Hedgeye - BYI YOUTUBE

In preparation for BYI's FQ1 earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.

YOUTUBE from FQ4 earnings call

“Our fiscal 2012 is a tale of two years with the first part of the year being more investing; in the second half, more harvesting.”

“We released the Pro Curve, the first of its kind gaming device with a curved LCD display. All of our ALPHA 2 cabinets are equipped with the iDeck, another first for the industry. We continue to develop exciting player-centric applications for iVIEW network and now we have acquired MacroView, a leader in mobile gaming applications”
“While opportunities in our systems business had been frustratingly slow to convert to revenue, we are now confident more than ever in the long-term outlook for this segment.”
“During the quarter, we fixed the interest rate on the entire term loan of our new facility through its maturity at approximately 2.07%. For the foreseeable future, we anticipate continuing to allow the rate on the revolver, which amounted to approximately $219 million as of June 30, 2011, to float with LIBOR.”
“We also began shipping our Pro Curve this quarter, which contributed to our record ASP. We are very happy with the success of our Pro Series cabinets; however, this success has come at a short term impact to our game sales margins”
[Systems] “We anticipate similar growth in maintenance revenues in fiscal 2012”
“We expect that our effective tax rate for fiscal 2012 will be between 36% and 37%.”
“Our replacement game sales grew by 18% since the fourth quarter of fiscal year 2010, the first meaningful increase in replacement sales in four quarters. Approximately 77% of our domestic sales this quarter consisted of video, which exclude sales of our new Pro Curve. Our Pro Series cabinets, which made up almost 50% of our worldwide shipments for the year and 72% in the current quarter, helped to drive our North America ship share for the quarter to around 19%.”
- “Playboy Hot Zone was our top-selling domestic team this quarter. We sold 1,015 games in international markets. We officially launched in Australia with almost 100 units.”
“Gaming operations had a record quarter in many different ways including overall revenue and our best revenue per day levels ever. Our premium units increased by 7% during the quarter and by almost 20% during the year and we established a quarterly record in terms of revenue per unit. This was driven by the successes of Cash Spin, Vegas Hits and Cash Wizard. There are over 500 Cash Wizard units in the field today. With the release of Betty Boop and Money Vault during the third quarter of fiscal 2011, we are now seeing a steady increase in the number of WAP units, win per day, and overall revenue.”
“For the year, more than 80% of the systems revenue came from current customers. About half of the major go-lives during the quarter were at relatively smaller sized casinos, a segment we are penetrating at an increasing pace now. We will be releasing SDS on Linux solution on the same SDS code base, providing smaller casinos with a platform choice, Windows and Linux. Our systems market share in Macau in terms of slot machine connections has grown from 30% in 2009 to 64% in 2011. In terms of the number of tables and our TableView system, our market share in Macau has grown from 7% to 33%. I think it’s reasonable to expect that we can repeat that kind of performance in other international markets as well during the next couple of years.”
“Due to a seasonally low number of planned implementations and go-lives, our first quarter fiscal 2012 is expected to represent a slow start to the year in terms of systems revenues. However, in spite of the lower system revenue level in the first quarter we expect systems revenues to get back to a good growth mode this year”
“We positioned ourselves to be the leading U.S. company in the new Italian market with orders for over 5,000 machines which should start to generate long-term revenue for us by the end of this calendar year.”
“We were selected as the preferred systems provider for major Canadian provinces and expect the initial revenues from these Canadian systems to begin within six months and run for about three years thereafter.”

“We expected initial revenues from Canada system procurements to begin toward the end of this calendar year. We still feel that way”

“We signed major new systems deals in Sun International to include iVIEW or iVIEW DM across 12,000 games: Caesars DM, Golden Nugget, Navajo Nation and others.”
“Financial guidance for 2012, we currently expect fully diluted earnings per share to exceed $2.15 a share and first quarter to exceed $0.40 a share… we’ve included things and we’ve talked about in our release that we do expect some contribution from Canada. We do expect a contribution from Italy. We expect contribution from Aqueduct; but we thought it prudent at this point to put in a minimum EPS target because the timing of those large projects have moved around a little bit over the last year and so we wanted to put out a number that we know we can exceed.”
“We would have roughly the 5,400 units that we’ve announced in Italy; an average cost of anywhere between $7,500 and $8,000; and then 50% of the Aqueduct units, so that’s roughly 2,250 units at about the same cost.”
“We do believe that SG&A will grow slightly YoY during the year. If you look at the fourth quarter run rate that’s more in-line with what we might anticipate for the year.”
“At this point we’ve identified 10% to 12% cost reductions that we think we can get out of Pro Series over the next say 12 months or so and that will be gradual. We’ve achieved some cost reductions already, but we’ve also had some royalty expense that hit this latest quarter. So look for our margins to sort of steadily increase over the next three to five quarters and get back to reasonable as we enter fiscal fiscal 2013.”
“The largest impact in this quarter was the fact that more of our cabinets and our conversion kits were weighted towards royalty-based themes as opposed to non-royalty based themes.”
“Obviously in this kind of environment, we’re not assuming a strong replacement cycle this year at all, not much uptick at all in that. We are assuming a little improvement in our ship share that we’ve shown the new Pro Series can do and we know our historical innovation and what we’re doing in game ops should allow us to regain some ship share. We are assuming some improvement in gaming ops because of the great product offering we have as well as Italy and New York coming online.”
[iVIEW DM Margins]: “Well, in general we expect margin on that product to be in excess of 50%, and it sort of depends on volume purchases. We’re also working aggressively on our cost for that product as we see volumes coming up. But we do expect it to be sort of above most hardware margins but below our software margin. Also keep in mind that we expect iVIEW DM to drive a whole lot more software application sales as well. It is not just about the margin of DM alone. That has a much higher potential to drive our other Elite Bonusing Suite and other bonusing kind of applications behind it”
“Well, first of all, we are pleased with the performance of our games in Australia, and right now we’re just in New South Wales. By the end of this fiscal year, we expect to be in Victoria, so we’ll have the two largest markets of Australia covered. So Australia requires a pretty big investment because of the technical complexity of the market, the size of the market. We’ve also added a game development studio there for which we don’t yet have game content. So it’s been an expensive market for us but one we’re excited about long-term. So look for us to continue to do better in Australia as the year progresses.”