BYI F2Q 2014 YOUTUBE

In preparation for BYI FQ4 2013 earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.

INTERNATIONAL

  • International units and revenue were down, largely as a result of continued importation restrictions in Argentina, which were partially offset by increased sales into Mexico. While international game sales improved by 5% to 782 units versus last year, they did not meet our internal expectations.

ASP

  • Our domestic ASP has been more or less holding up the way it was before. And we have been very disciplined with our pricing.
  • And international ASP is down because we shipped a lot more to Mexico this quarter. So, if you remove all those particular regional and product effects, our ASP has held really steady across the quarters.
  • This Pro Wave will help keep the ASP at current levels and probably slightly higher, but I wouldn't think of that as a big contributing factor to ASP of game sales.
    • If you remember when we introduced the Pro Curve a while back, it initially took a slight hit on our margins. We don't actually expect that with the Pro Wave, but I don't think it's going to be accretive probably for at least the first 12 months.

GAMING OPS 

  • With more new products coming to market, based on brands which are terrific, fits for our target demographics, and utilizing proven math models, we are confident that our Gaming Operations business is well positioned to see meaningful growth resume before the end of FY 2014.
  • The margin on Gaming Operations was 70%, up from 69% in the comparable period last year, and within our expected range at 68% to 73%.

SYSTEMS GROSS MARGINS

  • Given the continued growth of maintenance revenues, we now expect annual Systems' gross margin will approximate 75% for the full year.

WAP YIELD/INSTALLED BASE

  • Yield will continue to improve. The last two WAP releases, we have out there, the latest Michael Jackson and Jackpot Empire, are definitely doing very well. So we are positive as far as the yield improvements in the future go.
  • Based on our current release schedule, we do not anticipate our WAP footprint to grow (i.e. flat-to-slow growth) during the second quarter. However, we do expect the growth in our WAP install base to pick up again during the second half of this fiscal year.
    • I would expect it to be a bit flat, but not go down, and then pick up again in the subsequent quarters.

SYSTEMS REVENUES

  • We continue to expect to establish a new annual revenue record for Systems in fiscal 2014, with revenue expected to grow by at least 10% over fiscal 2013, which was itself a record year.

SHFL SYNERGIES

  • At least $30 million

COMPETITIVE PRESSURES

  • Most of our unit shipments just kind of follow the approvals by the gaming board there. In Q4 there were a lot of approvals. In fact, recently, there were a lot of approvals. So I would expect Q2 to be equal to or greater than Q1, but no competitive pressure there. We're still getting our more than fair share of the market.

PREMIUM FOOTPRINT

  • With respect to our premium footprint, it still remains healthy. We've actually got a number of releases slated up over the next couple months.
  • Pawn Stars is reaching about a year old. You have Cash Wheel, a quick hits-style game going out on that, which customers have really been asking for. So, there's a lot to come in our premium footprint.