Bally Technologies Management Discusses Q2 2013 Results - Earnings Call Transcript

Jan.31.13 | About: Bally Technologies, (BYI)

Bally Technologies (NYSE:BYI)

Q2 2013 Earnings Call

January 31, 2013 4:30 pm ET

Executives

Richard M. Haddrill - President of Alliance Gaming Corp.

Neil P. Davidson - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer

Ramesh Srinivasan - Chief Executive Officer, President and Director

Analysts

David Bain - Sterne Agee & Leach Inc., Research Division

Jonathan Mohraz - JP Morgan Chase & Co, Research Division

Amir J. Markowitz - Morgan Stanley, Research Division

Kelly Knybel - Deutsche Bank AG, Research Division

Barry Jonas - Wells Fargo Securities, LLC, Research Division

Chad Beynon - Macquarie Research

Todd Eilers - Eilers Research, LLC

Operator

Welcome to the Q2 2013 Bally Technologies Inc. Earnings Conference Call. My name is Adrienne, I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I'll now turn the call over to Richard Haddrill. Richard, you may begin.

Richard M. Haddrill

Thank you, and welcome everyone to Bally Technologies Second Quarter Fiscal Year 2013 Earnings Call. Today's results mark a record second quarter for overall revenue and earnings per share and our sixth consecutive quarter of year-over-year earnings per share growth. Additionally, we have raised our guidance for the remainder of fiscal year 2013 to $3.20 to $3.40 per diluted share. So my final quarter as CEO was a very good one, but more importantly, our future is very bright.

I'm also pleased to inform you that the CEO transition is going exactly as planned, and Ramesh is doing an excellent job with his new role. The transition has not caused any interruptions and is already on. We need to spend additional time on strategic initiatives to further enhance our position for the long term. So my thanks to all of the Bally team members and especially to Ramesh for making this transition as seamless as possible.

Now for today's call, Neil Davidson will cover our overall financial results, then Ramesh will further discuss the operational highlights in recent successes. And I will close with a few final thoughts before we open it up for questions. Neil, over to you.

Neil P. Davidson

Great. Thank you, Dick. Today's call is simultaneous webcast contain forward-looking statements about Bally and our future business. These forward-looking statements are based on currently available information. Actual results could differ materially from those anticipated in the forward-looking statements and reported results should not be considered an indication of future performance. We do not intend and undertake no obligation to update our forward-looking statements, including forecast of future performance, the potential for growth of existing markets or the opening of new markets for our products, as well as future prospects and proposed new products.

More information on risks and uncertainties that may affect our business and financial results or may cause us not to achieve our forecast are included in our annual report on Form 10-K for the year ended June 30, 2012, and other public filings we have made with the Securities and Exchange Commission. The forward-looking statements made on this call and webcast, the archived version of this webcast and any transcripts of this call only speak to this date, January 31, 2013.

Today's call and webcast may include non-GAAP financial measures within the meaning of Regulation G. A reconciliation of all such non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in today's press release.

Today, we reported record financial results for the second quarter ending December 31, 2012, and increased our guidance for fiscal 2013. Overall, total revenues was a second quarter record $238.3 million, up 13% from last year, with diluted earnings per share increasing 48% year-over-year to a second quarter record of $0.80 per fully diluted share and similar to our first quarter results, was slightly ahead of our internal expectations.

Revenue from game sales were $82.6 million for the quarter, up 18% from $70.2 million in the prior year. We sold 4,565 new units during the quarter, including 3,778 units in North America. Replacement units sold of 2,956 units marks the seventh quarter in a row. Our North America replacement units were up year-over-year, continuing to reflect increases in our ship-share, resulting from our improving core video content, combined with what we believe represents a continued uptick in replacement units sold.

Average selling price for the quarter was $16,553. As expected, our ASPs declined slightly from last quarter. We shipped 568 lower ASP Canadian VLT units and 399 Illinois VGT units in the quarter. However, after factoring out of these units, our ASP was comparable to the last quarter.

Game sales margins increased to 53% versus 47% last quarter and 43% last year, ahead of our expectations, driven by benefits from ongoing supply chain initiatives in our Pro Series line of cabinets. Margins benefited by approximately 200 basis points this quarter from a customer contract election that reduced costs but did not impact revenue. We now expect our gaming equipment margin will approximate 50% for the rest of fiscal 2013.

On to gaming operations. Revenues from gaming operations set a second quarter record at $99 million, up 15% from $86.2 million in the comparable period last year, principally as a result of continued success with our Cash Connection link, which ended the quarter with 1,360 units, up 144 units from last quarter. Our ending WAP installed base increased by 87% versus last year, driving record WAP revenues, which were 84% higher than in the second quarter of fiscal 2012. The margin on gaming operations was 70%, within our expected range at 68% to 73%.

Systems revenues were $56.7 million, up 5% from $54 million in the comparable period last year. This quarter marks our fifth consecutive quarter in which systems revenues exceeded $50 million. Maintenance revenues for the quarter were a record $23.1 million, up 28% from $18.1 million in the comparable period last year as we continue to grow the number of units connected to our systems and the average maintenance revenue per connection. Sequentially, recent conversions of Class II systems to traditional SDS systems, which reduced our centrally determined system unit count in gaming operations, drove additional maintenance revenue growth. The margin on systems revenue was 76% for the quarter, up from 74% last year, driven primarily by mix and at the high end of our expected range.

Finally, the effective income tax rate for the quarter was 37% and did not include the recent reinstatement of the U.S. research and development tax credit. The reinstatement is effective beginning this month and will lower our income tax rate for the full fiscal 2013 year to 36% to 37%.

Turning to the balance sheet. Our DSOs improved to 101 days, down from 106 days last quarter, continuing to reflect our prudent use of financing terms. In fact, our overall trade receivables with contract terms over 1 year has declined by $13 million to approximately 35% of our total trade receivables versus 40% at year end.

We continue to generate strong free cash flow, which enabled us to maintain our leverage ratio comfortably below 2 terms, and we bought back over 500,000 shares for $24 million during the quarter. We had approximately $126 million available under our current board authorized share repurchase plan.

Overall, our second quarter was strong. Higher game sale margins were more than offset by few onetime expenses related to legal and executive compensation. Even with G2E expenses in both quarters, which approximated $2 million, we were able to increase our operating margins to 24% versus 20% in the prior year.

Now I'll turn the call over to Ramesh for some more discussion on product innovation and our recent accomplishments. Ramesh?

Ramesh Srinivasan

Thank you, Neil. We continue to make very good progress on our internal fiscal 2013 financial and operational goals, following up well on a record-setting fiscal 2012. This quarter was our all-time best in terms of total overall gross margin dollars, WAP revenue and systems maintenance revenue. We also set several second quarter records, including all our revenue, gaming operations revenue and diluted EPS.

We had another great quarter in gaming operations, with year-over-year increase of 15%. As expected, seasonality in variable fee games and the recent conversion of certain Class II systems to traditional SDS Class III installations now generating systems maintenance revenues resulted in a slight sequential Q1 to Q2 gaming operations revenue decline. Our consistent and significant investments in game development studios and our game platform will continue to drive our gaming operations engine forward.

The launch of Betty Boop Fortune Teller, following up on Michael Jackson and Grease on our Cash Connection link grew another record quarter in WAP revenues. We will be launching 2 additional titles, Hot Shot Progressives and NASCAR on the Cash Connection link during the coming months. Our pipeline of new premium titles continues to be very strong, with the release of Pawn Stars earlier this month and the upcoming release of Beach Boys. Additionally, we expect Tiki Magic, the much anticipated follow-up title to the very successful cash reserve game to launch later this quarter. We are planning carefully and investing wisely in the product roadmaps on our current cabinets and brands.

We've released only one game each so far on Michael Jackson and Grease. More will follow as we continue to invest in these valuable long-term franchises. In addition, we continue to attract and explore new and interesting brands that our game development teams are very excited about. Overall, our investments in and expectations of our gaming operations business continue to be very positive.

On the gaming equipment front, our continuing investments in an increased number of game studios and new market opportunities are producing good results, with an 18% year-over-year increase in revenue. We expect the first set of output from a couple of our new key game studios and an important third-party partner to be available for sale towards the end of this fiscal year.

During the quarter, we announced an agreement to provide 650 VLTs to WCLC Canada and expect to begin shipping the initial tranche during the March quarter. We continue to perform well in all respects, in the Illinois VGT market so far, including overall contract signed, quality of route management systems installations and the performance of our installed games. The Illinois Gaming Board approved over 350 locations during the month of December alone.

International game sales have been a disappointment once again. We sold 787 units in international regions this quarter. We have multiple product development initiatives currently underway, focused on these international markets. As an example, our first set of player-selectable language games have been approved and deployed in Asia. We remain confident such efforts will pay off, with improved international game sales in the future.

On the systems front, we expect fiscal 2013 to be our best year ever, with increasingly visible backlog strength for the quarters ahead. We added about 4,000 connections to the Bally systems family during this quarter. We now have customers live in multiple regions of the world, with various new functionality features being implemented by us for the first time, including Smart Card, multicurrency handling and responsible gaming.

We are continuing to gain good momentum with iVIEW DM and the Elite Bonusing Suite of products, with an increasing number of customers deploying them with very significant and measurable return on investment results. The demonstrable increases in Coinen [ph] and net win [ph] attributable to such products continue to build and spread throughout the industry.

We will be hosting our 10th Annual Systems User Conference this coming June for the first time on the East Coast at Mohegan Sun in Connecticut. Mohegan is an early adopter of iVIEW DM and several of our Elite Bonusing Suite tools and has experienced several successful promotions utilizing these tools. We expect record attendance for this conference with hundreds of current and prospective customer users witnessing various products in action on the floor.

Regarding our interactive division, we were recently awarded the prestigious 2012 Gaming & Hospitality Partner Award for the Bally Mobile platform. Our cloud-based mobile platform, offering a non-regional [ph] portfolio of content and services continue its strong momentum and has now grown to more than 6 million users. Thanks to the measurable return on investment, these mobile applications are generating from our customers. We are seeing significant growth both in new customer acquisitions, which has grown by more than 50% year-over-year to over 75% now; and in the delivery of new applications and features for existing customers.

October 2012 was our best month ever in terms of mobile application downloads. Our mobile platform has been architected to support wagering for our customers in the future as of when such regulations get passed. We are also making good progress with our game content distribution strategy in the online world. We expect over a dozen major operators to feature the Bally virtual game library on their portals during the next few months.

While Bally's business remains very exciting, the management transition has been pretty uneventful, to be honest with you, with nothing exciting to report. Business is as usual at Bally now, and the transition has been as seamless and smooth as possible. That is a huge compliment to Dick and the entire Bally team. Thank you for everything, Dick. It's been an absolutely wonderful ride, and you have our collective and my personal assurance that we will all work very hard and very smart to keep all the progress moving forward.

All things considered, fiscal 2013 continues to hold excellent opportunities for Bally and our first half results are indicative. As Dick mentioned, we are increasing our earnings guidance for fiscal 2013 to $3.20 to $3.40 per fully diluted share as a reflection of this continued momentum. Now I will turn the call back over to Dick for some closing comments.

Richard M. Haddrill

Thank you, Ramesh. Well, I believe that this is my 77th quarter conducting earnings calls across 4 companies, and I couldn't be more proud of this company and this team. We remain confident that our combination of very supportive customers, talented and dedicated professionals, effective and practical innovation and focused execution will enable us to continue to deliver good business results for many quarters to come. I'm excited about my new role as Chairman of the Board and can assure our stockholders that I will continue to work very hard to ensure the long-term success of Bally.

In closing, I want to give thanks to all Bally team members, to Ramesh and to our investors. Our future together is terrific.

Operator, it's now time to open up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And we have David Bain from Sterne Agee online with a question.

David Bain - Sterne Agee & Leach Inc., Research Division

Obviously, I'm hoping to hear your views of the potential merger plans of one of your peers today, and how you look at that competitively. And kind of hoping to hear what you think about consolidation in the supplier industry in general.

Richard M. Haddrill

Well, Dave, I think the first observation we have is that this deal announced today, it does acknowledge the undervalued nature of our industry sector, so we're happy to see that. I think as we look out Bally's window, it's important to note that we have plenty of internal growth opportunities that we're very excited about and don't feel the need for any large deal to grow our own shareholder value. And I think it's also noteworthy that a deal like this could create opportunities for Bally, just with the normal changes and potential for disruption. Now that said, I'm sure the talented team at Sci Games is going to be working hard to do a great job of that integration, but for us, there could be some opportunities here over the next year or two because of it.

David Bain - Sterne Agee & Leach Inc., Research Division

Okay, great. And you guys hit the 50% game equipment margin bogey faster than we had expected. And I think, Neil, you said you're expecting to maintain that in your remarks, is that correct?

Neil P. Davidson

Yes, that's correct. We expect, going forward, we're at that 50% mark.

David Bain - Sterne Agee & Leach Inc., Research Division

And not to get greedy from there, but is this an area where several quarters out, we can still see further improvement?

Neil P. Davidson

Yes, I think from our vantage point, we have a long way to go in a lot of high-margin areas. Conversion kits comes to mind. And, frankly, we can do a lot better once we ramp up international sales to do a better job from a margin standpoint there, so -- but I would say, in the near term, look for that 50% margin, mid to longer term, certainly, we can expand beyond there.

David Bain - Sterne Agee & Leach Inc., Research Division

Okay, great. And just one final one, Neil, can you also give us a current look as to how Africa and the Canadian systems contracts are going to ramp from here? I mean, are we going to start to hit stride for a couple of thousand installs this quarter, hitting a peak several quarters out? Can you just give us your current visibility on that front?

Ramesh Srinivasan

David, this is Ramesh. I'll take that question for you. Don't want to get into customer or country specifics with respect to system implementation, but I can tell you this much. The Canada, South Africa implementation, the pilot go-lives and there are various actions of pilot go-lives depending on the contract. All that are going well, exactly according to plan, no delays there. But in terms of what is there in the results and what you could expect, it would be fair to say that over the next couple of years, practically every quarter, you should expect some hardware, software revenue from Canada, South Africa. For the next 2 years, you should find that in practically every single quarter. I think that's about the extent of how much we can talk about that.

David Bain - Sterne Agee & Leach Inc., Research Division

Okay, but still kind of in a bell curve nature, or just try and work with it from here?

Ramesh Srinivasan

Yes, I mean, each quarter, David, always involves some big system deals, some small system deals. And so the extent of revenue from each deal just tends to vary from quarter-to-quarter.

Operator

And we have from Jonathan Mohraz from JPMorgan online with a question.

Jonathan Mohraz - JP Morgan Chase & Co, Research Division

This is Jonathan Mohraz, in for Joe Greff. I have 2 questions for you today. First, and I apologize if I missed it, Neil, but x Canada, what were North America replacement units for the fourth quarter? And what was the approximate ship share?

Neil P. Davidson

We really didn't talk about ship share. Obviously, we have a couple of other guys who have yet to report. I'd say we're probably in that 20-something percent if I had to guess. In terms of replacements, we were 2,956 units replacements. And then I think in the press release, we said that, of that 2,956, roughly 568 of those were Canada.

Jonathan Mohraz - JP Morgan Chase & Co, Research Division

Perfect. And then second, given the soft fourth quarter and what seems to be a slow January for the regional casino operators, are you seeing any change in casino operators' appetite for either slot purchases or participation games?

Richard M. Haddrill

Our business has been kind of steadily improving for some time now, and it's kind of hard for us to tell which of that is related to product and which is related to market. So I would say that we continue to have just modestly improving optimism but nothing specific related to regional performance that you mentioned just now.

Operator

And we have Amir Markowitz from Morgan Stanley.

Amir J. Markowitz - Morgan Stanley, Research Division

Just 2 quick ones on game ops. I guess your growth on the WAP side was strong on a year-over-year basis, but it seems to have slowed somewhat on a sequential basis. So was that a function of kind of timing of game releases? Or is there kind of something else going on?

Ramesh Srinivasan

Yes, it mostly has to do with the timing of game releases, Amir, and the pace that we have kept up in the last few quarters is quite a dotted pace. And with a couple of new game releases that are due to come out now, and that's all is an indicative. It's indicative of.

Richard M. Haddrill

Keep in mind that seasonality, this is normally a slower quarter. And also keep in mind, we were somewhat impacted by the Sandy as well in game ops.

Amir J. Markowitz - Morgan Stanley, Research Division

Okay, and just one quick one. What was your game ops CapEx in the quarter if you have that on hand?

Neil P. Davidson

I can give you a year-to-date game ops CapEx. It's right around $45 million.

Operator

And we have Kelly Knybel from Deutsche Bank.

Kelly Knybel - Deutsche Bank AG, Research Division

Given the softness that we saw in the ASPs, given the mix that you had in there for the rest of the year, how should we think about your ASPs kind of on go forward, just kind of given what you're seeing on the mix side?

Neil P. Davidson

Yes, I would say, I wouldn't have used the term softness, what I would have used, the term mix. Clearly, with Canada VLTs and with the Illinois units coming in, that is putting mixed pressure on ASPs. But I mentioned when you look sequential quarter-to-quarter, ASPs were fairly comparable, so there's really not been any pressure on what I call our core business, if you will. We're progressing nicely and kind of to our expectations.

Kelly Knybel - Deutsche Bank AG, Research Division

Okay. And so just as we go forward, do we -- should we expect the mix to remain elevated with the VLTs and VGTs for the remainder of the year?

Neil P. Davidson

Certainly, the VGTS will continue to pick up steam. In Illinois, if anything, we've seen the regulators there continuing to approve more and more locations. And then with respect to the Canadian VLTs, that's a market where, if I think about our deliveries thus far, we're somewhere in the 1,200 of a 1,600 unit contract. So you can do the math on that and figure out mixes.

Kelly Knybel - Deutsche Bank AG, Research Division

Fair enough. And then just real quickly, the Hot Shot and NASCAR rollouts, I know previously you guys have talked about -- maybe about a later fiscal 4Q rollout of NASCAR. Is any of the timing of those rollouts changed? Or has that been moved forward or anything?

Ramesh Srinivasan

The timing of them have largely not changed, although 1 or 2 of those games have moved up to compensate for the others.

Kelly Knybel - Deutsche Bank AG, Research Division

Okay, okay. And then one, just can you provide some more clarity just on the contract election? I know you said it was about 200 basis point impact to the product sales margins, but just kind of is there any other color you could give around that?

Neil P. Davidson

Yes, to be honest with you, just from our vantage point, it impacted cost only about 200 basis points. It didn't have a revenue impact. And for the quarter, frankly, we had some unusual SG&A expenses to the tune of about $2.9 million. So once you factor out that margin adjustment and the SG&A expenses, it's really a non-impact.

Richard M. Haddrill

Other than that, your go-forward margin, as Neil said earlier, would be more like 50-ish percent as opposed to the 53%.

Operator

And we have Barry Jonas from Wells Fargo online with a question.

Barry Jonas - Wells Fargo Securities, LLC, Research Division

Just had a question on your guidance. Can you just go over some of the key assumptions between the revised guidance from the high and low end?

Ramesh Srinivasan

This is Ramesh. I'll take that one. In terms of the guidance we provided, it has to do with our improved game sales margins that will remain in the 50-ish kind of range. The Canada VLT shipments that are coming up in the next couple of quarters, ship-share improvements that we generally have expectations of, game operations pickup, the visibility and the increases in systems revenue, so all of that goes into our guidance. I would say probably the only negative there is international revenue from games has been less than expected this fiscal year.

Neil P. Davidson

Yes, and I'd add that certainly closing our guidance range into a $0.20 range was really just a factor of the visibility. And Ramesh mentioned a pretty strong year for systems, just that overall visibility that we keep keeping picking up on that's got us closing the range.

Barry Jonas - Wells Fargo Securities, LLC, Research Division

And just to clarify, no incremental share buybacks in the guidance?

Neil P. Davidson

We, typically, in our guidance, assume somewhere in the $15 million, 1-5, to $20 million per quarter buyback.

Barry Jonas - Wells Fargo Securities, LLC, Research Division

Got it. And is there any -- I mean, I know you've said international is a little bit of a disappointment, is there any update you can give on Italy?

Ramesh Srinivasan

In terms of Italy, Barry, there's no change in status, and we are working feverishly on various changes to our games that'll improve game performance there. But unfortunately, as you know, the regulatory process in Italy is a lot slower than other jurisdictions. So such improvements in games that we are working on is taking much longer to reach the field.

Barry Jonas - Wells Fargo Securities, LLC, Research Division

Got it. And then just last question, I believe one of your competitors commenting on ASPs suggested that the level of discounting in the market had leveled off a bit, are you seeing that as well?

Ramesh Srinivasan

No major change in status as far as levels of discounting is concerned. Like we told you, even last time, now and then, it does affect a systems deal here and there when a competitor decides to discount too much, and we are very disciplined about our margins as far as systems goes. Games wise, no major change in the climate of discounting the good games and the games that provide value to customers still come on a pretty good price.

Operator

And we have Chad Beynon from Macquarie, online with a question.

Chad Beynon - Macquarie Research

Quick question for you, Neil. Just kind of looking at the balance sheet, ended the quarter pretty strong, I think over $80 million with the restricted, how should we think about this kind of going forward? Where your uses are, either with buyback,s, any near-term capital needs, or maybe more kind of tuck-ins on the system side?

Neil P. Davidson

Yes, so this quarter, we actually ended the quarter a little bit stronger in cash just because we had some last month quarter collections that we were working on. So don't let the stockpiling cash be any change. We're going to do the same thing that we typically do, obviously, pay down debt. If there are tuck-in acquisitions that make sense, that's where we're going to allocate capital. And like I said a few minutes ago, we, typically, in our guidance, held $15 million to $20 million in stock buybacks, could be more, could be less. In fact, this quarter, we were a touch higher at $24 million.

Chad Beynon - Macquarie Research

Okay. And then just a modeling question, saw some more conversions here from the Class II to STS, putting up another record maintenance revenue quarter. Should we expect more of these throughout the year? Or will the maintenance revenues really just grow with more connections throughout the year?

Ramesh Srinivasan

Chad, I think you should expect systems maintenance to grow the normal way based on the number of connection increases during the year, so no special bumps because of Class II to Class III kind of conversions. And keep one thing in mind as you think about these, determining Class -- sort of Class III conversions. They are good for the -- number one, it's natural evolution moving from Class II to Class III systems. It's good for the customer, it's good for us, because the customer now has access to all our iVIEW DM and Elite Bonusing Suite kind of products. It's a short-term impact on game ops and a short-term positive impact on system maintenance, but it is good in the long term, both for the customer and for us.

Operator

And we have Todd Eilers, Eilers Research.

Todd Eilers - Eilers Research, LLC

I think I might've missed it, but did you guys give some of the Illinois video gaming units you shipped in the quarter? And then it sounds like you expect that to kind of ramp up in the next couple of quarters, just any color on that would be helpful. And then on the Canadian VLT replacement activity, I believe you mentioned that the Western lottery orders starting in the March quarter. Should we assume that all of that order would likely get placed in the second half of the fiscal year or might some of that spill over into next year?

Neil P. Davidson

So you didn't miss it. There were about 399, so I'll round the 400 VGT units in the quarter to Illinois. In terms of the new Canadian order, you're correct. We mentioned starting to ship Q3. We believe, at this point, a vast majority of those will ship into this fiscal year, maybe a handful fall into '14, but it's not meaningful. And then with respect to the Atlantic Lottery, I think I mentioned earlier, we're somewhere around 1,200 to 1,300 of those shipped, so the remainder of those will likely come into this fiscal year. I think I got all your questions there. Did I, Todd?

Todd Eilers - Eilers Research, LLC

Yes, that was good. And then just have 1 question on the system side. Would it be -- kind of just curious to get your thoughts. I mean, a couple -- it looks like a couple of your enterprise is in customers, regional operators, either made or announced some large acquisitions, bringing in the large number of additional properties. I mean, how should we kind of think about that going forward? I mean, how -- I don't know if it's fair to answer, but I'll ask anyway. How typical is it for some of these operators to start converting systems from competitors over to a Bally systems for instance? Is that a fairly quick move, or is that something that should be done over a longer period of time?

Richard M. Haddrill

Todd, let's take Pinnacle and Ameristar, both very well-run companies that we respect. And it's no secret that Pinnacle is an enterprise-wide systems customer and Ameristar is not, although we've talked to them over the years. So we would think that at a minimum, with that consolidation, our opportunity to serve Ameristar in the systems front improves from where it is today, but we have no -- are aware of no specific action plans for them to make changes in the near term. But we would hope over time that the benefits of cross-property marketing would give us a good chance to implement at Ameristar. But again, no immediate plans. So that'll vary by company. Some companies want to do that immediately and others will deliberate on it more over time.

And with that, I think we'll wrap up the call. I'd just like to say that we're very excited growing all revenue categories. Our margins are expanding. Our balance sheet's in great shape, with DSOs at their lowest level in years. And I want to take the opportunity to take thank all of our investors, employees and customers for their support as we continue to grow this business. Thank you.

Operator

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating, and you may now disconnect.

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