Shuffle Master has profitable second quarter

Jun 12, 2007 5:32 AM

Just a day before Shuffle Master Inc. (SHFL) gave its financial report for the second quarter one analyst told clients they could expect a solid quarter with earnings of fifteen cents per share.

He was only half right.

On Wednesday, the company said it had returned to a profit making basis for the second fiscal period that ended on April 30 but that earnings per share had only reached $0.10, or three cents less than the consensus expectations.

A day later, the company’s stock was pummeled, dropping $2.10 per share to $17.51 per share.

Speaking about the company’s most recent experience, Dr. Mark Yoseloff, chairman and CEO, said he believed the company had positioned itself to "re-accelerate growth and drive long-term, sustainable profitability in the future."

He noted that the quarter was equal to the company’s 2006 report and substantially better than the first quarter of 2007.

However, he would not give guidance for the remainder of the fiscal year.

Revenue for the period was $44.6 million with per share earnings of $0.10.

Total revenue from the Australian company Shuffle Master acquired last year totaled $13.9 million, a "sequential quarter increase of $3.8 million from $10.1 million." Also reflected in the quarterly report was a 17% increase of installed shufflers and a 15% increase in shuffler sales.

There was a decrease in gross margins and operating margins, the company said. "The decrease in gross margins was due to product sales mix, namely the contribution of lower margin sales of Stargames slot products."

Yoseloff said the company does expect "to see improvement in the back half of the year, however, the remainder of fiscal 2007 will be characterized by additional term challenges and staying the course in order to achieve our long-term objectives. For that reason, we continue our previously communicated suspension of fiscal 2007 earnings guidance."