Light & Wonder Inc (LNW) 2016 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Scientific Games Corporation Earnings Conference Call.

(Operator Instructions)

I would now like to introduce your host for today's conference, Mr. Bill Pfund, Vice President, Investor Relations.

Sir, please go ahead.

Thank you, Ayla.

Welcome, everyone.

During today's call we will discuss our 2016 first quarter results and operating progress, followed by a question-and-answer period.

With me this afternoon are Gavin Isaacs, President and Chief Executive Officer; and Mike Quartieri, Executive Vice President, and Chief Financial Officer.

Our call will contain statements that constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995.

These statements involve risks and uncertainties that could cause actual results to differ materially from those being discussed.

For certain information regarding these risks and uncertainties, please refer to our earnings press release issued today, the materials relating to this call posted on our website, and our filings with the SEC, including our most recent Annual Report on Form 10-K filed on February 29, 2016, and our subsequent reports filed with the SEC.

We will discuss certain non-GAAP financial measures.

A description of each non-GAAP financial measure and a reconciliation of each non-GAAP financial measure to the most comparable GAAP financial measure can be found in our earnings press release.

As a reminder, this conference call is being recorded, and a replay of this webcast and the accompanying materials will be archived in the Investor section at scientificgames.com.

Now, let me turn the call over to Gavin.

Thanks, Bill.

Good afternoon, and welcome, everyone.

I'm happy to report that our strategic focus on product excellence, profitable growth, and strengthening cash flow is taking hold, yielding positive growth for the last two quarters.

Here are a few of our milestones.

First quarter 2016 revenue rose 4% to $682 million.

Operating income increased by $32 million, and was more than double the level a year ago.

And our AEBITDA increased to $259 million.

Cash flow from operations rose by $23 million, and free cash flow increased $41 million during the quarter, leading to a $17 million increase in our cash position, and $28 million in debt reduction.

Before I get into the business segment highlights, I'd like to share something that fueled my passion and that of my team, our EMPOWER Customer Conference.

The conference highlighted our convergence technologies, innovation, and the broadest product portfolio in the industry.

For the first time, we brought together approximately 500 people from 190 gaming, lottery and interactive customer entities, for professional development, hands-on demonstrations, and workshops with direct access to our product experts.

Customers were excited about our new products and technologies on display.

And for us, the greatest benefit was the chance to listen to our customers and incorporate their feedback into our innovation roadmap.

EMPOWER was a great success.

It reinforced our leadership position in innovation and our ongoing commitment to our customers.

Reviewing our business segments' results, I'll start with interactive, our star performer of the quarter.

We significantly outperformed the social casino gaming category prior-quarter and year-ago levels.

Total interactive segment revenue was up 20% on a quarterly sequential increase, and 55% year over year.

This strong performance was driven by our ability to leverage our strong portfolio of brands including Quick Hit Slots, capitalize on the continued strong momentum from Jackpot Party Casino, and launch Hot Shot Casino Slots internationally.

And in our B2B side during our first quarter, we helped nine additional land-based casino operators go live with our SG Universe mobile solution, designed to increase engagement with their players.

Interactive is a strategic growth engine.

Based on its first quarter revenue, interactive's annual run rate is nearly $300 million.

This puts interactive at the annualized level of revenue similar to our gaming systems and table products.

We also have a treasure trove of untapped intellectual property at our disposal.

Rest assured that [Barry, Jordan, Sherman, Josh], and their entire interactive teams are continuing to work diligently to expand market penetration and extend our product portfolio.

Additionally, our social business enables us to take advantage of real-time testing to improve our land-based slot product performance.

Our Lottery business performed well.

As revenue increased $1.7 million and AEBITDA rose to $81.5 million.

Innovation and customer relationships are at the heart of our Lottery division's success.

Let me share with you a couple of recent multichannel cross-over innovations and successes that are helping to drive the Lottery business.

In New York, we recently launched our Jackpot Party instant game, an industry first use of extending a great proprietary brand across all platforms, second chance sweepstakes, and promotions with visits to the New York Lottery [race centers].

In February, we launched the Georgia Lottery's first [gigantic] ticket, Mighty Jumbo Bucks, at a new $25 price point, contributing to a record-breaking $79 million in weekly instant game sales, the Lottery's best instant game retail sales week in its history.

With innovation like this, our instant games revenue increased $5.2 million, up 4% versus a year ago.

Our Gaming businesses continue to show the benefit of our successful integration process, as illustrated by the nearly 6% first quarter increase in slot machine sales revenue, and the 13% increase in table products revenue.

Overall, Gaming revenue declined 1%, including the 1% unfavorable impact from foreign currency translation, and the impact from Gaming operations' lower installed unit base versus last year.

As we have pointed out before, with extended sales cycles and often complex installation timelines, systems modeling on a quarterly basis is not predictable.

We continue to invest and maintain market leadership in the Gaming systems business.

The strength and breadth of our hardware and game content portfolio drove the 6% increase in slot machine sales revenue.

Sales of our Pro series Wave platform, introduced in 2013, continued to soar.

With its premium curved, high-definition monitor, and the expanding and improving game content library, the Wave provides customers with high earnings, and it outsold all our other cabinets in the quarter.

While still early in its introductory phase, the TwinStar cabinet, which combines the best technology and content from Bally and WMS, is performing well on a growing number of casino floors, and exceeding even our own high internal expectations.

Likewise, the Dualos cabinet for Australia is continuing to improve, as we expand our content library with successful game themes.

New games, including themes with the highly successful Lock It Link feature, are performing well.

And we are now expanding Dualos with these new games into Asia.

I'm particularly delighted with our electronic table business, which performed very well, with revenue up 33% against last year.

The strength of our combined portfolio and our ability to provide a one-stop shop is reflected in multiple integrated casino systems, as recently evidenced in our new contracts with Angel of the Winds Casino and Quinault Beach Resort and Casino in Washington state.

We provide best-in-class solutions by leveraging our systems, games and table games businesses.

No one else can do this.

[Overall], I am pleased with our progress and the execution of our business strategies.

With the bulk of our integration process behind, it is great to see the team coming together and the momentum building.

And now I will turn the call over to Mike to provide a more in-depth review of Q1 results.

Thanks, Gavin.

Good afternoon, everyone.

I appreciate your interest in Scientific Games, and will provide more financial detail on the quarter.

First quarter revenue rose to $682 million, despite a $7 million unfavorable currency translation impact.

On a constant currency basis, rev when up 5%.

Operating income more than doubled to $50 million, and attributable EBITDA rose to $259 million, largely reflecting the benefit of prior-year integration cost synergies.

Operationally we reinvested a portion of these synergy savings into our ongoing innovation efforts, our people, and supporting our profitable growth initiatives.

Net cash from operating activities increased by $23 million to $101 million, while free cash flow rose by $41 million, due to improved conversion of AEBITDA to cash flow.

As a result, cash increased by $17 million, while we repaid $28 million in debt during the quarter.

Turning to our segments, Gaming revenue declined by $4 million, impacted by $4 million of unfavorable currency translation.

Operationally, the decrease in gaming operations and gaming systems revenue was partially offset by an increase in gaming machine sales and table products revenue.

On a sequential basis, revenue from WAP, premium, and daily fee participation units was down slightly.

The installed base decreased 277 units, while the average daily revenue increased $0.48 per unit.

The decline in footprint was principally comprised of higher performing WAP units, which had the effect of dampening the typical seasonal sequential increase in average daily revenue.

We remain cautiously optimistic that the installed base will stabilize during 2016, benefitting from the significant pipeline of new games, such as Cirque du Soleil KOOZA, Margaritaville, and several others.

Additionally in Q3, we expect to launch the trailblazing Gamescape cabinet, featuring a player-proven brand, Willy Wonka's World of Wonka.

This innovative cabinet will be exclusive to our gaming operations business.

The installed base of other participation and leased units increased by 137 units on a sequential basis, reflecting additional leased international units, and another great quarter of growth for electronic table systems.

Electronic table systems are up 37% year over year, driven by their growing global popularity, and the success of our first branded electronic table game, Table Master Fusion, Playboy Bonus Blackjack.

The total average daily revenue per unit was essentially flat on a sequential basis.

The impact of lower yielding international units was largely offset by the benefit from electronic table games.

Year over year, the decline in the average daily revenue largely reflects the 5% increase in the gaming machine tax which had been imposed by the UK government one year ago.

Gaming systems revenue of nearly $60 million was down due to lower revenue recognized on hardware and software installations.

Quarterly systems revenue is inherently variable quarter to quarter, and does not necessarily reflect the underlying strength of the gaming systems business.

Maintenance revenue increased 8% year over year.

Turning to table products, revenue increased due to consistent growth in leased products, and a modest increase in product sales.

Product sales are a smaller portion of our business today, but are somewhat lumpy on a quarter-to-quarter basis.

The installed base of table products reached a quarterly record level year over year.

Our strategic emphasis continues to be on growing the installed base of shufflers, proprietary table games, electronic table games, and table progressives.

As noted in our last earnings call, we anticipated that gaming operators would proceed cautiously in deploying their capital budgets for slot floor replacements early in 2016, just as they have in the last several years.

Following the seasonal trend of recent years, we expect gaming machine sales revenue to pick up in the second quarter, ease somewhat in the seasonally slower third quarter, and then pick up in the fourth quarter.

During the first quarter we shipped 6,748 new gaming machines globally.

Of the total, 4,365 units were shipped to customers in the US and Canada.

Replacement units totaled 3,932 units, which included 840 Oregon VLT units.

Additionally, we shipped 433 units per new openings, which were all Illinois VGT units.

We shipped 2,383 new units to international customers, all of which were replacements.

I would also note last year included more than 750 units related to the convert-to-sales shipments in Maryland for several large casinos, which impacted the ASP last year.

This year ASP improved to $16,719.

The ASP benefited in the quarter from the continued strong sales of our premium Pro series Wave cabinets, partially offset by the lower priced Oregon VLTs.

With our solid unit sales, broad portfolio of platforms, and consistent ASP, we anticipate Scientific Games will capture the leading domestic wallet share of replacement gaming machine units in the first quarter.

AEBITDA in the Gaming division was $191 million, with an AEBITDA margin of 45%.

While we benefited from cost synergies associated with the integration actions from last year that benefit was offset primarily by a less profitable mix of revenue, as well as higher SG&A expenses.

Lottery revenue increased by $2 million year over year, despite the previously disclosed expiration of the high-margin China validation contract, and $3 million unfavorable foreign currency translation impact.

This growth was driven by a 4% increase in instant games, with US instant games being up 8%.

The revenue growth and improved margin contribution by instant games was due in part to higher year-over-year premium licensed games activity, combined with strong retail sales performance for those customers for which we are the primary provider of instant games, and for which we also provide CSP services.

Year over year, services revenue was about flat, a $5 million unfavorable impact from the validation contract related to the China Sports Lottery that expired in January of 2016, was largely offset by the benefit of higher retail sales because of the record $1.6 billion Powerball jackpot in January.

The Powerball jackpot is again growing.

It is now expected jackpot award in excess of $400 million.

Both operating income and AEBITDA increased for the Lottery segment.

The modest increase in revenue, along with a more profitable mix of revenue, more than offset the impact of higher R&D expense, and a decline in EBITDA contributed by our joint ventures.

Now turning to interactive, this segment had a strong quarter.

Social casino revenue continued to benefit from the launch of the enhanced 2.0 version of the original Jackpot Party Social Casino app in the third quarter of 2015.

The growth of the Quick Hit Slot app, which launched in the second half of last year, was also a strong contributor to our success.

In total, average daily users of our wholly owned social gaming apps increased 9% both year over year and sequentially to 2.5 million users.

The average revenue per daily active user increased to $0.26, which was up 37% year over year, and up 18% on a quarterly sequential basis.

As a result of the revenue growth, improved scale within the interactive business, and integration cost synergies, operating income increased $7.6 million, and AEBITDA rose $5.5 million over the prior-year period.

Now turning to cash flow, during the first quarter we made $28 million in debt payments, including $15 million of voluntary repayments under the revolving credit facility.

Our cash balance also increased by $17 million.

Total CapEx was $51 million during the quarter, down $21 million from a year ago, primarily reflecting the timing of our quarterly capital deployment.

For all of 2016, we are continuing to budget between $290 million and $310 million.

And with that, I'll turn the call back over to Gavin.

Thank you, Mike.

Our first quarter results demonstrate that we are executing well.

We have a pathway of exciting opportunities, and are working diligently to build on our growing momentum.

Our team is passionate and energized to deliver unrivaled innovation, high-performing products, and extraordinary customer service.

And we'll work hard to capitalize on these opportunities to drive profitable growth, increase free cash flow, and generate meaningful long-term shareholder value.

Now, we are happy to take your questions.

(Operator Instructions) Steven Wieczynski, Stifel

Hey, good afternoon, guys.

So, how are you Gavin?

First question on Gaming operations; and I understand that you talked about there was a $2.30 decrease in terms of the yield year over year.

And it's up sequentially.

But maybe help us understand how that should-- how you guys are viewing the yield as we kind of move through the year, given there are decent amount of puts and takes there at this point.

Well, Gaming has obviously been an area-- obviously for the last 12 months or the last 24 months or even longer-- under pressure.

But we're starting to see some stabilization and even potential growth.

You know, we obviously have strategies in each of those areas.

You have to remember we have WAPs.

We have premium games.

We have standard games.

And we obviously also have (inaudible) VLT businesses.

So we do have a broad portfolio.

So our goal is to stabilize and grow that part of the business.

So, I don't know quite how to answer the yield question, though, the exact numbers.

No.

I guess what I was getting--

(Inaudible) stabilization and growth.

I guess what I was getting at is this-- is the level where we're at today in terms of yield; is that a pretty comfortable number for your guys, or could you continue to see that move a little bit lower?

No.

We think it's a comfortable number.

Okay, got you.

And then second question, and I don't think you'll really answer this, Gavin.

But I'm going to ask it anyway.

But it seems like there's always more and more we hear about other manufacturers out there in the space looking to potentially sell some of their assets.

Is that an avenue you guys would explore?

Or are you guys pretty comfortable at this point with your-- obviously your debt level is a little bit high.

But do you guys continue to look at other manufacturer's games?

Yes, we do.

I'm happy to answer that.

Because obviously we're taking a leadership position.

We always look at every opportunity that's out there.

We do have some accommodations.

We're obviously-- we don't need to make any major moves at this stage.

But certainly we look at every opportunity that's out there.

Okay, great.

Thanks a lot.

Appreciate it.

James Kayler, Bank of America

Hi, guys.

How are you doing?

Good, good.

I guess the first question is, the SG&A line was significantly higher than I expected.

And I think, Mike, you mentioned it in the prepared remarks.

But I'm just curious what was driving that, if it was sort of anything one-time, and sort of if any of that was a reversal of some of the synergies you attained last year.

No.

It's not really a reversal of any of the synergies.

The synergies are still coming through.

But one of the things we've done is we've reinvested in our people.

We want to make sure that we've got the best class in people to be able to produce the best class of performance, especially in our Gaming and our innovation machine.

So is that--

So sorry, let me just add one thing to that, James.

Strategically we obviously the interactive business is growing and we've been investing there.

And we always look to add strength to our India operations.

All right.

So investing in people, is that hiring new people?

Or is that investing to keep people or invest in them?

It's a combination of both.

So you have a number of growth initiatives within the interactive segment.

And in order to fuel that growth, we need to go out and hire additional game developers and programmers and individuals to support that revenue stream.

And at the same time, we're taking care of our existing employees through merit raises, improved healthcare, and things to that effect.

So it is a mix of both.

Okay.

Very good.

On the system side, obviously I understand that the sales part of the business is lumpy.

Although generally you do have some visibility on that.

So is there any way you can give us some sense for how to think about the systems business for the rest of the year?

I know that Alberta is expected to roll out in the back of the year.

But just more broadly, when you look at the pipeline of installs over the next three quarters, how should we be thinking about systems?

I think part of the issue with systems is it's got such a long lead time from a sales perspective.

And given the level of complexity that goes into getting the installation done, and then you can't recognize any of the revenue until the customer actually signs the piece of paper saying that they've gone live.

And a lot of that work sometimes is just outside of our control.

And it's basically a fundamental reliance on the customer's resources to have those to be able to meet those timelines.

So from our perspective, I know looking year over year last Q1, we had a number of large contracts that came through.

There was about five contracts that were in excess of $2 million versus this quarter we only had two of those contracts that came through.

Yes.

I think the key outlook is the business is very strong, as you can tell by the growth in the maintenance revenues.

And I think that's the key way to look at that business.

But you obviously-- you've mentioned some of the strong contracts we've got in our pipeline now.

And we continue to announce new contract wins.

So it's very difficult to give guidance-- obviously we don't give guidance, James.

But I think if you look at the history of the systems business, it continues to be very solid and very strong.

And I don't see any reason that that would change.

Okay, understood.

And then just finally, can you give us anymore color around the rollout of TwinStar?

Meeting with some slot managers, I heard some pretty favorable feedback on initial numbers.

I'm curious if you're willing to give anymore color on that.

And then also just how to think about the ramp up.

My understanding is a lot of the later adopters want 90 days or more of performance data and we should be getting to that point now.

So I'm curious how to think about the ramp up of that.

And I don't know if you want to disclose how many units you sold in the quarter.

Well, obviously the first thing to note in the gaming sales business is the continued strength of Wave.

That continues to be our strongest product, which is great.

Because we brought TwinStar out, and the key for us is that TwinStar runs on the new combined operating system, which means it's really the platform for the future.

So we continue to work through any kind of kinks, and touch wood, there are very few of them left.

We're continuing to put more and more content out on that platform.

I think to date we have approximately-- let me have a look-- we've got them approved in about 34 jurisdictions.

And we have seven titles released.

By the end of the year, we're going to have 25 games released.

And the numbers continue to perform strongly.

And that's good news for us.

I think it's fair to say that at the end of the quarter we had about 700 out in total.

Okay.

Very good.

Thank you, guys.

Mike Malouf, Craig-Hallum Capital

Great.

Thanks for taking my questions.

I wanted to explore a little bit on the interactive side.

You know, you have grown that just tremendously over the last year.

And I'm wondering, at what point do we start to see some leverage on the bottom line?

I know obviously you're still investing.

But I think the EBITDA was basically flat year over year on just tremendous top-line growth.

And so when do you start to see that come through?

Just double-checking that.

EBITDA I don't think was flat.

No.

EBITDA was up.

It was $5.5 million for the quarter.

Well, EBITDA margins.

EBITDA margins.

Okay.

So okay, so EBITDA margins, right.

You know, I think one of the things about our interactive business and why it's so strong, if you look at the social side of it.

In the social side we have all this great content from the Bally portfolios, the WMS portfolios, the Shuffle portfolios, the Barcrest portfolios, the Shuffle and some of the others that we can start bringing forward.

And as we are bringing forward, those games clearly are proven performers, and they perform in the social side.

At the same time, we bring out new platforms on different-- in mobile we're bringing them out in iOS, we're bringing them out in Apple.

We bring them out across the board.

So as we get more and more platforms out there with more and more content, we continue to see growth.

From a marketing perspective, which is where I think maybe the crux of your question may be coming, when we compare ourselves to what we know of ours peers, I think we're at much at the lower end.

And we're very cautious and very prudent in relation to how we market.

And whilst we have such good growth, obviously it's an area in which we're very carefully monitoring and as I said, maintaining sensible levels.

So, do I see massive improvements in the actual level of margin?

Probably not in that social business.

We just see continued growth.

Okay, great.

And can you give us a sense of how much Powerball actually helped the Lottery side of the business, or the abnormally high Powerball lottery in the first quarter?

I think-- do we give that number?

Do we disclose that number?

I'll just see--

You could back into it--

Okay.

So it's roughly--

It's about $4 million for-- the $1.6 billion jackpot got us about $4 million in incremental revenue for the period.

Okay.

Great.

Thanks a lot.

I appreciate it.

But I'd like to add, if I may, to that.

That when we do our planning each year, we plan for several large jackpots.

Because they do-- the way the lottery sales work, after a jackpot goes off they're fairly slow and small.

And as they get bigger each year-- and I mean $1.6 billion is obviously extraordinarily high.

But when you get into the $400-500 million range, you see a peak.

And you see an increase in volumes.

So we do budget for a certain number of that each year.

Okay, great.

Thanks for the help.

Susan Berliner, JPMorgan

Hi.

Good afternoon.

I wanted to start with CapEx, if I could.

Because it came in a lot lower.

And I know you reaffirmed it for the year.

But I was wondering if you could just kind of talk about should we expect a big step-up in 2Q?

And I guess, why was it so much lower in the first quarter?

Well, there's a couple things to look at.

One, a lot of it has to do with just timing of the deployment.

So one of our big CapEx projects in Q1 that we had budgeted for is the Arizona Systems contract that we won in the Lottery division.

We had about $8 million that we were expecting to spend in March, and that just happened to fall into early April instead.

So the $21 million decrease year over year, about half of that is timing, just in basis of we thought the CapEx would have come through at the end of March that it's actually flown into April.

I wouldn't expect there to be a massive increase above what our normal levels had been in Q2 for 2016.

And there have been-- you know, one of the things that we can now do is we continue-- last year we were putting together the companies, and we were doing a lot of integration.

We've now got the benefit of two quarters of running a combined company.

And as we do that, we look for ways to continuously improve and find savings.

And clearly, we're going to find some savings in that space as well.

So Gavin, does that mean there's a possibility it could be lowered for the year?

Yes.

There's a possibility it could be lower.

I mean, as I said, we continue to look for better ways.

We continue to sharpen our pencils and continuously improve.

But yes, it's very difficult at Q1 timeframe to say-- to change the projection we gave last quarter.

So we kept it the same.

But in every area we operate, we look for continuous improvements.

And we have lots of processes going on in every area from finance through to manufacturing.

And part of that is looking at product management and the way we deploy our capital.

And we've put in place some new processes on capital.

We have a capital committee now that we're running the business.

And every project, even if it's already in the budget, still needs to go through the process to ensure that it's appropriately spent.

Great.

And then I guess I just want to talk about some, I guess, forward opportunities.

I know you guys have talked about Ontario.

I was wondering if you could update us on that, if there's anything new on Greece, and any other potential things we should be thinking about, whether it be Jamul or National Harbor.

Yes, sure.

So from an Ontario perspective, I believe we're on track with our systems rollouts.

And I don't know if we've told people when we expect the first ones.

But I think it's probably going to be next year would be my guess.

I think that's what we've always been planning.

In relation to Greece, we wish we knew when that was going to happen.

The VLT numbers are still in the bailout plans.

And they haven't been taken out.

So we do expect it to start.

But we just don't know when.

We keep hearing it's going to be soon, soon, soon.

But I wish I had better information that I could share publically.

But we don't.

In relation to Jamul, you know, we're obviously waiting to see.

Obviously we'll leave that to Penn to make any announcement there.

And National Harbor, we have great product working across the board now.

So we expect to be well presented in both those openings.

Okay, great.

Thanks so much.

David Katz, Telsey Group

Hi.

Afternoon, all.

Hi.

So I-- if I'm sort of drawing my attention and as much as I am consumed by the other aspects of the business, but if I'm drawing my attention to the cash flow statement and specifically the cash from ops, and from investing, I'm trying to figure out what the cash from ops-- quite frankly is going to roll, like as we go through the rest of the year.

And obviously you can't give us guidance on CFO going out into the future.

But you can appreciate that it's an important area for us.

What issues can you talk about or help us with that may relate to changes in current assets and liabilities and some of the other movements in there, other than what we may model on for net income and D&A which are fairly straightforward?

Yes.

The changes in working capital has moved around quite a bit.

So if you go back to Q4, the source of cash was about $100 million for the quarter.

Unfortunately that included about $50 million of some one-time items related to some of the impairments that we took in Q4 that cleaned up some of the balance sheet items.

In the current quarter we're about $17-- just under $18 million for working capital for the period.

It's really driven by three primary line items, which is the accounts receivable, inventories and accounts payable.

As we continue to work through the lean processes and continue to refine our manufacturing operations, expectations would be that you would continue to see a slight decline in inventories.

Although from year end to Q1 there was a slight increase in inventory this period.

Receivables, with a $400-plus million receivable balance outside, the timing of collections could move the number substantially.

You get two or three good collections in the last couple of days of the period, and that becomes a tremendous source of cash flow within the working capital line item.

And then with payables, it's a timing matter as to how the payables just work through the process.

All right.

So if we-- and I know we shouldn't look at a cash flow statement necessarily just on a quarterly basis.

But would you say that the cash from ops is getting closer to what a normal run rate for the Company might be, or are we still-- do we still have some issues to work through in that regard?

I think probably the bigger driver of the cash flow from operations is going to be the actual operations itself.

So to be able to give you a quarterly run rate, as I said in my comments, the gaming operations, it will fluctuate quarter to quarter between the seasonality associated with the Gaming sales.

Right.

Okay.

If we came at the issue a different way, and just took what we thought your EBITDA might be, and we knew what your interest expense would be; that puts us in a ballpark in a sort of cash flow ballpark from the operating perspective, irrespective of any other movements that may occur.

Do you think that's a fair way for us to reality check ourselves?

Yes.

I would think that's fair.

All things being equal, I would say that that's fair.

Okay.

And if I can apologize and I got on a little bit late, if you could just tell us what your-- I understand you probably talked about your CapEx for the year.

What is your expectation, please?

We're keeping with the consistent guidance that we gave at the-- at our Q4 call of $290 million to $310 million at this point.

Although was had a lower CapEx for Q1, and we're constantly reevaluating that CapEx number, at this point we're comfortable with keeping it at the original $290 million to $310 million.

Got it.

Thanks so much.

Barry Jonas, Bank of America

Hi, guys.

Just a couple of quick ones from me.

I believe all of the new property gaming machine sales came from Illinois this quarter.

Just wondering your outlook for the year.

Do you expect new property and expansion shipments to be ahead of 2015?

Yes, we do.

And the first part of the answer was yes, they did come from Illinois.

And yes we do expect improvement over 2015.

And is most of that back-end loaded?

I'm just trying to think what the possibility of some of that shifting into 2017 is.

Well, [part]-- you know, I think you guys follow the openings as well as we do.

You possibly aren't across the expansions, particularly in Native American land as we are.

But I would say that clearly Q1 there wasn't many.

It was only Illinois.

So by definition, it's probably going to be a little bit heavier in the back half.

So I would say, yes.

I don't know how to answer that one properly.

Because I mean there's very well documented some of these openings.

And I haven't heard of a lot of stuff pushing out yet.

The ones that I heard, there was one about an hour ago on a call that's mid-December.

That's always a risk.

But invariably for gaming equipment, not systems, we deliver at least a month before.

Got it.

And then just last question on new jurisdictions.

I think I saw that the Turkish Lottery may come to rebid.

Is that something you would look to participate in again?

Yes.

I mean obviously we look at everything.

And if the right-- if it made sense and it was the right [consortia], of course we would.

Okay.

Fair enough.

Thank you very much.

And I'm showing no further questions--

Well,

I would now like to turn the call back--

Okay, now-- I'm jumping ahead of you.

I would now like to turn the call back over to Gavin Isaacs for any further remarks.

Okay.

Well, thank you, again.

And thanks for joining us this afternoon.

We appreciate your continued interest in Scientific Games.

The months ahead are going to be exciting and well fast-paced, as we focus on executing our business strategies, continuous improvement, and our overriding mission, which is to empower our customers by creating the world's best gaming and lottery experiences.

Thank you, again, for joining us today.

Ladies and gentlemen, thank you for participating in today's conference.

You may all disconnect.

Everyone, have a great day.