SHFL posts record revenue, wins right to appeal LT Game’s Macau injunction

TAGs: lt game, Macau, patent infringement, shfl entertainment

shfl-entertainment-record-revenueGaming supplier SHFL Entertainment (formerly Shuffle Master) generated record revenues in both its fourth quarter and fiscal year, each of which concluded on October 31. Total Q4 revenues grew 12% to $73.6m, while recurring revenue increased 14% to $31.5m and net income rose 11% to a record $10.8m. Earnings per share were up 6% to $0.19, which fell just shy of analysts’ $0.20 target, possibly as a result of $1m in expenses related to the company’s rebranding efforts (which we figure should have actually improved earnings, since our years of watching Wheel of Fortune taught us that it’s buying vowels, not shedding them, that costs you money).

For the fiscal year, revenues rose 14% to $259m, while recurring revenue rose 12% to $118.2m. Net income was a record $38.6m and earnings per share rose 17% to $0.68. Small wonder that SHFL recently saw fit to extend CEO Gavin Isaacs’ contract to April 2016. Isaacs, who currently earns $650k per year, said “all but one of our product categories witnessed double digit revenue growth” a feat that Isaacs described as “impressive in any environment, and especially in this one.” Looking forward, Isaacs says it’s an opportune time for the company to “prudently bring our slot machines to select US markets.” SHFL also intends to expand the reach of its interactive arm, which generated revenue of $2.8m over the past year, and Isaacs expects the division to break even by H2 2013.

SHFL’s annual profit would have been even rosier had it not been for greater legal expenses of $1.5m, part of which was blamed on ‘various litigation matters.” One such matter, the company’s patent spat with Asian gaming device maker LT Game Ltd., played out in public in dramatic fashion at this year’s Global Gaming Expo (G2E) Asia. The donnybrook started when LT Game execs obtained an injunction that said Shuffle Master’s live dealer Rapid Baccarat electronic table game technology infringed on an LT Game patent – although the relevant lawsuit has been mired in the courts since 2009 – prompting Macau Customs officials to order Shuffle Master to cover up the offending technology. Outraged, the Shufflers got a court order later on that same day allowing them to openly display their wares, which led to the Customs boys filing a criminal complaint against the Shufflers a few days later.

Since that dustup, SHFL filed an appeal of LT Game’s injunction, only to have Macau’s Court of First Instance turn them down. Undaunted, SHFL took its case to the Court of Second Instance, which granted SHFL leave to appeal. Macau Business Daily reported that the decision was handed down last month, but only made public on Monday. The decision could have far-reaching implications, given that Macau casinos such as Sands Cotai Central thought it best to remove the offending SHFL technology from their casino floors rather than risk involving themselves in the patent litigation.


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