Multimedia Games, Inc. F1Q10 (Qtr End 12/31/09) Earnings Call Transcript

Feb. 9.10 | About: Multimedia Games, (MGAM)

Multimedia Games, Inc. (NASDAQ:MGAM)

F1Q10 (Qtr End 12/31/09) Earnings Call Transcript

February 9, 2009 9:00 am ET

Executives

Uri Clinton – General Counsel and Corporate Secretary

Anthony Sanfilippo – President and CEO

Adam Chibib – CFO

Pat Ramsey – COO

Mick Roemer – SVP, Sales

Analysts

Todd Eilers – Roth Capital Partners

Ryan Worst – Brean Murray, Carret & Company

Operator

Good day and welcome to the Multimedia Games Inc. Q1 2010 conference call. Today's call is being recorded. At this time, I would like to turn the conference over to Mr. Uri Clinton, General Counsel. Please go ahead.

Uri Clinton

Thank you. The following presentation contains statements about future events and expectations that are characterized as forward-looking statements within the meaning of applicable securities laws. These statements are based on management's beliefs, assumptions and expectations about future economic performance, taking into account information currently available to them. Forward-looking statements involve risks and uncertainties that may cause actual results, performance or financial conditions to be materially different from the expectations of future results, performance or financial conditions. Please refer to the Risk Factors section in our recent SEC filings for a description of certain of these risks and uncertainties. The company does not take and expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable law. Today's call and webcast may include non-GAAP financial measures within the meaning of the SEC Regulation G, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found on our website, www.multimediagames.com, in the Investor Relations section. Thank you. Anthony?

Anthony Sanfilippo

Uri, thank you. And you are going to all hear from Uri in just a few minutes.

Again, I want to welcome all of you to our first quarter earnings discussion. With me in addition to Uri is Pat Ramsey, who is our Chief Operating Officer, Adam Chibib, who is our Chief Financial Officer, Ginny Shanks, our Chief Marketing Officer and also over our game design development group, Mick Roemer, who is our Senior Vice President of Sales, Joaquin Aviles, who is our Vice President of Technology.

There have been a number of highlights in this quarter, a couple that I would like to mention. One is our Mississippi license that was granted on December 18, the first commercial license that Multimedia Games has received. And what's important about Mississippi is there are over 40,000 slot machines in the state.

We received our company license in December. We are going through specific game testing through the Mississippi lab right now and we expect to start to make placements in the third quarter of our fiscal year. We are very excited about Mississippi. We think that there is opportunities there for us. We continue to work through other jurisdictions. We are currently having our application reviewed in Louisiana. We are excited about that. And we hope in the very near future to get our approval to be able to sell or place our games in Louisiana.

We have also seen an increased interest from Washington State. We recorded sales at Northern Quest Casino and we placed 100 games at Tulalip that will be a sale. We have not recorded that in this quarter. You'll see that in -- you should see that in this quarter that we are in right now.

What is exciting about Tulalip is that those games are in their high-limit area and they are truly featured in their casino and it is if you've not been to the Tulalip Casino, it is a terrific casino, one of the best casinos on the West Coast. And yes, I include Las Vegas when I say that. It is about 45 minutes from Seattle, has a beautiful hotel spot and casino and a wonderful team that manages that facility. And we are very pleased that we have 100 of our Class III games that's there in that facility.

We are focused and diligent in producing content that will provide terrific games for both Class III and Class II markets. Both markets, we talk a lot about Class III, but Class II, specifically when you look in Oklahoma or New York and even parts of Washington are markets that at one point, our company had more share and we are going to get that share back. We are going to go back and take where it was taken from us before. And part of that is just our focus on making sure we're both delivering on content that will support Class III and Class II games.

We have also been very prudent in our use of resources. Our quarter reflects much lower selling, general and administrative costs and we continue to be disciplined in how we allocate our capital. These results have contributed to a continued reduction of our debt.

Now, Adam is going to talk more specifically about our financial results. But first, I wanted Uri to give an update on Alabama. That has been an evolving market for us and we yesterday released an 8K that was specific to what is happening there. But we thought we would also spend some time on this call with Uri giving you a perspective. He has been very close to it. He spent a lot of time in Alabama and it's important that we make sure that we protect our interests, our shareholders' interest in that state. Uri?

Uri Clinton

Thank you, Anthony. As we stated in yesterday's 8K, the Alabama situation remains fluid and unpredictable. However, there are certain facts that I wanted to share today.

The first fact is that as recent as January 29, 2010, the Alabama Attorney General expressed his concerns that the actions of the Governor's task force could result in a disregard of private property and due process rights. So the point there being that there continues to be a public disagreement between the Attorney General and the governor's office on this issue of electronic bingo.

The second point I want to share today is that on Thursday, February 4, 2010, the Alabama Supreme Court issued a ruling where it found that civil remedies could not be used to enjoin the Governor's task force. However, the court on Thursday did not directly address the legality of electronic bingo within the state of Alabama.

And then the third point deals with the Alabama State Legislature which is currently reviewing proposed legislation in a form of both general bills and constitutional amendments that are aimed at resolving the need for judicial intervention. While these outcomes all remain uncertain, Multimedia continues to monitor the situation and to stay engaged in order to protect our shareholder interest. Thank you. Adam?

Adam Chibib

Thank you, Uri. The highlights for the quarter include our fourth consecutive quarter of increasing cash balances, our third consecutive quarter of positive free cash flow and our third consecutive quarter in which we reduced our outstanding borrowings.

Our fiscal first-quarter end cash balances totaled approximately $14.9 million, up $2.5 million or approximately 20% from our fiscal 2009 fourth quarter. The company generated free cash flow of approximately $5.1 million for the quarter. Free cash flow is defined as cash flow from operations, less property and equipment purchases.

Total cash generated for the quarter which is defined as cash flow from operations, less cash used in investing activities was approximately $8.5 million. Our fiscal first quarter and outstanding borrowings under the company's credit facility totaled approximately $69.8 million, down $5.9 million or approximately 8% from our fiscal 2009 fourth quarter.

As Uri discussed, yesterday we issued an 8K describing the closing of certain customer facilities in the state of Alabama. At this time, we cannot determine the duration of the closings and therefore, we cannot determine the ultimate financial impact to the company.

In fiscal 2009, the Alabama market contributed approximately $9.4 million in revenues and approximately $8.7 million in EBITDA. Additionally, the company's balance sheet contains approximately $9.3 million in net assets related to its business activities in Alabama.

If the facilities of the company's Alabama customers continue to remain closed, the resulting decrease in our revenues and EBITDA for fiscal year 2010 as well as any potential write-down of assets currently dedicated to the Alabama market may adversely impact our financial results and our ability to comply with operating covenants in our credit agreement. The company is currently working with our creditors to evaluate the situation.

Revenues for the three months ended December 31, 2009 totaled approximately $26.3 million, a decrease of $2.3 million or approximately 8% year-over-year and down approximately $6.3 million or approximately 19% on a quarterly sequential basis. Our fiscal first-quarter revenues include the sale of 132 gaming units with revenues and gross margins totaling $2 million and 46%, respectively.

EBITDA for the three months ended December 31, 2009 was $10.9 million, an increase of approximately $3.1 million year-over-year and up approximately $9.1 million on a quarterly sequential basis. EBITDA for the prior fiscal first quarter included approximately $3.7 million in pre-tax charges lent to the settlement of litigation.

EBITDA for the three months ended September 30, 2009 include certain pre-tax charges to SG&A, totaling approximately $12.9 million related to asset write-offs and reserves, litigation expenses, settlement fees and severance expenses.

Adjusted EBITDA, which is used for measuring compliance with certain covenants in our credit facility has back interest income and income tax benefit if any, legal costs and settlement fees related to our settled Diamond Game's litigation, stock-based compensation and certain asset impairment charges was approximately $13.1 million for the three months ended December 31, 2009. And our trailing 12-month adjusted EBITDA was approximately $67.3 million for the period ended December 31, 2009.

Net loss for the three months ended December 31, 2009, was $4.1 million or $0.15 per diluted share compared to net loss of $5.9 million or $0.22 per diluted share in the prior year period. SG&A expenses for the three months ended December 31, 2009, were approximately $15 million, down from $20 million in the prior year period.

For the three months ended December 31, 2009, our capital expenditures was approximately $10.1 million, down approximately $15 million year over year. We are pleased with the progress we have made with respect to cash flows for the quarter and our continued reduction of our debt balances.

I will now turn the call over to Pat Ramsey, our Chief Operating Officer, to discuss any key market developments. Pat?

Pat Ramsey

Thanks, Adam. As Adam stated our revenues were down year over year 8% and down on a quarterly sequential basis 19%. You will see in our financials and you heard from Adam that this year-over-year decline was actually softened due to the fact that we recognized over $2.5 million in new player station sales, which is obviously the result of our plan to diversify revenue model and offer proprietary games for sale. All last year, the player stations that were sold were those that were removed from our gaming operations space. So we are pleased to see the beginning of our diversification of our revenue model.

On the gaming operations side are, what we formerly referred to as recurring revenue. Our year-over-year decline was 15% or $3.9 million and I will now walk through the details by major markets. The Oklahoma market represented just over $15.7 million or 70% of our first-quarter revenues from gaming operations. These revenues were down 12% year over year or $2.1 million and 7% sequentially mainly for the following reasons.

Like we have discussed the past few quarters, our gaming operations revenue was down approximately $1 million year over year, due to a few tribes either purchasing equipment or removing some units, net of the initial footprint we have gained outside of those specific tribes.

Second, revenue from WinStar loan was down slightly less than $1 million year over year, due to both the renovation, which was temporarily completed in late October and what we are also seeing as a dilution in our net win per unit per day based on the initial units at a lower revenue share percentage.

It is important to remind you that the final phase of construction is now slated to begin late in our second fiscal quarter and will affect over 200 of our 2,440 machines at that facility. Regarding the win per unit dilution, like we did in fiscal year 2009, we are actively working on supplying our top customers with the best third-party games as we develop our own improved proprietary product to place on their floors.

In Mexico, our revenues year over year were down $331,000 or 14% and were down sequentially $286,000 or 12% due to a few factors. First, as we discussed in the past, our partners experienced some disruption due to the changes in smoking policies that affected this first fiscal quarter.

Second, we continue to see an increase in supplying key markets as competitors open more facilities.

Regarding our future with our largest partner, as we have discussed before, our current contract expires at the end of April and we are currently in negotiation with this partner for a new agreement which, as currently contemplated, would be effective until December 31, 2013.

In Alabama, our revenues year over year were down $446,000 or 18% and the New York lottery business continues to grow modestly. We were up 4% year over year and are currently preparing for the Aqueduct expansion.

I will now turn the call over to Anthony Sanfilippo for closing remarks.

Anthony Sanfilippo

Pat thanks. We have in the past had both Ginny Shanks and Mick Roemer to give you an update. Let me provide that, at this point on the game side, we continue to be very focused on developing content, as I mentioned earlier, that we believe is going to resonate with both our customers directly, which would be those that are operating facilities as well as the players who play the games.

And we continue to do that through very detailed testing of the games and we've had a number of new titles that have come out and we continue to get feedback on those titles as they are on the floor. So if anything, we are adding to that process and we have been able to add to the talent that is part of that group while keeping our total headcount, you will note, flat year-over-year.

On Mick's side, he has brought on a couple of additional salespeople. He is well-focused on Mississippi and a rollout plan for Mississippi. We are planning events that will both take place in the northern part and the southern part of the state to show our products once our games receive the licensing there. We will be at the Southern Gaming Conference in Biloxi in May and we continue to work the markets that we are licensed in, California, Washington, Oklahoma, in a very aggressive manner to increase the placement of our games.

You'll note on our press release that we have added new proprietary units sold. We think it is important we report to you on a quarterly basis the number of units that we've actually recognized revenue on and continue to update you, not only on our efforts from a sell side, clearly from a diversification of this company's revenues, but also on a licensing side. And we have our head down and we are very much focused on making that happen. We know what is going to grow the business and that is what we're focused on.

Cindy, at this point we will ask if there are questions for any of us. If you would, please check with those listening.

Question-and-Answer Session

Operator

(Operator Instructions) And we will take our first question from Todd Eilers at Roth Capital Partners.

Todd Eilers – Roth Capital Partners

Good morning, everyone. Just a few questions, with respect, Anthony, to the WinStar property. Can you tell me were there any, did you guys have any games out of commission in the current quarter related to any sort of renovation activities?

And then also, with respect to the second quarter as sounds like you'll have some, I think roughly 200 games mentioned that would be impacted from the final phase of renovation. Can you maybe give us a sense of what type of games those are? Are they class II or compacted games, maybe how do they perform relative to the rest of your installed base?

Anthony Sanfilippo

Sure. Good morning, Todd. Thanks for asking. Pat, you want to address?

Pat Ramsey

Sure. So in our first fiscal quarter, for the whole month of October, we had, I don't have the exact numbers in front of me, but it was approximately 400 of our games were out for all of October. Those were all in the higher, obviously, in the higher rev share area and a lot of them were Class II games, some of our higher performing games. Come mid-March we will have approximately 200 out in the last section, the last leg of construction as that begins which is scheduled now for mid-March through April, really.

Anthony Sanfilippo

Todd, let me add to that also. They have done babying the Chickasaws and the management of WinStar have done really a terrific job in taking the older section and providing a seamless experience for the customers from the newer section. And anybody that's been there knows it is a huge casino and we have a very big footprint there. So we are starting to see a more equal distribution play throughout the facility, which does somewhat affect us because of our, we have a higher revenue share of the gains in the older facility. But in the long run, it's actually better for the facility. You really want to distribute customers throughout the facility, so that they can both experience not only the gaming floor but the non-gaming part of the facility.

And so the goal would be to continue to build a customer base there, where not only, we would benefit with our 2,440 games there, but others would benefit there too. So the strategy is the right strategy to utilize the complete facility. And we are almost through the transition of the older facility getting a facelift and I do believe the Chickasaws are beginning to get comfortable with the operation of a much bigger facility.

Todd Eilers – Roth Capital Partners

Okay. Thank you. That's helpful. And then I guess the other question I had looks like you guys now have summarized your unit installed base. Can you may be just give us a sense of how many of those units were in Oklahoma and I guess charity or Alabama markets at the end of the quarter?

Pat Ramsey

Yes. Let me find it in this book.

Anthony Sanfilippo

Pat is taking a look. I want to add one other thing to Windsor because it is such an important property and to drive home the point about the non-gaming amenities which they need to continue to add. They are going to be opening up on the 15th of this month a, Toby Keith, I love this bar concept.

It is both the food, beverage, entertainment concept. It is those types of things and it's actually a terrific concept. I've seen it in a couple of places and it I think it will really resonate with people from North Texas. It's those types of ad that they are doing that will cause more visitations into that property and like I said, will benefit not only our Company but others too.

Pat Ramsey

Todd, the end of period installed base in Oklahoma was 6,927. In Mexico it was 5,403. Alabama was 2,509 and the other markets were 1,229 which total 16,068.

Todd Eilers – Roth Capital Partners

Okay. That's helpful. And then I guess on the subject of Alabama, can you, so you had roughly 2,500 at the end of the quarter. Was that the same number, I guess, heading into all of this activity that happened over the last couple of weeks?

I guess to the extent you can give us a number of games you had, heading into when these charity facilities shut down here that would be helpful. And then I guess one of the facilities is still open which is Greentrack. Can you maybe give us a number of games that you have installed at that facility?

Pat Ramsey

Sure. So heading into sometime in early January for, we had, if you recall as we talked about VictoryLand in the past, we had 1100 units on our old system in the back rooms there at VictoryLand. And with volumes declining that, those units have been removed from the floor.

So I gave you a number in Alabama a few seconds ago of 2,400 at December 31. So when all of this started a few weeks ago, two weeks ago we had about, in operation 2,400 less the 1,100. And then at Greentrack we currently have 433 units in operation.

Todd Eilers – Roth Capital Partners

I'm sorry. How many at Greentrack?

Pat Ramsey

433.

Todd Eilers – Roth Capital Partners

Okay. And then you said I should take, remove the 1100 VictoryLand units prior to the activities in the last couple of weeks.

Pat Ramsey

That's correct.

Todd Eilers – Roth Capital Partners

All right. That's helpful. How about with respect to, you guys mentioned that you are taking or Adam mentioned you are taking a look at the lender agreement and covenants with potential losses, Alabama EBITDA here that could put you kind of close to the trailing EBITDA covenant.

Anthony or Adam, can you maybe give me, give us a sense of what areas you've got some leverage or some what can you kind of give up to your letters to kind of maybe seek some relief if these Alabama facilities remain closed indefinitely here for a couple of quarters?

Anthony Sanfilippo

Yes. And I'm glad you brought that up. It really is a heartbeat for us to make sure that we have a credit facility that we are comfortable with. And we have been, we've continued with the main lender who is based here in Austin, Comerica on a regular basis to be in communication with them to make sure that we don't find ourselves in a situation that we lose leverage on it, is the better way to say it. And if you think about our current capacity is $125 million, we have continued to dramatically reduce our line.

And we are not yet to a 50% mark but we are a lot lower than we were before. So if you think about things that we could have discussions with them on is, do we really need a capacity of $125 million today?

Our focus has been as I said earlier, prudent use of capital, making sure that we are managing every dollar of our expenses but we don't want to be shortsighted. We don't want to cut things out that's going to grow our business in the future.

And we have been very proud of the fact that we have been able to successon a successive quarter standpoint reduce our debt. That has been very important to us. So we want to make sure we stay in front of that curve and they have been from a working standpoint very receptive.

I, they see that the progress that we've made and that's sort of the best way I can answer that. It is always on the forefront of both Adam and my mind to make sure that we have an appropriate credit facility.

Todd Eilers – Roth Capital Partners

Okay. Great. That’s helpful. And then just one last question. Obviously the awarding of the aqueduct contract in New York will be positive for you guys assuming that moves forward here. I know it is always tough but can you maybe give us a sense of timing? I know, I believe reports that I saw were the winning bidder expects to be open or have the first 3,000 games in operation six months after the signing of an MOU.

But to the extent you guys might have any sense for timing of when that MOU might be signed that would be helpful. And then also that market seems to be doing fairly well, relative to other domestic markets with revenue continuing to increase. Is that now a profitable business for you guys?

And can you maybe also give us a sense of what sort of operating leverage you have in that model with the addition of the games at Aqueduct, i.e., how much of that incremental revenue really flows to the bottom line for you guys?

Anthony Sanfilippo

Yes. Let me address the first part and that is timing. We control what our responsibility is. And that is to get the system in place and ready for connection, games to connect to our system. And we have been ready to execute that plan and we have been in close contact with the New York lottery folks to do that. So that's what we control and what we are responsible for. So we are ready to go. When they tell us that they are ready to move, we are ready to move.

We don't have access to information beyond that. We just want to make sure that we are ready to put in place our servers, our equipment and allow them to get hooked up. So as soon as they are ready to tell us to move it forward, we have a plan in place ready to execute. Adam, if you want to address the second part of that.

Adam Chibib

Sure. Yes. That market is currently profitable for us and it is a highly leveraged piece of business for us so we think probably about 90% of that revenue will flow through to the bottom line. And I will let Pat add anything to that if I've missed anything but it's.

Pat Ramsey

No. That's right and I've read the comments about it being a breakeven business but currently we do operate at a pretty high operating margin there and we'll continue. That will grow as we add to another facility. So especially a facility with this size revenue where we will add obviously a couple more people on. But given the revenue it's going to be a pretty high flow through business.

Todd Eilers – Roth Capital Partners

Thanks. Appreciate it.

Pat Ramsey

Thanks Todd.

Operator

We’ll take our next question from Ryan Worst at Brean Murray.

Ryan Worst – Brean Murray, Carret & Company

Thanks, guys. Good morning.

Adam Chibib

Good morning. Ryan.

Pat Ramsey

Good morning. Ryan.

Ryan Worst – Brean Murray, Carret & Company

Just a couple of questions. Just a follow-up on the New York question. How much CapEx is necessary for you guys to get that extra facility up and running?

Adam Chibib

CapEx and it's probably, I'm not entirely sure when you think about the capitalized labor that we because we have a couple of projects going on right now with the New York lottery so I don't know the breakdown just for that facility. When we talk about going to expanded hours in gaming we and table and the addition of table games there. I don't know the exact breakdown between just that facility and the…

Anthony Sanfilippo

Equipment for that.

Adam Chibib

I don't understand.

Ryan Worst – Brean Murray, Carret & Company

But it's not that much, right?

Anthony Sanfilippo

No. I mean I don't want to give the wrong number because I'll have my attorney mad at me again for the rest of the day. I remember it was like $2.5 million in equipment.

Ryan Worst – Brean Murray, Carret & Company

Yeah.

Anthony Sanfilippo

Okay. Is what I remember the number was on equipment and then we have the labor to get it all installed. So…

Ryan Worst – Brean Murray, Carret & Company

Right. Okay.

Anthony Sanfilippo

From the standpoint of getting it hooked up and even if it's close to Yonkers, then it will be very accretive for us.

Ryan Worst – Brean Murray, Carret & Company

Yeah. And then, Anthony, in the press release you also talked about selling games. I think it was selling, maybe placing on a revenue share, but to four additional tribal casinos in Washington, Alabama and Minnesota. Could you provide some color on that maybe in terms of the number of games and timing that revenue will be recognized?

Anthony Sanfilippo

I am going to ask Mick to talk about those markets. Specifically, we will start with Washington because we really feel like Washington was a market that our company in the past had really a great presence in. And we still have the number one game Mega Meltdown. And then the company took its eye off of Washington and we've -- we invigorated our efforts with Washington. So Mick, if you want to…

Mick Roemer

We had some good success in turning that Washington market around. We have a very -- as Anthony mentioned, we've got a very strong game content there and it's specifically led by Meltdown. But the two orders primarily with Kalispel at 126 that we've installed with another 74 coming up this quarter and Tulalip with 100 machines and another add on order for them. There's an additional to add there are three additional orders that are in process not under contract yet. But show real signs of strength in that pipeline. We've also installed our first installation with the Porsche Band, Creek Indians in Alabama and that as at Riverside and we have two other installations going in that facility and those are on a daily fee.

We had two additional installs in Minnesota, which is our first installs there at the Grand Casinos in Hinckley and the Grand Casinos Mille Lacs. And the early performance feedback is very positive from that location. So we feel like we are making some pretty strong progress. And the customers still seem to be very receptive to the products that we have shown at the G2E. Those products will begin to roll out here over the next quarter or two.

Ryan Worst – Brean Murray, Carret & Company

Okay. Mick, what kind of a games are going in as a daily fee? Is that the turn event or the Sport of Kings series?

Mick Roemer

We offer -- I'm sorry, go ahead. We offer our library titles as well as Sport of Kings and TournEvent under a daily fee model as well as a sale

Ryan Worst – Brean Murray, Carret & Company

Okay.

Mick Roemer

So it's really a mixture. In the case of Minnesota it's a combination of Sport of Kings and library titles. In the case of -- in Alabama they are all library titles although we are in discussions with them for TournEvent.

Ryan Worst – Brean Murray, Carret & Company

Okay. So Minnesota is going to be a revenue share two or a daily fee?

Mick Roemer

Yeah. We offer an opportunity for them to take daily fee games and allow them to roll those into sales if they choose.

Ryan Worst – Brean Murray, Carret & Company

Okay. And then yeah, so I guess that feeds into my question on CapEx. $10 million in the quarter, could you provide some detail on that I guess if you are placing games on a daily fee? Is that what's in that $10 million CapEx number?

Adam Chibib

That's a portion of it and we did some expansions into Country Crossing and VictoryLand, which is the other big component of it and also placing the units on some of our Oklahoma footprint. We do think that this quarter was probably the highest quarter for the year. So we expect to see it trend down from here on out.

Ryan Worst – Brean Murray, Carret & Company

Okay. And then could you just remind us what the annual EBITDA covenant is? Requirement?

Adam Chibib

The trailing 12 month covenant is 60 million.

Ryan Worst – Brean Murray, Carret & Company

60 million still? Okay. And then based on the numbers that Pat gave us, it looks like -- could you talk about Windstar and how many games? Did you have your games fully operational at the end of the quarter?

Adam Chibib

At the end of the quarter all 2,440 were fully operational, yes.

Ryan Worst – Brean Murray, Carret & Company

Okay. So it looks like you guys lost some games elsewhere maybe not in Oklahoma, but other Class II. Could you just provide some detail on that?

Adam Chibib

I'm trying to think where the significant, let me look at that chart one second. Yeah, yeah, sorry. The largest -- it was in our -- in Tulsa facility where we, year-over-year were down approximately 500 units.

Ryan Worst – Brean Murray, Carret & Company

Okay.

Adam Chibib

At the River Spirit facility. That's -- one of the comments that I mentioned was the reduction $1 million year-over-year net of our additional footprint. And that mainly came from one facility.

Ryan Worst – Brean Murray, Carret & Company

Okay. And that includes the games that you sold? Or when I look at it sequentially it looks like you're down about 250 units or so?

Adam Chibib

Yeah. Yeah, exactly. We expanded in certain properties in Oklahoma, but year-over-year at that one facility we were down 530, which does include the amount of game the totals that were sold as well, Okay, there were some that were just removed from that store and then some that were purchased.

Ryan Worst – Brean Murray, Carret & Company

Okay. Great. Thanks. That's my questions.

Operator

(Operator Instructions) And it appears we have no further questions at this time. I would like to turn the conference back over to Mr. Sanfilippo for any additional or closing remarks.

Anthony Sanfilippo

Cindy, thank you very much and thanks to everybody who called in to listen to the call today and who -- whether you are an investor in our company or thinking about becoming an investor. We very much appreciate your interest and confidence. And we will continue to do everything we can to build shareholder value. Thank you so much for joining us.

Operator

That does conclude today's conference. Thank you for your participation today.

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