The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Joe Greff - JPMorgan - Analyst: Good afternoon, guys. We're a few weeks from G2E and we're seeing a few of our competitors coming out with press releases highlighting their newer products and their products look similar to the stuff you've introduced the last couple of years. I guess my question strategically and it's also a legal question, what are you guys doing to protect our existing IP and existing games and then I'll have a couple follow-ups.
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: Joe Greff - JPMorgan - Analyst: Great. Then as a follow-up maybe this is a question for Scott, we're also hearing the same things from a number of flat managers about increasing budgets next year which is great to year and we appreciate the commentary in the press release today. How does that comport with how you baked in your fiscal 2010 revenue guidance three months ago does that give you -- the way to think about that is you have greater confidence in hitting that revenue guide or does that give you greater confidence in exceeding that revenue guide?
Answer By: Scott Schweinfurth - WMS Industries Inc. - EVP, CFO
Question: Joe Greff - JPMorgan - Analyst: Are you seeing any of your competitors do anything differently more recently in terms of financing or larger discounts? That's my final question. Thank you.
Answer By: Scott Schweinfurth - WMS Industries Inc. - EVP, CFO
Question: Joe Greff - JPMorgan - Analyst: Great. Thank you.
Question: Steven Kent - Goldman Sachs - Analyst: Hi. Good morning, Brian. Good afternoon, sorry. Long day. Could you just talk a little bit about the margin side of the equation, how much more opportunity is there, you've been talking about that for a couple of years now. Could you just start to lay out some of the initiatives we might see in 2010 and 2011?
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Answer By: Scott Schweinfurth - WMS Industries Inc. - EVP, CFO
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: Steven Kent - Goldman Sachs - Analyst: But, Brian, are there any -- a couple of years ago or a year ago you looked at the way you were putting together products and you know sourcing and some of those opportunities. Are there more to go that you have -- that you have found or identified?
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Answer By: Scott Schweinfurth - WMS Industries Inc. - EVP, CFO
Question: Steven Kent - Goldman Sachs - Analyst: Okay. Thank you.
Question: David Katz - Oppenheimer - Analyst: Good afternoon.
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: David Katz - Oppenheimer - Analyst: So the productivity of your installed base, right, the daily revenue per unit, has there's just going to be one of those odd questions where it's growing so nicely and we would love to get a sense for how sustainable that really is. Can we reasonably expect just looking out into the future that it can continue to grow in the low double-digits as it has?
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: David Katz - Oppenheimer - Analyst: One follow-up, if I may and thank you for the answer. You have I think to a large degree led the industry in terms of cabinets with Bluebird 2 and I you know, see those performing quite well. Have you at all started thinking about Bluebird 3 or what the next wave of cabinet should look like and what kind of feedback you're getting that might help you for the -- that next version?
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: David Katz - Oppenheimer - Analyst: Okay. Thanks very much.
Question: Ralph Schackart - William Blair - Analyst: Good afternoon, guys. Obviously, the Win Per Day metric, you had a great quarter. Could you help us think through the factors of what is driving that performance and give us a sense of the waiting is it really the brand new games the Reel Em In, the Time Machine, et cetera, sort of on the right band of that pulling up the average or is it the better performance of the Wizard of Oz or Star Trek, some of the games that have been in the field longer and perhaps are doing better than people anticipated.
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: Ralph Schackart - William Blair - Analyst: Right.
Answer By: Scott Schweinfurth - WMS Industries Inc. - EVP, CFO
Question: Ralph Schackart - William Blair - Analyst: Just a follow-up on that latter point like on the installed base obviously the average win per day was going up but installed base was flat to maybe slightly down most notable the sand alone. Was that sort of driven by your decision or anything in the end market?
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: Ralph Schackart - William Blair - Analyst: Right. Thanks, guys.
Question: Steve Wieczynski - Stifle Nicolaus - Analyst: When you look at the guidance, your revenue guidance, obviously stays the same but is any of that composition changing in terms of the new unit shipments or seems like the yields you might be able to beat your previous guidance?
Answer By: Scott Schweinfurth - WMS Industries Inc. - EVP, CFO
Question: Steve Wieczynski - Stifle Nicolaus - Analyst: In terms of the conversation you've had with your customers, you talked about them wanting to spend more, but what has been the feedback from you know relating to our products?
Answer By: Orrin Edidin - WMS Industries Inc. - President
Question: Steve Wieczynski - Stifle Nicolaus - Analyst: Great. Thanks for the color. Thanks, guys.
Answer By: Scott Schweinfurth - WMS Industries Inc. - EVP, CFO
Question: Kent Green - Boston Asset Management - Analyst: My question pertains to the rollout of the international Sebastian, you mentioned Mexico, could you tell us a little bit more about Australia, particularly whether you expect Australia to try to see some fairly decent unit growth sales.
Answer By: Orrin Edidin - WMS Industries Inc. - President
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: Kent Green - Boston Asset Management - Analyst: Could you talk about ASPs over there and also, I don't know, is that market conducive to the gaming operations? Is there progressive in that market, in any of those markets?
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: Kent Green - Boston Asset Management - Analyst: Thank you.
Question: Todd Highliers - Roth Capital Partners - Analyst: Good afternoon. Thanks for taking my question. You guys mentioned you started to play games in the class 2 central markets, planeness Washington, Alabama, Mexico. Are these game placements predominantly games being sold or are you leasing those? Can you give us a sense of maybe what the revenue model is there and what you expect going forward? And if you could, maybe a percent of total shipments to types of markets for the quarter?
Answer By: Orrin Edidin - WMS Industries Inc. - President
Answer By: Scott Schweinfurth - WMS Industries Inc. - EVP, CFO
Question: Todd Highliers - Roth Capital Partners - Analyst: Okay. And should we expect those to be in your international shipments going toward?
Answer By: Scott Schweinfurth - WMS Industries Inc. - EVP, CFO
Question: Todd Highliers - Roth Capital Partners - Analyst: Okay. Second question is with regard to the Helios platform launch, I think in the past that you've mentioned that South Africa was an exam you will of a market where that might work well. Can you give us some examples and we expect to see those types of games and platform being introduced going toward?
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: Todd Highliers - Roth Capital Partners - Analyst: Okay. Great. And then just last question with respect to R&D, can you guys maybe talk a little bit about -- a little bit higher than the prior year as a percent of revenue, can you make talk, was there a certain technology or just that you wanted to bring forward quicker than maybe previously thought or just what maybe was driving that increase?
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Answer By: Scott Schweinfurth - WMS Industries Inc. - EVP, CFO
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: Todd Highliers - Roth Capital Partners - Analyst: Okay. Thank you.
Question: Bill Lerner - Union Gaming - Analyst: Can you hear me?
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: Bill Lerner - Union Gaming - Analyst: Brian I'm not sure maybe this is for you or the other guys or even Ken, I don't know, but with the premium that your game units are generating does the same old structure make sense? I guess it's an economic decision on your part with the market share versus pricing.
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: Bill Lerner - Union Gaming - Analyst: Yes, I mean -- (Inaudible)
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: Bill Lerner - Union Gaming - Analyst: I guess what I'm asking, Brian, given that your games are generating such a relative premium, are you under pricing your participation product?
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Answer By: Orrin Edidin - WMS Industries Inc. - President
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: Bill Lerner - Union Gaming - Analyst: Okay thanks. Then as a follow-up, and maybe this is for Scott, how much that have ASP growth that we've seen in this quarter and recent quarters is a function of greater Bluebird 2s in the mix versus mix of video, et cetera, et cetera. I'm really just trying to get a feel for extension -- how much of your back log is Bluebird 2. The ultimate question is how much of a tail does this ASP growth have for you guys?
Answer By: Scott Schweinfurth - WMS Industries Inc. - EVP, CFO
Question: Bill Lerner - Union Gaming - Analyst: Thanks, guys.
Question: David Bain - Sterne Agee - Analyst: I was wondering if you have a gut feel on where your percentage ship share on replacement for the quarter. I know in the first -- if you had any thoughts on that, that would be interesting.
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: David Bain - Sterne Agee - Analyst: Potentially in line with your last quarter, best guess?
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: David Bain - Sterne Agee - Analyst: Then if you can help dissect the trend but given the sequential footprint number and combined with that higher yield can you give us a essential of what title are being replaced in your own network of games? Is it Monopoly or some other title so we can kind of --
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: David Bain - Sterne Agee - Analyst: Okay. An I guess just a follow-up to that, in terms of some metrics you guys look at, I don't know if it would be wins per day but any games that show a trajectory in terms of Wizard of Oz or terms of its introductory period that could be one of those next up and comes.
Answer By: Brain Gamache - WMS Industries Inc. - Chairman, CEO
Question: David Bain - Sterne Agee - Analyst: Okay, great. Thank you.
Answer By: Bill Pfund - WMS Industries Inc. - VP, IR
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