Shuffle Master’s net helped by cost cutting

Sep 15, 2009 5:06 PM
Industry Insider by Ray Poirier |

Despite a 9 percent drop in revenue, Shuffle Master Inc. (SHFL) was able to increase earnings during the third fiscal quarter primarily by better managing its costs.

Earnings for the period jumped to $5.6 million or $0.10 per share from last year’s $3 million or $0.08 per share.

"Improved cost control," was a major factor according to Tim Parrott the company’s new chief executive officer.

"We believed we are continuing to strike the right balance between sales and lease revenue," he said.

Also benefiting the company’s operations, said Grant Govertsen of Union Gaming Group, was the lack of spending among casinos.

"The current capex (capital expenditure) environment at casinos," he told Reuters, "plays right into Shuffle’s hands in that capex budgets have never been lower, so it’s easy for the company to lease its products rather than sell."

The company has been shifting its business model to generate more lease-based revenue and targeting cost reductions to counter sagging sales amid the weak economy.

Question? Comment? E-mail me at: Ray Poirier