Finally a solid quarter and guidance in a sea of disappointments



“Our fourth quarter and fiscal 2012 results validate our leadership position in gaming technology innovation. This innovation leadership and visibility into further growth opportunities for all of our businesses for fiscal 2013 and beyond is tremendously encouraging.”


- Richard M. Haddrill, the Company’s Chief Executive Officer



  • 19% NA ship-share
  • iVIEW DM went live in 8 additional locations this quarter. Now have a solid base of 1,050 games running across all major manufacturers and pipeline continues to grow.
  • Anticipate an improvement in their FY13 operating margin as gaming sale margins should increase
  • Recorded a $10MM charge recorded to settle certain outstanding legal matters
  • 4,143 units to NA (1,323 new and expansion units and 2,820 replacements)
  • Still expect to get to 48-49% game sales margins due to continuous cost reductions 
  • Repurchased 1.6MM shares of stock in the quarter
  • In July several of their Elite Bonusing Suite of products went live across iVIEW and iView DMs at South Point in LV.  Since the launch, South Point saw an improvement in food traffic, carded play and player card enrollment.
  • They were the first company to get an interactive gaming supply license in the US
  • BYI's cloud-based mobile product continues to move forward at good speed.  Have 58 gaming and non-gaming sites currently using their mobile products with ~60 applications running.  Expect their content generating revenue on various portals in regulated international markets some time in the near future.
  • First U.S. based play for free poker site at Golden Nugget using their backend B2B i-gaming platform went live this quarter. 
  • They completed testing in Italy and are currently operating in several locations.  Expect to have 1,000 VLTs in Italy by the end of FY13.
  • Making progress in their shipments to Australia and completed their first systems installation there 
  • Expect to begin initial shipments to IL in F2Q pending approval of more locations
  • Making good progress on international systems implementations 


  • Legal $10MM accrual:  For several matters (more than 1, less than 6)
  • Michael Jackson/ Grease:  Think that the games have the potential to have 750 units each. Cannabalization is still low because they don't have much in terms of WAP. They also don't see any impact from consumer weakness yet.  Their gaming operations margin this quarter was impacted by a bit by higher jackpot expense.
    • Average win per day is meeting their expectations.  In each of the quarters this year, they have been above $100/day on WAP and were below that last year.
  • Range for FY2013 depends on success of future WAP releases, ability to hit their margins and meet sales expectations with Pro-Series. There are a lot of new markets opening as well. 
    • How much and how fast of IL will roll out; how much will be for sale vs. participation
    • Italy rollout and win per day performance
  • WAP:  there hasn't been any new competitor pressure 
  • 745,000 shares were repurchased for $33MM post June 30th
  • Grease:  Out since March.  They have a couple of follow on games and changes to extend the life of the games.
  • Their WAP strategy doesn't stop with just MJ & Grease
  • Their iDeck is considered a value proposition; don't need to switch out the button panel.  Same thing with the Curve- customers don't need to change out the reels.
  • They are focused on the categories of gaming operations. They are not focusing on WAP at the expense of Premium.
  • Very comfortable with their leverage ratio given their 50% recurring revenue base.  They have been very focused on execution of their strategies. So a lot of the execution risk is behind them now, and therefore some accretive / strategic acquisitions in addition to using their FCF on making buybacks.  They usually buy back $15-20/MM per quarter. They assume that they will buy back between $60-80MM of stock in FY13.
  • Their DM sales were up several times what they were last year.  Expect that DM sales will keep increasing YoY.
  • In Italy, their prospects are modest given their product delays
  • Their first system went live in Australia and just went live in New Zealand a few months ago.  South Africa is moving along.
  • Canada VLTs do come at a lower ASP- but the margin is good.  IL will also come at a lower ASP.
  • Their i-gaming strategy is to go in with their customers.  They launched their free play poker site for Golden Nugget.
  • They have 58 mobile sites up and running.  They believe that mobile can be more profitable than i-gaming in the near term. 



  • FY2013 guidance for Diluted EPS of $2.95 to $3.30. 
    • "This guidance anticipates continued year-over-year growth in each of game sales, gaming operations, and system revenues. The Company currently anticipates an increase in the placement of its premium games, particularly WAP, an increase in the number of gaming devices sold with continued margin improvements on game sales, and continued growth in its systems business. This guidance assumes an effective tax rate between 38 percent and 39 percent"
  • BYI reported $246MM of revenue and EPS $0.78, a little ahead of consensus estimates
  • In 4Q BYI purchased $73MM of stock and another $33MM since June 30, 2012. In FY 2012. BYI repurchased $155MM of stock at an average price of $40.06.  $58MM is available under their buyback plan as of today
  • Gaming Equipment: 
    • New gaming devices: 5,322; ASP: $17,182 (increase due to higher mix of Pro Series cabinets sold)
    • International shipments: 1,170
    • Gross margin increased to 46%.... primarily due to mix and cost reductions on certain models of the Pro Series line of cabinets
  • Gaming operations:
    • “Increased the Cash Connection wide-area progressive (“WAP”) installed base by almost 500 units in the fourth quarter including additional installations of Grease and the recently launched Michael Jackson"
    • 72% gross margin
  • Systems: 
    • $20MM of maintenance revenue
    • 74% gross margin, due to change in mix.  "Hardware sales were 29%  of systems revenues, and software and service sales were 35%, as compared to 42% for hardware and 29% for software and services" in 4Q11
  • "SG&A increased $2 million primarily due to an increase in payroll to support key new markets."

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