Bally reports higher earnings, net income despite lower revenues

Slot machine maker Bally Technologies grew both its quarterly earnings and net income despite declining revenues brought on by casinos holding back on equipment purchases.

The Las Vegas-based gambling equipment provider said Wednesday that it earned 58 cents per share in the fourth quarter that ended June 30 on net income of $33.2 million. The figures compared with 54 cents a share on net income of $31.3 million in the same quarter a year ago.

Analysts polled by Reuters Estimates expected Bally to report earnings per share of 55 cents.

Revenues in the quarter $205.1 million, a decline of 17 percent compared with $247.4 million a year ago.

"Despite the continued challenging economy which has negatively impacted our customersу capital spending, our diversified business model drove yet another very profitable quarter," Bally Technologies Chief Executive Officer Richard Haddrill said in a statement.

Haddrill added that Bally improved its gross margins on slot machine sales while expenses fell. The companyуs average slot machine price was $14,245 in the quarter, which compared with $13,329 a year ago.

MorganJoseph gaming analyst Justin Sebastiano said the lack of new casino openings and a marked slowdown by casinos in replacing older slot machines, contributed to the companyуs declining revenues.

However, Sebastiano said Bally has been able to implement cost controls that showed up on the bottom line.

For the full fiscal year, Bally Technologies said it earned $2.22 a share on net income of $126.3 million. A year ago, the company earned $1.85 a share on net income of $107.2 million. Revenues for the full year were $883.4 million, a decline of 1.8 percent compared with revenues of $899.7 million in fiscal 2008.

Bally said new slot machines and an expected improvement in spending by casinos starting next year would offset the current sluggish North American slot machine replacement market and an overall weakness in the economy.

Bally announced earnings after the close of trading on the New York Stock Exchange. Shares of the company closed Wednesday at $37.61, down 51 cents or 1.34 percent.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.