MS also initiated fiscal 2011 third quarter revenue guidance of us$ 209-to-us$ 215 million, a 6%-to-9% increase over the comparable quarter a year ago, with an expected operating margin of 20.5%-to-21.0%.
Fiscal 2011 second quarter highlights:
•Total revenues rose 6% to us$ 199.9 million, driven by a 12% increase in product sales revenues to us$ 127.2 million, reflecting global new unit shipments of 6,310 units, an 8% increase in the average selling price to us$ 16,620 per unit reflecting strong customer demand for premium-featured Bluebird 2 and Bluebird xD gaming machines and higher sales of used gaming machines.
•Product sales gross margin improved 170 basis points on a quarterly sequential basis to 50.4%, reflecting continuous improvement initiatives and initial success with supply chain efforts to reduce the cost structure of the Bluebird xD cabinet following its commercial launch in June 2010, partially offset by an unfavorable sales mix of higher revenues from low-margin used gaming machines and lower revenues from higher-margin game conversion kit sales.
•Gaming operations revenues were us$ 72.7 million, reflecting average daily revenue of us$ 74.39 and an average installed participation base of 10,147 units, which grew late in the quarter to 10,174 units at December 31, 2010 reflecting the impact from the timing of new product introductions and installations.
•Research and development spending, as planned, increased us$ 4.2 million to support investment in and commercialization of new Networked Gaming applications and systems.
•Net income was us$ 27 million, or us$ 0.46 per diluted share, inclusive of a us$ 0.02 per diluted share prior-period benefit due to the retroactive reinstatement of the U.S. Federal Research and Development tax credit to January 1, 2010.
•Net cash provided by operating activities for the six months ended December 31, 2010 increased 18% year over year to us$ 44.5 million.
"WMS' revenue gains were again driven by strong global demand for our Bluebird2 and new Bluebird xD premium gaming machines," said Brian R. Gamache, Chairman and CEO. "In addition, reflecting our dedicated company-wide attention to continuous improvement, including the implementation of strategic supply chain efficiencies, we began to achieve the expected reduction in the cost structure of our Bluebird xD gaming machine, our newest, high-demand product, which resulted in quarterly sequential growth in our product sales gross margin. WMS' talented and creative worldwide workforce continues to offset the challenges of the difficult, but improving, industry environment by developing player-appealing products that continue to drive strong ship share and steady revenue growth. Reflecting these factors and further operating execution improvements, we are well positioned to maintain our pace of continued progress and profitable growth in the second half of fiscal 2011 and beyond."
Gamache added, "Reflecting our first-half fiscal 2011 performance and the ongoing worldwide demand for our premium Bluebird xD and Bluebird2 cabinets, we are reaffirming our fiscal 2011 revenue guidance of $830 million to $850 million. With our broad portfolio of high-earning, player-appealing products and highly anticipated next-generation platform innovations that deliver exciting new game experiences for players and consistent, sustainable returns for casino operators, WMS is uniquely positioned to grow our ship share, expand our participation installed base and drive greater yields from our gaming operations business. In addition, by maintaining our disciplined focus on enhancing operational execution, we expect to continue to elevate Bluebird xD margins on a quarterly sequential basis throughout the remainder of fiscal 2011, which will drive an improvement in operating margin, and lead to strong momentum as we enter fiscal 2012."