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: Rohan Gallagher - Jarden Limited, Research Division - Analyst
: I'd like to focus on gaming, if I may. Outright sales, typically, replacement demand, we're looking at about 80,000 units a year, 20 share, 16,000 units
for you guys, that's 4,000 a quarter. First of all, Matt, is that sort of scalable and ratable? But second of all, adjacency opportunities. You've got the
Canadian provinces, Oregon, Illinois, HHR. Can you sort of unpack what the potential opportunity that is for the next 12 months, please?
Question: Rohan Gallagher - Jarden Limited, Research Division - Analyst
: And just if you indulge on, I'm looking at your operating leverage on Gaming. You've had some nice margin expansion despite the fact that you
had a disproportionate increase in revenues in outright sales, which is typically lower margin. So clearly, there's some good work being done behind
the scenes around supply chain, operating efficiencies, et cetera. Oliver, can you sort of shed some light in terms of what we could see in terms of
operating leverage going forward, taking into consideration mix effects?
Oliver Chow
Yes. Thank you, Rohan. Yes, we delivered exceptional numbers and we continue to post really healthy margins as we demonstrated here in the
quarter. We did benefit from some revenue mix in the quarter, but we also do have opportunities to expand margins over time as we work through
our margin-enhancement initiatives across the business.
Our performance this quarter across all 3 segments really reflects the team's commitment to growing the business while maintaining profitability.
And over the course of the year, we have implemented and executed several cost optimization initiatives and some examples there are supply
chain, sourcing initiatives that were previously implemented but then support the healthy margins you see in Gaming.
But you also see the efficient management of UA expenses and marketing expenses from a SciPlay perspective. Even at the corporate level, we're
going to be driving further integration and efficiency within the organization.
So all things considered, we'll continue to improve process and systems while driving sustainable long-term profitability. And I said -- as I said
earlier, we are incredibly pleased with the team's execution this quarter.
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