AGEM's August 2014 Index reveals steady growth

The AGEM Index has witnessed month-to-month gains in three of the past eight months. In August, seven of the 17 global gaming equipment manufacturers reported monthly increases in stock price, with four witnessing substantial gains of more than 15 percent. Of the 10 manufacturers that reported a decline in stock price, two were down by more than 10 percent.

The broader stock markets reported similar month-to-month growth in August 2014, with each of the major indices up by more than three percent. The Dow Jones Industrial Average ended the month at 17,098.45, representing an increase of 3.2 percent compared to July 2014. The S&P 500 reported an increase of 3.8 percent, rising to 2,003.37. NASDAQ reported the greatest monthly growth of the three, rising 4.8 percent to 4,580.27.

Selected positive contributors to the August 2014 AGEM Index included the following:

- Bally Technologies contributed 6.72 points, due to a 31.8-percent increase in stock price to US$ 79.29.

- Scientific Games reported a stock price of US$ 10.15 (+18.9 percent) and contributed 1.13 points.

- With a stock price of US$ 27.81 (+15.3 percent), Multimedia Games contributed 0.88 points.

Selected negative contributors included the following:

- Ainsworth Game Technology contributed negative 0.73 points, due to a 10.9-percent decline in stock price to AU$3.36.

- Due to a stock price of AU$5.53 (-3.0 percent), Aristocrat Technologies contributed negative 0.56 points.

In August, a number of gaming equipment manufacturers reported their financial results for the three months ending June 2014, with earnings showing mixed results. Selected company highlights are noted below.

Bally Technologies reported total revenues of US$ 342.2 million in the company’s fiscal fourth quarter of 2014, up 29.4 percent from the same period in 2013. Electronic gaming machines revenue reported the greatest annual increase, rising 35.2 percent to US$ 119.9 million. The company notes that the gain was attributable to higher replacement sales and the sale of 1,262 Equinox units and 343 ETS seats.

In addition, the average selling price of new units increased 7.8 percent to US$ 17,472. Systems revenue reported a 3.8-percent increase during the quarter, rising to US$ 75.7 million due to increased hardware revenue. Meanwhile, gaming operations revenue totaled US$ 104.8 million during the quarter, which represents an increase of 1.9 percent compared to the prior year period. The company notes that the latest performance is attributable to the placement of premium games, record wide-area progressive revenue and the leasing of 2,173 ETS seats.

Galaxy Gaming also reported revenue gains in the three months ending June 2014 compared to the same period of 2013. The company reported total revenue of US$ 2.5 million during its fiscal second quarter of 2014, which represents an increase of 26.7 percent compared to a year ago. The latest increase is due to a 27.4-percent increase in product leases and royalties, which rose to US$ 2.5 million. Meanwhile, product sales and service revenue, which accounts for a small portion of total revenue, declined from US$ 12,350 to US$ 1,175.

Global Cash Access (GCA) witnessed a decline in revenues during its fiscal second quarter 2014. The company reported revenues of US$ 144.9 million during the period, which represents a decline of 2.8 percent compared to the prior year period. The company notes that the latest decline is due to the loss of a contract with Caesars Entertainment, which resulted in a revenue loss of US$ 11.3 million. Without the loss of the contract, company revenues would have increased 5.3 percent year-over-year.

Other gaming equipment manufacturers that reported declines in revenues in the three months ended June 2014 include Gaming Partners International (GPIC). Revenues for the company fell 27.8 percent to US$ 10.2 million, due to a decline in the sale of worldwide casino currency products. In addition, Transact Technologies (TACT) reported a 12.7-percent decline in net sales during its fiscal second quarter of 2014, falling from US$ 15.8 million to US$ 13.8 million. Notably, casino and gaming revenue fell 16.4 percent to US$ 6.1 million as casino printer sales declined.