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Gaming Guru

Howard Stutz

Shuffle Master Earnings Increase; New Products Already Popular

7 September 2005

On the same day Shuffle Master announced several quarterly earnings records, the table game equipment manufacturer said it had made significant sales inroads with two of its newest products.

The Las Vegas-based company said Tuesday it had received its largest order for a roulette table chip sorting machine and that its automated table game product will be distributed into Spain.

Both devices are somewhat new to the company's product line, and the announcements did not figure into the Shuffle Master's third-quarter earnings, which included a 17.4 percent quarter-over-quarter increase in revenue and a 25.7 percent jump in cash flow.

Company Chairman Mark Yoseloff said the sales and the addition of new table games has put Shuffle Master in a good position to prosper.

"We have the broadest array of table game content in our company's history," Yoseloff said during the company's conference call with analysts and investors. "Our outlook is very bright."

Shuffle Master earned $8.1 million, or 22 cents per share, in the three months ended July 31, compared with $6.3 million, or 17 cents per share, a year ago. The latest per-share results beat the estimate of analysts polled by Thomson First Call by a penny.

Revenue rose 17.4 percent to $27 million from $23 million.

Cash flow, defined as earnings before interest, taxes, depreciation and amortization, was $15.2 million, up 25.7 percent from $12.1 million in the same quarter last year.

Shuffle Master shares rose 88 cents, or 3.77 percent, Tuesday to close at $24.25 in trading on the Nasdaq National Market.

Before announcing its earnings, Shuffle Master said it entered an agreement that will have Table Master, an electronic, multiple player blackjack game, distributed throughout Spain. Yoseloff said revenues from Table Master were $1 million during the third quarter and the agreement will contribute more than $5 million to the company in revenues in the first year of the transaction.

The company said it received its largest order ever for the Easy Chipper roulette chip sorter, placing 125 units into the Genting Highlands Casino in Malaysia.

"We announced our first sales for the Easy Chipper in the second quarter and we think the product's outlook is promising," Yoseloff said.

Deutsche Bank gaming analyst Marc Falcone, in a note to investors, said despite a 22 percent decline in the company's stock price since July 8, the company's earnings are still solid.

During the conference call, analysts asked if Shuffle Master would suffer because of damage to equipment by Hurricane Katrina.

Yoseloff said insurance was sufficient to cover damage to any leased products and would replace revenue lost because of business interruptions.