In preparation for IGT’s FQ3 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from its FQ2 earnings release/call.



Youtube from FQ2 Conference Call

  • “We expect our current trends of moderate revenue and earnings growth to continue for the remainder of this year and into fiscal year 2012.”
  • “I am quite enthusiastic about our international business opportunities.”
  • “Our [Gaming Operations] yields should continue their modest sequential improvement, assuming normal seasonal trends continue.”
  • “Approximately 82% of our install base is comprised of variable-fee games that earn a percentage of machine play levels rather than a fixed daily fee. For the remainder of the year, we expect our Gaming Operations’ installed base to continue its moderate growth.”
  • “Given the current selling environment and volume levels, we expect average selling prices to rebound modestly from this quarter’s levels, mainly due to mix, but margins to be under pressure for the remainder of the year.”
  • “Internationally, the average selling price was up 10% year-over-year to $13,000, due to favorable geographic mix, specifically higher shipments in Argentina and Australia.”
  • “We expect a modest, upward trend in SG&A for the remainder of this year as we invest in people and processes necessary to take advantage of new business opportunities.”
  • “The new facility will reduce interest expense including deferred offering costs, amortization, by about approximately $13.5 million on an annual basis. Additionally in April, we entered into arrangements to swap fixed rate interest for variable rate interest, which is expected to save an incremental $7 million in annual interest expense at today’s rates.”
  • “Roughly 12 months ago, we installed our very first Center Stage platform, and we now have over 500 units on that platform with another 500 units on order."
  • “We expect our International unit sales to keep pace with our North American sales for the remainder of the fiscal year, which is another testament to the strength of our global reach. We will combine that with growth in international Gaming Operations, to further enhance our strengths outside North America.”
  • “We have been deploying Wheel of Fortune Triple Spin onto the Center Stage platform and in many instances seeing meaningful increases in daily play levels versus older versions.”
  • “On a macro level, we are still very much in a promotional environment for the replacement business, and it may become more so in the upcoming quarters. To date, we have had some well received promotions that generally speaking have increased our ship share and generated sales in other areas as we bundle our offerings. To help offset these promotions, we continue to gain efficiencies in our manufacturing processes.”
  • “For the remainder of fiscal year 2011, we see very limited opportunities for new and expansion shipments in the for sale business. For fiscal year 2012, there is more optimism, but still no certainty.”
  • “Our systems business is also performing well. Year-to-date our consolidated systems revenues have grown in the high single-digit range. We currently have 65 sbX contracts in our sales funnel from all over the world, indicative of potential future revenue opportunities. This is another area of our business that we anticipate seeing earnings leverage as the overall gaming environment improves.”
  • “For the current fiscal year 2011, we are raising our earnings guidance to $0.84 to $0.90 per share, excluding the $0.04 of special items for the first quarter.”
  • “We have seen the WAP installed base start to stabilize and improve slightly in terms of the installed base. Performance obviously is much better with a new line-up of great performing games and a little help from the macro environment. I think on the margin we see consumers freeing up a little more money.”
  • “On the margins and Product Sales, I think you’re probably safe if you assume a run rate domestically of say 52%. Somewhere in that, plus or minus, probably seems like a good range. And then on, as far as R&D spend, I think we’re working hard to try and keep that relatively flat.”
  • “We are seeing some of our competitors’ price lower than our for-sale games are in the market at. What we find is our promotional activity is very disciplined, and we stick to a particular formula.”
  • “Our guidance, at the low end, assumes kind of flattish to the first half. At the higher end, it’s assumed some uptick there, but it also assumes at the higher end, some uptick in both the units and the play levels in the Game Operations business. But still, I think relatively modest.”

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