In preparation for IGT's 2Q earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.
IGT Granted License from Gaming Commission for Online Poker (6/21/2012)
IGT Announces New $1BN Share Repurchase Authorization and $400MM Accelerated Stock Buyback (6/14/2012)
- IGT entered into an accelerated stock buyback agreement with Goldman Sachs under which it will repurchase approximately $400MM of its common stock. The accelerated stock buyback will be conducted as the first part of the Company's new $1BN share repurchase authorization.
- Initially, Goldman Sachs has agreed to deliver approximately 21MM shares IGT's stock on or before July 6, 2012.
- The remaining $600MM is currently anticipated to be utilized over the next 3 to 4 years.
IGT Partners with Atlantic Lottery to Upgrade VLT Network (5/24/2012)
- Signed an agreement with Atlantic Lottery, a public corporation owned by the governments of Nova Scotia, Prince Edward Island,New Brunswick and Newfoundland and Labrador, to provide 1,612 video lottery terminals for the replacement of obsolete units.
WELLS FARGO SECURITIES GAMING CONFERENCE (5/21/2012)
- "I would say the mood is improving but still tempered. I think we're all wondering about the economy as we go into this election cycle, and then, post-election, kind of what things look like next year. And I think there's always a great intent to make investments and then just stopping short of actually making it at the same robust level....I would say people are enthusiastic but still a little anxious."
- "We feel very good about our position there [Canada], that market is going through a huge replacement cycle in 2013 and 2014, fiscal 2013 and 2014 for us, is kind of a once-every-10-year opportunity, so when it comes, you have to really be prepared. We feel like we are prepared. It's a huge opportunity for us."
- [DoubleDown] "We've owned it now for three or four months, and we're comfortable that it's out ahead of what we expected it to be at this point financially. It will be accretive on an adjusted basis this year, and accretive on a GAAP basis in 2014."
- [DoubleDown] "On your projections, EBITDA should roughly triple from here, and that would equate to a purchase multiple of roughly 6.5 to 7 times EBITDA on 2014. Are we in the same ballpark?"
- "So I would say your math makes sense in this kind of a worst-case, and we think there's actually a lift from that in the business, just based on the R&D that has been spent years ago, and putting some legs on that R&D as we repurpose a lot of our content into the social gaming space and monetize it, again, when it's been sitting on the shelf."
- [Bringing a theme via Double Downs] "It's one-third the cost generally to get something out into that marketplace, which is important for us. If you think about the hits business that you're in in the casino floor, it really reduces the strikeouts and makes sure that you have more hits in that marketplace, so a very important testing vehicle for us as well as just a revenue and customer touch point."
- "The Dark Knight has moved out from Vegas into some of the regional markets. It's doing well in the regional markets. We've moved our Dark Knight into Monaco. I had an opportunity to be there for the unveiling of The Dark Knight. And it's amazing; you don't think it really would translate to a bunch of French tourists, but the reality is it really does translate, and it all comes down to the video that we talked about earlier. That video component, that immersive component really pulls people in. Sex and the City has moved to the Asia-Pac region, which has been great, and it's playing well down there, and our MegaJackpots into Macau, the first MegaJackpots into Macau, again, really performing well and ready to expand down there. We're excited about the product lineup looking very good"
FQ2 CONFERENCE CALL YOUTUBE (4/24/2012)
- "Our international business pace continues to accelerate, with improvement in both quantity and quality of order flow."
- "Our first Cloud trials are up and running across Europe, and our partnership with Lottomatica in Italy underscores the value of our leading game content and our intense focus on driving higher returns on our investments in research and development."
- "We expect our financial results will continue to strengthen throughout the remainder of this fiscal year."
- "We are responsibly focused first on reducing risks and managing that which is within our control."
- "Our core objectives for 2012 remain consistent, as we look to grow revenues, build on the momentum of our internal improvements, leverage our income statement and energize our Interactive business."
- "We're generally pleased with our WAP product performance. It continues to perform as expected. Really, the quarter was really just a mix to the lower earning units and we expect continued improvement sequentially over the remainder of the year."
- "We had an isolated non-standard cost situation in our Asia-Pac region in the quarter, so we are anticipating that the gross margins across the board... will pick up between now and the year – and the end of the year back to more normalized levels."
- "We're very comfortable, if you look at the accretion to cash earnings that Double Down has provided, we feel very comfortable that it's outperforming our expectations in the business case going into the acquisition. I think the thing to keep in mind is that the way we count our daily users is a little bit different than others in the market because we count them when they come in the door of Double Down. So if you go into the Double Down casino and you play more than one machine, it still is only counted as one. So we're very focused on the stickiness of the full-on casino as opposed to an individual game."
- "Our outlook is positive for North American replacements. It will, we think, continue to strengthen throughout the year, we will expect North American replacements to grow modestly over the remainder of the year, but there wasn't anything extraordinarily unusual in the quarter that doesn't lead us to believe that there's continued strength in that market for us...the replacement market is going to be flat to growing has kind of been IGT's stance now for about six months. This year's going to be flat to growing and our share in that is going to be in the mid 30%s. So I think that tells you year-over-year, our North American replacement markets will be in that kind of 3% to 5% growth range with, you know, about a mid 30% share."
- "It's just worth noting that when you think about our business on an annual basis, we're targeting in that kind of mid-30% market share range"
- "I would say that we have drawn out the retention payments because they are of a short duration. They will only be in place for a short number of years. And recognize that currently they are not cash payments. They are accruals against cash payments that will be earned into the future"
- "In the quarter on an adjusted basis, Double Down contributed about a penny. And we expect that to be the case for the next couple of quarters as well."
- "Just to add clarity, on the $0.15 that's in our press release, that predominately relates to the amortization of certain intangibles which we detail out separately in the current quarter, and we'll most likely continue to do in future quarters, as well as the retention payments, which we are also independently calling out on our income statement due to their size and the short-term nature over which they will appear in our income statement."
- "We're certainly hoping to count on a couple more pennies to carry forward this quarter's performance of Double Down forward, but not in the bank yet."
- "It's a reflection of our focus on the international market, moving ourselves to higher ground there with more sophisticated installations and the investment that we've made, the R&D investment to build localized content."
- [Replacement level] "We've recognized 8,100 units. I think that's a comfortable kind of six month rate for us that we feel very comfortable with. And as we indicate I think every quarter, you're going to find things moving around quarter-to-quarter but kind of sitting in at that level on an annual basis is something we're comfortable with."
- "Gross margins for the Interactive business, Double Down in particular, is a little skewed because of the way the Facebook credits come through. So a little bit higher revenue growth, a little bit more stretched gross margins. We expect those gross margins because of the way it's so kind of clinical in the calculation, right? It's ...$0.70 of every dollar for us. We expect them to kind of hold in there in the Double Down business and the general Interactive business outside of that, we expect slight margin pickup there in the back half."
- "We haven't really pursued the Cloud domestically at this point. We've been very focused with both regulators and customers outside the U.S. and are very comfortable with the trials and we're very focused now on converting the trials to commercials. That will take place over the coming months. And I would say the U.S. is still well into 2013 or 2014, until we really start thinking about. There's a lot of work that has to be done regulatorily but also just in really exercising the Cloud technology with our customer set ahead of bringing it into the U.S."
- "It's interesting to see the legs on Sex and the City internationally. That's been a real pleasant surprise for us, to see how applicable that product is outside the U.S. So we've really been able to pick up some strength by adding life to the Sex and the City product, the original product. Dark Knight not just here in the U.S. but outside the U.S. also very strong for us, Ghostbusters as well. So we're feeling very good. Breakfast at Tiffany's is doing very well. It's moved from an exclusive out more generally into the market. So we feel good about how the product is playing. And Big Buck Hunter is kind of the next generation for us. So I feel like we have a nice lineup of product in the bag of the sales folks at this particular point in the game ops side."
- "Asia is a great opportunity for share pickup for us. In Central, South Latin America, it's really more about new openings and some share pickup. But, you know, I will tell you that our EMEA group has really done a remarkable job at really getting us back in doors that we had not been in in a very, very long time introducing new product that many of our customers had not been introduced to. So I would just say we can't count out our EMEA region. They really are scrambling for every machine order and they've proven that, you know, every machine order matters."
- [International share target] "Can we set our sights on being north of 20%? I think we can set our sights on that."
- [Canada VLT] "We still think we might get some in the September quarter. It just kind of comes down to timing and revenue recognition issues. It's really going to be more of a 2013 event. There may be 1,000 contracts or so that sneak into September. But we... obviously got a very good share from the first announcement and we're hopeful that those kind of trends continue."
- "Our current forecast is that the Ohio properties will be recognized in June. That being said, that largely comes down to the licensure process and the requirements we need to meet in order to ensure appropriate revenue recognition but our current perspective is those will be recognized in our third quarter."