In preparation for IGT's F1Q 2013 earnings release tonight, we’ve put together the recent pertinent forward looking company commentary.
POST QUARTER ANNOUNCEMENTS
DECEMBER 19: INTERNATIONAL GAME TECHNOLOGY COMPLETES $400 MILLION ACCELERATED STOCK BUYBACK
- Under the terms of the accelerated stock buyback agreement, Goldman, Sachs & Co. will have delivered 30.3 million shares (27.8 million in the fiscal 2012 and 2.5 million in the fiscal first quarter of 2013) to IGT at an average price of $13.22 per share
NOVEMBER 20: INTERNATIONAL GAME TECHNOLOGY ANNOUNCES A 17% DIVIDEND INCREASE
- IGT announced today its Board of Directors declared a cash dividend of $0.07 per share on its common stock, a 17% increase compared to the dividend paid in the same quarter last year. The dividend is payable on Dec. 31, 2012 to shareholders of record on Dec. 19, 2012.
YOUTUBE FROM F4Q CONFERENCE CALL
- “Gaming Operations gross margin increased in the 4Q by 400bps basis points to 61%. On a same-store sales basis, Gaming Operations gross margin was up about 100 bps. This is mainly driven by an increased percentage of standalone and fixed-fee games that carry higher gross margins than typical WAP games. It also reflects the success of our strategy to manage the turnover of capital in our MegaJackpot installed base”
- “In 2013, we expect Gaming Operations revenue and installed base to be about flat with 2012, while gross margin and profit per unit are expected to show modest improvements.”
- “For 2013, on a same-store sales basis, we expect our pricing to follow historical trends.”
- “On the strength of our VLT business in Canada, Ohio, and Illinois, where we expect to enjoy leading ship shares, we anticipate our product sales revenue and gross profit to deliver double-digit increases, while gross margin may be slightly softer due to mix.”
- “We have seen remarkable growth in the number of mobile users and a corresponding growth in revenue from those users. We remain very excited about DoubleDown's potential and still expect the transaction to be GAAP accretive by 2014.”
- “Moving forward, we expect some additional costs and, in the short term, lower revenues and gross margin in our IGTi business as this restructuring plan is executed. On the positive side, these actions are anticipated to reduce annual operating expenses in our IGTi business.”
- “For the year, adjusted operating expenses were about flat as a percentage of revenue, and we expect this trend to remain consistent into 2013.”
- “We are extremely pleased with the rate at which our revenue is being converted into operating cash flow, roughly 21%. Over the past five years, on average we have converted 26% of revenues into cash flow from operations.”
- “Looking forward to 2013, we are initiating our adjusted earnings per share guidance at $1.20 to $1.30 per share, representing 15% to 25% growth over fiscal 2012. We feel this guidance reflects the positive momentum in our business as well as the current economic conditions globally and the improving sentiment of our customers toward our products and services. We expect to continue to grow the top line and grow operating income and adjusted earnings per share even faster.”
- The guidance excludes $40MM of SG&A charges related to amortization of intangibles (DD) and earn-out mark to market.
- “Historically we earn about 40% to 45% of our full-year earnings in the first half of the fiscal year and that the fiscal first quarter is usually less than half of that”
- “We expect to stabilize our MegaJackpot revenues, improve our return on invested capital, and increase our product sales gross margin, especially in our international business.”
- “At DoubleDown, the world's largest social casino, we expect to launch a more complete mobile product. We expect to add localized content for the international markets and to leverage even more of our proven IGT brands and game content.”
- “At our IGTi group, we expect to see continued growth in our mobile real-money wagering business consistent with our past trends.”
- “The vast majority of the growth in SG&A this year has been related to our Interactive businesses. That's the IGTi business and then, obviously, the acquisition of Double Down. In fact, the base SG&A has grown less than double-digit dollars. So we would expect to continue to invest in the Interactive business, but at a rate that's less than the revenue growth expectations going forward. And then in the base business, we'd expect again, low single-digit SG&A growth.”
- Q: So if I think about that just empirically, maybe $30 million in incremental SG&A?
- A: I think that's about right on the growth next year, recognizing that we have one more quarter of Double Down next year than we had in the prior first quarter.
- “We are looking now expecting our North American replacement share to come in at around 48% for the quarter, a very strong quarter for us. There wasn't anything that we pulled in. Our guidance 90 days ago was to stay with our guidance range, which is exactly where we came in. So there wasn't an expectation; there was no moving here of shipments from one quarter to the other. We shipped what we had forecasted that we would ship that hit the guidance range that we confirmed last quarter”
- “I think the margin, the gross margin on Canada is a bit stronger than Illinois, but not markedly so”
- “The products that we have moved from the IGT game library into the DoubleDown Casino have had a significantly positive impact on that monetization. They're proven products. We were able to move them into the market in about half the time and with about half the cost of the other people we compete with in the social casino space.”
- “I would say still cautiously optimistic on spending on the customer front. But as you can see this quarter and for the year, we continue to pick up ship share, even in a very restricted capital market, so we felt very good.”
- “I would think about capital in the Gaming Operations business as flat to down slightly.”
- “I would expect that there will be continued pressure on yield, so we're taking active steps in the quarter and have been for the last quarter.”