Continued strong growth boosts Shuffle Master net income

Feb 25, 2003 6:41 AM
Benefiting from strong table game revenue and slot product revenue, Shuffle Master Inc. (SHFL) reported net income of $3.3 million or $0.19 per diluted share for the fourth fiscal that ended on Jan. 31. The company’s revenue of $14.2 million was an increase of 19% over the $11.9 million reported during the corresponding period of a year earlier. Oaperating income increased 37% to $5.1 million, easily topping last year’s $3.7 million. Prior to last week’s report, company officials reiterated their expectation that fiscal 2003 earnings per share would grow by approximately 20% to 25% or to $0.91 to $0.95 per share. But because of the strong first quarter, the company has raised its expected earnings per share to $0.93 to $0.97. In announcing the quarterly results, Dr. Mark Yoseloff, chairman and CEO, remarked that “Several positive developments have already taken place in the second quarter, including the initiation of blackjack in Arizona and the approval of our upgrade kit in Nevada. We continue to have an extremely positive outlook regarding the rest of the fiscal year.” Included among the first quarter highlights, he said, were: Recorded the 21st consecutive quarter of recurring revenue growth. Increased operating margin from 31% to 36%. Generated EBITDA (earnings before interest, taxes, depreciation and amortization) of $7 million, representing 50% of revenue. Repurchased 541,000 shares of the company’s common stock at a cost of $10.3 million, an average of $18.96 per share. Increased rolling fourth-quarter return on equity to 34% from 31% a year ago. Generated almost $5 million in free cash flow in the quarter. Magna Entertainment Net loss more than doubled during the three months ended on Dec. 31, 2002 even though revenues were higher for Magna Entertainment Corp. (MIEC). Revenues for the period were $106,821 compared to last year’s $92,511 but the loss per share increased to $0.10 from last year’s $0.06. For the years, Magna Entertainment saw revenues grow to $549,221 from the previous year’s $519,061 while EBITDA fell to $23,869 from $51,689. “The major reasons for the decline,” explained Jim McAlpine, president and CEO, “were a write off of asset values recorded on a prior year’s acquisition, higher insurance and utility costs, costs associated with the launch of XpressBet in California and HRTV, and a weak economy in many of the markets in which we operate. Also, losses incurred at Lone Star Park and The Maryland Jockey Club between their dates of acquisition and year-end, which arose because their primary race meets for the year were completed prior to acquisition, contributed to the decline. “In addition, we incurred costs attempting to improve the regulatory framework for a variety of our business operations. We also retained a number of experts to advise on matters relating to possible alternative gaming at our racetracks in 2002.” McAlpine added that “despite the net loss, our basic strategy remains intact. Today we are North America’s number one owner and operator of horse racetracks and related pari-mutuel wagering operations, a position that will benefit the company and its shareholders in the years ahead.” Pinnacle Entertainment During the year 2002, Pinnacle Entertainment Inc. (PNK) experienced a management change primarily due to regulatory problems that resulted in a new chairman and chief executive officer taking over. That was Dan Lee, a former Wall Street executive who became chief financial officer for Steve Wynn’s Mirage Resorts. And it was Dan Lee’s financial background that showed up in the company’s financial reports for the fourth quarter and year that ended on Dec. 31, 2002. It read like a clean sweep with asset write-offs, regulatory penalties, impairment expenses and potential investment expenses. As for the operation of the company’s five properties, Lee said he was “very pleased with our fourth quarter and full-year results. Both operating income and EBITDA for our five U.S. properties jumped over $25 million for the 2002 year to $49.4 million and $91.5 million, respectively, led by Belterra Casino Resorts’ $21 million operating income and EBITDA improvement. I believe that reflects some of the strongest operating improvements in the entire gaming industry.” Lee noted that the company’s headquarters were being relocated to Las Vegas from California and that the directors had elected to no longer pursue the purchase of the Aladdin Casino Hotel. Excluding a charge related to an accounting change and other non-recurring items, the company’s net loss for 2002 improved to $4.7 million or $0.18 a share to a net loss of $18.9 million or $0.73 a share. Monarch Casino The fiscal year ended on Dec. 31, 2002, was a record year for Monarch Casino & Resort Inc. (MCRI), with net income increasing 87% to $8.6 million or $0.90 a share compared to the previous year’s $4.6 million or $0.49 a share. EBITDA for the period increased 13.6% to $27.5 million from $24.2 million. The company noted that in the fourth quarter net income was $0.14 a share on revenue of $17.4 million. Hotel occupancy during the period improved 3.6% to 89.3% with the average daily room rate rising to $51.75. John Farahi, co-chairman and CEO, said the improved results were achieved despite a soft market in the Reno, Nev. area. “Our results continue to be driven by a superior location, the commitment of the entire Atlantis team, and our intense focus on the local, tour and travel, and convention markets.” Resorts Atlantic City Gaming revenues were flat for the fourth quarter at the Resorts Atlantic City hotel/casino operated by Colony Investors IV, L.P. Net revenues for the quarter were $51.8 million a decrease of 1% from the fourth quarter of 2001 when net revenues were reported as $52.2 million. The decline was attributed to the closing of a 166-room tower in September, 2002. The company said the tower was demolished to make room for a new hotel tower and casino expansion. For the year, the company said net revenues increased 5% to $236.7 million compared to $225.2 million in the prior year. Acres Gaming Benefiting strongly from its Bonusing Technology for the gaming industry, Acres Gaming Inc. (AGAM) reported record results for its second fiscal quarter and six-month period ended on Dec. 31, 2002. Net income for the quarter was $2.3 million or $0.22 per diluted share, more than three times the $729,000 or $0.07 per diluted share reported a year earlier. Net income for the first half of the 2003 fiscal year was $2.8 million or $0.27 per diluted share compared to $1.1 million or $0.11 for the first half of 2002. “Business is quite good,” said Bud Glisson, company CEO. “We continue to expect earnings for the fiscal year to more than double last year’s earnings. Second quarter gross profit was a record for any quarter in the company’s history, and we have an estimated $19 million gross profit in our Dec. 31 order backlog. We’re aggressively investing in growth initiatives, adding staff and planning for a $3.3 million increase in second half expenses. We’re more confident than ever about our future.” Sands Regent Solid increases in revenues, resulting from a recent acquisition, were reported for the second fiscal quarter ended on Dec. 31, 2002, by Sands Regent Inc. (SNDS). The company said revenues were $12.7 million, a 68% increase over last year’s $7.5 million. The increase was credited to the purchase of the Gold Ranch Casino and RV Resort in Verdi at the California state line near Reno, Nev. For the first six months of fiscal 2003, the company reported revenues of $28.5 million, or $16.5 million more than last year. During the second quarter, there was a loss per share of $0.04 versus a loss per share last year of $0.06.