AGEM releases February 2015 Index

The latest month represents the highest monthly gain reported since the index rose 18.59 points from June 2013 to July 2013. However, the AGEM Index remains down 0.43 points (-0.2 percent) compared to a year ago.

In February 2015, 11 of the 14 global gaming suppliers reported month-to-month gains in stock price. Of the companies reporting gains, all but one were up by more than five percent, with Intralot and Scientific Games reporting the greatest gains of 36.6 percent and 14.4 percent, respectively.

The broader stock markets also reported substantial month-to-month gains in February 2015. During the month, the S&P 500 reported an increase of 5.5 percent, rising to 2,104.50. Meanwhile, the Dow Jones Industrial Average ended the month at 18,132.70, which represents a gain of 5.6 percent from January 2015. NASDAQ reported the greatest monthly increase of the three major indices rising 7.1 percent to 4,963.53.

Selected positive contributors to the February 2015 AGEM Index included the following:

• Crane reported a stock price of US$ 66.83 (+9.7 percent) and contributed 3.14 points.
• With a stock price of US$ 17.84 (+5.4 percent), IGT contributed 2.02 points.
• Aristocrat Technologies contributed 1.98 points, due to a 6.0-percent gain in stock price.

Selected negative contributors included the following:

• Ainsworth Game Technology (AGI) contributed negative 0.79 points due to a 15.3-percent decline in stock price.
• Daktronics reported a stock price of US$ 10.23 (-17.4 percent) and contributed negative 0.65 points.

In the past month, a number of gaming equipment manufacturers released their earnings results for the period ending December 31, 2014, with additional earnings releases expected in the coming weeks. Selected company highlights are noted below.

AGI reported revenue of US$ 87.5 million for the six months ending December 31, 2014. The latest period represents a decline of 8.1 percent when compared to the six months ending December 31, 2013. Domestic revenue (Australia), which accounts for 47.8 percent of total revenue was US$ 41. 8 million for the period, representing a decline of 34.3 percent from a year ago. Meanwhile, international revenue, which accounts for the remaining 52.2 percent of total revenue reported an annual gain of 44.6 percent, rising to US$ 45.6 million. Gains in international revenue were attributable to a 46.7-percent increase in North America revenue to US$ 23.6 million as well as a 63.0-percent revenue gain in South America to US$ 17.5 million, driven by sales activity in Canada, Oklahoma, California, Mexico and Argentina.

Ainsworth recently broke ground on a 291,000-square-foot facility in Las Vegas, Nevada that will serve as the new headquarters for the Americas. The facility will be located along Interstate-215 (within minutes of McCarran International Airport) and is expected to be completed in the first half of 2016.

In its fiscal first quarter of 2015, IGT reported net revenues of US$ 450.6 million, which represents a decline of 16.7 percent from a year ago. During the quarter, the company reported a 22.7-percent increase in interactive revenue to US$ 91.5 million. However, these gains were offset by declines in gaming operations and product sales revenues.

Gaming operations revenue for IGT totaled US$ 211.1 million during the quarter, down 5.3 percent from a year ago, due to a 16.4-percent decline in the installed base. Product sales revenues declined 39.2 percent to US$ 148 million. During the period, machine units recognized fell 54.7 percent to 5,800, while the average machine selling price increased 5.3 percent to US$ 13,900.

In February, gaming regulators in Nevada approved GTECH's US$ 6.4-million acquisition of IGT. The new company will reportedly be named "IGT" and will have its corporate headquarters in the United Kingdom, with operating headquarters in Las Vegas, Rome and Providence, Rhode Island. The company's global gaming operating unit will be headquartered in IGT's existing Las Vegas offices, while its building in Reno, Nevada will become a primary manufacturing facility. The acquisition is expected to close in mid-April 2015.

Scientific Games Corporation, which recently completed its acquisition of Bally Technologies, has not yet announced its earnings release date. The company recently reported it would be relocating its global corporate headquarters to Las Vegas. Scientific Games is currently in the process of transitioning the WMS manufacturing operations from Illinois to Las Vegas.