In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance.
OVERALL: WORSE - ASPs were awful and while there was some progress made domestically, international was disapointing. Revenue guidance was reduced as the company will not generate YoY growth in the 2nd half of fiscal 2012.
Here is the report card evaluating actual results against management's previous assertions.
- WORSE: On its previous call, WMS had expected YoY growth in revenues and operating margins for the 2nd half of 2012. For FQ3, revenues were down by 9% YoY. For operating margins, it was a mixed picture, as gaming operations margins were unchanged YoY while product sales margins gained 320bps YoY. For FQ4, WMS expects revenues to be modestly lower YoY but better operating margins YoY.
- ILLINOIS/ITALY VLT
- SAME: still does not expect revenue in FY 2012 from the Illinois and Italy VLT market
- WORSE: WMS had mentioned previously that they're not known to reduce prices significantly but ASPs fell 8% YoY, missing Street expectations by a wide margin. Clearly, WMS is feeling the heat from the competition. Both IGT and BYI reported around 10% increases in ASPs.
- REPLACEMENT MARKET
- SAME: even though sentiment seems to be modestly better, the market is still somewhat challenged with a slight improvement in capital budgets
- INSTALL BASE/ADR GROWTH
- SAME: as a result of new participation products, FQ3 gaming operations installed base and average revenue per day both increased by 1% sequentially to $9,389 and $68.06, respectively.
- COST SAVINGS
- SAME: still on track for R&D and SG&A savings
- SHIP SHARE GAIN
- SAME: continue to expect recapturing ship share over time
- NEW OPENING SHARE
- SAME: floor share for new casino openings for FY 2012 is expected to be in the high-teens.
- SAME: no change in outlook on replacing and upgrading their installed base of 7,000 VLTs
- BETTER: 2,100 open orders were higher than previous guidance of 1,900 games
- CAPITAL SPEND OUTLOOK
- SAME: continues to expect lower capital spend YoY in FY 2013