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8-K - 8-K - BALLY TECHNOLOGIES, INC.a14-23647_18k.htm

Exhibit 99.1

 

 

 

Investor Contact: Michael J. Carlotti

Media Contact: Mike Trask

(702) 532-7995

(702) 532-7451

mcarlotti@ballytech.com

mtrask@ballytech.com

 

 

 

BALLY TECHNOLOGIES, INC. REPORTS ADJUSTED EPS OF $1.17 AND GAAP DILUTED EPS OF $0.75 FOR THE FIRST QUARTER OF FISCAL 2015

 

-                   TOTAL REVENUE INCREASES TO A FIRST QUARTER RECORD OF $321 MILLION, UP 29 PERCENT FROM PRIOR YEAR

 

-                   ACHIEVES QUARTERLY ELECTRONIC GAMING MACHINE UNIT SALES OF 4,744, UP 19 PERCENT FROM PRIOR YEAR

 

-                   GAMING OPERATIONS REVENUE SETS AN ALL-TIME QUARTERLY RECORD OF $106 MILLION

 

 

LAS VEGAS, October 30, 2014 — Bally Technologies, Inc. (NYSE: BYI) (“Bally” or the “Company”), a leader in gaming machines, table game products, casino-management systems, interactive applications, and networked and server-based systems for the global gaming industry, today announced record first quarter revenue of $321 million and Adjusted EPS of $1.17 for the three months ended September 30, 2014.  Diluted earnings per share (“GAAP Diluted EPS”) was $0.75 for the period.

 

“We were pleased by customer responses to the launch of several new products, including the Pro Wave 360° and Pro Theater, as well as our line-up of powerhouse brands including FriendsTM and Duck DynastyTM at last month’s Global Gaming Expo (G2E).  During the quarter, Cash Wheel featuring Quick Hit, which was launched in September 2013, eclipsed a 1,000-unit installed base,” said Richard Haddrill, the Company’s Chief Executive Officer.  “We achieved record first quarter revenue and excellent overall operational results in the quarter, driven primarily by strong Electronic Gaming Machines and Gaming Operations revenue.  With SHFL in the mix, we grew our international new-unit sales by 168 percent, further driving our global presence.  Finally, during the quarter, we announced Ontario Lottery and Gaming Corporation (OLGC) selected Bally as its central gaming management system provider, further strengthening the long-term prospects for our Systems business.”

 



 

Bally Technologies, Inc. Reports Adjusted EPS of $1.17 and Diluted EPS of $0.75 for the First Quarter of Fiscal 2015

Page - 2 of 8

 

First Quarter Fiscal Year 2015 Highlights

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

 

2014(3)

 

%
Rev

 

2013

 

 

%
Rev

 

(in millions, except per share amounts)   

Revenues:

 

 

 

 

 

 

 

 

Electronic Gaming Machines (“EGM”)

 

$

94.2

 

30%

 

$

71.3

 

29%

Gaming Operations

 

106.5

 

33%

 

101.9

 

41%

Systems

 

74.3

 

23%

 

76.1

 

30%

Table Products

 

45.8

 

14%

 

 

Total revenues

 

$

320.8

 

100%

 

$

249.3

 

100%

 

 

 

 

 

 

 

 

 

Gross Margin: (1)

 

 

 

 

 

 

 

 

EGM

 

$

48.8

 

52%

 

$

36.0

 

50%

Gaming Operations

 

72.0

 

68%

 

71.3

 

70%

Systems

 

53.3

 

72%

 

56.9

 

75%

Table Products

 

37.7

 

82%

 

 

Total gross margin

 

$

211.8

 

66%

 

$

164.2

 

66%

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

$

93.2

 

29%

 

$

72.4

 

29%

Research and development costs

 

34.4

 

11%

 

29.5

 

12%

Depreciation and amortization

 

21.8

 

7%

 

5.3

 

2%

Operating income

 

$

62.4

 

19%

 

$

57.0

 

23%

GAAP Diluted EPS

 

$

0.75

 

 

 

$

0.97

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Measures: (2)

 

 

 

 

 

 

 

 

Adjusted Operating Income

 

$

87.2

 

27%

 

$

62.2

 

25%

Adjusted EBITDA

 

$

116.3

 

36%

 

$

86.7

 

35%

Adjusted EPS

 

$

1.17

 

 

 

$

0.96

 

 

 

(1)          Gross Margin excludes amortization related to intangible assets which are included in depreciation and amortization (“D&A”).

(2)          Adjusted Operating Income, Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, including share-based compensation and restructuring and acquisition-related costs), and Adjusted EPS are Non-GAAP financial measures.  Reconciliation between GAAP and Non-GAAP measures can be found at the end of this news release.

(3)          Results for the three months ended September 30, 2014 include SHFL entertainment, Inc. (“SHFL”) and Dragonplay Ltd (“Dragonplay”).

 

 

 

As of September 30,

 

 

2014

 

2013

End-of-period installed base:

 

 

 

 

Linked progressive systems

 

2,378

 

2,522

Rental and daily-fee games

 

15,496

 

14,533

Lottery systems (1)

 

12,591

 

11,907

Centrally determined systems

 

29,311

 

33,711

Utility products

 

9,324

 

NA

Proprietary Table Games (“PTG”)

 

3,065

 

NA

Table game progressive units, table game side bets, and add-ons

 

5,761

 

NA

 

(1)          Excludes 703 and 727 third-party Electronic Table System (“ETS”) seats operating as of September 30, 2014 and 2013, respectively.

 

 

 

Three Months Ended
September 30,

 

 

2014

 

2013

Operating Statistics

 

Units
Sold

 

Average Selling
Price (“ASP”)

 

Units
Sold

 

ASP

New EGM

 

4,744

 

$17,767

 

3,995

 

$16,307

Utility products

 

824

 

$16,967

 

NA

 

NA

 



 

Bally Technologies, Inc. Reports Adjusted EPS of $1.17 and Diluted EPS of $0.75 for the First Quarter of Fiscal 2015

Page - 3 of 8

 

Highlights of Certain Results for the Three Months Ended September 30, 2014

 

Overall

 

·                  Total revenue increased 29 percent to a first quarter record of $321 million as compared with $249 million last year.

·                  Adjusted EBITDA increased 34 percent to a first quarter record of $116 million as compared with $87 million last year.

·                  Selling, general and administrative expenses (“SG&A”) remained constant at 29 percent of total revenues and includes $8 million of one-time acquisition-related costs.  After adjusting for these one-time costs, SG&A was 26 percent of total revenues in the current period, down from 27 percent when adjusted for $5 million of one-time acquisition-related costs last year.

·                  Research and development expenses (“R&D”) decreased to 11 percent of total revenue versus 12 percent last year.

·                  Operating income increased to $62 million as compared with $57 million last year.  Adjusted Operating Income increased by 40 percent to a first quarter record of $87 million.  Adjusted operating margin increased to 27 percent from 25 percent last year.

·                  GAAP Diluted EPS was $0.75 as compared with $0.97 last year.  Adjusted EPS increased 22 percent to a first quarter record of $1.17.

 

Electronic Gaming Machines

 

·                  Revenues increased 32 percent to $94 million as compared with $71 million last year, primarily driven by the increase in unit sales in Australia coupled with an increase in ASP.

·                  ASP of new electronic gaming devices increased 9 percent to $17,767 per unit from $16,307 last year, primarily due to the increase in Australia sales volume and an increase in the sale of the Pro Wave premium cabinet.

·                  New-unit sales to international customers were 44 percent of total new-unit shipments as compared to 20 percent in the prior year period.

·                  Gross margin increased to 52 percent from 50 percent last year, primarily due to the sale of higher margin Pro Wave cabinets and geographic mix.

 

Gaming Operations

 

·                  Revenues increased to a record $106 million as compared with $102 million last year, driven by continued placement of premium games, record wide-area progressive (“WAP”) revenue, and the inclusion of 2,242 leased ETS seats.

·                  Gross margin decreased to 68 percent from 70 percent last year, primarily due to the inclusion of lower margin leased ETS seats.

 

Systems

 

·                  Revenues were $74 million as compared with $76 million last year, decreasing primarily due to a large system installation recognized in the prior period offset by the inclusion of revenues from the acquisition of Dragonplay during the current period.

·                  Maintenance revenues decreased 8 percent to $23 million as compared with $25 million last year.

·                  Gross margin decreased to 72 percent from 75 percent last year, primarily as a result of the change in mix of products.  Specifically, hardware sales were 33 percent of systems revenues, and software and service sales were 36 percent, as compared to 30 percent for hardware sales and 37 percent for software and services sales in the same period last year.

 

Table Products

 

·                  Revenues were $46 million, with Utility products revenue of $31 million and PTG revenue of $15 million.

 



 

Bally Technologies, Inc. Reports Adjusted EPS of $1.17 and Diluted EPS of $0.75 for the First Quarter of Fiscal 2015

Page - 4 of 8

 

Non-GAAP Financial Measures

 

The following table reconciles the Company’s net income attributable to Bally Technologies, Inc., as determined in accordance with generally accepted accounting principles (“GAAP”), to Adjusted EBITDA:

 

 

 

Three Months Ended

 

 

 

September 30,

 

 

 

2014

 

2013

 

 

 

(in millions)

 

Net income attributable to Bally Technologies, Inc.

 

$

28.8

 

$

37.8

 

Interest expense, net

 

16.7

 

2.0

 

Income tax expense

 

16.2

 

16.2

 

Depreciation and amortization

 

41.7

 

22.0

 

Share-based compensation

 

3.9

 

3.5

 

Restructuring and acquisition-related costs

 

9.0

 

5.2

 

Adjusted EBITDA

 

$

116.3

 

$

86.7

 

 

Adjusted EBITDA is a supplemental Non-GAAP financial measure used by the Company’s management and by some industry analysts to evaluate the Company’s ability to service debt, and is used by some investors and financial analysts in the gaming industry in measuring and comparing Bally’s leverage, liquidity, and operating performance to other gaming companies.  Adjusted EBITDA should not be considered an alternative to operating income or net cash from operations as determined in accordance with GAAP.  Not all companies calculate Adjusted EBITDA the same way, and the Company’s presentation may be different from those presented by other companies.

 

The components of restructuring charges are related primarily to executive transition costs, inventory, and fixed assets write-offs and non-cancelable lease costs related to excess facilities.  Acquisition-related costs include financial advisory, legal, and debt fees; accounting, consulting, and professional fees associated with due diligence, valuation and integration; severance; and adjustments related to step-up in inventory basis and amortization of purchased intangible assets.

 

The following tables reconcile the Company’s GAAP to Non-GAAP Financial Measures:

 

 

Three Months Ended September 30, 2014

 

 

 

 

 

Gross

 

SG&A

 

 

 

Operating

 

Net

 

 

 

 

 

Revenues

 

Margin (1)

 

Expenses

 

D&A

 

Income

 

Income (2)

 

EPS

 

 

 

(in millions, except per share data)

 

GAAP Measures

 

$

320.8

 

$

211.8

 

$

93.2

 

$

21.8

 

$

62.4

 

$

28.8

 

$

0.75

 

GAAP %

 

 

 

66%

 

29%

 

 

 

19%

 

 

 

 

 

Amortization of purchased intangibles

 

 

 

 

(15.8)

 

15.8

 

10.2

 

0.27

 

Restructuring and acquisition-related costs

 

 

0.7

 

(8.3)

 

 

9.0

 

5.8

 

0.15

 

Total adjustments

 

 

0.7

 

(8.3)

 

(15.8)

 

24.8

 

16.0

 

0.42

 

Adjusted Non-GAAP Measures

 

$

320.8

 

$

212.5

 

$

84.9

 

$

6.0

 

$

87.2

 

$

44.8

 

$

1.17

 

Adjusted %

 

 

 

66%

 

26%

 

 

 

27%

 

 

 

 

 

 

(1)          Gross Margin excludes amortization related to intangible assets which are included in depreciation and amortization.

(2)          Adjustments are tax affected at 35.5%.

 


 

 


 

Bally Technologies, Inc. Reports Adjusted EPS of $1.17 and Diluted EPS of $0.75 for the First Quarter of Fiscal 2015

Page - 5 of 8

 

Three Months Ended September 30, 2013

 

 

 

 

 

Gross

 

SG&A

 

 

 

Operating

 

Net

 

 

 

 

 

Revenues

 

Margin

 

Expenses

 

D&A

 

Income

 

Income (1)

 

EPS

 

 

 

(in millions, except per share data)

 

GAAP Measures

 

$

249.3

 

$

164.2

 

$

72.4

 

$

5.3

 

$

57.0

 

$

37.8

 

$

0.97

 

GAAP %

 

 

 

66%

 

29%

 

 

 

23%

 

 

 

 

 

Acquisition-related costs

 

 

 

(5.2)

 

 

5.2

 

3.4

 

0.08

 

One-time tax benefit

 

 

 

 

 

 

(3.6)

 

(0.09)

 

Total adjustments

 

 

 

(5.2)

 

 

5.2

 

(0.2)

 

(0.01)

 

Adjusted Non-GAAP Measures

 

$

249.3

 

$

164.2

 

$

67.2

 

$

5.3

 

$

62.2

 

$

37.6

 

$

0.96

 

Adjusted %

 

 

 

66%

 

27%

 

 

 

25%

 

 

 

 

 

 

(1)          Adjustments are tax affected at 35.5%.

 

 

Adjusted EPS and other such adjusted measures are supplemental Non-GAAP financial measures that the Company’s management believes more accurately reflects the Company’s operating results for the periods presented.  Adjusted measures should not be considered an alternative to GAAP measures as determined in accordance with GAAP.

 

About Bally Technologies, Inc.

Founded in 1932, Bally Technologies, Inc. (NYSE: BYI) provides the global gaming industry with innovative games, table game products, systems, mobile, and iGaming solutions that drive revenue and provide operating efficiencies for gaming operators.  For more information, please contact Mike Trask, Senior Manager, Marketing & Corporate Communications, at 702-532-7451, or visit http://www.ballytech.com.  Connect with Bally on Facebook, Twitter, YouTube, LinkedIn and Pinterest.

 

 

This press release may contain “forward looking” statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and is subject to the safe harbors created thereby.  Forward looking statements may be typically identified by such words as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” and other similar expressions among others. Although we believe the expectations reflected in any forward looking statements are reasonable, they involve known and unknown risks and uncertainties, are not guarantees of future performance, and actual results, performance or achievements may differ materially from any future results, performance or achievements expressed or implied by such forward looking statements and any or all of our forward looking statements may prove to be incorrect. Consequently, no forward looking statements may be guaranteed and there can be no assurance that the actual results or developments anticipated by such forward looking statements will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company or its business or operations. Factors which could cause our actual results to differ from those projected or contemplated in any such forward looking statements include, but are not limited to, the following factors: (1) the risk that the conditions to the closing of the merger (the “Merger”) contemplated by the Agreement and Plan of Merger, dated as of August 1, 2014, by and among the Company, Scientific Games Corporation (“Scientific Games), Scientific Games Nevada, Inc. and Scientific Games International, Inc. (the “Merger Agreement”) are not satisfied (including a failure of the stockholders of the Company to approve, on a timely basis or otherwise, the Merger and the risk that regulatory approvals required for the Merger are not obtained, on a timely basis or otherwise, or are obtained subject to conditions that are not anticipated); (2) litigation relating to the Merger; (3) uncertainties as to the timing of the consummation of the Merger and the ability of each of the Company and Scientific Games to consummate the Merger; (4) risks that the proposed transaction disrupts the current plans and operations of the Company; (5) the ability of the Company to retain and hire key personnel; (6) competitive responses to the proposed Merger; (7) unexpected costs, charges or expenses resulting from the Merger; (8) the failure by Scientific Games to obtain the necessary debt financing arrangements set forth in the commitment letter received in connection with the Merger; (9) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger; and (10) legislative, regulatory and economic developments. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the risk factors included in the Company’s most recent Annual Report on Form 10-K for the year ended June 30, 2014, and our more recent reports filed with the Securities and Exchange Commission. The Company can give no assurance that the conditions to the Merger

 



 

Bally Technologies, Inc. Reports Adjusted EPS of $1.17 and Diluted EPS of $0.75 for the First Quarter of Fiscal 2015

Page - 6 of 8

 

will be satisfied. Except as required by applicable law, the Company undertakes no obligation to revise or update the information in this press release, or to make any other forward looking statements, whether as a result of new information, future events or otherwise, except as required by law and represents that the information speaks only as of today’s date.

 

 

— BALLY TECHNOLOGIES, INC. —

 

 

 

Duck Dynasty — © 2014 A&E Television Networks, LLC. All rights reserved. Duck Dynasty, A&E and their associated logos are the trademarks of A&E Television Networks, LLC. All rights reserved. Friends — TM & © Warner Bros. Entertainment Inc. (s14)

 


 


 

Bally Technologies, Inc. Reports Adjusted EPS of $1.17 and Diluted EPS of $0.75 for the First Quarter of Fiscal 2015

Page - 7 of 8

 

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

 

 

 

 

Three Months Ended

 

 

 

September 30,

 

 

 

2014

 

2013

 

 

 

(in 000s, except per share amounts)

 

Revenues:

 

 

 

 

 

Gaming equipment and systems

 

$

186,228

 

$

147,387

 

Product lease, operation and royalty

 

134,577

 

101,902

 

 

 

320,805

 

249,289

 

Costs and expenses:

 

 

 

 

 

Cost of gaming equipment and systems (1)

 

71,257

 

54,506

 

Cost of product lease, operation and royalty(1)

 

37,718

 

30,619

 

Selling, general and administrative

 

93,170

 

72,427

 

Research and development costs

 

34,425

 

29,504

 

Depreciation and amortization

 

21,793

 

5,265

 

 

 

258,363

 

192,321

 

Operating income

 

62,442

 

56,968

 

Other income (expense):

 

 

 

 

 

Interest income

 

1,588

 

2,481

 

Interest expense

 

(18,338

)

(4,427

)

Other, net

 

(400

)

(900

)

Income from operations before income taxes

 

45,292

 

54,122

 

Income tax expense

 

(16,248

)

(16,172

)

Net income

 

29,044

 

37,950

 

Less net income attributable to noncontrolling interests

 

199

 

166

 

Net income attributable to Bally Technologies, Inc.

 

$

28,845

 

$

37,784

 

 

 

 

 

 

 

Basic and Diluted earnings per share attributable to Bally Technologies, Inc.:

 

 

 

 

 

Basic earnings per share

 

$

0.76

 

$

0.98

 

Diluted earnings per share

 

$

0.75

 

$

0.97

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

Basic

 

37,796

 

38,381

 

Diluted

 

38,266

 

39,091

 

 


(1)         Cost of gaming equipment and systems and product lease, operation and royalty exclude amortization related to intangible assets which are included in depreciation and amortization.

 



 

Bally Technologies, Inc. Reports Adjusted EPS of $1.17 and Diluted EPS of $0.75 for the First Quarter of Fiscal 2015

Page - 8 of 8

 

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2014 AND JUNE 30, 2014

 

 

 

September 30,
2014

 

June 30,
 2014

 

 

 

(in 000s, except par value amount)

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

74,417

 

$

77,439

 

Restricted cash

 

14,069

 

17,179

 

Accounts and notes receivable, net of allowances for doubtful accounts of $16,541 and $14,806

 

289,851

 

314,119

 

Inventories

 

96,938

 

82,289

 

Prepaid and refundable income tax

 

19,105

 

21,938

 

Deferred income tax assets

 

37,504

 

36,934

 

Deferred cost of revenue

 

12,541

 

15,723

 

Prepaid assets

 

23,568

 

21,800

 

Other current assets

 

14,885

 

6,013

 

Total current assets

 

582,878

 

593,434

 

Restricted long-term investments

 

19,247

 

93,977

 

Long-term accounts and notes receivables, net of allowances for doubtful accounts of $909 and $929

 

43,579

 

50,329

 

Property, plant and equipment, net of accumulated depreciation of $76,996 and $74,158

 

70,104

 

70,218

 

Leased gaming equipment, net of accumulated depreciation of $240,447 and $248,086

 

121,980

 

131,504

 

Goodwill

 

1,016,675

 

1,003,377

 

Intangible assets, net

 

515,942

 

508,245

 

Deferred income tax assets

 

2,072

 

3,892

 

Income tax receivable

 

 

457

 

Deferred cost of revenue

 

2,716

 

6,989

 

Other assets, net

 

59,135

 

56,389

 

Total assets

 

$

2,434,328

 

$

2,518,811

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

41,555

 

37,651

 

Accrued and other liabilities

 

95,285

 

115,010

 

Jackpot liabilities

 

10,579

 

11,726

 

Deferred revenue

 

37,141

 

43,161

 

Income tax payable

 

8,475

 

5,554

 

Current maturities of long-term debt

 

38,399

 

38,465

 

Total current liabilities

 

231,434

 

251,567

 

Long-term debt, net of current maturities

 

1,842,671

 

1,886,953

 

Deferred revenue

 

6,404

 

20,209

 

Other income tax liability

 

10,218

 

10,355

 

Deferred income tax liabilities

 

113,700

 

110,899

 

Other liabilities

 

40,467

 

32,907

 

Total liabilities

 

2,244,894

 

2,312,890

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $.10 par value; 100,000 shares authorized; 66,145 and
66,047 shares issued and 38,345 and 38,694 outstanding

 

6,607

 

6,595

 

Treasury stock at cost, 27,800 and 27,353 shares

 

(1,161,893

)

(1,134,407

)

Additional paid-in capital

 

604,188

 

593,427

 

Accumulated other comprehensive loss

 

(34,241

)

(5,423

)

Retained earnings

 

773,784

 

744,939

 

Total Bally Technologies, Inc. stockholders’ equity

 

188,445

 

205,131

 

Noncontrolling interests

 

989

 

790

 

Total stockholders’ equity

 

189,434

 

205,921

 

Total liabilities and stockholders’ equity

 

$

2,434,328

 

$

2,518,811