Shuffle Master posts record results

Wednesday, Sept. 7, 2005 | 11:02 a.m.

Las Vegas-based gaming equipment supply company Shuffle Master Inc. stayed on a roll in Fiscal Year 2005 with record earnings for the third quarter, company officials said Tuesday.

The company, known for its signature product -- automatic card shuffling machines -- has branched out into table management systems, table-game chip-sorting machines that use radio frequency identification microchips. The company reported an 18 percent increase in revenue to $27.3 million for the fiscal quarter ended July 31.

Shuffle Master reported earnings of $8.1 million, 22 cents a share diluted, on that revenue compared with $6.2 million, 17 cents a share, on revenue of $23.1 million for the same period a year ago.

Nine analysts surveyed by Thomson/First Call had expected earnings of 21 cents a share.

The company also reported record results in its first and second quarters of the year.

The earnings announcement came on the heels of two major overseas purchase agreements announced earlier in the day.

A Shuffle Master subsidiary signed an exclusive distribution agreement on its Table Master multiplayer table game platform with Machines Games Automatics of Spain. The company expects the transaction to contribute more than $5 million in revenue in the first year and the Spanish version of the platform, which is expected to be placed in arcades throughout the country, will include "Fortune Card," a modified version of blackjack.

The company also announced that it had received its largest order to date on its Easy Chipper roulette chip sorting machine, with 125 units acquired by Genting Highlands Casino in Malaysia.

Analysts are enthused about the deal in Malaysia, since the worldwide base of 6,500 roulette tables is untapped for that type of sorting technology.

Bill Lerner, a gaming analyst for Prudential Equity Group LLC, reiterated the company's "overweight" rating on the company, meaning that analysts believe the stock's total return will exceed the average total return of all of the stocks covered.

"These announcements indicate to us that Shuffle Master's international distribution strategy is paying early dividends," Lerner said in a note to investors. "In our view, this announcement is the first of a confluence of potentially positive events" including the earnings results, a special meeting for analysts today and next week's Global Gaming Expo in Las Vegas.

In the company's earnings announcement, Chairman and Chief Executive Mark Yoseloff said revenue from the company's utility products was up 37 percent to $16.5 million, more than offsetting a decrease in revenue from the company's entertainment products from $11 million to $10.7 million.

The flat performance in entertainment products was attributed to the conversion of the company's popular Let It Ride and Three Card Poker royalty units to lifetime license sales agreements.