Bally Technologies, Inc. Investor Presentation July 2013

Transcription

1 Bally Technologies, Inc. Investor Presentation July Bally Technologies. NASCAR is a registered trademark of the National Association for Stock Car Auto Racing, Inc Motorsports Licensing Company, LLC. All trademarks shown are used with the permission of their respective owners. HISTORY, the H logo, and Pawn Stars are trademarks of A&E Television Networks, LLC. Gold & Silver Pawn is a trademark of Gold & Silver Coin Shop, Inc A&E Television Networks, LLC. All rights reserved The Beach Boys is a trademark of Brother Records, Inc, and is under license by Bally Gaming, Inc.

2 Safe Harbor Statement Certain statements that may be made today will be considered forward looking as that term is defined under the rules of the Securities and Exchange Commission ( SEC ), and are therefore subject to the safe harbor created by such rules. Although the Company believes the expectations reflected in any forward looking information and statements are reasonable, such forward looking information and statements involve risks and uncertainties that could lead actual results to differ from those contained in today s presentation materials and discussion. The general factors impacting future results are discussed in detail in the Company s SEC filings. The forward looking information and statements in this presentation speak only as of the date hereof and the Company undertakes no obligation to update the information contained in this report unless required by law. Bally Technologies, Inc. (NYSE: BYI) 2

3 Leading Gaming Technology Provider 3

4 Segment Gaming Equipment Diversified Business Model Overview Sale of Slot Machines, Conversion Kits, Parts, & Used Games Licensed to Sell in 317 Jurisdictions Worldwide LTM Revenue (1) $348M 36% YTD Revenue Growth (1) Expected Gross Margin 17% ~50% Gaming Operations Lease of Slot Machines in Class III, Lottery, and Class II Markets Fixed Daily Fee and Revenue Share $396M 40% 15% 68% - 73% Casino Systems Sale of Slot Monitoring, Player Tracking, Marketing, and Intelligence Technology Global Leader in Systems; Installed in over 660 Casinos $235M 24% 15% 70% - 75% (1) LTM and YTD period ended March 31,

5 Strong Industry Fundamentals Slots Have the Highest ROI to Casinos A New Slot s Payback Can be as Little as Two Months Slots Generate 70% - 90% of a Typical North American Casino s Revenue Spend on Slots is Low Compared to Casino Infrastructure Costs Large Installed Base of Recurring Revenue Gaming Operations Units 9 12% of a Typical Casino Slot Floor All Casinos Require a System for Slot Monitoring High Switching Costs Razor / Razor-Blade Business Fragmented Customer Base More than 900 Casinos in North America with ~ 975,000 Gaming Devices 5

6 Disciplined Capital Deployment Disciplined Allocation of Free Cash Flow and Balance Sheet Optimization ~ 2.0x Leverage Invest in Recurring Revenue Game Ops CAGR of 12% since FY08 Share Repurchases Over $1 Billion since November 2007 Value Creating Acquisitions Focus on Tuck-Ins, Product Diversification, and Content Sources 6

7 Discussion Topics Uniquely Positioned Growth Platforms Significant Potential 7

8 Bally Is Uniquely Positioned Leading Innovator Industry Firsts: iview DM Elite Bonusing Suite ideck Pro Curve Leading Mobile & Interactive Platforms High Visibility and Diversification Majority of Revenues are Recurring in Nature (1) Long-term Contracts Lottery, Class II Multi-Year Systems Deals Significant and Growing Maintenance Revenue Disciplined Deployment of Free Cash Flow Investment in Core Business & New Markets Technology Tuck-In Acquisitions Investments in Brands Return Excess Capital to Shareholders Growing Systems Services (1) Revenues that are recurring in nature is defined as revenues from gaming operations, systems maintenance and systems services revenue. 8

9 For Further Growth N.A. Market vs. Ship Share Trends ~13% Bally Market Share WAP Market Share 50% Organic 16-22% Bally Ship Share ~10% Bally Bally Systems Share, by Casino Size 16% >2k slots <1k slots New Markets & Products Canada South Africa Illinois VGT Asia Pacific International VLT Interactive & Mobile Game Sales Game Ops Systems Future Prospects New Jurisdictions New Products Organic and 3 rd -Party Content Additional Brands Operating Leverage Value-Creating Acquisitions 9

10 Innovative R&D is Driving Results Customer-Centric R&D 11% of LTM Revenues GAMES ALPHA 2: Pro Series with ideck Ship Share Improvement VLT and VGT Penetration ASP Up 20% Since FY09 Video >80% of Sales vs. 56% in FY09 WAP Base Up 160% Since March 2011 ~800 R&D Professionals R&D Employees Up 43% Last 4 years Doubled Game Studios Last 4 Years SYSTEMS iview DM and Elite Bonusing Suite Measurable ROI for Customers Backward-Compatible Solution SDS for Windows 2/3 of 116 Competitive Replacements Signed in FY10 FY12 10

11 and Outpacing Competitors Zinnov 11

12 Discussion Topics Uniquely Positioned Growth Platforms Significant Potential 12

13 Gaming Equipment: Innovation Leader Growth Opportunities Improve Ship Share Expand Content Penetrate Under-Represented Markets Global VLT International Expand Gross Margins New Property Openings Replacement-Market Improvement Conversion Kits Pro Curve ideck 100 New Units Sold = $0.01 of EPS 100bp Increase in Margin = $0.05 of EPS 13

14 Gaming Operations: Premium Growth Potential Growth Opportunities WAP Premium Daily Fee Video Lottery New Casinos / Markets International Grow Portfolio of Brands New Premium Daily-Fee Games New WAPs 100 Premium Games = $0.02 of EPS 100 WAPs = $0.03 of EPS 14

15 Significant WAP Growth NASCAR, Hot Shot Progressive, and Future Titles 2,365 1, Q11 2Q12 3Q13 15

16 Bally is the Global Systems Leader 500, ,000 Total Slots Connected to Systems Year-End (1) Bally IGT Aristocrat Konami Other 300, , ,000 - CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 Each New 2,000-Unit System: Installation = $0.09 of EPS Maintenance = $0.01 of EPS (1) Source Eilers Research, LLC & Company Reports. IGT, Konami, and Other units are estimated. Aristocrat units are for N. America while IGT, Bally, and Konami are worldwide. 16

17 With Multiple LT Growth Opportunities FUTURE REVENUE DRIVERS # OF GAMES $ PER GAME $ POTENTIAL OVER 5-7 YEARS Current Customers to Sell New Products ~450k+ ~ $2,500 $1,100M Market Share Gains (Competitive Replacements) ~120k ~ 3, M New Market Opportunities (50% Share) ~100k ~ 3, M RECURRING SEGMENTS PER ANNUM Increasing Maintenance Increasing Services $8-12M $5-10M LTM Maintenance Revenues of $86 Million; Growing at a 16% CAGR since FY08 Each New 2,000-Unit System Impact on EPS: Installation $0.09 Recurring Maintenance Revenue $

18 iview DM and Elite Bonusing Suite ROI-Generating, Floor-Wide Tools to Excite and Reward Players Picture-in-Picture Technology Automated and Personalized Promotions Multiple Screens or Separate Screen Backward Compatible Works on Most Manufacturers Games Real-Time and Customized Marketing at Point of Play Floor-Wide Bonusing Slot Tournaments 10,000 iview DMs = $0.13 of EPS Driving ROI! Elite Bonusing Suite Customer Case Studies: SoCal: Rated Play Up 17%, Floor-Wide Coin-In Up 12%, Players Database Up 10% Reno: Coin-In Up 40% on DM-Enabled Machines Vegas: Coin-In Up 28% from Virtual Racing Event 18

19 Discussion Topics Uniquely Positioned Growth Platforms Significant Potential 19

20 Global Gaming Expansion to Continue Economic Uncertainty Has Led to New Markets Since 2008 Ohio: 20k-30k Illinois VGT: 15k-30k Massachusetts: 7k-10k Maryland: 12k-15k Italy: 57k Philippines: 5k-10k Several Additional Expansions / New Markets are Possible Greece: 35k Japan: 5k Illinois Expansion: 20k New Hampshire: 5k Kentucky: 14k Florida Expansion: 15k Texas: 25k-50k New York (non-track): 14k Continued Replacement Cycle Improvement New Property Openings and Expansions in Existing Markets 20

21 Long-Term Global Growth Dynamics Systems Multi-Year Contracts SDS for Windows iview DM & EBS Gaming Operations Top-Tier Brands WAP & Premium Growth Global Lottery Gaming Equipment Content = Ship Share New Markets VLTs & VGTs INNOVATION, VISIBILITY & DIVERSIFICATION, and CAPITAL MANAGEMENT Position Bally Well for Revenue and EPS Growth Midpoint of FY13 Diluted EPS Guidance of $3.35 to $3.45 (1) Represents 2-Year Diluted EPS CAGR of 36%! (1) Fiscal guidance as provided on April 24,