W. Bruce Turner
President & Chief Executive Officer
Jaymin B. Patel
Senior Vice President & Chief Financial Officer
Fiscal Year 2005 - Second Quarter Earnings Conference Call
September 21, 2004 8:30 AM
Fiscal Year 2005 - Second Quarter Earnings Conference Call
Safe Harbor Act. . .
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o Comments made during this presentation may contain forward-looking
statements, including, without limitation, statements relating to the
future operations and financial performance of the Company and the
Company's future strategies. Such forward-looking statements reflect
management's assessment based on information currently available, but
are not guarantees and are subject to risks and uncertainties, which
would cause the results to differ materially from those contemplated in
the forward-looking statements. These risks and uncertainties include,
but are not limited to, those set forth here and in the Company's
filings with the SEC.
Fiscal Year 2005 - Second Quarter Earnings Conference Call
Agenda. . .
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o W. Bruce Turner, Chief Executive Officer
o Welcome
o Q2 and FY'05 YTD Performance Review
o Strategy Update
o Jaymin B. Patel, Chief Financial Officer
o Review of Q2 and FY'05 YTD Financial Results
o Updated Guidance for FY'05 and Guidance for Q3
Fiscal Year 2005 - Second Quarter Earnings Conference Call
Q2 Review. . .
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o Financial Performance
o Another quarter of steady growth and profitability
o Lottery Business
o ONCE
o Mexico
o Oregon
o Maine
o Gaming Solutions
o Italy
o Jamaica
o Commercial Services
o Barbados
o Poland
Fiscal Year 2005 - Second Quarter Earnings Conference Call
Going Forward. . .
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o New Games
o Monitor Games
o e-scratch
o Self-Service
o GamePoint
o New Opportunities
o Thailand
o Pennsylvania
o Canada
o Additional upcoming opportunities
Fiscal Year 2005 - Second Quarter Earnings Conference Call
Returning Value to Shareholders. . .
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o Share Repurchase Program
o Q1 FY'05 (1.0M shares for $28M) + Q2 FY'05 (2.6 shares for $55M)
= YTD FY'05 (3.6M shares for $83M)
o Dividend Payment
o Quarterly dividend of $10M paid in April and July 2004
o Over $100M returned to shareholders on a YTD basis
Fiscal Year 2005 - Second Quarter Earnings Conference Call
Service Revenue Analysis. . .
Q2 FY'05 vs. FY'04
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U.S. International Gaming Commercial GTECH
Lottery Lottery Solutions Svcs. / Other Total
$M % (1) $M %(1) $M % (1) $M % (1) $M % (1)
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FY'04 126.4 87.4 4.0 20.2 238.0
Same Store
Sales 7.6 +6% 1.8 +2% 0.6 +15% 2.2 +11% 12.2 +5%
Net, All
Other -4.8 -4% 2.0 +2% 3.0 +74% -2.3 -11% -2.1 -1%
FY'05 129.2 +2% 91.2 +4% 7.6 +89% 20.1 - 248.1 +4%
(1) All percentage points are rounded to the nearest percent.
(2) Reflects contract wins/losses, jackpot activity, contractual rate changes,
foreign exchange changes, the impact of acquisitions, and revenue withheld in
Brazil.
Fiscal Year 2005 - Second Quarter Earnings Conference Call
Key Financial Highlights. . .
Q2 FY'05 vs. FY'04
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o Total Revenue +17%
o Service Revenues +4%
o Gross Profits +13%
o Service gross profits -5% Impact of higher D&A and Brazil
o Operating Income +19%
o Net Income +10%
o Diluted Earnings Per Share +8%
Fiscal Year 2005 - Second Quarter Earnings Conference Call
Cash Flow. . .
Q2 FY'05
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Cash From Operations $75M
Maintenance Capital (1) $36M
Recurring Free Cash Flow (1) $39M
Investing for Growth $27M (Florida, PolCard, Tennessee, LILHCo)
Cash returned to shareholders:
o $10M in dividends
o $55M in share repurchases
(1) For a calculation, explanation, and reconciliation to GAAP measure, see
Supplemental Financial Data on Website.
Fiscal Year 2005 - Second Quarter Earnings Conference Call
Service Revenue Analysis. . .
FY'05 YTD vs. FY'04
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U.S. International Gaming Commercial GTECH
Lottery Lottery Solutions Svcs. / Other Total
$M % (1) $M %(1) $M % (1) $M % (1) $M % (1)
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FY'04 247.3 173.3 8.2 32.8 461.6
Same Store
Sales 14.7 +6% 5.3 +3% 1.1 +13% 4.5 +14% 25.6 +6%
Net, All
Other -4.7 -2% 11.1 +6% 3.8 +47% 4.0 +12% 14.2 +3%
FY'05 257.3 +4% 189.7 +9% 13.1 +60% 41.3 +26% 501.4 +9%
(1) All percentage points are rounded to the nearest percent.
(2) Reflects contract wins/losses, jackpot activity, contractual rate changes,
foreign exchange changes, the impact of acquisitions, and revenue withheld in
Brazil. International lottery also deferred revenue in Taiwan.
Fiscal Year 2005 - Second Quarter Earnings Conference Call
Cash Flow. . .
FY'05 YTD
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Cash From Operations $172M
Maintenance Capital (1) $66M
Recurring Free Cash Flow (1) $106M
Investing for Growth $192M (Spielo & LILHCo)
$ 43M (Other Growth Capital)
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$235M (Total Growth Capital
Cash returned to shareholders:
o $20M in dividends
o $83M in share repurchases
(1) For a calculation, explanation, and reconciliation to GAAP measure, see
Supplemental Financial Data on Website.
Fiscal Year 2005 - Second Quarter Earnings Conference Call
FY'05 Guidance. . .
As of September 21, 2004
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FY'05(1)
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Total Revenue Growth 18% - 19%
Service Revenue Growth 5% - 7%
Product Sales $210M - $220M
Service Margins 40% - 42%
Product Margins 36% - 38%
Full-Year Effective Tax Rate 35% - 36%
Earnings per Share(2)(3)(4) $1.43 - $1.48
Net Cash Invested $520M - $540M
(1) Includes full year of PolCard and Interlott; 10 months of Spielo and LILHCo.
(2) Based on a diluted share estimate of 133.7M shares vs. 130.2M in FY'04.
(3) Includes the net effect of the sale of our 50% interest in Harrington
Raceway and the early retirement of private placement notes.
(4) Adjusted to reflect a 2 for 1 stock split that occurred on July 30, 2004.
Fiscal Year 2005 - Second Quarter Earnings Conference Call
Q3 FY'05 Guidance. . .
As of September 21, 2004
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Q3 FY'05
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Service Revenue Growth 6% - 8%
Product Sales $55M - $65M
Service Margins 38% - 40%
Product Margins 37% - 39%
Effective Tax Rate 33%
Earnings per Share (1)(2) $0.33 - $0.36
(1) Based on Diluted Share Estimate of 133M Shares
(2) Adjusted to reflect a 2 for 1 stock split that occurred on July 30, 2004.
Fiscal Year 2005 - Second Quarter Earnings Conference Call
Closing. . .
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