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SHFL Entertainment Q1 Profit Meets View, But Revenues Miss

Gaming device maker SHFL entertainment, Inc. (SHFL) reported Monday a profit for the first quarter that increased from last year, reflecting higher operating expenses related to global growth initiatives across all product categories. Earnings per share for he quarter matched analysts' expectations, while quarterly revenues missed their estimates.

"I'm pleased to report record first quarter revenue and several other highlights including continued strong performance in Asia, which is the fastest-growing gaming market in the world. PTG continued to grow 12% year-over-year and, more impressively, the majority of revenue is recurring," CEO Gavin Isaacs said in a statement.

The Las Vegas, Nevada-based company reported net income of $7.06 million or $0.12 per share for the first quarter, lower than $7.65 million or $0.14 per share in the prior-year quarter.

On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.12 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter increased 5 percent to a record $58.78 million from $56.05 million in the same quarter last year, but missed five Wall Street analysts consensus estimate of $59.89 million.

Adjusted for settlements and licensing fees, total revenue increased 9 percent. Recurring revenue growth was 12 percent.

Total utility revenue grew 29 percent year-over-year to $25.3 million, and total proprietary table games revenue increased 12 percent from last year to $12.8 million. Meanwhile, total electronic table systems revenue declined 14 percent year-over-year to $7.1 million, and total electronic gaming machines revenue decreased 8 percent from last year's $13.3 million.

"With 29% year-over-year revenue growth, our Utility segment achieved standout results with over 470 MD3 shuffler placements, many of which were replacements," Isaacs noted.

Operating margin decreased 350 basis points to 16.3 percent due to an increase in operating expenses, partially offset by improved gross margin of 50 basis points amid improvement in Utility gross margin driven by an increase in shuffler sales.

Total costs and expenses increased to $49.21 million from $44.94 million in the year-ago quarter.

"The collective strength of our product categories delivered an overall solid quarter and we intend to continue capitalizing on our unique business model to drive profitable, long-term growth for our shareholders," Isaacs added.

SHFL entertainment makes gaming devices, and operates inter-casino linked systems and slot routes.

SHFL closed Monday's regular trading session at $15.99, up $0.15 or 0.95% on a volume of 0.66 million shares. However, the stock lost $0.79 or 4.94% in after-hours trading.

by RTT Staff Writer

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