In preparation for the BYI FQ3 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from its pre-annoucement on April 7,  BYI’s Investor Day, FQ2 earnings call and other releases.



  • “Short-term market conditions remain difficult, with the timing of large systems implementations becoming more challenging to predict. However, we continue to be pleased with the strong performance in our gaming operations business, the initial acceptance of our new Pro Series cabinets, and our business-specific initiatives. Our systems outlook remains strong, and this month we will begin selling the first ALPHA 2™ titles Playboy Hot Zone and Ole Jalapeños.”
  • 3Q EPS (ex impact of refinancing and stock tender/repurchases): $1.82-1.95; 4Q EPS higher than 3Q EPS
  • Lower than expected systems revenue caused from the timing of decisions for large installations, and lower than expected gross margins in gaming equipment due to a higher than anticipated mix of Pro Series cabinet sales.
  • Will not achieve $205MM in systems revenue for fiscal 2011
  • Refinancing:
    • $700MM of new senior secured credit facilities comprised of a $400MM, 5-yr revolving credit facility and a $300MM, 5-year term loan (collectively, the “Credit Facilities”).
    • $50 million sublimit for the issuance of standby letters of credit, a $10 million sublimit for swingline loans and a $150 million sublimit for multicurrency borrowings in Australian Dollars, Canadian Dollars, and Euro
    • Initial pricing: LIBOR +175bps (assuming a gross leverage ratio of 2.0)
    • Will have $150MM of undrawn availability under new revolver.
    • Tender offers expires on May 6
  • Repurchased ~ 898,000 shares for a total of $35.1MM, leaving $27.3MM available under its existing share repurchase plan
    • Increased repurchase program to $550 million minus the amount repurchased in the tender offer (which is expected to be $400 million).



  • "We now expect fiscal 2011 System revenues between $205 million to $215 million. As we have been guiding, this will equate to approximately 60% of our Systems revenues occurring in the back half of fiscal 2011."
  • "Based on the expected timing of current deals, we already have signed commitments for close to two-thirds of the back-half revenue."
  • "We continue to maintain our maintenance revenue guidance of $63 million to $65 million for fiscal 2011."
  • "We now expect that our effective rate for the remainder of fiscal 2011 will be between 35% and 36%."
  • "Over the next few quarters, our working capital will be used to invest in new gaming operation assets, our expansion into Italy and Australia and to supply approximately 50% of the floor at Aqueduct, all of which we will expect
    to begin to generate returns in the second half of calendar 2011."
  • “We continue to focus on international expansion opportunities, and expect to obtain regulatory approvals to begin selling our games in Australia within the next 30 days. The Italian VLT market has been initially seeded by a few European manufacturers, and the performance numbers are exceeding expectations. This has led us to favor initial deployments of more recurring revenue units versus up-front sale revenue games.”
  • "We sense some optimism from our customers but remain cautious for replacement games for the remainder of this fiscal year."
  • [Systems revenue] “We are forecasting further increases in the upcoming quarters.”
  • “We expect DM and our recently re-engineered game monitoring unit to drive in-game hardware revenue increases during the upcoming quarters.”
  • “We currently expect fully-diluted EPS of $2.00 to $2.15 per share versus our last guidance of $2.05 to $2.30 per share.”
  • “Now, due to this anticipated stronger net win, we expect most of our Italy arrangements to be recurring revenue with very little profit in fiscal 2011. However, this bodes well for our Italy revenues for our fiscal year 2012 and beyond.”
  • “Canada’s Systems revenue should also begin in the second half of this calendar year.”
    • “Canada’s not signed, and we don’t expect signing for several more months.”
  • “So we’ve been buying back roughly $20 million a quarter, so I’ve got that currently in our EPS range for the back half of the year.”
  • “Our ALPHA 2 games are beginning to roll out. iDeck has already rolled out and is showing great performance improvement for us. We’ve just got approval now for our first new WAPs in a long time. Cash Wizard goes out starting next month (March).”
  • “And on System products, iVIEW DM we’re confident of a couple more signings of casinos for iVIEW DM here in the next 60, 90 days. And the bonusing products are beginning to hit the field. If the application’s right, View DM will obviously be sold as the casinos adopt iVIEW DM. But good strong interest for iVIEW DM, where we would expect to see revenues.”
  • for that beginning in the March quarter.
  • “Other opportunities in Canada?” “Yes.”
  • [New WAP games] “The beautiful thing about Wide-Area Progressive games is that they’re always a percentage of coin-ins because we fund the top jackpot. Hence, traditionally with all our competitors, the higher revenues from those types of games, so they’ll follow the same pricing model as that.”
  •  “No deterioration in the last three months, in visibility.”
  • [Cash Spin] “It’s still going up and around 45 degrees on our charts, which is pretty much where it started. It but that’s why we timed games like Hot Spin and things like that to replenish it.”
  • “Total CapEx for this year is actually going to be up over last year."
  • Service revenues have increased from $3MM to $6MM per quarter--upgrades/add ons, etc. As they penetrate smaller casinos - which have smaller IT departments, they require more outsourcing of services.
    • Wants Software to Services revenue ratio to be 1:1
  • Additional opportunities include:
    • If BYI can capture 30% of their domestic competitor biz, they can add 120k slots to their system, which would equate to a $420MM opportunity.
    • If BYI can capture 50% share of the new casinos, then BYI can add 70K slots, representing a $245MM opportunity.
  • All-in, they think they have a $1.8BN addressable opportunity in systems.

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