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US – AGEM Index grows in February

By - 14 March 2016

The AGEM Index reported positive growth in February 2016 after falling 8.86 points in January 2016.

The composite index stood at 197.00 at the close of the month, which represents an increase of 8.54 points, or 4.5 percent, when compared to January 2016.

The AGEM Index reported a year-over-year increase for the fifth consecutive month, rising 4.29 points, or 2.2 percent, when compared to February 2015.

During the latest period, eight of the 14 global gaming equipment manufacturers reported month-to-month gains in stock price, with two up by more than 50 percent and another up by more than 40 percent. Of the six manufacturers reporting declines in stock price during the month, only one was down by more than 10 percent.

The broader stock markets experienced continued volatility and lackluster performances in February. The Dow Jones Industrial Average reported a modest increase month-to-month, rising 0.3 per cent to 16,516.50. Meanwhile, the S&P 500 and NASDAQ both reported month-to-month declines in February. The S&P 500 fell 0.4 per cent to 1,932.23, while NASDAQ declined 1.2 per cent to 4,557.95.

With a stock price of $8.51, up 43.8 per cent, Scientific Games Corporation (SGMS) contributed 3.69 points.

Konami reported a stock price of ¥2,739, down one per cent and contributed 1.47 points.

Astro Corp. contributed 1.16 points, due to a 109.2 per cent increase in stock price to NT$41.00.

With a stock price of $7.07, down 12 per cent), Daktronics contributed negative 0.43 points.

Intralot contributed a negative 0.13 points, due to a five per cent decline in stock price to €1.13.

In the past month, a number of gaming equipment manufacturers released their financial results for the period ending December 31, 2015. Additional releases are expected in the coming weeks. Selected company highlights are noted below.

Ainsworth Game Technology (AGI) reported revenue of AU$141.9m for the six months ending December 31, 2015. The latest period represents a 26.8 per cent increase when compared to the six months ending December 31, 2014. Domestic revenue (Australia), which accounts for 35.4 per cent of total revenue was AU$50.3m, representing a decline of six per cent from a year ago. Meanwhile, international revenue, which accounts for the remaining 64.6 per cent of total revenue reported an annual gain of 56.8 per cent, rising to AU$91.6m. Gains in international revenue were attributable to a 42 per cent increase in North America to AU$43m, which was driven by strong performances in California and new markets in Idaho, Louisiana, Kansas, Missouri, Maryland and West Virginia.
Scientific Games Corporation (SGMS) completed its merger with Bally Technologies in November 2014. In the fourth quarter of 2015, Scientific Games reported revenues of $737m, which represents a gain of 4.2 per cent compared to the prior year. The product sales segment reported the greatest annual increase in revenues during the period, rising 8.5 per cent to $252m. Services followed with a gain of 2.5 per cent to $343m, while the instant games segment reported revenue growth of 1.0 percent and increased to $142m.

Despite the gain in fourth quarter revenue, Scientific Games’ revenue fell 6.4 per cent in 2015 to $2.8bn. Services revenue increased 7.4 per cent during the year to $1.4bn, while instant games revenue rose 2.1 per cent to $544m. However, these gains were offset by a 25.3 per cent decline in product sales revenue to $863m.
Agilysys (AGYS) reported revenue of $31.3m in the company’s fiscal third quarter of 2016, representing a 26.5per cent increase over the same period of the previous year. Product revenue was a key driver of the revenue gains, increasing 64.5 per cent year-over-year to $11.9m. Hardware replacement sales as well as increased new logo hardware sales were important facets in product revenue escalation. With a gain in customer installation and implementation projects, professional services revenue increased 25.5 per cent to $4.5m. Support, maintenance and subscription services revenue increased seven per cent year-over-year in the latest period, rising to $14.9m.

While selected gaming suppliers reported positive results in a number of areas, it will be important to monitor the balance of the sector to provide additional insight.

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