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Commentary by Eric Berg, President of IGT and Craig Churchill, International Senior Vice President 

Operational excellence

  • IGT has the advantage of scale in an industry where scale matters.  They believe that they have the ability to leverage their scale to deliver more operating efficiencies and better profitability.  Having this scale and cash flow generation allows them to have more capital to fuel growth opportunities and maintain their edge.
  • Goal is to be a one-stop shop for their casino operator clients and therefore, drive revenue growth
  • Want to drive operating efficiency and use some fruits of this effort to give cash back to shareholders but also invest some of the capital in new growth venues
  • Improve processes

Systems business

  • 44% share internationally for 2011 awarded business.  Roughly in 800 casinos.  Expanding presence of sbX installs.
  • Systems function as a "pull through for the games"

Game sales/operations

  • Got north of 40% ship share last quarter
  • The agreement with Sony allows them to get some themes that their competition just can't get
  • They went from 15 cabinets to just 2-3 cabinets.  Trying to improve the merchandising value of their cabinets and enhance their cabinet ROIC.
  • Top performers with > 1,000 placements: Red Hot Fusion, Hangover, Sex in the City

Globalization

  • Moving to a loose federation of country subs to a tightly integrated operating model, which should get them economies of scale
  • Get rid of duplicate systems and functions

International opportunities

  • International 5-year CAGR of 15.4% (The opportunity is anywhere between 17-100k units over the next few years)
  • International GDP growth > Domestic GDP growth; Vietnam may be an opportunity

IGTs share of install base internationally

  • NA: 52%
  • Australia: 25% (dominated by Aristocrat & Ainsworth); took market share from 18% to 25% over the last few years.  This year, they actually have the #1 ship share.
  • Asia/ Pacific: 13%
  • EMEA: 15%
  • LATAM: 13%

Opportunities to improve international operations model

  • Implement best of breed practices across regionals
  • Want to become the petri dish for new technologies, internationally

Macau game plan

  • Hire and train professional account executives situated in local markets; leverage ANZ success; deliver customized games and introduce the ANZ BC2O Neo product (an EGT machine - really resonated with local market place).
  • Launched 12 new locally themed games

Latin America

  • South America casino gaming sector is forecasted to grow to $24.3BN by end of 2014
  • Potential of Brazil can be "huge" (300k units)

Localized game content: underpinning of their strategy

  • Conducting local focus groups and research to develop local content
  • Utilize global studio to develop new localized games
  • "Re-skin" game library to make it more "local"