Release Date: February 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 17% to AUD 285 million compared to the prior period.
- Underlying EBITDA slightly improved to AUD 58 million from AUD 55.8 million in the prior period.
- North America revenue grew by 17%, with high denomination games performing well.
- International revenue now represents 86% of the group's total revenue, showing strong offshore momentum.
- The company has a strong balance sheet with a net cash position of AUD 19.4 million and undrawn facilities of USD 32 million.
Negative Points
- Significant currency translation losses of AUD 21.5 million due to the devaluation of the Argentinian peso.
- Noncash impairments and one-off items resulted in a loss of AUD 17.4 million.
- The Board has decided to continue suspending the declaration of dividends to maintain a strong financial position.
- Domestic revenues in Australia fell by 12%, impacted by minimal corporate sales and competitive market conditions.
- Increased operating costs by 18%, mainly due to higher headcount and variable selling costs.
Q & A Highlights
Q: With nearly half of your business coming from North America, have you considered listing on a U.S. exchange to expand your potential investor base or close the valuation gap between your peers?
A: We are currently reviewing all strategic opportunities together with Macquarie, including the possibility of listing on a U.S. exchange. However, we have found no substantial evidence that listing in the U.S. would significantly impact our share price.
Q: Can you provide an update on the strategic review and its potential outcomes?
A: The outcome of the Macquarie project is still open. There is no assurance of any specific transaction, and it could result in no change. We expect to provide more information after the second half announcement, with a final decision likely by the end of this year.
Q: How is the momentum Ainsworth is seeing today in the U.S. low denomination market?
A: We have seen significant success with our Raptor cabinet and San Bao series of games. The Raptor is the #1 cabinet in the U.S. for new cabinets, and San Bao is performing well in the low denomination market. We expect to release more San Bao-themed games, which should further increase our market share.
Q: How would the potential increase in the Jackpot hand pay threshold level in the U.S. impact Ainsworth?
A: This regulatory change would likely benefit all manufacturers by increasing coin through and win per day, as machines would stay in play longer without being disabled for hand pays.
Q: What are Ainsworth's objectives for 2024, and can you provide any guidance on revenue and EBITDA?
A: We expect growth in North America, driven by the success of the Raptor cabinet and San Bao games. In Latin America, we aim to offset the reduction in Argentina with other regions. In Australia, we anticipate market share increases due to a better game pipeline. However, we cannot provide specific EBITDA and profitability forecasts at this time.
Q: Can you clarify the purpose of the strategic review with Macquarie?
A: The review aims to explore all potential opportunities, including mergers, acquisitions, or remaining independent, to ensure the company's long-term growth and competitiveness. The process is thorough and will take time to complete.
Q: Is there a perceived conflict of interest with Novomatic controlling Ainsworth?
A: Novomatic is a shareholder like any other, holding 53% of the shares. There is no conflict of interest as they are subject to the same strategic review process as all other shareholders.
Q: What is the backlog for new machines in North America?
A: We started production in December and expect to reach maximum capacity by April or May, producing 500-600 pieces per month. We currently have a backlog of roughly 100 pieces for Latin America, especially Mexico.
Q: What is the potential for HHR (Historical Horse Racing) machines in Europe?
A: HHR is only successful in regions without an established slot machine market. France is the only European country where HHR could be successful due to its lack of limited payout machines.
Q: How does Ainsworth plan to address the illiquidity and valuation issues on the ASX?
A: We are aware of the illiquidity and valuation concerns. The strategic review aims to explore all options, including potential listings in other markets, to improve shareholder value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
