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International Game Technology (IGT)
Q2 2011 Earnings Call
April 21, 2011 5:00 pm ET
Matt Moyer - Vice President of Investor Relations
Eric Tom - Chief Operating Officer
Patti Hart - Chief Executive Officer, President, Lead Independent Director and Member of Stock Award Committee
Patrick Cavanaugh - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer
Carlo Santarelli - Wells Fargo Securities, LLC
Dennis Forst - KeyBanc Capital Markets Inc.
David Katz - Jefferies & Company, Inc.
Cameron McKnight - Buckingham Research Group, Inc.
Joseph Greff - JP Morgan Chase & Co
Chris Woronka - Deutsche Bank AG
Mark Strawn - Morgan Stanley
Robin Farley - UBS Investment Bank
Steven Wieczynski - Stifel, Nicolaus & Co., Inc.
Steven Kent - Goldman Sachs Group Inc.
[Operator Instructions] I'd like to turn the call over to Mr. Matt Moyer, Vice President of Investor Relations. Thank you, sir. You may begin.
Previous Statements by IGT
» International Game Technology CEO Discusses Q1 2011 Earnings Call Transcript
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Before we begin, I'd like to remind listeners, our discussion will contain forward-looking statements concerning matters such as our expected financial and operational performance, our expectations for the economy in general, and the gaming industry in particular, expected interest expense reductions from the new credit facility, recent interest rate swaps and our strategic operational and product plans. Actual results may differ materially from the expected results and reported results should not be considered as indicative of future performance.
Potential risk and uncertainties that could cause our business and financial results to differ materially from our forward-looking statements are included in our filings with the SEC, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. All information discussed on this call is as of today, April 21, 2011, and IGT does not intend and undertakes no obligation to update this information to reflect future events or circumstances.
In addition, on today's call, we may discuss certain non-GAAP financial measures. Reconciliation of these non-GAAP measures to the GAAP measures we consider most comparable, can be found in today's earnings release, which is posted on the Investor Relations section of our website, www.igt.com, and included with the Form 8-K which we furnished today to the SEC.
With that in mind, I'll turn the call over to Patti.
Thanks, Matt, and good afternoon, everyone. The results that we reported today are both a reflection of the advancements we have made in improving our profitability and internal processes and evidence of progress made towards strengthening the financial health of IGT. We continue to leverage and diversify what we believe to be the best business model in the industry. While at the same time, we continue to capitalize on the inroads we have made in markets around the globe.
Our revenue is beginning to better reflect the progress we have made in improving game performance by leveraging the capability of new platforms, both in gaming operations and in product sales. Looking ahead, visibility remains limited, and we expect continued pressure from the macroeconomic environment in the second half of the year. With that said, we are focused on the assets of our business that are within our control, keeping our customers and our partners at the core of every decision we make.
We expect our current trends of moderate revenue and earnings growth to continue for the remainder of this year and into fiscal year 2012. I recently returned from a trip to Asia, and I can tell you that I am quite enthusiastic about our international business opportunities. We are beginning the deployment of resources closer to our customers and expect to make significant progress across all dimensions of our International business, games and systems in Asia, Latin America and the Caribbean. We are working hard for you, our shareholder, in every corner of the globe.
With that, I would like to ask Pat to provide you a few more details on our financial performance. Pat?
Thanks, Patti, and good afternoon, everyone. Our second quarter earnings from continuing operations totaled $70 million or $0.23 per share versus $26 million or $0.08 per share on last year's second quarter, the details of which are provided in this afternoon's press release. This quarter, there wasn't much noise in the numbers, and we are seeing improvements in many areas. Generally speaking, we saw improved revenues in margins. We had better game ops -- game performance in our International business, especially in gaming operations, was a nice contributor.
Our total revenues for the second quarter increased 1% to $492 million, of which 56% were generated by gaming operations and the balance came from product sales. Gross margin for the company was 59%, up about 300 basis points year-on-year, mainly due to improved geographic and product mix. We had another improving quarter in our Gaming Operations business with sequential improvement in both the installed base and yield. Gaming operations revenue were $278 million in the second quarter, which was up 7% versus the first quarter and down only slightly year-on-year.
Sequentially, we saw moderate growth in the installed base and a higher mix of MegaJackpot games. Gross profit and margin were flat compared to last year. We generated an average of $53.62 in revenue per unit per day, which is up $2.66 compared to last year's quarter and up $3.24 versus the immediately preceding quarter, due to an increased mix of newer, higher-yielding gains, higher play level and expected normal seasonality. Our yield should continue their modest sequential improvement assuming normal seasonal trends continue.