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WMS Industries Inc. Reports Operating Results (10-Q)

February 08, 2013 | About:
10qk

10qk

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WMS Industries Inc. (WMS) filed Quarterly Report for the period ended 2012-12-31.

Wms Industries, Inc. has a market cap of $1.36 billion; its shares were traded at around $25 with a P/E ratio of 23.753 and P/S ratio of 1.9956. Wms Industries, Inc. had an annual average earning growth of 32.6% over the past 10 years.

Highlight of Business Operations:

The priorities for the utilization of our cash flow are to: continue to enhance stockholder value by emphasizing internal and external investments to create and license advanced technologies and intellectual property; seek acquisitions or licensing deals that can extend our presence and product lines, increase our distribution channels, enhance our intellectual property portfolio and expand our earnings potential; and, when appropriate, repurchase shares in the open market or in privately negotiated transactions. For the six months ended December 31, 2012, our research and development spending increased $6.2 million compared to the prior year and we spent $32.9 million on property, plant and equipment and $38.6 million on additions to gaming operations equipment, and we funded approximately $5.0 million of common stock repurchases. We also had $25.0 million net borrowings on our credit facility and had $85.0 million long-term debt outstanding at December 31, 2012.

Quarter Ended December 31, 2012, Result: During the quarter ended December 31, 2012, our average installed base of participation gaming machines decreased 1.0% over the quarter ended December 31, 2011 while, at December 31, 2012, our total installed participation footprint grew 3.7% to 9,624 units compared to 9,282 units at December 31, 2011. Our average revenue per day declined 5.5% in the December 2012 quarter from the December 2011 quarter to $63.89. Our focus in fiscal 2013 is to increase the percentage of the installed base that are coin-in gaming machines as they generate the highest profit of our three lease models and to convert a portion of our installed base from Bluebird gaming machines to Bluebird2, Bluebird xD and our new Gamefield xD gaming machines. The percentage of coin-in gaming machines in our installed base was 36.7% of the installed base at December 31, 2012, compared to 38.6% of the installed base at December 31, 2011. The coin-in gaming machines decrease was in our non-WAP gaming machines as our WAP installed base was 3,330 units at December 31, 2012 compared to 2,971 units at December 31, 2011. We have successfully converted approximately 70% of the participation installed base to Bluebird2 and Bluebird xD gaming machines, although this required a higher capital investment over the last two years. We invested $38.6 million in gaming operations capital in the six months ended December 31, 2012 and $35.6 million in six months ended December 31, 2011. We expect that the amount of capital invested in gaming operations will decline modestly for the next two years as a lower amount of capital spent on our participation gaming machines will be partially offset by increased capital spent on gaming machines for operating leases as we expect a portion of the new VLT market in Illinois will be conducted through operating leases. In fiscal 2011 and the first half of fiscal 2012, we experienced delays in launching new products due to the new technologies we were imbedding in our participation products and as a result of not having as many new participation game themes approved, some of our older game theme performance lagged resulting in a higher level of removals of participation gaming machines, which caused a reduction in the installed base. We expect that with an anticipated increase in participation game themes that our installed base will grow in the balance of fiscal 2013 and continue to grow in fiscal 2014.

Selling and administrative expenses increased 4.7%, or $14.2 million, to $37.9 million in the December 2012 quarter, compared to $33.2 million in the prior-year period while increasing by 360 basis points as a percentage of revenues to 24.1%. The year-over-year increase reflects:

Selling and administrative expenses increased 1.1%, or $0.8 million, to $72.3 million in the six months ended December 31, 2012, compared to $71.5 million in the prior-year period while increasing by 30 basis points as a percentage of revenues to 22.8%. The year-over-year increase reflects:

Our operating income decreased by $4.9 million, or 20.0%, in the six months ended December 31, 2012 on a 0.4% decrease in total revenues. Our operating margin of 6.2% represented a 150-basis point decrease over the 7.7% operating margin achieved in the prior-year period. This decrease reflects:

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