AGEM releases May 2015 index

After reporting a month-to-month gain of 10.39 points in April 2015, the AGEM Index declined in May 2015. The composite index dipped to 196.98 in the latest period, which represents a decline of 3.70 points (-1.8 percent) from the prior period and the second month-to-month decline this year. Compared to a year ago, the AGEM Index is up 18.05 points (+10.1 percent). The index previously reported year-over-year gains for three consecutive months.

In May, eight of the 13 global gaming equipment suppliers reported monthly gains in stock price, with four up by more than 10 percent. These gains were offset by declines reported by five suppliers, two of which were down by more than 10 percent.

The broader stock markets reported gains in May 2015 compared to April 2015. The Dow Jones Industrial Average closed the month at 18,010.68, which represents an increase of 1.0 percent. The S&P 500 also reported a 1.0-percent increase during the period, rising from 2,085.51 to 2,107.39. NASDAQ witnessed the most substantial growth of the three major indices, rising 2.6 percent to 5,070.03.

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

Scientific Games Corporation (SGMS) contributed 3.08 points due to a stock price of $15.22 (+20.1 percent).

With a stock price of AU$3.10 (+10.7 percent), Ainsworth Game Technology (AGI) contributed 0.78 points.

Konami Corp (TYO:9766) contributed 0.45 points due to a 5.3-percent gain in stock price to ¥2,325.

Selected negative contributors included the following:

With a stock price of $18.09 (-11.1 percent), International Game Technology (IGT) contributed negative 4.67 points. 

Aristocrat Technologies (ALL) contributed negative 3.55 points due to a 6.3-percent decline in stock price to AU$7.80.

During the month, a number of gaming equipment manufacturers reported their earnings for the three months ending March 2015. While results by company have been mixed, selected results are highlighted below.

International Game Technology PLC (IGT) reported separate results for GTECH S.p.A. and International Game Technology, since their merger was not completed until after the end of the reporting period. During its first quarter of 2015, GTECH S.p.A. reported net revenues of €807.7 million, which represents an increase of 3.4 percent compared to the prior year. The gain in net revenues was primarily attributable to a 3.6-percent increase in service revenues to €755.4 million, which was driven by lottery growth in Italy and the Americas. Adjusted EBITDA was €295.6 million, down modestly from €296.0 million reported a year ago.

The Americas segment reported the greatest annual increase in net revenues during the period, rising 22.8 percent to €300.0 million due to gains in service revenues. The International segment followed with net revenues of €77.1 million (+2.0 percent annually). Meanwhile, net revenues in Italy reported a decline of 6.7 percent year-over-year, falling to €430.4 million due mainly to higher sports betting payout.

IGT reported net revenues of $399.4 million during its second fiscal quarter of 2015, which represents a decline of 22.1 percent compared to the prior year period. Gaming operations revenues fell 17.2 percent to
$190.7 million due to an 18.4-percent decline in the installed base to 43,600 units. Product sales revenues fell 43.4 percent annually to $114.6 million, primarily due to a decline in new unit sales and non-machine sales. In addition, the average machine selling price fell 18.4 percent to $12,000.

IGT recently announced plans to sell its 610,000-squarefoot campus in Las Vegas, Nevada located on Buffalo Drive near the 215 Beltway. The company reportedly plans to keep corporate headquarters in Las Vegas, but is looking for smaller locations to fit its needs.

Galaxy Gaming (GLXZ) reported revenues of $2.6 million in its first quarter of 2015, up 14.1 percent from $2.3 million one year ago. The latest gain is attributable to increased placement of premium games as well as expansion into new markets.

Meanwhile, adjusted EBITDA reported an annual decline of 15.4 percent to $828,700 during the period, which the company sourced to a 37.0-percent rise in selling, general and administrative expenses from a year ago.

Intralot S.A. (INLOT) reported a 12.0-percent gain in net revenues in its first quarter of 2015, rising from €445.7 million in 2014 to €499.4 million in the latest period. During the quarter, the company renewed its contracts with the Netherlands, Morocco and Azerbaijan and continued to streamline its operations.