Todd Valli - Ram V. Chary - Chief Executive Officer, President and Director Randy L. Taylor - Chief Financial Officer, Principal Accounting Officer and Executive Vice President.

David Bain - Sterne Agee & Leach Inc., Research Division Jason Kreyer - Craig-Hallum Capital Group LLC, Research Division.

Hello, everyone. Thank you for standing by, and welcome to the Global Cash Access Holdings, Inc. First Quarter 2014 Earnings Conference Call. [Operator Instructions] This conference is also being recorded today, Tuesday, May 6, 2014.

And I would now like to turn the conference over to Todd Valli, Vice President of Corporate Finance and Investor Relations. Please go ahead, sir..

Thank you, and welcome, everyone, to our first quarter 2014 earnings conference call. Joining me on today's call is President and Chief Executive Officer, Ram Chary; and Chief Financial Officer, Randy Taylor. Before turning the conference over to Ram, please note the following.

First, we have posted our earnings release to the Investor Relations section of our corporate website at www.gcainc.com. Second, if we use any non-GAAP financial measures for references, we will provide the appropriate GAAP financial reconciliation on our website. Third, a replay of today's call will be posted on our website after 5 p.m. Pacific Time.

Fourth, please note that today's discussion contains forward-looking statements based on the environment as we currently see it, and are subject to a number of risks and uncertainties.

These include, without limitation, the overall growth of the gaming industry, if any; our ability to replace revenue associated with terminated contracts; margin degradation from contract renewals; our ability to introduce new products and services; our ability to execute on mergers, acquisitions and/or strategic alliances; our ability to integrate and operate such acquisitions consistent with our forecasts; gaming establishment and patron preferences; national and international economic conditions; changes in our gaming regulatory, card association and statutory requirements; regulatory and licensing difficulties; competitive pressures; operational limitations; gaming market contraction; changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; inaccuracies in underlying operating assumptions; unanticipated expenses or capital needs; technological obsolescence; and employee turnover.

And fifth, for factors that could cause actual results to differ materially from those described in our forward-looking statements, we refer you to our SEC filings and the risk factors set forth therein. With that, I am pleased to introduce our President and CEO, Ram Chary..

Thank you, Todd. Good afternoon, everyone, and thank you for joining us today to discuss our first quarter 2014 financial results. In my first 100 days with the company, I have been impressed by the feedback that we have received from our clients. They consistently view us as a strategic partner who helps them to compete in the gaming marketplace.

As we move forward, we will continue to shift our focus to providing them full solutions as opposed to individual products. That transition begins with our integrated kiosk. Rather than focus on short-term hardware sales, we will offer kiosk as part of an overall cash support solution.

As innovations like QuikTicket, TableXchange and Cash Club make their way from beta to market, we will integrate them into broader, multi-year solution offerings that are consistent with our position as a long-term strategic partner for our clients. Our gaming footprint is unique.

To that end, any material investment by our company needs to be gaming relevant. While our recent acquisition of NEWave is small, it is consistent with our objective of increasing the value to our gaming client base.

Even though we will continue to pursue other gaming-relevant opportunities, our overall capital allocation approach will remain the same. We will continue to buy back shares and pay down debt in addition to making capital investments in our business. Network security is one specific area where we have and will continue to make investments in 2014.

Our segment of the payments industry is clearly not immune to security threats. Correspondingly, we fully intend to maintain our best-in-class leadership position. As we proceed through this year, our financial results will better reflect our market-leading position.

We recently renewed agreements to provide integrated solution offerings to several key long-term customers such as the Seminole Tribe of Florida and Pinnacle Entertainment to include the recently acquired Ameristar properties.

These renewed and expanded customer relationships, together with expected new business signings, will help to bolster our top line. At the same time, overall efficiency initiatives and incrementally improved new business margins will help us to be more profitable.

Randy will now review our first quarter and provide insight on our updated full year guidance..

modest improvement in the company's overall operating margins and modest growth to the domestic gaming industry and operating income from our cash advance segment. We also expect 2014 capital expenditures to be within a range of $15 million to $18 million. This concludes the portion of the call. Now back to Ram..

Thank you, Randy. We will now turn the call back to the operator for questions..

[Operator Instructions] And our first question comes from the line of David Bain with Sterne Agee..

Can you give us a little bit more on NEWave? Apologize, I'm on the move so I don't see a lot of detail, but if you can provide maybe in terms of size acquisition and strategic fit, if it's accretive or impactful to guidance, maybe just a bit more on the strategy as well..

NEWave is a software provider that gives the capability to our clients inside the cage to better manage AML and task-filing requirements. It's a relatively small business. All in, it's about $14 million to us, which we funded, as Randy mentioned, with cash on hand.

It's consistent with our gaming-relevant acquisition approach, in that clearly it's gaming-relevant because it helps our casino operators inside the cage be more efficient with things they're required to do.

So your question to whether or not it's accretive, we have an integration plan, identified and in place, and we have to execute against that plan for the remainder of the year. But to the extent we do so, we expect it to be accretive..

Okay, great. So that -- okay, so that may answer part of my second question. But as it relates to guidance, you know a couple of different things. One is that margins will go higher. I'm wondering if that's a portion of that for Ceasar's contract, credit card cash advance mix or other factors such as this acquisition.

And then in terms of your outlook for the domestic gaming industry, if you could speak to anything that led you to the assumption where we're going to see it relatively flat, I guess, is it easing comps, is it something you hear from customers on pent-up demand after weather issues -- any trends on May? Anything there will be helpful as well..

Relative to our increased guidance, we're very focused on continuing to run a more efficient company. So we have some broader house initiatives underway that will help us and translate to better financial performance.

As I've mentioned before, we're also very focused on our core cash access business, not just improving the margins that we have today, but as we pursue renewals and do business, pursuing business that would be more profitable to us given our deposit margins. So those are the things that are really driving the guidance.

The modest growth in the domestic gaming industry, we believe it won't be flat. It will at least grow even if that's only 1% on a year-over-year basis. But we think that, that growth, consistent with our internal initiatives, will allow us to be more profitable as we go through the year..

Okay. That's all right. I don't usually deal with 3 questions, but if I could just ask because it's part of this new bundling strategy as to the progress of some of the new products like the QuikTickets, maybe how many customers have it on beta at this point.

Any data points in terms of coin-in improvements for customers or usage by customers or their customers?.

Well, as I've mentioned in my opening remarks and it applies to QuikTicket, TableXchange and our Cash Club offering, we are shifting to combine those into a more meaningful solution sale that will allow our capability to be fully showcased within our customer's footprint.

And so we're starting to move away from talking discretely about individual products. Those are all on the timeline, to time out the next several months in terms of how they're going to be offered in our solutions. But we're moving away from discretely identifying and describing individual products as they relate to our overall solutions..

[Operator Instructions] And our next question comes from the line of George Sutton with Craig-Hallum Capital Group..

It's Jason on for George. Just wondering, Ram, if you could clarify, in your prepared remarks, you talked about this individual moving to a suite sale.

I'm wondering if that still pertains to the kiosk business if you'll still sell that individually or if that is also moving to a suite sale?.

In my remarks, I described the integrated kiosk as being the beginning of that shift. So we are definitely integrating the kiosk as a standalone into a broader solution sale. We're selling that solution in total. Our recent renewals and our expected new business signings that we have in the pipeline I think will reflect that.

Again, as I mentioned, that will get us away from a short-term hardware sale into a more sustainable, longer-term revenue flow against that solution..

Okay.

And then just wondering if you can provide any updates to pricing, what you're seeing, if there's any change to your previous commentary and then your expectations for pricing as you move into these suite sales?.

Yes. As a market leader, I have mentioned before that we shouldn't be as successful as we have been to the commoditization of our solutions and that we have differentiated solutions that should provide differentiated value to our clients, and, therefore, command a premium in the market.

And as we move the solution sales, we're going to be uniquely positioned relative to any possible competitor from providing an integrated solution that no one else can provide. And I think that will translate its inherent value for our clients, and that value for our clients will translate into better results for us.

So we are taking the initiative to be proactive about how we describe and ultimately sell our solutions. And I think that will help relative to some of the historical pressures we have been a victim of, frankly, relative to pricing pressure..

Okay, perfect. And then just last from me. You did talk about the NEWave acquisition. And I'm just wondering if you can maybe provide any thoughts into other areas of the market that you could pursue some M&A opportunities..

Again, as I described in my opening remarks, whatever we do will be gaming-relevant. So I have taken the time, as you would expect, to talk to our major clients and really try to listen in terms to what's important to them both operationally and strategically in terms of running their businesses.

And I have, as you might expect, talked to them about some of the ideas that we have internally in terms of expanding our business through acquisition. And those ideas at least conceptually have been received very well in that they resonate with our gaming clients, which would tell you that whatever we do would be gaming-relevant.

And I keep describing the term gaming-relevant because I don't want to be pioneering in terms of doing things as being gaming-specific or payment-specific, but instead things that would be relevant to our gaming base.

Clearly, we're a payments company, but if we pursue things that are outside of our current payments offerings, they still need to be relevant to our gaming customers.

So you'll see us continue whether it's larger or smaller, whatever the time frame may be, we're going to be opportunistic, but we're going to pursue an M&A approach that's gaming-relevant..

[Operator Instructions] And I'm showing no further questions at this time. I'd like to turn the call back over to management for closing remarks..

We have no further remarks. Thank you, everyone..

Ladies and gentlemen, this concludes the Global Cash Access Holdings, Inc. First Quarter 2014 Earnings Conference Call. Thank you for your participation. You may now disconnect..