Higher prices boost WMS profits

Apr 28, 2009 5:06 PM
Earnings by Ray Poirier | Having the ability to raise prices when casinos have reduced their orders for replacement slot machines permitted WMS Industries (WMS) to substantially increase its earnings during the fiscal quarter that ended on March 31.

Revenues during the period rose 4.6% to $180.8 million while net income was $24.4 million or $0.43 per share compared to $18.8 million or $0.32 per share in the comparable quarter of 2008.

Slot machine sales dropped to 6,431 compared to 7,793 a year earlier but the price per machine was raised to $14,854 from last year’s $12,579.

Chairman and CEO Brian Gamache, obviously elated, commented: "Our operating execution is outpacing the challenging environment and is driven by the consistency of our high-return, high-earnings games that are embraced by players and other casino customers worldwide."

At least one gaming analyst agreed.

Steve Kent, chief gaming analyst at Goldman Sachs, wrote in a client note, "This quarter’s results exemplify WMS’ ability to sell machines and place participation games, as well as its ability to control costs in a challenging environment." He maintained his "buy" rating on the company’s stock.

Also agreeing was Robert LaFleur of Susquehanna Financial Group who noted, "While the overall equipment industry remains weak, WMS is a bright spot given the strong game themes, product sales diversification, continued margin improvement and solid balance sheet."