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While IGT's quarter contained two surprises - international sales (bad) and margins (good) - there wasn't a big read through to WMS. We expect an in-line quarter next week.

WMS will report its FQ2 EPS on Tuesday after the close.  Replacements should be sequentially better, margins on product sales should also improve, and the install base for gaming operations should see a small sequential uptick on the back of more new releases.  For more details see below:

We expect WMS to report $202MM of revenues and EPS of $0.45.

  • $128MM of product sales revenues at a 52.5% gross margin
    • NA new shipments of 850 and 3,250 replacement shipments (roughly flat YoY)
      • New units include shipments to Perryville (29% share) and Gun Lake (23-25% share)
    • 2.3k international shipments
    • $16.2k ASP
    • $18.5MM of used machine sales and $6MM of conversion kit sales
    • Our understanding is that with the exception of Europe, the international business has been doing well
  • $74MM of gaming operations revenue at a 79% margin
    • Ending install base of 10,500 units and win per day of $73.40. We expect increases across all categories with the following title launches:
      • % coin in: Great and Power Oz, Monopoly Refresh
      • % net win: Godfather
    • $3.7MM of daily fee, royalties, and other lease revenue
  • Other stuff:
    • R&D: $29.5MM
    • SG&A: $40MM
    • D&A: $16MM
    • Reduced tax rate due to the reinstatement of the R&D tax credit