ussel McMeekin, Progressive Gaming International Corporation President and CEO, commented: “The pace of systems installations through the first half of 2008 once again demonstrates the consistency with which we are growing our core systems business.”
He then added: “With this foundation firmly established, we recently entered into a broad based technology agreement with International Game Technology to address server-based gaming technologies and applications, which is anticipated to be the next major technology shift in the gaming industry. Our agreement with IGT, which we expect to finalize on August 15th concurrent with our financing transactions, provides us with a new platform to grow and expand our existing systems business which we expect will generate significant incremental revenues, EBITDA and net income over the term of the agreement.”
Systems revenues were us$ 18.1 million for the quarter ended June 30, 2008. The company also had a us$ 1.6 million order that was delivered in the second quarter 2008 but was not recorded until early July. Systems revenues for the quarter ended June 30, 2007 were us$ 18.8 million, inclusive of us$ 3.8 million of deferred revenues from the 2007 first quarter.
It reported an adjusted loss per share from continuing operations of us$ 0.06 for the three months ended June 30, 2008, excluding severance costs of us$ 0.01 per share.
Progressive Gaming's slot management systems installed base as of June 30, 2008 was 84,797, representing year-over-year growth of 28%, or 18,579 systems, and quarterly sequential growth of 5%. It installed 8,458 slot management systems in the first half of 2008, or approximately 35% of its expected full year total of 24,261, which is consistent with the historical seasonality of installations.
Its installed base of table management systems as of June 30, 2008 was 6,879, more than double the installed base as of June 30, 2007, and grew by 5%, or 346 table management systems on a quarterly sequential basis. The Company has installed 1,139 table management systems in the first half of 2008, representing 36% of the expected 2008 full year table management system installations of 3,160 systems.
"In addition to solid domestic system installation growth, we are also benefiting from robust international expansion in key regions including Europe, Asia, Canada and more recently Latin America," said McMeekin.
"Progressive Gaming continues to expand both our product offerings and the markets we serve. The approval during the second quarter of the Casinolink Jackpot System module of our Casinolink Enterprise system in Nevada accelerated customer interest and we're moving forward with all of our previously planned placements in this market. Progressive has recently installed CJS at six Nevada sites, all of which have further expansion plans. We expect the number of sites in Nevada and games per site to increase materially throughout the second half of 2008 and into 2009. The performance of CJS in Nevada properties are meeting or exceeding the expectations of our customers," he added.
"In addition, we have made significant progress year to date with the development of our sports product lines, with customer demand for these offerings steadily increasing. To date, we have signed agreements to install our sports betting system at five new sites, three of which will replace a competitor's system. In June 2008, we went live with our first multi-site Rapid Bet Live network at two properties, with expected roll-out to at least ten sites by year-end".
Last week, the firm also announced an expected convertible note offering and strategic technology agreement with IGT and a new credit facility with Private Equity Management Group Financial Corporation (“PEM”). The transactions are scheduled to be completed on August 15, subject to certain closing conditions, and are planned to be used for the retirement of the remaining us$ 30 million of our outstanding high-yield debt. Following the retirement, the company will move forward with the financial resources and flexibility necessary to continue our growth with anticipated new opportunities to leverage its systems capabilities.
Mc Meeking pointed: "The new strategic technology agreement with IGT is expected to complement our initial alliance established earlier this year and provides us with additional channels to generate new revenue streams with attractive margins beginning next year. Through this technology alliance we expect to capitalize on the strong customer demand we are now seeing for server-based product functionality and technology solutions."
"We believe our ability to develop, market and support applications for server-based functionality will expand and accelerate the adoption of server-based gaming technologies in many international markets, particularly with key customers in Canada, Europe and Asia," he added.
Progressive Gaming International Corporation Executive VP, CFO and Treasurer, Heather Rollo, added, "Our year to date slot and table management systems installation growth is tracking in line with the comparable period in 2007 and we remain confident in our ability to achieve our full year revenue guidance of us$ 80 - us$ 90 million. Finally, with an improved balance sheet and added flexibility, we believe the anticipated growth for 2008 will be sustainable throughout 2009 and beyond."
Progressive Gaming also expects that its strategic relationship for server-based gaming will be minimally dilutive to neutral to earnings per share results for fiscal 2009 and slightly accretive to earnings per share results for 2010. The company expects the strategic technology agreement to benefit its operating results thereafter with significant earnings per share and EBITDA accretion expected for fiscal 2011 as the server-based gaming adoption rates are expected to meaningfully increase at that time.