGIES, INC. —

 

NASCAR – NASCAR® is a registered trademark of the National Association for Stock Car Auto Racing, Inc. NASCAR® is a registered trademark of NASCAR, Inc.; Pawn Stars – ©2013 A&E Television Networks, LLC. All rights reserved. Pawn Stars, HISTORY, the “H” and their associated logos are trademarks of A&E Television Networks, LLC. Gold & Silver and its associated logos are trademarks of Gold & Silver Coin Shop, Inc. All rights reserved.

 


 

Bally Technologies, Inc. Reports Record Second-Quarter Diluted EPS of $0.80         Page - 6 of 7

 

 

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2012 AND DECEMBER 31, 2011

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

(in 000s, except per share amounts )

 

Revenues:

 

 

 

 

 

 

 

 

 

Gaming equipment and systems

 

$

139,323

 

$

124,217

 

$

273,334

 

$

234,230

 

Gaming operations

 

99,016

 

86,240

 

200,156

 

171,194

 

 

 

238,339

 

210,457

 

473,490

 

405,424

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of gaming equipment and systems(1)

 

52,205

 

54,073

 

107,559

 

101,174

 

Cost of gaming operations

 

29,335

 

23,858

 

60,328

 

48,090

 

Selling, general and administrative

 

67,852

 

61,304

 

132,368

 

118,526

 

Research and development costs

 

26,599

 

22,377

 

51,694

 

45,763

 

Depreciation and amortization

 

5,687

 

5,806

 

11,291

 

11,441

 

 

 

181,678

 

167,418

 

363,240

 

324,994

 

Operating income

 

56,661

 

43,039

 

110,250

 

80,430

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income

 

1,403

 

1,146

 

2,547

 

2,470

 

Interest expense

 

(4,538

)

(4,485

)

(9,155

)

(9,082

)

Other, net

 

(1,059

)

(728

)

(1,802

)

(2,584

)

Income from operations before income taxes

 

52,467

 

38,972

 

101,840

 

71,234

 

Income tax expense

 

(19,389

)

(14,688

)

(37,818

)

(26,541

)

Net income

 

33,078

 

24,284

 

64,022

 

44,693

 

Less net income (loss) attributable to noncontrolling interests

 

(48

)

16

 

(1,636

)

33

 

Net income attributable to Bally Technologies, Inc.

 

$

33,126

 

$

24,268

 

$

65,658

 

$

44,660

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted earnings per share attributable to Bally Technologies, Inc.:

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.82

 

$

0.57

 

$

1.62

 

$

1.03

 

Diluted earnings per share

 

$

0.80

 

$

0.54

 

$

1.57

 

$

0.99

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

40,399

 

42,870

 

40,633

 

43,296

 

Diluted

 

41,494

 

44,771

 

41,805

 

45,176

 

 

 

(1)     Cost of gaming equipment and systems excludes amortization related to certain intangibles, including core technology and license rights, which are included in depreciation and amortization.

 


 

Bally Technologies, Inc. Reports Record Second-Quarter Diluted EPS of $0.80         Page - 7 of 7

 

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2012 AND JUNE 30, 2012

 

 

 

December 31,
2012

 

June 30,
2012

 

 

 

(in 000s, except share amounts)

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

69,563

 

$

32,673

 

Restricted cash

 

13,215

 

13,645

 

Accounts and notes receivable, net of allowances for doubtful accounts of $18,195 and $14,073

 

264,848

 

264,842

 

Inventories

 

73,877

 

75,066

 

Prepaid and refundable income tax

 

31,457

 

13,755

 

Deferred income tax assets

 

41,740

 

42,822

 

Deferred cost of revenue

 

18,585

 

17,615

 

Prepaid assets

 

15,520

 

13,061

 

Other current assets

 

3,540

 

6,980

 

Total current assets

 

532,345

 

480,459

 

Restricted long-term investments

 

10,577

 

12,171

 

Long-term accounts and notes receivables, net of allowances for doubtful accounts of $3,305 and $3,029

 

34,567

 

55,786

 

Property, plant and equipment, net of accumulated depreciation of $57,557 and $58,823

 

33,431

 

30,667

 

Leased gaming equipment, net of accumulated depreciation of $202,250 and $185,846

 

123,504

 

121,151

 

Goodwill

 

172,252

 

171,971

 

Intangible assets, net

 

34,727

 

39,166

 

Deferred income tax assets

 

8,760

 

7,409

 

Income tax receivable

 

12,041

 

12,041

 

Deferred cost of revenue

 

12,747

 

16,542

 

Other assets, net

 

22,770

 

23,104

 

Total assets

 

$

997,721

 

$

970,467

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

32,118

 

$

41,414

 

Accrued and other liabilities

 

86,383

 

85,310

 

Jackpot liabilities

 

9,396

 

11,682

 

Deferred revenue

 

56,202

 

46,314

 

Income tax payable

 

3,330

 

12,226

 

Current maturities of long-term debt

 

20,891

 

17,091

 

Total current liabilities

 

208,320

 

214,037

 

Long-term debt, net of current maturities

 

538,125

 

494,375

 

Deferred revenue

 

21,262

 

26,715

 

Other income tax liability

 

14,646

 

13,922

 

Other liabilities

 

19,210

 

23,943

 

Total liabilities

 

801,563

 

772,992

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Special stock, 10,000,000 shares authorized: Series E, $100 liquidation value;115 shares issued and outstanding

 

12

 

12

 

Common stock, $.10 par value; 100,000,000 shares authorized; 64,491,000 and 63,150,000 shares issued and 41,201,000 and 42,102,000 outstanding

 

6,442

 

6,309

 

Treasury stock at cost, 23,290,000 and 21,048,000 shares

 

(890,668

)

(790,633

)

Additional paid-in capital

 

522,199

 

489,002

 

Accumulated other comprehensive loss

 

(12,089

)

(13,477

)

Retained earnings

 

570,553

 

504,895

 

Total Bally Technologies, Inc. stockholders’ equity

 

196,449

 

196,108

 

Noncontrolling interests

 

(291

)

1,367

 

Total stockholders’ equity

 

196,158

 

197,475

 

Total liabilities and stockholders’ equity

 

$

997,721

 

$

970,467