Chilton Investment Company and Bally Technologies
Chilton initiated positions in Abbott Laboratories (ABT), U.S. Bancorp (USB), Macy’s Inc. (M), and TransDigm Group Inc. (TDG). The fund sold its stakes in Genesco Inc. (GCO), Bally Technologies Inc. (BYI), and CarMax Inc. (KMX).
Chilton eliminated a position in gaming company Bally Technologies Inc. (BYI) last quarter that had accounted for 0.93% of the fund’s third quarter portfolio. The position appears to have been initiated in the third quarter.
Bally Technologies is a diversified global gaming company that designs, manufactures, operates, and distributes gaming machines, table game products, casino-management systems, interactive applications, and networked and server-based systems that drive revenue and provide operating efficiencies for gaming operators. It also provides hardware and games, including spinning-reel and video gaming devices, specialty gaming devices, table game products, and wide-area progressive systems. Under its business-to-business model, Bally supports customers that include traditional land-based, riverboat, and Native American casinos, video lottery, and central determination markets.
Bally, the gaming industry’s second-largest slot machine provider, completed the acquisition of SHFL entertainment, Inc., in November 2013 for a total consideration of approximately $1.3 billion. The acquisition of SHFL complements Bally’s existing product portfolio while providing new access to the global land-based and online table games market and the growing e-Tables market, as well as enhancing its presence in key international markets, creating an end-to-end gaming technology company. Once combined, Bally expects to achieve synergies of at least $30 million.
Bally’s recently reported 2Q 2014 revenue missed estimates despite a 20% increase, to $285 million, compared to $238 million last year. Adjusted EPS increased 35%, to $1.06 from $0.80 in the same quart a year ago—above Street estimates. Management said the “second quarter fiscal 2014 was transformative” due to the ongoing integration of SHFL acquisition. Bally’s Electronic Gaming Machines and Systems segments saw revenue increases, while the company’s Gaming Operations sugment revenues decreased 2%, to $97 million, driven by lower yields on certain variable-fee games. Bally’s 1Q fiscal 2014 gaming equipment revenues decreased 14%, to $71 million, because the company recorded video lottery terminal sales to the Canadian national lottery in 1Q fiscal 2013.
As a result of the completion of the SHFL acquisition, Bally revised full-year fiscal 2014 guidance for adjusted EPS to a range of $4.30 to $4.50.