Shuffle Master, Inc. Reports Record Fourth Quarter and Fiscal Year Results
biz.yahoo.com
Thursday December 8, 4:06 pm ET
LAS VEGAS--(BUSINESS WIRE)--Dec. 8, 2005--Shuffle Master, Inc. (NASDAQ: SHFL) today announced its operating results for the fourth quarter and fiscal year ended October 31, 2005.
Fourth Quarter Financial Highlights
Diluted earnings per share from continuing operations increased 33% to $0.24
Revenue increased 30% to $33.8 million
Income from operations increased 28% to $13.7 million
EBITDA from continuing operations increased 25% to $16.0 million
Fiscal Year Financial Highlights
Diluted earnings per share from continuing operations increased 35% to $0.81
Revenue increased 34% to $113.6 million
Income from operations increased 26% to $45.8 million
Net cash provided by operating activities increased 29% to $34.2 million
EBITDA from continuing operations increased 36% to $57.0 million
Significant fiscal 2005 accomplishments included:
Excluding a one-time $1.0 million asset write-off, full year diluted earnings per share increased 38% to $0.83.
Revenue surpassed $100.0 million for the first time in the Company's history.
Total revenue contribution from acquired CARD products was $10.4 million and $2.6 million for the one2six(TM) shuffler and Easy Chipper®, respectively.
Table Master(TM) products revenue totaled $4.9 million.
Total shuffler installed base increased 22% to approximately 18,600.
Total table game installed base increased 14% to approximately 3,700.
Proprietary table game content expanded significantly through internal development and acquisition.
Formed Shuffle Up Productions(TM) to further leverage the Company's intellectual property.
Formed strategic alliances with IGT / Progressive Gaming to develop a fully automated table game management solution and Ameranth Wireless, Inc., to integrate the Company's Deck Mate® poker shuffler into Ameranth's poker room management software.
Improved global distribution capabilities significantly through various distributor agreements, including Machines Games Automatics, S.A., in Spain and Casino Solutions S.A.C., in South America and the acquisition of VIP Gaming Solutions in Australia.
Named one of America's 200 Best Small Companies by Forbes magazine for the seventh consecutive year and included in the FORTUNE Small Business 100 list for the fourth consecutive year.
Mark L. Yoseloff, Chairman and Chief Executive Officer commented, "Fiscal 2005 represented a period of significant strategic accomplishment for Shuffle Master. Our record financial performance in virtually every category was complimented by successful product development, exciting intellectual property additions, strategic alliances, and a vast improvement in global distribution. We have executed on our plan of becoming a true global leader in entertainment and utility products for the table game market and we've done so while preserving our balance sheet strength and driving profitability to record levels."
Utility Products
Fourth Quarter 2005
Revenue from Utility Products totaled a record $20.5 million in the fourth quarter, an increase of 33% from $15.4 million in the comparable prior year quarter due to record quarterly revenues in the Company's core shuffler business, as well as additional placements of the Easy Chipper product. Utility Products lease revenue increased 23% due to a greater number of shuffler units on lease, primarily the Deck Mate, MD2(TM) and one2six shufflers. Utility Products sales and service revenue increased 37% resulting from increased sales of the ACE® and MD2 shufflers. Additionally, significant sales growth of the Easy Chipper contributed to the record increase in Utility Products sales and service revenue.
Fiscal Year 2005
For the fiscal year, Utility Products revenue increased 47% to a record $67.8 million versus $45.9 million in the comparable prior year period. Utility Products lease revenue increased 22% to $23.7 million versus $19.4 million in the comparable prior year period. The year-over-year increases in Utility Products lease revenue reflect the greater number of shuffler units on lease. Utility Products sales and service revenue increased 66% to $44.0 million versus $26.5 million in the comparable prior year period. The year-over-year increases in Utility Products sales and service revenue resulted primarily from a full year of the one2six shuffler sales, strong demand for the Deck Mate and MD2 shufflers and additional placements of the Easy Chipper. Additionally, fiscal year Utility Products sales and service revenue was favorably impacted by a 10% increase in consolidated average shuffler selling prices.
Entertainment Products
Fourth Quarter 2005
Revenue from Entertainment Products totaled a record $13.2 million in the fourth quarter, an increase of 26% from $10.4 million in the comparable prior year quarter primarily due to the Company's sales of Table Master. Entertainment Products lease and royalty revenue increased slightly compared to the prior year quarter. During the fourth quarter, the Company experienced a higher average monthly royalty rate for Three Card Poker®, Four Card Poker® and Fortune Pai Gow Poker®, which favorably impacted lease and royalty revenue. The fourth quarter was also favorably impacted by additional lease placements of the Company's Table Master products, Four Card Poker, Dragon Bonus, and the recently acquired games of Bet the Set 21(TM), Jackpot Pai Gow Poker(TM), and Progressive Pai Gow(TM). Offsetting the increase in lease and royalty revenue was the conversion of Let It Ride® and Three Card Poker royalty units to lifetime license sales. Entertainment Products sales and service revenue increased 63% resulting from increased sales of the Company's Table Master products, partially offset by a decline in lifetime license sales of Let It Ride and Three Card Poker.
Fiscal Year 2005
For the fiscal year, Entertainment Products revenue increased 18% to a record $45.5 million versus $38.7 million in the comparable prior year period. Entertainment Products lease and royalty revenue increased slightly compared to the prior year period. The year-over-year increases in revenue primarily reflects a higher average monthly royalty rate for Three Card Poker, Four Card Poker and Fortune Pai Gow Poker, increased placements of our Table Master products and the Company's latest table game offerings, including recently acquired games. These favorable results were partially offset by the conversion of Let It Ride and Three Card Poker royalty units to lifetime license sales. Entertainment Products sales and service revenue increased 38% to $20.7 million versus $15.0 million in the comparable prior year period. The year-over-year increases in revenue resulted from increased lifetime license sales and increased sales of Table Master products.
Operating Expenses
For both the fourth quarter and fiscal year, operating expenses as a percentage of revenues decreased slightly from the comparable prior year periods. Operating expenses for the quarter totaled $10.4 million compared to $8.3 million in the comparable prior year quarter. For the fiscal year, operating expenses totaled $38.4 million compared to $29.1 million in the prior year. The quarterly and year-over-year increase in operating expenses was primarily due to project costs associated with Sarbanes-Oxley 404 compliance, an increase in payroll and related costs due to increased infrastructure requirements, including the related headcount resulting from the CARD acquisition, restricted stock compensation expense, and increased investment in research and development activities.
Non-operating Expenses
For the quarter and fiscal year, income from continuing operations includes a $1.0 million asset write-off related to an equity investment.
Balance Sheet, Cash Flows & Capital Deployment
Cash, cash equivalents, and investments totaled $34.1 million at October 31, 2005, a decrease from $47.0 million at October 31, 2004. Net cash provided by operating activities totaled $5.1 million and $34.2 million during the fourth quarter and fiscal year period, compared to $8.3 million and $26.6 million in the comparable prior year periods.
Capital deployment initiatives totaled approximately $1.7 million and $10.1 million in capital expenditures during the fourth quarter and fiscal year period, respectively, and $2.8 million and $7.2 million related to the acquisition of intellectual property during the fourth quarter and fiscal year period, respectively. The Company repurchased 715,000 common shares during the fourth quarter for approximately $17.8 million at an average price of $24.93 per share. For the fiscal year, 1,472,500 common shares were repurchased for approximately $38.6 million at an average price of $26.24 per share. As of October 31, 2005, approximately $8.8 million remains outstanding under our existing share repurchase board authorization.
Current Outlook
Consistent with previous guidance, management is targeting approximately 25% growth in quarter-over-quarter and year-over-year fiscal 2006 earnings per share, or $1.00 - $1.05 for the full year, excluding the adoption of SFAS 123R in fiscal 2006 and any contribution from the anticipated Stargames acquisition. |
