IGT INVESTOR DAY - PART ONE

12/07/11 09:50AM EST

Notes from IGT Investor Day. Nothing major yet.

2011: Deliverables

  • Growing game ops: increased domestic install base, first time since 2007; drove yields up 9% YoY
  • Improving profitability by decreasing COGS
  • Improving their competitive positioning internationally by restructuring their organization into 3 regions and introducing localized content
  • Increased their interactive presence - acquired Entraction: poker, bingo, & sports betting
  • Improved FCF: returned $120MM to shareholder; very focused on cash flow generation

Over the past 10 years...

  • Generated $2.5BN of cash flow over the decade while their competitors have generated almost none (BYI & WMS)
  • Returned $4.3BN to shareholders through buybacks and dividends compared to $250MM by WMS and ~$600MM for BYI (and that's over the last 2 years)
  • Generated $11.5BN of gaming operations revenues, which is the most valuable part of their business
  • They've nearly doubled their international revenues.  Have a +13,000 unit install base internationally.

Plan: "The World of Possible"

  • Grow revenue from $2.0BN to $2.5BN - didn't disclose over what time period so pretty useless
  • Grow international ship share from mid-teens to mid 20's
  • Gross margins from 58% to north of 60% through managing their promotions and having the best products
  • Operating margins of 27% to +30%

How will they achieve their goals?

  • Product, product, product and then focusing on process e.g. Sony
  • They need to enter new markets that they aren't participating in with more relevant products, particularly locally
  • Energize interactive division
  • Next generation platforms: leading the "cloud transformation" bringing new technologies to small facilities - first outside the US and then in the US; this will change the way content gets delivered.
  • Continue to be ROI-focused and being good stewards of capital
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