SHFL Entertainment Q3 Profit Declines - Update

(RTTNews) - Gaming device maker SHFL entertainment Inc. (SHFL), Friday reported a steeper-than-expected decline in third-quarter profit, hurt mainly by higher research and selling expenses as well as costs related to its merger with Bally Technologies Inc.

Revenue for the quarter climbed 16 percent on stellar performance at its Electronic Table Systems segment, but came in below Wall Street estimates.

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

The Las Vegas, Nevada-based company reported third-quarter net income of $6.4 million or $0.11 per share, compared with $10.4 million or $0.18 per share last year.

Results for the quarter included expenses of $3.6 million, or $0.05 per share, related to its merger with Bally Technologies.

Excluding items, adjusted earnings for the quarter were $9.5 million or $0.16 per share.

On average, 8 analysts polled by Thomson Reuters expected earnings of $0.21 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the third quarter climbed to $74 million from $63 million in the prior year, but missed analysts' expectations of $77.57 million.

Growth reflects a 79 percent jump in Electronic Table Systems revenue, along with contributions from Electronic Gaming Machine, Utility and Proprietary Table Games businesses.

Total expenses for the quarter escalated to $65 million from $50 million last year.

Gross margin for the quarter slid to 62.3 percent from 63.1 percent a year ago, due to the mix of segment performance, and was also impacted by an increase in headcount.

In July, SHFL entertainment agreed to be acquired by gaming company Bally Technologies Inc. (BYI) for about $1.3 billion. Last month, Bally posted a better-than-expected rise in quarterly profit, mainly on an eight percent growth in revenue.

SHFL closed Tuesday at $22.79, up $0.01 or 0.04%, on a volume of about 275 thousand shares. In after hours, the stock dropped $0.14 or 0.61%.