Bally Technologies reports record second quarter

Slot machine maker Bally Technologies told the financial community Tuesday it had a record second quarter despite the current economic slowdown that has broadly impacted the gaming industry.

Bally’s chief executive officer, Richard Haddrill, called the three months that ended Dec. 31 the most profitable in the Las Vegas-based company’s history.

Bally said its net income in the quarter was up 37 percent to $33.6 million, or 59 cents a share, compared with $24.4 million or 45 cents a share in the same quarter last year. Meanwhile, total revenues were $233.3 million, a 1 percent increase compared with $230.6 million a year ago.

Company executives said the average selling price for a slot machine was more than $14,500, which helped drive the gross margins up 49 percent.

However, the company said it shipped 6,099 slot machines during the quarter, a decline of 15 percent compared with 7,144 slot machines a year ago.

Chief Operating Officer Gavin Isaacs said Bally sold slot machines to a wide selection of casinos worldwide. Revenues from sales declined 7 percent to $101 million, but the gross margin grew because the machines cost more.

“We continue to be pleased with our steady improvement in ship share globally and our ability to leverage our broad product portfolio across a diversified range of customers,” Isaacs said in a statement.

Revenues from sale of slot machine and casino management systems fell 1 percent to $56 million. However, the gross margin from those sales increased to 77 percent primarily due to an increased proportion of software, services, and maintenance revenue during the quarter.

Bally Technologies has been selection of several Wall Street researchers as a company expected to do well in 2009.

MorganJoseph gaming analyst Justin Sebastiano, in a report to investors in January, said Bally could be “formidable player” as slot machine floors become networked through server-based gaming technology.

“Bally will continue to increase its share of the North American and international slot machine markets,” Sebastiano said. “The company’s continued focus on cost cutting efforts and increased operating leverage should help expand margins.”

Bally announced earnings after the close of trading on the New York Stock Exchange Tuesday. Shares of Bally closed at $18.25, down $1.62 or 8.15 percent. In after hours trading, however, the company’s shares jumped in value almost 8 percent.

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