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A recent stock offering by Shuffle Master prompted Wall Street to sing the gaming equipment provider's praises.
The third-quarter earnings from the Las Vegas-based distributor of table games and table games-related products added to the chorus.
Shuffle Master said Tuesday its net income for the quarter ended July 31 was almost $3 million, compared with $2.7 million a year ago.
Earnings per share came in at 8 cents, the same as a year ago but below 10 cents estimated by analysts polled by Thomson Financial.
Revenues rose 9.8 percent to $49.5 million from $45.1 million.
"In three months time, we committed to a refinancing solution and successfully executed it thereby strengthening the balance sheet," Shuffle Master Chief Executive Officer Mark Yoseloff said. "We will now turn our attention to cost control and expense reduction."
Last month, Shuffle Master completed a secondary stock offering of 20.3 million shares that raised roughly $86 million and increased the company's lending capabilities by $60 million. The company plans to repurchase outstanding debt.
Company executives and analysts noted Shuffle Master is moving away from direct sales of its products toward a business model that focuses on leasing the equipment to casinos.
Deutsche Bank gaming analyst Bill Lerner thought Shuffle Master could raise earnings per share annually by 25 percent.
Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said the stock offering may have helped flipped the company's fortunes. Shuffle Master's stock has traded anywhere from $16 a share to a low of $3.93 a share in the past year on the Nasdaq National Market. On Tuesday, shares of Shuffle Master fell 55 cents, or 9.91 percent, to close at $5.
"So far, management has taken the right steps in returning this company to a lease-based model," Wieczynski said in a note to investors. "We acknowledge that it will take time for the results to become more consistent. We expect operational improvement will be key to bringing investors back into the shares."
Shuffle Master acting Chief Financial Officer Coreen Sawdon said the company's refinancing strategy helped retire a large amount of debt.
"We have significantly de-levered our balance sheet and improved the company's financial flexibility," Sawdon said.
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