Bally reports second quarter fiscal 2012 results

He added: “Our recent innovations have resulted in four consecutive quarters of year-over-year revenue and earnings-per-share growth. Numerous of our investments of recent years are now producing good results.”

“In addition to repurchasing approximately 330,000 of our shares during the quarter for us$ 10 million, we also paid down us$ 19 million of debt which reduced our leverage ratio to below 2.0 times,” said Neil Davidson, the company’s CFO. “This quarter represents the 17th quarter in a row that we have repurchased stock.”

As of December 31, the company had us$ 111 million available under its Board-authorized share repurchase plan. Further, as long as the firm’s leverage ratio remains below 2.0 times, its share repurchases are not restricted under the terms of its credit agreement. The decline below 2.0 times also resulted in a 25-basis point decline in the Company’s borrowing costs.

“Our innovative products are driving growth for all of our divisions,” said Ramesh Srinivasan, the company’s President and COO. “Recently released products including the Pro Curve, the Pro V32 and new ALPHA 2 content positively impacted North America ship share. We again set new records in Gaming Operations this quarter on the continued growth of such premium games as Cash Wizard and Vegas Hits, the growth in our wide-area progressive installed base, and the placement of games at the newly opened Resorts World Casino New York. Additionally, the powerful combination of iVIEW Display Manager (‘DM’) and Elite Bonusing Suite applications such as DM Tournaments and U-Spin Bonusing continues to drive incremental demand with backlog for iVIEW DM at record levels. We look forward to showcasing our latest innovative Systems products in action at our upcoming annual Systems User Conference in March.”

Highlights of certain results for the three months ended last December
-Total revenue increased 15 % to us$ 210 million as compared with us$ 183 million last year.
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, including share-based compensation), a non-GAAP financial measure, increased 18 % to us$ 67 million as compared with us$ 57 million last year.
- Selling, general and administrative expenses declined to 29 % of total revenues from 30 percent last year. SG&A increased us$ 6 million primarily due to increases in payroll, regulatory, and other infrastructure expenses to support key new markets and an increase in bad debt resulting from a general increase in accounts receivable associated with increasing revenues and heavier weighting to international markets. Bad debt as a percentage of revenue remains at approximately 1%.
- Research and development expenses decreased to 11 % of total revenues compared to 12 % last year, with revenues growing faster than R&D expense growth, as past R&D efforts begin to pay off with increased product acceptance among our customer base. R&D increased us$1 million primarily due to an increase in payroll.
- Operating income increased 20 % to us$ 43 million compared with us$ 36 million last year. Operating margin was 20 percent%.
- Diluted EPS from continuing operations increased 10 % to us$ 0.54 from last year’s us$ 0.49, which included a prior-period benefit of us$ 0.05 per diluted share from the reinstatement of the U.S. research and development tax credit.

Gaming Equipment
- Revenues increased 19 percent% to us$ 70 million as compared with us$ 59 million last year, driven by higher ASP and unit sales.
-ASP of new gaming devices increased 13 % to us$ 17,201 per unit from us$ 15,244 last year, primarily as a result of product mix, including a heavier sales mix towards Pro Curve during the quarter, and an increase in ASP from international sales.
-New-unit sales to international customers were 25 % of total new-unit shipments.
- Gross margin decreased to 43 % from 49 % last year, primarily due to higher costs for the initial production runs of several models of the Pro Series line of cabinets, which were released in late fiscal 2011, and a heavier sales mix towards Pro Curve during the quarter.

Gaming Operations
- Revenues increased 12 % to a quarterly record of us$ 86 million as compared with us$ 77 million last year, driven by growth in the installed base of premium and wide-area progressive games, as well as placement of games at the newly opened Resorts World Casino New York.
- Gross margin remained relatively consistent at 72 % compared to 71 % last year.

Systems
- Revenues increased 16 % to us$ 54 million as compared with us$ 46 million last year, due to increases in software and services and maintenance revenues. Maintenance revenues increased to a record us$ 18 million as compared with us$ 16 million last year.
-Gross margin increased to 74 % from 72 % last year, primarily as a result of the change in mix of products sold and an increase in maintenance revenues. Specifically, hardware sales were 33 % of systems revenues, and software and service sales were 33 percent, as compared to 40 % for hardware and 26 % for software and services in the same period last year.

Highlights of certain results for the six months ended December 31
Overall
-Total revenue increased 15 % to us$ 405 million as compared with us$ 354 million last year.
-Adjusted EBITDA increased 10 % to us$ 126 million as compared with us$ 115 million last year.