he company announced that approximately us$ 4.5 million (representing approximately 3,500 games) of Casinolink Jackpot Systems ("CJS") and Casinolink Enterprise installations originally expected to be recorded in the fourth quarter of 2006 are now expected to be recorded in fiscal 2007.
The installations, which were completed in various stages during the fourth quarter of 2006, will be recorded upon receipt of formal customer acceptance documentation. The company expects to record revenues of approximately us$ 16 - us$ 17 million for the fourth quarter of 2006, subject to final audit procedures, and expects to report an installed base of CJS games of approximately 3,100 at December 31, 2006 compared to 1,900 at September 30, 2006.
Progressive Gaming intends to file a press release with full fourth quarter financial results after the market closes on March 5, 2007. A conference call to discuss the Company’s operating results will be hosted by management next March 6, 2007.
Chief Financial Officer Heather Rollo commented: "Our business momentum remains strong; however, the transition to a systems company will continue to create variances in our quarterly results. We intend to mitigate these quarterly variances through the growth of our installation base and related daily fee revenues. Our daily fees on systems contracts increased by over 50% in the fourth quarter of 2006 compared to the same quarter in 2005 and we are anticipating even higher growth in 2007.”
“The fourth quarter 2006 revenue growth does not include the daily fees associated with the $4.5 million of transactions referred to above. During the fourth quarter of 2006, we were required to pre-pay certain inventories in conjunction with our system installations. However, we continue to require the majority of our CJS and Casinolink customers to pay a significant deposit upon execution of their contract to mitigate the upfront costs of inventory. We anticipate our cash balance at December 31, 2006 to be relatively consistent with prior periods," Rollo added.
Rollo continued: "With a full quarter of new product installations behind us and more transparency to our customer installation schedule, we are providing guidance for our aggregate expected 2007 financial results. We expect our revenues in 2007 to be approximately us$ 85 million to us$ 95 million with gross margins of approximately 54% to 58%, depending upon the mix of our customer products. The 2007 estimates are expected to represent a growth in core revenues of approximately 65% compared to core revenues in 2006 of approximately us$ 55 to us$ 56 million. The 2006 core revenues exclude one-time intellectual property licensing revenues of approximately us$ 14 million and there are no planned one-time intellectual property license revenues included in our 2007 estimates.”
“The revenue growth in 2007 is expected to be sourced primarily from approved products which have a growing backlog. Also, our 2007 estimates anticipate that RFID table system revenues will be more significant in the second half of the year. These revenues are generally reflected in our financial statements net of costs (with a 100% gross margin contribution) and as a result are expected to take longer to aggregate to be a major contributor of our total revenues. Additionally, the 2007 estimates have only a small dependency from our server-based wagering products (wired and wireless); including: Rapid Bet Live ("RBL"), Peer to Peer Poker - World Series of Poker Brand and central server slot games. We will allow these server-based wagering products to become more widely deployed before we include any material revenues in our estimates," he concluded.
President and Chief Executive Officer Russel McMeekin stated: "At year-end we had approximately 3,100 CJS installed games. We also had an additional 3,500 CJS and Casinolink installations in progress. These installations include over 1,000 CJS systems installed or under installation at Harrah’s Entertainment Corporation’s owned or affiliated properties. We anticipate an ending CJS installation balance of approximately 12,000 games by December 31, 2007. The CJS progress in Nevada continues to remain on track with field trials scheduled at Boyd Gaming and a new field trial scheduled at MGM Mirage. We will provide an update of our other strategic initiatives (table management, table game progressives and RBL) during our fourth quarter 2006 earnings call."