Shuffle Master’s Q3 dip hurts price of shares

September 11, 2007 6:37 AM
by

share

Shares in Shuffle Master Inc. (SHFL) fell 8.6% in after hours trading on Monday in the wake of the company’s financial report for the third quarter that ended on July 31.

The company reported an increase in revenues to $45.1 million from last year’s $40.7 million but earnings were only $2.74 million, or $0.08 per share, a sharp decline from last year’s $7.27 million or $0.20 per share.

Analysts had expected revenues to reach $46 million and earnings to be in the $0.13 per share range.

In after-hours trading, the share price fell to $13.99 from the closing price of $15.31.

Total shuffler installed base increased 17% to 24,572 units while utility products lease revenue totaled $6.3 million, equaling the previous quarterly record established in the fourth quarter of 2005.

Mark Yoseloff, chairman and CEO, said the quarterly results showed progress in the company’s long-term strategic initiatives laid out earlier this year.

He also announced recently instituted organizational changes at its global headquarters in Las Vegas. The company said the Las Vegas-based operations have been divided into two distinct entities, a corporate headquarters group and a new profit center called Shuffle Master-Americas.

Yoseloff said he will lead the corporate group which will be responsible for overseeing the global execution of approved strategies and initiatives.

The Shuffle Master-Americas group will be under the supervision of President David Lopez..

Isle of Capri

It wasn’t the way the new chief operating officer of Isle of Capri Casinos Inc. (ISLE) would have preferred her first appearance to be, but Virginia McDowell was upbeat in describing the future.

A lackluster first quarter left the company with a loss of $7.1 million or $0.23 per share compared to a profit last year of $9.3 million or $0.30 per share.

Revenues increased 2% from $274 million to $278.5 million.

Taking a toll was the expense of pre-opening costs at two new properties and an early debt extinguishment. These items totaled $4.9 million or $0.16 per share.

Analysts had expected the company to show a profit of $0.04 per share.

Less than a spectacular performance from its new racino in Florida hurt the company’s projections. Pompano Park held a 54% market share of the three licensed slots properties in Broward County but the results were still disappointing.

Analysts took varying views of the first quarter report.

Brian McGill at Wachovia Capital Markets felt that the Florida performance was handicapped by a nearly 60% tax rate and competition from Indian casinos that pay no taxes. Also, he felt the Mississippi and Iowa casinos were getting squeezed by increased competition.

Larry Klatzkin of Jefferies & Co. said he felt the results looked worse than they really were. He ignored an increase in interest expense and higher depreciation by focusing instead on its EBITDA (earnings before interest, taxes, depreciation and amortization) that reached $55.6 million.

And Robert LaFleur, an analyst at Susquehanna Financial Group noted that the Florida results had improved since automatic teller machines were installed in July. He expects further improvement as tourists head south for the winter months.

Nevada Gold

Nevada Gold & Casinos Inc. (UWN) was able to discard the red ink after selling its way out of the racino business.

For the first quarter that ended on July 29, the company said it had net income of $500,000 or $0.04 per share compared to last year’s loss of $1.8 million or $0.14 per share.

Helping the company climb back into the black was the sale of its share of American Racing, an activity that was involved in the slots and racing action at Tioga Downs and Vernon Downs, both in New York State. The sale left the company with a gain of $1.3 million.

Excluding the impact of non-recurring items, the company said it would have recorded income before taxes of $41,000 compared to a loss of $2.8 million in the first quarter of 2006.

CEO Robert Sturges said the company continued to "deploy our resources to the most compelling projects in our portfolio and we remain committed to divesting non-core assets."

The company owns a 43% interest in the Isle of Capri-Black Hawk Casino in Colorado and operates the Colorado Grande Casino in Cripple Creek. It also has projects with several Indian tribes.