Multimedia Games' Second Quarter Revenue Rises 18% to $46.6 Million and EBITDA Increases 32% to $24.

Multimedia Games' Second Quarter Revenue Rises 18% to $46.6 Million and EBITDA Increases 32% to $24.1 Million; Reports Diluted EPS of $0.31

- Deploys 1,104 New Revenue Units, Including 580 For-Sale Units and 524 Net Additions to Installed Base -

- Raises Fiscal 2013 EPS and EBITDA Guidance to $0.98-$1.02 and $90-$92 Million, Respectively -

AUSTIN, Texas--(BUSINESS WIRE)-- Multimedia Games Holding Company, Inc. (NAS: MGAM) ("Multimedia Games" or the "Company") today reported operating results for its fiscal 2013 second quarter ended March 31, 2013, as summarized below:

Summary of 2013 Q2 Results

(In millions, except per share and unit data)

Three Months Ended
March 31,













Operating income (2)





Net income (2)





Diluted earnings per share (2)





Pro-forma diluted earnings per share (3)





New units sold



Domestic participation installed units:








EBITDA is defined as net income before net interest expense, income taxes, depreciation, amortization and accretion of contract rights. A reconciliation of EBITDA to net income, the most comparable Generally Accepted Accounting Principles ("GAAP") financial measure, can be found attached to this release.


Operating income, net income and diluted earnings per share ("EPS") for the three month period ended March 31, 2013, reflects a change in the depreciable lives for the Company's gaming operations equipment as described on page 3.


Pro-forma diluted earnings per share for the three month period ended March 31, 2012, reflects the following adjustments: (i) a tax expense rate of 32.3%, representing the effective tax rate for the fiscal 2013 second quarter, which results in a $0.07 per diluted share reduction from the reported results; and, (ii) an estimated $0.05 benefit to fully diluted EPS related to the change in depreciable lives of its gaming operations equipment (which is described in more detail below).

Three Months Ended
March 31,



Diluted EPS as reported (2) (3)





Pro-forma at 32.3% tax rate


Normalize depreciation, net of tax


Pro-forma diluted EPS (3)





Patrick Ramsey, President and Chief Executive Officer of Multimedia Games, commented, "Our strategies to expand the Company's total addressable market and invest in the development of great games that resonate with customers continue to drive robust financial growth and a further strengthening of both our balance sheet and our Company. In the fiscal 2013 second quarter, total revenues grew approximately 18% to over $46 million, driven by continued strength in unit sales and the ongoing expansion of our installed base of participation units. For the third consecutive quarter we deployed over 1,000 new revenue units, with deployments across 22 states in the fiscal 2013 second quarter. With the 18% rise in second quarter revenues and a slight decline in total operating expenses, the Company generated year-over-year EBITDA growth of over 32%, which highlights the tremendous operating leverage in our business model.

"During the March 2013 quarter, our new MForce™ gaming platform and several game themes achieved a key milestone as they received final approval from the Nevada Gaming Commission, allowing us to pursue performance field trials at casinos throughout the state. Our fiscal second quarter 2013 results include initial contributions from the sale and placement of a small number of games in Nevada. We are making solid progress with additional technical trials of the MForce platform as well as additional game titles which will allow us to expand our presence in the state. We also recently began technical field trials of our TournEvent® slot tournament system in Nevada.

"Our gaming operations business also continued its growth, as we added over 500 units to our installed base for the third consecutive quarter. Growth was driven primarily by placements outside of Oklahoma which increased by 395 units, or 12.6%, on a quarterly sequential basis. Our installed base growth in higher-yielding markets combined with a growing number of premium game placements led to an increase in average revenue per day despite reported gaming revenue weakness in the majority of our markets. Premium games grew by over 180 units, bringing our total footprint to 505 games outside of Oklahoma."

Ramsey concluded, "Our success in the first half of fiscal 2013 has positioned the Company for continued progress in the second half of the year as the awareness and availability of our products in a larger portion of the domestic marketplace continues to expand. Creating games that clearly resonate with players and deliver value to operators is enabling Multimedia Games to grow market share in existing markets and successfully enter new markets. Given our improving outlook, we are raising our diluted EPS outlook for fiscal 2013 to a range of $0.98-$1.02 from our prior $0.79-$0.84 range."

Summary of Fiscal 2013 Second Quarter Operating Results

Multimedia Games' fiscal 2013 second quarter revenue rose 17.8%, or $7.0 million, to $46.6 million, compared to revenue of $39.5 million in the fiscal 2012 second quarter. Fiscal 2013 second quarter revenue included approximately $33.4 million from gaming operations and approximately $12.8 million from gaming equipment and system sales, compared with $29.0 million from gaming operations and $10.1 million from gaming equipment and system sales in the year-ago period.

Gaming operations revenue in the fiscal 2013 second quarter grew 15.0% to $33.4 million, as a $0.6 million, or approximately 4%, year-over-year decline in Oklahoma revenues from a very strong second quarter a year ago was more than offset by growth in each of the Company's other markets. Multimedia Games' ending installed base of participation machines increased by 1,821 units, or 18.4%, from the fiscal 2012 second quarter and by 524 units, or 4.7%, on a quarterly sequential basis. There was broad based unit growth across the Company's markets including a combined 134 units added in Louisiana, Mississippi and California and 120 units added throughout the Midwest. Included in the quarter-end participation base were 505 premium participation units deployed outside of Oklahoma, an increase of 187 units, or 58.8%, on a quarterly sequential basis. Fiscal 2013 second quarter revenue also benefitted from a 5.5%, or $0.2 million, year-over-year rise in revenues related to the Company's operation of the central determinant system for the New York Lottery.

Gaming equipment and system sales in the fiscal 2013 second quarter increased 26.4% to $12.8 million, from $10.1 million in the prior-year period. During the quarter, the Company recorded revenue of $11.0 million related to the sale of 580 new units and $1.3 million in revenue related to parts and equipment sales, compared to $8.5 million in revenue related to the sale of 472 new units and $0.7 million related to parts and equipment sales in the year-ago period. Multimedia Games sold units into 19 markets, including modest initial unit sales in Nevada and Illinois, while Washington, Michigan and California were the Company's three largest markets for new unit sales with a combined total of 267 units sold. There was $0.5 million and $0.9 million of deferred revenues for the sale of player stations and a system in a prior-year period recognized in the fiscal 2013 and fiscal 2012 second quarter periods, respectively.

Other revenue, primarily comprised of service revenue, was approximately $0.4 million in both the fiscal 2013 and fiscal 2012 second quarter periods.

Total operating expenses for the fiscal 2013 second quarter fell $0.2 million, or 0.7%, to $32.7 million as an increase in total cost of goods sold was more than offset by lower depreciation and amortization reflecting the Company's decision to change the depreciation schedule for its gaming operations equipment, as previously reported. Total cost of goods sold increased by $1.5 million due to an increase in the number of units sold as well as the significant increase in the number of participation units in the Company's installed base compared to the prior-year period. Selling, general and administrative ("SG&A") expenses fell 5.7%, or $0.7 million, to $11.6 million, primarily reflecting lower marketing and inventory expenses which were partially offset by higher salary and benefit costs. SG&A for both the fiscal 2013 and fiscal 2012 second quarter periods includes non-cash stock compensation costs of approximately $1.0 million. Depreciation and amortization was $8.1 million in the fiscal 2013 second quarter compared to $9.5 million in the prior-year period, primarily reflecting the previously disclosed change in the depreciable lives for gaming operations equipment from 36 months to 48 months, effective as of October 1, 2012, which is more consistent with the useful life of the Company's products as well as with the standard used by the majority of the gaming equipment suppliers in the industry. Research and development expenses of $4.3 million in the fiscal 2013 second quarter compares to $3.9 million in the prior-year period and reflects the Company's ongoing efforts to develop innovative gaming products that deliver high-value player entertainment.

Operating income rose to $13.9 million and operating margins improved to 29.9% in the fiscal 2013 second quarter compared to 16.9% in the year-ago period, driven by the rise in revenue, increased high-margin recurring revenue in the overall mix and the slight decline in total operating expenses. For the fiscal 2013 second quarter, Multimedia Games reported net income of $9.3 million, or $0.31 per diluted share, compared to net income of $6.8 million, or $0.24 per diluted share, in the fiscal 2012 second quarter. Net income and diluted earnings per share for the fiscal 2013 second quarter reflect a tax expense rate of 32.3% while net income and diluted earnings per share in the prior-year period reflect a tax expense rate of 2.6%.

Balance Sheet Review

Multimedia Games ended the fiscal 2013 second quarter with $81.5 million in cash and net cash (total cash in excess of total debt) of $50.0 million, versus net cash of $40.9 million and $22.2 million as of December 31, 2012, and March 31, 2012, respectively. The fiscal 2013 second quarter represents the seventeenth consecutive quarter the Company has grown net cash or reduced net debt. The Company generated free cash flow of $7.6 million in the quarter compared to $12.2 million in the year-ago period. Capital expenditures were $12.9 million compared to $11.5 million a year ago, reflecting continued investment in the Company's installed base.

In the second quarter of fiscal 2013, the Company repurchased approximately 103,000 shares of its common stock at an average price of $16.00 per share, excluding commissions, for total consideration of approximately $1.6 million. As of March 31, 2013, the Company had approximately $36.3 million remaining under its existing $40.0 million share repurchase authorization which was announced in November 2012. Since December 2010, the Company has repurchased approximately 2.5 million shares of its common stock.

Adam Chibib, Chief Financial Officer, commented, "Our second quarter results again highlight the Company's operating momentum and the benefits of our strengthened financial position. Products such as TournEvent and the High Rise Games® series are garnering customer attention and are playing a key role as we successfully enter new markets and gain share in existing markets. During the fiscal 2013 second quarter, we generated our first sales in Nevada and Illinois. We also continue to invest in the business to drive future growth and to return capital to shareholders through share repurchases. Based on the strong first half and our expectations for continued profitability and operating performance in the second half of the year, we are raising our fiscal 2013 financial guidance."

Updated Fiscal 2013 Outlook

Reflecting the strong financial performance in the first half, Multimedia Games today raised its fiscal 2013 guidance. The Company now forecasts fiscal 2013 revenues in the range of $183.2-$185.6 million, representing total revenue growth of approximately 17%-19% year over year. The revised revenue growth forecast assumes unit sales of 2,450-2,550 units as well as continued quarterly sequential increases in the domestic installed base. The fiscal 2013 revenue guidance also includes the previously disclosed early fourth quarter reduction in revenue share percentage on approximately 1,000 units installed at the WinStar World Casino in Oklahoma. The Company expects this reduction in revenue share percentage to impact diluted EPS by $0.02 in the fiscal fourth quarter. The current unit sales and installed base growth forecast for fiscal 2013 includes an expectation for a measured level of unit deployments into Nevada and Illinois over the balance of the fiscal year as Multimedia Games continues to build its library of approved games in these jurisdictions.

The Company now expects to generate EBITDA, a non-GAAP financial measure, of $90.0-$92.0 million in fiscal 2013, representing growth of approximately 27%-29% over total fiscal 2012 EBITDA of $71.1 million.

Revised Fiscal 2013 Guidance

(In millions, except per-share)

Twelve Months Ended
September 30, 2013















Diluted earnings per share





(1) Represents Company guidance for fiscal 2013 provided on January 30, 2013.

Operating margins for the fiscal 2013 third and fourth quarter periods are expected to decline from the second quarter and should be in line with the first quarter as unit sales are currently anticipated to comprise a higher mix of the overall revenue generated in the second half of the year and the Company incurs higher marketing costs in the fiscal fourth quarter related to the annual industry trade show, G2E. The Company currently expects its tax rate to range from 35% to 39% in the second half of fiscal 2013 compared to 34.5% in the first half of the fiscal year and a benefit of 11.4% in fiscal 2012. As a result, Multimedia Games now expects to report fiscal 2013 diluted EPS of $0.98-$1.02, representing a year-over-year increase of approximately 40%-46% over fiscal 2012 diluted EPS as adjusted for the new depreciation schedule and when applying a 35.7% tax rate (the average of the actual rate for the first half of the year and the mid-point of the Company's expected tax rate for the second half of fiscal 2013) for fiscal 2012.

Revised Fiscal 2013

Fiscal 2012


EPS Reconciliation:



As reported



Pro-forma at 35.7% tax rate



Impact of depreciation, net of tax


Adjusted, Pro-forma EPS







Multimedia Games cautions that market dynamics are constantly changing and as such, actual results could vary materially from the expectations noted above based on various factors, such as changes in the Company's markets, operations, regulatory requirements, and its estimates and assumptions. See the risk factors in our publicly-filed Form 10-K's and subsequent filings and other items as more fully described in the section below titled "Cautionary Language."

2013 Second Quarter Conference Call and Webcast

Multimedia Games is hosting a conference call and webcast today, April 30, 2013, beginning at 9:00 a.m. ET (8:00 a.m. CT). Both the call and the webcast are open to the general public. The conference call number is 720-545-0001 (domestic or international). Please call five minutes prior to the presentation to ensure that you are connected.

Interested parties may also access the conference call live on the Internet at Approximately two hours after the call has concluded, an archived version of the webcast will be available for replay at

Non-GAAP Financial Measures

See definitions of EBITDA, net cash, free cash flow, and pro-forma diluted earnings per share included in the discussion of Non-GAAP financial measures below.

About Multimedia Games Holding Company, Inc.

Through its wholly owned subsidiary, Multimedia Games Holding Company, Inc. ("Multimedia Games") develops and distributes gaming technology. The Company is a creator and supplier of comprehensive systems, content and electronic gaming units for Native American gaming markets, as well as for commercial casinos and charity and international bingo markets. Revenue is primarily derived from gaming units installed on revenue-sharing arrangements. Multimedia Games also supplies the central determinant system for the video lottery terminals ("VLTs") installed at racetracks in the State of New York. The company is focused on pursuing market expansion and new product development for Class II, Class III and VLT markets. Please visit, or, where Multimedia Games discloses important information about the Company, its sales, and its business.

Cautionary Language

This press release contains forward-looking statements based on Multimedia Games' current expectations and projections, which are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. The words "believe", "expect", "continue", "intend", "plan", "seek", "estimate", "project", "may", or the negative or other variations thereof or comparable terminology as they relate to Multimedia Games and its products, plans, and markets are intended to identify such forward-looking statements. All forward-looking statements are based on current expectations and projections of future events.

These forward-looking statements reflect the current views, models, and assumptions of Multimedia Games, and are subject to various risks and uncertainties that cannot be predicted or qualified and could cause actual results in Multimedia Games' performance to differ materially from those expressed or implied by such forward looking statements. These risks and uncertainties include, but are not limited to, the ability of Multimedia Games to maintain strategic alliances; increase unit placements, installations or installed-base; grow revenue; garner new market share; secure new licenses in new jurisdictions; successfully develop or place proprietary product; comply with regulations; or have its games approved by relevant jurisdictions. Please refer to the Company's most recent Form 10-K and subsequent filings with the Securities and Exchange Commission for a further discussion of risks and uncertainties. All forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized. Readers are cautioned that all forward-looking statements speak only to the facts and circumstances present as of the date of this press release. Multimedia Games expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


As of March 31, 2013 and September 30, 2012

(In thousands, except share and per-share amounts)


March 31,

September 30,





Cash and cash equivalents





Accounts receivable, net of allowance for doubtful accounts of $313 and $266, respectively






Current portion of notes receivable, net



Deferred tax asset



Prepaid expenses and other



Total current assets



Property and equipment and leased gaming equipment, net



Intangible assets, net



Long-term portion of notes receivable, net



Deferred tax asset, less current portion



Value added tax receivable, net of allowance of $755 and $722, respectively



Other assets



Total assets







Current portion of long-term debt





Accounts payable and accrued liabilities



Federal and state income tax payable


Deferred revenue



Total current liabilities



Long-term debt, less current portion



Long-term deferred tax liability



Other long-term liabilities



Total liabilities



Commitments and contingencies

Stockholders' equity:

Preferred stock:

Series A, $0.01 par value, 1,800,000 shares authorized, no shares issued and outstanding

Series B, $0.01 par value, 200,000 shares authorized, no shares issued and outstanding

Common stock, $0.01 par value, 75,000,000 shares authorized,

37,245,384 and 36,296,027 shares issued, and 28,885,304

and 28,183,549 shares outstanding, respectively



Additional paid-in capital



Treasury stock, 8,360,080 and 8,112,478, common shares at cost, respectively





Retained earnings



Accumulated other comprehensive loss, net



Total stockholders' equity



Total liabilities and stockholders' equity