BYI BUSINESS UPDATE CALL: “NOTES”
Below are our notes from the business update. We will follow up with a more detailed note shortly.
CONF CALL:
- Agreement to sell Rainbow will allow them to concentrate on their core business – no surprise since this has been rumored in a while
- Reluctance of customers
- Low win per day in gaming operations seems to be bouncing back – claim it was weather related
- Alabama negatively impacting them by 2-3 cents per quarter
- Italy placements will begin in latter half of 2010. BYI expects to play a meaningful role on both the games and systems side. Expects to place over 3,000 games and get several systems contracts
- Releasing Alpha 2 with a 10 times improvement in processing power over Alpha 1.
- Digital Towers – great – 900 Powerballs and have commitments for 1300 slot products for their wheel products.
- Continue to take share on the systems business.
- Canada RFP’s represent a big opportunity for them as do other new markets
Q&A
- No difference between big operators and small ones on the replacement side
- G2E meetings were very positive, but the orders just didn’t come – which was surprising based on the feedback from G2E. Thinks part of this is due to weather and weak performance in Jan & Feb. Their numbers in game operations bounced back in March and hopes that implies an uptick in operators results
- Write-offs in Alabama? Not yet, hoping that they will have more clarity in the next few days there.
- Rainbow – in discontinued operations? 10-11 cents a share from loss of Rainbow. But if they use the proceeds then it’s neutral from an accretion/ dilution standpoint. Tax basis on Rainbow? Estimate net proceeds of around $60MM (+/- $5MM)
- Credit Facility Amendment? Gives them more market pricing and more flexibility to use their balance sheet – old deal was done in the a rough time in the market
- Still think that their market share is still in their 20% range +/- several percent
- Think that they can get about 500 cash spins out until the end of June. Alpha 2 platform not out until Sept 2010. Those 500 are included in the 1,300 wheel number.
- Fireballs are replacing their products, while Cash Spin is helping them gain incremental floor share (50% or less cannibalization).
- Systems business lead time – is that getting shorter or longer?
- Well shorter since it has shifted more to maintenance products from new openings
- But its taking customers longer to make decisions
- Guidance they are giving for the balance of this year is mostly for business in the bag – but there could be some slippage for openings. However for next year – when they give guidance, a lot of it will be based on upgrade assumptions.