Good day. My name is Dennis, and I will be your conference operator. At this time, I would like to welcome everyone to the Ainsworth Game Technology Limited 2023 full- year results general conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to Harald Neumann, Chief Executive Officer. Please go ahead.
Thank you, Dennis. Good morning, everyone, and thank you for joining me for the Ainsworth conference call for our unaudited results for the 12 months period ended December 31st of 2023. Lynn Mah, our Chief Financial Officer, and Mark Ludski, our Company Secretary, will also be on the line today. On the call today, I will concentrate on the key points and the regional review, and Lynn, Lynn will take us through the financials. At the end of the presentation, we would be pleased to answer any questions. All the numbers Lynn and I quote throughout the call are denominated in Australian dollars, unless otherwise specified.
I also note that, as a result of the change in the reporting period, the previous audited financial results were for the six months ended, 31st December, 2022, and as such, we have used the twelve months period ended 31st December, 2022 for comparative purposes within the presentation. To start, I would like to further note, the statements made by AGT Chair Danny Gladstone in our ASX release this morning. The strategic review being undertaken by Macquarie Capital has continued to progress and remain an ongoing process. As we announced in this, in November last year, this review includes a broad range of potential organic and inorganic alternatives to maximize shareholders' value. While the strategic review continues, there is no assurance that any transaction will result. Coming now to page 5: Result summary.
Let's make a start on page 5 with some highlights of the results. The overall reported results show a profit before tax of AUD 2.6 million, however, incorporate significant currency translation in the second half of calendar year 2023 and other one-off items outside the normal operations of the company, including non-cash impairments assessed on cash generating units. O n cash generating units, Lynn will provide more details on this in her financial review. I'm encouraged that, that Ainsworth has maintained and delivered a solid operational result, with revenue increasing to AUD 285 million in the current period. This represented a 17% increase on the AUD 244 million in the prior corresponding period. Underlying EBITDA for the period was AUD 58 million, slightly ahead of the prior period, with the second half of calendar year 2023 contributing AUD 29 million.
Profit before tax, excluding currency impact and one-off items, were AUD 41.5 million in the current period. This resulted in a second half pre profit before tax on the same basis of AUD 18.4 million and was in line with the guidance outlined by the company. As reported at the first half, we have provided for the full write-down of the carrying value of investments held in Argentina, following a notification by the investment company that a reorganization petition had been filed by the trustor of the investment. Court proceedings relating to determining recoverability on this investment cannot be reliably measured at this stage, despite preliminary legal advice indicating the likelihood that that recoverability is high.
The macroeconomic uncertainties and political instability in the region have contributed to further significant devaluation of the Argentine peso against the U.S. dollar, with a decline of 50% being experienced in December 2023. The board has determined to continue to suspend the declaration of a dividend at the present time, given the company's priority to maintain a strong financial position. The board is committed to recommence paying dividends when considered appropriate. However, the priorities are to maintain investment in R&D and ensure working capital requirements necessary to ensure no production disruption. Coming to page 8, profit and loss summary. Let me turn to the result on page 8. As I noted, the reported results are not reflecting of operational improvements, and I'm encouraged to see the momentum that started in the first half of the year has continued into the second half of the 2023 calendar year.
As I mentioned, revenue increased to AUD 285 million, up 17% on the AUD 244 million in the prior period. Revenue increases were achieved across the key regions in both North and Latin America. Reflecting the momentum offshore, international revenue increased AUD 245 million, a 24% increase compared to prior period and represents now 86% of the group's total revenue. The gross margin achieved in the period was 62%, consistent with the prior period. The strong average selling price and an increased proportion of high-margin recurring revenue compared to the prior period ensured margin were maintained in the current period. Coming to page 10. As outlined on page ten, underlying EBITDA was AUD 57.8 million, compared to AUD 55.8 million in the prior period.
Translational foreign currency losses in the current period were AUD 21.5 million, compared to gains of AUD 2.6 million in the prior period. These were primarily as a result of the significant devaluation in the Argentine pesos, as I have outlined. Other one-off items outside normal operations included a loss of AUD 17.4 million, resulting from the profit uplift of AUD 1.9 million on the amendment of the GAN exclusivity agreement, a writedown in investment in Argentina of AUD 13.2 million, and a non-cash impairment charge of AUD 6.1 million within Latin America. Coming now to North America, page 17. I will now go through the regional review, starting on page 17 with North America.
North America revenue in the current period was AUD 140.4 million, an increase of 17% on the prior period, representing 57% of total international revenue. High denomination games continue to be the strengths of AGT in the United States, with multiple games consistently included in the top 25 indexes with the Eilers and ReelMetrics . Development initiatives initiated to provide greater market share within the low and mid-denomination product groupings have resulted in both San Bao Pandas and San Bao Dragon being reported in the Eilers top 25, indexing new games in February 2024. Following the continued success of MTD games in South Dakota, the launch of the games in Louisiana have seen similar success, with strong performance of the new Squish Wheel game in this market.
The exclusive distribution agreement within Montana was extended for one additional year, and further opportunities are expected within this state once exclusivity expires. Machines under operations in North America at the reporting date were 3,090, an increase of 9% from the prior period, primarily to expansion within Kentucky and Alabama, where new placement opportunities occurred in the current period. Machines placed under participation and lease, including connection fees, which generate recurring revenue, contributed 53% of the segment revenue. Historical horse racing products continue to perform with 8,118 units connected to AGT's HHR system at December 31st of 2023, with the anticipation of further growth as new installations occur in Kentucky and Alabama during calendar year 2024.
Strong average selling price and increased recurring revenues, along with disciplined cost controls, resulted in a rise in segment profit of AUD 65 million, versus AUD 59.3 million in the prior period, up 10%. Turning to page 19, Latin America and Europe. The revenues in Latin America and Europe increased during the current period by 26% compared to the prior period, and 141% on the second half of the 2022 calendar year. Unit sales in the current period were 2,264, an increase of 18%. This increase was driven by the strong demand and utilization of import licenses in Argentina, which was previously reported in the first half of calendar year 2023. Demand continues to grow for the A-Star range of cabinets and top-performing game themes, such as Xtension Link and Multi-Win games.
At the reporting date, a total of 4,132 units were under operation, compared to 3,690 units in the prior period. These units generated AUD 22.6 million in recurring revenue, an increase of 14%. Despite the reduction in units under operations reported in the first half of calendar year 2023, primarily due to the introduction of regulatory changes in Mexico, strong demand in Peru and Mexico resulted in the installation base of machines under operating, increasing 60% in the second half of calendar year 2023, with average yield being maintained at $12 per day. Discussion with Mexican Tax Administration Service on the previously disclosed audit and review of unpaid duties and associated charges in the region have progressed in the period.
Based on this discussion, the group has reached an in-principle agreement with SAT, subject to administrative procedures, and the provision at the 31st of December 2023 has been updated to reflect this agreement. It is expected that this matter will be finalized with SAT once all administrative processes are completed. I note that a non-cash impairment charge of AUD 6.1 million was recorded in the current period for the Latin American cash-generating unit. As in previous periods, this impairment charge to the carrying value of assets reflects the reassessment of discount rates, inflationary cost pressures, and the uncertainties inherent in validating expected revenues in future periods within these regions. These factors contributed to a reduction in the available headroom, resulting in a lower recoverable amount for this cash-generating unit.
This results from the time and nature of the current business model within this region, where gaming machines are initially placed under operations, which requires these assets to be assessed for impairment purposes, despite the generation of increased participation revenue prior to the potential conversion to sale. Page 20 outlines the region of Asia Pacific. As you will note, we have now consolidated Australia, New Zealand, and Asia under the one region as a result of changed management responsibilities introduced in the period. Asia Pacific revenue was AUD 48.8 million in the current period, similar to the prior period. Overall, domestic revenues fell by 12% to AUD 39.8 million when compared to prior period. New South Wales reported an increase of 7%.
However, both Victoria and Queensland declined and were impacted by minimal corporate sales and competitive market conditions. The release of a new A100 hardware at AG23 was positively received, and together with improved performance of the Jackpot Kingdom brand, it is expected sales in Australia region will improve in calendar year 2024. This brand, recently released, has reported strong initial performance at above 1.5x house average in Queensland. Further market recovery, including changed distribution channels in Asia, resulted in revenues of AUD 9 million within Asia and New Zealand in the period, an increase of 317% on the AUD 2.1 million in the prior period. Average selling price improved despite competitive market conditions. However, segment profit was affected by increased marketing and trade show costs, production costs, and material costs in the current period compared to prior period.
On page 21, we outlined the digital segment, which reported revenue of AUD 15.6 million, which included the one-off profit uplift of AUD 1.9 million, resulting from the GAN contract amendment. This high margin online revenue resulted in a segment profit of AUD 40 million in the current period. It is expected that when GAN exclusivity contract terminates in March 2024, the group will be able to directly explore further opportunities with U.S. operators. I will now ask Lynn to outline a summary of the financials.
Thank you, Harald. Turning to page 11. Operating costs were carefully controlled in the current period, rising by 18%. Group operating costs in constant currency terms were AUD 134.2 million, 14% higher compared to the PCP. The increase in operating costs was mainly attributable to the increase in overall headcount in the current period to ensure talent retention, to support business growth and implemented strategies. Operating cost increase was also attributable to increased variable selling costs on the 17% increase in revenue achieved during the period. Research and development expenses increased by 25% compared to PCP, reflecting the company's continued focus on product development investment to produce competitive products. R&D expenses as a percentage of total revenue were 16% in the current period, consistent with the 15% in the PCP.
A consistent level of investment in R&D is expected to continue as the company revamped its studios in Sydney, Las Vegas, Austin in Texas, and Reno in Nevada, which are led by experienced game veterans. On page 12, AGT's global headcount was 555 employees at the reporting date, with 57% within the Americas. This represented an increase of 11%, 56 employees, compared to the same period in 2022, with increased R&D resources accounting for 43% of the overall increase. The global organizational structure established provides new product leadership and clear lines of accountability to provide efficiencies and the ongoing development of an exciting range of diverse and new product offerings. Management continues to implement measures focusing on technology, development, and culture to improve product performance, lift staff retention rates, and enhance AGT's ability to attract world-class development talent.
As Harald has pointed out, it has been a key priority to ensure we maintain a strong balance sheet to protect the company and allow liquidity to pursue planned development initiatives. On page 14, you'll see we closed the current period with a net cash position of AUD 19.4 million, with undrawn facilities in place for $32 million. The receivables closing balance was AUD 119.4 million, a slight increase of 3% on the AUD 115.5 million at 31st December, 2022 reflecting the positive cash collections in the current period, especially given revenue increased 17% in the period. Initiatives introduced to stabilize supply chain rates and manage working capital resulted in a reduction in inventory holdings of 19% compared to 31st December, 2022.
The company has AUD 313 million of net assets with an undrawn facility of $32 million. On page 15, operating cash flows in the current period was AUD 27.4 million, an improvement on the AUD 15.4 million reported in calendar year 2022. The improvement was primarily due to prudent working capital management, particularly in a reduction in inventory holding of 19% at 31st December , 2023, compared to the prior year. While operating cash flows have improved during the period, investments were made in Argentina and capital expenditure to support the release of new hardware during the year. This resulted in a net cash held at a reporting date of AUD 19.4 million, a decrease on the AUD 29.3 million reported at 31st December , 2022.
In conclusion, we have a strong capital base and are well-financed to go forward to execute on strategies established. Thank you, and I will now hand you back to Harald for some concluding remarks.
Thank you, Lynn. To conclude, AGT enters the calendar year 2024 with good momentum and expects sustainable profitability. Trading conditions in both domestic and international markets have shown their resilience despite economic challenges in global markets. AGT's North American business continues to make progress in both Class II and Class III markets. Opportunities are continually being pursued for existing and new HHR markets. Despite more volatile market conditions in Latin America, the group expects to continue its trajectory of growth and profitability in this region. Domestic markets are expected to benefit from the new A100 hardware released in the recent Australian gaming exhibition and improved game performance following the release of new game titles. With a strong balance sheet and commitment to product innovation, AGT is well-placed to deliver improved financial performance.
As I said at the beginning, our results are much improved on the prior periods, driven by the contribution from international markets. We can also look forward to further improvements in Australia, where we will continue to leverage our key strengths of AGT's trusted brand, our highly capable staff, and the company's enduring commitment to develop superior game technologies. As I have previously communicated, for us to ensure continued growth and to sustain our performance, measures introduced are having the desired effect, and we are starting to see improvement in these outputs of our R&D investments, which is expected to lift the competitiveness of our product and provide growth opportunities. We have expanded our capabilities and talent within R&D in both the Sydney and Las Vegas studios. In addition, additional R&D studios are now operating to provide more creativity and diversity to our current product offerings.
Quality initiatives are continually assessed to improve game design, mathematics, and graphic arts, to create a more diverse and targeted range of product offerings to our customers. The infrastructure to achieve our product roadmap is in place, which we expect to translate into improved and sustainable long-term results across global markets. The global organizational structure is now established with new product leadership and clear lines of accountability, which continues to provide an ongoing efficiencies and an exciting range of diverse and new product offerings. We are committed to implement measures focusing on technology, development, and nurture to improve product performance, lift staff retention rates, and enhance AGT's ability to attract world-class development talents. Before I, before I close, I would like to finish by thanking all my colleagues at Ainsworth's for their contributions to the progress made and their dedication to our customers.
I'm incredibly proud of the way the team of AGT has taken on the challenges presented to them to ensure we are well-placed to improve our financial performance over coming periods, and I want to formally thank them all. Thank you for your time today, and I will now hand back to Dennis to open the lines for questions. Thank you, Dennis.
You are most welcome. If you would like to ask a question, simply press star, then the number one on your telephone keypad. Once again, to ask a question, please press star one. So our first question's from the line of Eddie Riley with Kanen Wealth Management. Please go ahead.
Hey, guys. Thanks for taking my question. With nearly half of your business coming from North America right now, and trading volume for gaming stocks on U.S. exchanges being at nearly 100x that of the ASX, have you guys considered listing on a U.S. exchange at all, maybe to expand your potential investor base or maybe close the valuation gap between your peers?
So we are currently reviewing, as we mentioned, we're currently reviewing the whole strategic opportunities for Ainsworth together with Macquarie.
Okay. That's really it for me. Thank you.
Once again, if you would like to ask a question, please press star one on your telephone keypad. Our next question's from the line of David Kingston with K Capital. Please go ahead.
Good morning, everyone. Hello, Harald.
Hello.
Look, it's just really, the strategic review has been going on for a number of months, and I think everyone welcomes that, because there's no doubt that shareholders at the moment, with the share price so where it is, are not getting fair value for their investment in the company. Look, I agree with the previous questioner that, if the stock was listed in America, it would be trading at a significantly higher value. But that might become redundant because clearly, as per the strategic review, the Austrian controlling shareholder is considering buying out the minorities.
And I suppose another option is that the Austrian controlling shareholder might sell out to someone like Light & Wonder, which is growing rapidly and which is rated at a far higher multiple of earnings and cash flow. But look, Harald, it is a crucial thing because shareholders have been waiting for a long time. The Austrian took control, I think from memory, at AUD 2.75, many years ago. While AGI has recovered from its lows, it's still trading way below what it would if it was listed in America or on comparables with people like Light & Wonder. So just be grateful if you could provide a little bit further update, because everyone's been waiting a long time for the Macquarie review. If you could clarify, when is the decision likely to be taken, Harald?
If you could give us a bit of flavor as to what are the most likely options coming out of that review? Thank you.
Yeah, first, I don't know where this rumor comes that Novomatic wants to buying out the minority shareholder. That's absolutely not the case. The outcome of the Macquarie project is totally open. There's also a likelihood that more or less everything remains the same, number one. Number two, and we have spoken to a lot of international large investment banks, and there's absolutely no reason why a listed company in the U.S. is higher evaluated than a listed company in Australia with exactly the same content. That's the reason why we said we don't want to spend AUD 7 million to AUD 10 million, just for listing and delisting without any impact of the share price.
It could be rather the other way around, and if you compare this to the small gaming technology companies in the U.S., that we are falling down with our share price, with comparable multi-EBITDA multiples. So whatever, and this, and you are not the first who is telling me U.S. would be much better, as we have investigated this with several companies, and that's simply not the case. And the outcome of this currently Macquarie project is totally open. I cannot give you any kind of direction whether it goes in one or in the other direction.
But Harald, you know, they've been working on it for many months. It must be getting towards the end of decision time. I am concerned when you mentioned in your comments that it might be that there's no change whatsoever. To me, that's a totally inappropriate conclusion, because objectively, everyone would accept that the shareholders at the moment, they're receiving no dividend, and the rating of Ainsworth, which is a good company, and you are delivering solid results, Harald, but it's just not being rated properly by the share market, which is probably a combination of illiquidity and a range of things. But I assume no change is not a possible outcome, Harald. But can you clarify, when is the decision likely to be taken?
It doesn't take all that long to do a strategic review. Appreciate your thoughts, Harald.
You mean how long it will take until we have a clearance o r, what do you mean? Maybe one comment, yeah. If you look at the current share price, we have a multiple of eight, which is much higher than companies like AGS and other small-cap U.S. companies. Just so that you know that we are not undervalued currently. Just a comment to your question before. I expect that we have some kind of, t hat we can give some kind of information after the second half announcement, and in my opinion, there will be a final decision by end of this year.
Is it possible to make an announcement at the annual general meeting, Harald?
No, that's much too early.
Okay. Look, a response to the comment that you're not underrated, with respect, Harald, I would strongly disagree with that. Probably with the exception of artificial intelligence companies, the area you're trading in is probably one of the highest-rated areas on stock markets around the world. It's a very sexy area that most liquid stocks are given a pretty high rating, and they're exhibiting pretty high growth. I think most people would say that Ainsworth is very poorly rated by the stock market at the moment, relative to the quality of company it is and the sector it's in. Bearing in mind that shareholders, there's only two reasons, Harald, shareholders invest in a company. Number one is for dividend, and number two is capital growth.
It depends on the timeframe people have invested in, but people who were buying when the Australians bought at around about AUD 2.75 have had a capital loss and very poor dividend situation. So it's pretty disappointing be cause on the one hand, it's a good company, delivering pretty solid operational results. On the other hand, the return you're delivering to your shareholders, Harald, who own roughly half of the company, apart from the Australians, is very poor, n o dividends, and a capital position, after the Austrians bought at around AUD 2.75, is a major capital loss. So, you know, shareholders, I think, quite correctly, are pretty disappointed in what's happened, and are looking forward to a dramatic uplift when the strategic review is finalized.
Yeah, as I already mentioned, let's wait what the result is, but I completely disagree with your comment that we are undervalued. Take the multiple compared with other gaming companies, with the exception of Aristocrat and Light & Wonder, and we are on the top of the range of the other gaming technology companies.
Clearly, the guy, c learly, the guy who asked the question before me, clearly he doesn't agree with you. He thinks that the American market is-
He doesn't agree with me is nice, but look at the figures. Okay, it's not. We are not talking about an estimation of mine or whatever. I'm talking about facts. You can look at all the gaming companies. You can simply calculate the multiple, the multiple with they are, and then you have the comparison. So these are facts. That's not my guess. That's simply the situation we are currently in. And once again, I don't want to, a nd once, just one point there. AGD is not competing against Light & Wonder and Aristocrat. These companies are 10x and even more bigger than we, with a completely different kind of cash situation, development capacity, and so on.
We are a mid-range company, and we are competing against the other mid-range companies.
Let me ask you a question, Harald, based on facts. Your parent company bought AGI at around about AUD 2.75, I can't remember, six or seven years ago. The fact is that shareholders from that time have had a very, very bad result in AGI. No dividend or minimal dividends, and a capital loss relative to the price your parent company paid. That's a fact, Harald. Could you clarify to shareholders why the performance since your parent company took control has been so poor from a shareholder value perspective?
It was simply the market condition and maybe Novomatic at this time paid too much.
Well, they're a smart company, and they're a major global gaming company.
And don't forget that the whole world was in a crisis in the last for over two years, which have impacted all companies and especially the gaming companies, because most of the casinos were closed.
Okay. Okay, that's a few years ago, Harald, y ou know, as you know, Aristocrat and Light & Wonder, okay, they're bigger companies, but they're shooting the lights out recently. But look, all I'd say, Harald, is, again, I'm disappointed if this strategic review won't be announced as a result of the AGM, but you've told us it won't be. Shareholders had a pretty poor run in this company, Harald. We're all hoping that the board can deliver an outcome that restores some of the value to shareholders, please, Harald.
Okay. Accepted.
Thank you. Thank you.
Thank you.
Your next question is from the line of Jim Devlin with Henley & Company. Please go ahead.
Yes. Hi. Good morning to you folks in Sydney. First thing, I wanted to congratulate you. I saw the interview you did with Frank Fantini at the Global Gaming Show in October, and you had success at that point, you were saying you were gonna be launching some new games, and that the clear focus was to go after the multi-denomination space in the United States with the Raptor cabinet and the San Bao series of games. And you said that your dedicated focus was to low denom. It's by far the biggest market segment of the slot machine floors in the U.S., right? There's 1 million machines out here.
We've seen that the San Bao Pandas and Dragons are in the recent Eilers, Eilers reports, and you had mentioned that you thought that that was important to have one or two or more games in that report. How is the momentum Ainsworth is seeing today in the U.S. low denom market, and where do you see it going, if you can window that out, you know, throughout this year and, you know, future periods?
Look, there's another huge success for Ainsworth. We have, I would say, for the first time in history, we have, in Eilers' report, the Raptor is the number one cabinet in the U.S. for the new cabinets, with a house average above $2. San Bao is successful and is the most successful game in HHR, continues now the success in the low denomination area in the U.S. I have recently seen the full pipeline of our R&D center in Nevada. We are coming out with a lot of new games, and of course, based on the success of San Bao, Panda and Dragon, we will release end of this year, beginning of next year, other San Bao games. So I expect b ased on this success that even in the U.S., in the low denomination market, will increase our ship share.
Okay. Thank you. And I just had a couple of other questions. One is, there is now an approval to move forward potentially in the United States and raise the jackpot hand pay threshold level, which was inaugurated in 1977 at $1,200. It hasn't changed since then, and it might be adjusted for inflation to $5,800, is the report. How does that impact Ainsworth? I would think, or the scuttlebutt is that it could cause bet inflation across the United States. In other words, you can't find a $5 blackjack table anymore in the United States. All over the Las Vegas Strip now, kind of the minimum buy-in to a blackjack table is $25, so you've seen 5x bet inflation.
Would we expect on the change of the tax code on hand pays going to almost $6,000, how would that impact your business? Would it impact the high limit rooms? Would it help you in low denom? Can you comment on that?
You can answer if you want.
Jim, you're right. Like, that's going to affect every manufacturer, you know, in the same, on the same basis. You know, we constantly see regulatory changes affecting the market, and we, you know, adjust accordingly. So the actual, the effect will only be something that will be seen in the future.
Right. But the logic being, though, a lot of machines get disabled at this $1,200 threshold. So if somebody were to win $3,000 or $4,000 or $5,000, the machine stays in play, you should get more coins through. It should help your win per days. I mean, is that a logical thought?
Yes, and it's good for the operators. Good for everybody.
Yeah. So, yeah, it's a win for everybody. Okay. Thank you. And then, just one other question with Europe. There's a video from the recent London ICE trade show, where the President of Ainsworth North America announced partnerships and distribution agreements to take Ainsworth's cabinets into Europe. Harald, I mean, you were once the CEO of the largest gaming operator on the continent in Europe. Two questions: Is Ainsworth licensed to sell gaming equipment today in Europe? And two, what's the total size of the European market addressable, and what's the opportunity for Ainsworth in the future?
So first, it was not, it was not the President of North America, it was the President of Latin America, Miguel Guardado. And my expectation to Europe, we are currently selecting mainly the Spanish markets based on the contracts and as the contracts and partners we have in Latin America. W e have a agreement with Aristocrat that they are supporting us for the Spanish market. The Spanish market is very difficult because you're translating money into points, then you play with points, and at the end of the day, you are translating the points again to money, and you need a converter, which we are currently developing.
But Spain, Spain is with more than 200,000 machines, I would say, the biggest European gaming market, which is via the converted vessel for us. We are looking at France because it's the only real casino market in Europe, because in most of the other countries, you have limited payout machines. So we are currently selecting, and this was also the case on what we did on the ICE show in London. We are currently evaluating which countries it makes sense to go to, and there are not so many licenses necessary. It's more the technical evaluation, which has to be done.
For example, in Spain, you have 16 different regions, and each region has to license your, your games from the, from the, process and so on. But, To be honest, I don't expect too much from Europe because we are, once again, we are competing against, against the European companies, the Spanish one, Gauselmann, Novomatic, and so on. But even if we are selling 1,000 pieces there, it would, it would support our, our bottom line.
Okay. And then, but as far as Europe goes, they kind of have the same problem the U.S. market does when it relates to horse racing, which is kind of stagnant to flat or down track handle. My thinking is HHR is a proven technology. There's actually a report out today, where Kentucky is supposed to eclipse $10 billion in HHR handle. It'll be six times bigger than the Kentucky Lottery this year. It's an outsized success. Would it be, I mean, there's racetracks all over Western Europe for them to increase their handle. Would HHR be transportable outside of the United States?
Thank you.
As HHR is only successful in regions where you have no approved or no normal slot machine market. The only country in Europe where it would make sense is France, because in France you have no limited payout machines, you have a lot of horse tracks there. So but outside of France, I'm not expecting a big success because you have in nearly all the European countries, you have a slot gaming market.
Okay, thank you. Continued success.
Okay, thank you.
Your next question is from the line of Steve Emerson. Please go ahead.
Thank you for your great success, particularly at the Vegas show and your new machines. Could you please tell us the backlog in your new machines, North America?
Look, we have started the production in December with 50 pieces, in January, 75, which is continuously increasing. And I think we will reach the maximum capacity in April or May with 500 pieces or 600 pieces per month. So currently, we are in a kind of startup phase. And once again, we are currently selling our Raptor cabinet, mainly in the U.S. We have a backlog of roughly 100 pieces for Latin America, especially for Mexico. But it's a little bit too early to give you a clear backlog figures because it's not, o nce again, it's in a startup phase. And we have trial periods with customers and so on.
Of course. Thank you. Now, can you discuss, please, your some of your objectives for this year, next year? I'm not asking for guidance, but if you can give us objective ranges, this will significantly help your valuation as the street or Australia analysts can then help the valuation of your stock, because in my view, it's selling at half of Light & Wonder's multiple. So if you can clarify, that's on 2024, it would be greatly appreciated if you would help us in our modeling.
There is not multiples.
Yeah, regarding the, let's say, the objective for 2024. First of all, I start with the different regions. When I start with Latin, based on the current political situation, Argentina, we will reduce our sales in Argentina because this is, or is it because of the devaluation of the pesos. It's a high-risk country currently. We are currently in the. I don't know if you know, but Mexico has restricted all the imports. We have now, together with a second company, got the import license, which is formally approved. We just need for the official confirmation.
So we will try to cover the reduction in Argentina with other countries in other regions in Latin America. So I don't expect a huge growth in Latin America. I expect the growth in North America based on the recent success of San Bao and the Raptor cabinet. And the objective here is finally to double our market share within the next 24 months. Australia, we have, in my opinion, much better game pipeline, which would also result in a market share increase. So that's more or less the objective for next year. Give me just one second. I'm looking for something.
Of course. It'd be fabulous if you could give us a range of revenue and EBITDA that like North American companies do for these metrics.
So I cannot give you an EBITDA and profitability forecast, because this is simply not possible. But what I told you, we are expecting a growth in all the regions.
Okay. Perhaps.
And there will be an update, and there will be an update at the AGM.
Okay. But look, once you give metrics or help analysts come up with numbers, then you can close the gap with the other fast-growing suppliers. Now, HHR, do you have an estimate of the number of machines of the industry, end of this year, end of 2025?
No, I have currently no, w e just know that several states are considering to approve HHR, but there is no update with how many machines they are calculating.
Okay. Thank you very much.
Thank you. Yeah.
Your next question is from the line of Ron Shamgar, with the Tamim Asset Management. Please go ahead.
Yeah. Hi, guys. Can you hear me?
Yep.
Yeah, hi, and just sort of more relating to the first few questions. You know, I think in terms of the strategic review, I think there's definitely an expectation that a corporate transaction will eventuate. And I think that one thing you wanna keep in mind is that the stock is currently trading at AUD 1.30-AUD 1.40, only because of the strategic review. And I think if there was no sort of corporate transaction outcome, the stock would definitely be back to sort of AUD 1.00-AUD 1.10, where it was before. I think some of the issues that you have is the illiquidity on the ASX, which restricts the larger funds to buy the stock or get interested, and obviously a lower valuation.
So I think when you're comparing that multiple, it's important to keep in mind that the only reason the stock is trading where it is, is because there is some expectation of a corporate transaction outcome. And I think we are, we are shareholders, and we also support the company looking to potentially list in the U.S. market. I don't believe it's going to cost as much as $7 million to $10 million. I mean, we've seen other companies do this, and I think the stock will rerate if you did that, which will, you know, provide a better shareholder outcome overall. So, you know, that's just our view, and we, we support that. And I think there is an expectation for this strategic review to bring a corporate transaction outcome, sooner than later.
Just one comment also to the other questions, and I have this list now in front of me. Aristocrat has a multiple of 11, Light & Wonder has a multiple of roughly 9, IGT, Ainsworth, 6, AGS, 5.6, Inspired, 5, Everi, 5. So, all these companies, besides Ainsworth, are listed on the U.S. Stock Exchange, and we still have a higher multiple than, a nd we have similar multiple than IGT. So the only exception is Aristocrat and Light & Wonder, and the rest is we are currently fair valued.
Just to all the remarks and all the stories about go to the U.S. and everything will be better. Even the figures from the other companies are proving that it's not the case.
Yep. Yep. All I'm saying is just keep in mind, the current share price is inflated purely because of the strategic review
I have already deducted. I have not taken the current share price. I have taken the share price before the announcement. And the share price before the announcement, there was a multiple of six, roughly. Now, we have a multiple of nearly eight.
Yes.
So I have already taken out the improved share price because of the announcement.
So can you just clarify again, what was the purpose of doing this strategic review with Macquarie? You know, I mean, what are you trying to achieve? Obviously, you know, just trying to understand what are you trying to achieve?
Look, there's a, there's a consolidation going on in the industry, and there are also some rumors that sooner or later, IGT will come out with a new corporate structure. The small and medium companies like AGS, Inspired, Everi, Ainsworth, at the end of the day, they are too small to, to survive standalone. And that's exactly the review we are taking. It doesn't mean that we are selling, it doesn't mean that o r it doesn't mean that we are sold, it doesn't mean that we are bought. It could also be that the company's merging with another company, which would generate additional synergies or maybe additional product lines. We are completely open, and I simply, I wanted to test the market, what kind of opportunities we have.
Right.
And therefore, we have chosen Macquarie because they are in both regions, in the U.S. and in Australia, one of the biggest investment banks for the gaming technology sector.
Yeah. Okay. And then, I mean, it sounds like the strategic review sort of began sometime in October last year, and was announced to the market in November. Waiting until the August/September results this year, you know, it's quite a long time for a strategic review, and that's why I think there's an expectation that, you know, shareholders want an outcome by the AGM.
Look, but I think everybody who has experience in the M&A market, what's the normal process? You define an investment bank, you make some kind of company presentations. This company presentations has to go, has to be approved by the board, then it goes to the investment bank. The investment bank is sending it out to several potential interested parties. The interested parties are looking this. There is an NDA. There is a data room, and so, and then you are starting to talk with maybe two or three possible cooperation partners. Even that process until we reach any kind of deeper analysis will simply take until May, June.
Then you are starting to negotiate with the companies. So, then you are maybe signing this maybe in September, and then there is a period of 3 months to 6 months until you can close it. That's the normal process, and I have done a lot of acquisitions in my life, and you cannot expect within 6 months an outcome of that kind of strategic review. That's simply not possible.
Yeah. Okay. I mean, last one for me. I mean, one of the concerns of investors also is that at the end of the day, Ainsworth is controlled by Novomatic, and there is not much of interest for Novomatic to create some sort of a competitive bidding process for Ainsworth or anything along that line, because it would sort of not necessarily work in their favor, considering they, if they would want to own the entire company. So there is some perceived conflict of interest.
So number one, Novomatic is already controlling the company because they have 53% of the shares. And once again, if Novomatic is interested or not, I cannot answer, because you have to ask Novomatic. But the conflict, there's no conflict of interest. They are a shareholder, like all the others.
Yep. Okay. All right. Thanks a lot. Cheers.
Thank you.
At this time, there are no further questions. I will now turn the call over for closing remarks.
Yeah. Thank you for your participation, and also thank you for your answers. And I hope I could clarify some of the thoughts which you have, and also something about the timeline of this project. And, yeah, I would say the next come together is the AGM, and I hope I can, a nd believe me, I also hope that I can give you maybe more information at this time. Thank you.
This concludes today's teleconference. Thank you all for joining it. You may now disconnect.