International Game Technology (IGT)
Q1 2012 Earnings Call
January 24, 2012 8:00 am ET
Patrick W. Cavanaugh - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer
Matthew G. Moyer - Vice President of Investor Relations
Eric A. Berg - President
Patti S. Hart - Chief Executive Officer, Lead Independent Director and Member of Stock Award Committee
Harry Curtis - Nomura Securities Co. Ltd., Research Division
Felicia R. Hendrix - Barclays Capital, Research Division
Robin M. Farley - UBS Investment Bank, Research Division
Dennis I. Forst - KeyBanc Capital Markets Inc., Research Division
James Omstrom - JP Morgan Chase & Co, Research Division
Steven E. Kent - Goldman Sachs Group Inc., Research Division
Mark Strawn - Morgan Stanley, Research Division
Shaun C. Kelley - BofA Merrill Lynch, Research Division
Cameron Philip Sean McKnight - Wells Fargo Securities, LLC, Research Division
Previous Statements by IGT
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Matthew G. Moyer
Thanks, Kim, and good day, everyone. Welcome to IGT's First Quarter Fiscal Year 2012 Earnings Conference Call. On the call with me today are Patti Hart, CEO; Eric Berg, President; and Pat Cavanaugh, CFO.
Before we begin, I'd like to remind listeners our discussions will contain forward-looking statements concerning matters such as our expected financial and operational performance, including our guidance for fiscal 2012; our expectations for the economy in general and the gaming industry in particular; expected impact of the Double Down acquisition; and our strategic operational and product plans. Actual results may differ materially from the results predicted, and reported results should not be considered as indicative of future performance.
Potential risks 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. All information discussed on this call is as of today, January 24, 2012, 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. Reconciliations of these non-GAAP financial 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 as an exhibit to the Form 8-K we furnished today with the SEC.
With that in mind, I'll turn the call over to Patti.
Patti S. Hart
Thanks, Matt, and welcome to everyone. I would characterize the first quarter as a demonstration of the strength of our global business model and the diversity of our profitability.
While there was limited activity in the new and expansion market, we generated $100 million of operating income by leveraging the power of our gaming operations and our international businesses. We continue to benefit from the improvements we have made in our gaming operations. We have increased our installed base of MegaJackpot games for 3 straight quarters and we are seeing increases in the revenue per unit year-over-year. On a consolidated basis, our installed base is up 3,000 units compared to this year's first -- last year's first quarter.
Internationally, we are making meaningful progress by positioning our sales teams closer to our customers and by equipping them with localized content. In the quarter, our international product sales revenues were up 21% year-over-year due to growth in both units and average selling price.
As anticipated, our North American product sales are off to a slow start in what is historically our softest seasonal quarter. We expect to gain momentum throughout the year given the planned increase in new openings and a more active replacement market. This quarter, our high-performing games are driving higher average selling prices on our premium price boxes, a result of our decision to drive business in market segments where we believe we have the most compelling differentiation. Overall, we remain on track to meet our fiscal year 2012 operating objective.
With that, I'll ask Pat to share with you some of the financial details of the quarter. Pat?
Patrick W. Cavanaugh
Thanks, Patti, and good morning, everyone. Our first quarter adjusted income from continuing operations were down 18% to $15 million or $0.17 per share versus $62 million or $0.21 per share in last year's, primarily due to decrease in North American product sales. Total revenues for the first quarter decreased 1% to $446 million year-over-year. All periods presented in this release have been adjusted to classify the Barcrest Group in discontinued operations.
Gaming operations revenues were $265 million in the first quarter, up 5% versus last year on increases in our interactive business and the installed base. For the quarter, we generated an average of $53.11 in revenue per unit per day, which is up 1% compared to last year's first quarter. IGT's consolidated installed base ended the first quarter at 55,600 units, up 3,000 units from a year ago and 1,700 units sequentially.
Gaming operations gross margin was 61% in the first quarter, down from 63% from the same quarter last year, primarily due to unfavorable interest rate changes and jackpot expense.
Consolidated product sales revenues decreased 9% to $181 million for the quarter compared to $198 million first quarter last year. Globally, we recognized 7,300 units in the quarter, down 12% from last year's first quarter, primarily driven by lower domestic new and expansion units.