In preparation for BYI's F3Q 2013 earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.




  • FY 2014 guidance of $3.70 to $4.05 per fully diluted share.  Due to normal seasonal trends and the timing of new openings, we expect our diluted EPS from the first half of FY 2014 to contribute about 46% of the earnings. Within that first half, we expect the second quarter to be stronger than the first quarter. In proportional terms, that would be very much along the lines of the fiscal year 2013 results. 


  • While in this fiscal year the WAP growth will continue.. to grow, we have a good pipeline coming, not at the pace that you are used to the last couple of years. The pace is going to slow down a bit in terms of pace of growth, and the rate at which the WAP titles are coming out are going to start increasing over the next three quarters or four quarters, and then the pace will pick up again.
  • Our R&D resources allocation to the WAP and the gaming operations portion of the business is increasing. So in terms of release of WAP titles, you will see that is ticking up over the next few quarters.


  • In terms of being a good content provider, we've already launched our games in about 12 portals to 15 portals in Europe, in all the regulated legal wagering sites and that is going well. We are just about to launch our version two there. We've learnt a lot from our first round experience there, and we created a version two of our content server and that is going to be launched this month and we expect further improvement there.


  • I think over the next couple of years, probably more like the latter half of FY 2015 and FY 2016... the Asia expansion will have a very positive effect on how Bally continues to grow. The SHFL acquisition is really going to help us a lot because it really showed us of our strength in the Australia/Asia part of the world where SHFL does extremely well with their game sales, with their electronic gaming machines. They do extraordinarily well there. And also, of course, the table strength that we will now have.


  • We have sold 1,943 units into Illinois through the end of FY 2013. We expect this momentum to carry into fiscal 2014 and beyond....We expect to exceed, by a good margin, the 4,000 total units we originally expected to place in this market.
  • We've gone in and we're about a 30-ish percent shift-share in that market. The Illinois Gaming Board continues to approve, I think they approved 250 locations roughly this week. So it's just an ongoing market for us, it's an exciting market. From a overall market, you'll probably see at the end of this over 15,000 machines in that market. And I think we'll continue to play at least the 30% share in that market.


  • It hadn't changed that dramatically from a promotional standpoint. Again, tough to talk about what the competitors are doing product-wise. We have some suspicions. From a pricing and product standpoint, I don't see much change. The benefit about innovating and having unique products like the Wave, like the Curve. We were first with a V32-type product is the ability to put a little bit of a premium on that product.


  • As you see all the regional markets year-over-year down somewhat some bigger than others, I would say our overall performance doesn't mirror that, it's down. But not at the same trajectory that you see some of the regionals down.
  • New York is a market where year-over-year-over-year, we've just had some great results there.


  • As expected, our ASP continued to be impacted by shipments of 200 lower ASP Canadian VLT and 713 lower ASP Illinois VGT units in the quarter. After factoring out these lower ASP units, our domestic ASP was flat versus last quarter. We continue to remain very disciplined with our pricing strategies.
  • (2014) Overall, I'd say net-net you might be up a touch.


  • The margin on Gaming Operations was 69%, within our expected range of 68% to 73%.


  • We continue to expect our Systems margin going forward to approximate an annual range of 70% to 75%.


  • we expect the program to be completed by the end of the first quarter of fiscal 2014. In April, we delivered $150 million in cash and received 2.4 million shares of our common stock. Upon completion of the program, we will likely not collect significantly more shares than the 2.4 million already received, given the recent increase in the volume weighted average share price of our common stock.


  • We feel like customers are purchasing in the marketplace. We may lose maybe a couple percentage of our ship share from time-to-time just because we're a little bit more disciplined in pricing. So we remain optimistic about the replacement cycle, but again, in terms of earnings for us, it's a small piece of our gross profit.


  • We continue to believe we're going to generate at least $30 million in synergy.


  • Looking forward into FY 2014, I think one of the challenges for our international – the game performance is going well, we've launched a lot of different products, but Argentina is a market that, depending upon our ability to get goods into the country, that is one of the drivers in an international quarter being 1,200 units or an international quarter being 950 or 1,000 units.
  • And in terms of FY 2013 we finished, Todd, at about 3,500 units internationally. We expect that number to pick up reasonably significantly in FY 2014.


  • Software and services has been kind of a mid-30s% in terms of percentage. Whereas this quarter, it was nearing 40%. I I'd guesstimate that that comes back down to the mid-30s%.


  • All-in-all, I would expect for R&D to remain at that 11% to 12% of revenue range.


  • Looking into FY 2014, from a margin standpoint, one thing that we've done an okay job at in the last 12 months and 24 months is conversion kit sales. I say, okay, because I think as you sell units and increase your footprint, that increases your ability to ultimately sell more conversion kits into the market, which come at a higher margin.
  • Our hope would be when I look into 2014, maybe we grow the margin fractionally. But again, a lot of the supply chain, for the most part, we've gotten through. From here it's going to require a little bit of change in mix, with our ability to sell conversion kits and go from there.


  • The new Michael Jackson game, that is too early to tell now. We are just launching it. The reaction when we have shown it in various shows has been very positive from customers. A number of customers are eagerly waiting for it. And once we place it this quarter, in the coming months, in our next call we'll be able to give you more color on it.

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