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: BETTER: BYI blew away consensus on the back of record systems revenue which they promise will continue to deliver. A lower tax rate also helped overcome some one time SG&A costs and FX losses. BYI's new re-upped buyback and ABS program also showed confidence in the company's outlook
GAMING OPERATIONS PRODUCT MOMENTUM
- SAME: Strong initial performances from recent premium and WAP product launches, including Hot Shot Progressive, Cash Wizard Tiki Magic, and Pawn Stars. NASCAR WAP debuted last week. WAP yield was higher in March, relative to January/February. BYI expects a pickup in WAP sales in the coming quarters.
- PREVIOUSLY: With respect to games operations… NASCAR is one of the most anticipated games that should be coming out in the next few months. The Hot Shot Dual Wheel… is an internal brand. We recently introduced a WAP game with a dual wheel, a big cabinet. That has just hit the floors, very small sample size, not statistically significant, but very, very good start… Pawn Stars on the premium segment, we know the reports have been very good from casinos. So overall we feel very good about our product momentum.
STOCK BUYBACK
- BETTER: BYI bought $31 million of stock in F3Q and authorized a new $300 million stock buyback program. BYI is entering into an accelerated share buyback agreement with JP Morgan today under which it will purchase up to $150 million worth of stock under the new share repurchase program. BYI will receive 2.5 million shares by the end of April.
- PREVIOUSLY: We typically in our guidance assume somewhere in the $15 million to $20 million per quarter buyback.
CANADIAN SHIPMENTS
- SAME: 788 VLTs were shipped in F3Q.
- PREVIOUSLY: During the quarter, we announced an agreement to provide 650 VLTs to WCLC Canada and expect to begin shipping the initial tranche during the March quarter. With respect to the Atlantic Lottery… somewhere around 1,200 to 1,300 of those shipped, so the remainder of those will likely come into this fiscal year
INTERNATIONAL GAME SALES
- SAME: International units sales continued to suffer this quarter, but BYI was steadfast that sales should improve as some new products get launched in the coming quarters
- PREVIOUSLY: International Games sales have been a disappointment once again… We have multiple product development initiatives currently underway focused on these international markets… We remain confident such efforts will pay off with improved International Games sales in the future.
SYSTEMS
- BETTER: Systems revenue ($71MM) was a quarterly record. 2/3rds of revenue came from existing customers. Margins will remain 'in the 70s, +/- a couple of % points.' Systems outlook for FY2014 is even better.
- PREVIOUSLY: On the Systems front, we expect fiscal 2013 to be our best year ever with increasingly visible backlog strength for the quarters ahead.