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Shuffle Master's presentation for the UBS/Deutsche Bank Gaming Investment Forum at G2E 2011
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Shuffle Master's presentation for the UBS/Deutsche Bank Gaming Investment Forum at G2E 2011

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  • 1. Q1 Q2 Q3 Q4SHUFFLE MASTER, INC.2011 gaming investment forumwww.shufflemaster.com / NASDAQ: SHFL
  • 2. WHO WE ARE 4 GROWTH AHEAD 10overview FINANCIALS 17 WHY INVEST IN US 21
  • 3. forward-looking statementDuring this presentation and the Q&A session, various remarks wemake about future expectations, plans and prospects for thecompany constitute forward-looking statements for purposes of thesafe harbor provisions under the Private Securities Litigation ReformAct of 1995. Forward-looking statements reflect and are subject toinherent known and unknown risks and uncertainties that couldcause actual results to differ materially from those expressed orimplied. Risk factors that could cause actual results to differmaterially from expectations are included in our recent SEC filings.We will also be discussing certain financial measures such asadjusted EBITDA, which represents a non-GAAP financial measure.This presentation includes reclassifications for discontinuedoperations and segment realignment. 3
  • 4. WHO WE ARE 4GROWTH AHEAD 10FINANCIALS 17WHY INVEST IN US 21
  • 5. executive teamgavin isaacs, linster fox, david lopez, roger snow, katie lever, lou castle, CEO EVP & CFO EVP & COO EVP EVP & GC CSO♦ 12 years in ♦ 30 years ♦ 13 years at ♦ 11 years at ♦ 10 years in ♦ co-founder: gaming experience SHFL; 5 in SHFL; 5 in gaming Westwood industry ♦ former CFO of senior senior industry Studios♦ most CHRK and management management ♦ most ♦ most recently ANCPA roles including roles including recently recently served as sales and product served as GC served as VP COO of BYI product development at GCA of Studios at management Zynga 5
  • 6. what we do slot machines e-Tables specialty games shufflers i-Gamingdiverse suite of products to outfit the casino floor 6
  • 7. four unique profit centers FY 2010 Deck Mate® i-Shoe Auto™ Easy Chipper® i-Deal® utility products revenue - $77.4 million “utility” gross margin -60.8% (shufflers, chippers, shoes) gross profit -$47.0 million Progressives Side Bets Proprietary Titles proprietary table revenue - $40.4 million games “PTG” gross margin -80.0% (live felt games, gross profit - $32.4 million progressives, side bets) i-Table™ Rapid Table Master® Vegas Star® electronic table revenue - $42.4 million systems “ETS” gross margin -50.9%(fully electronic and hybrid e- gross profit - $21.6 million Tables) electronic gaming revenue - $41.1 million machines “EGM” gross margin -56.0% (slot machines) gross profit - $23.0 million FY 2010 annual revenue - $201.3 million totals: gross margin – 61.6% gross profit - $124.0 million 7
  • 8. geographic distribution of revenue canada fy „09: 5% fy „10: 4% europe fy „09: 4% fy ‟10: 4% asia fy „09: 6% fy „10: 9% united states fy „09: 50% fy ‟10: 50% australia/nz fy „09: 32% other fy ‟10: 30% americas fy „09: 3% fy ‟10: 3% 8
  • 9. what sets us apart♦ worldwide leader in shufflers & table games♦ depth and breadth of IP portfolio o approximately 2,400 registered patents, trademarks & copyrights♦ leading provider of e-Tables♦ 50% of revenue is recurring♦ 50% of revenue is international♦ products to suit the needs of every market♦ not reliant on the North American slot replacement cycle for growth♦ significant FCF 9
  • 10. WHO WE ARE 4GROWTH AHEAD 10FINANCIALS 17WHY INVEST IN US 21
  • 11. strategic focus♦ sustainable growth o focus on leasing o increased investment in R&D o exploit online opportunities o global opportunities: Latin America and Asia o protect & preserve critical IP♦ improved execution o margin improvement across all segments o focus on building internal efficiencies o strengthen e-Table business♦ strong balance sheet management o continued deleveraging o evaluate buybacks o well-positioned for M&A 11
  • 12. utility products growth drivers♦ upgrade opportunities: o MD3 replacement opportunity of 7k sold MD1s and MD2s o long-term upgrade opportunities include next-generation Deck Mate and one2six shufflers; approximately 11.6k sold♦ new openings: o Macau openings in 2012: LVS sites 5 & 6 o new openings in US in 2012: OH and NJ o Philippines openings in 2013♦ other: o new marketing focus and increased sales coverage o new proprietary table games and i-Table placements fuel shuffler growth o opportunities in Asia o growing appeal of table games o 19k tables that are currently hand-shuffled; opportunity for shufflers 12
  • 13. proprietary table games growth drivers ♦ progressive upgrades: o installed base of 6,340 proprietary tables; nearly 800 have progressive feature (13% upgraded) ♦ new content and new features: o Blackjack Switch, MS Stud and Ultimate Texas Hold’em o newly introduced cross-property progressive (o-wap) o newly introduced wireless connectivity for progressives ♦ other: o proprietary table game business has a multiplier effect: opportunity for royalty, progressive and shuffler revenue o gaining popularity in international markets o leverage content to e-Tables and i-gaming 13
  • 14. e-Tables growth drivers♦ strengthen the e-Table business ♦ new leadership – global product manager ♦ improve current offerings o redesigns, upgrades, and innovative enhancements (ex: i-Table, Rapid Select) ♦ leverage IP o strong brands, proprietary content and progressives ♦ new product o innovative roulette concepts: i-Table Roulette and Vegas Star Roulette Live o over 2,500 live roulette tables in N. America – targets for i-Table Roulette ♦ focused rollout of i-Table o hot new “hybrid” e-Table o recently announced back-of-house connectivity to IGT’s player tracking system and others pending 14
  • 15. slot machines growth drivers♦ new cabinet: o Equinox™ cabinet launched July 2010 o record quarters in Q4 2010, and Q1, Q2 and Q3 2011 due to Equinox o margin improvement: stronger pricing and better-designed cabinet♦ new game titles: o over 15% ship share in Australia; #1 in Queensland o hot new game titles in $0.50 and penny denoms♦ replacements: o opportunity in Victoria in 2012♦ new markets: o opportunities in Asia and Latin America o sustainable, long-term business 15
  • 16. i-gaming online opportunities♦ capitalize on our IP in the online space♦ multi-pronged approached to internet: o license existing content to regulated online markets Cantor Gaming’s mobile eDeck with Ultimate Texas Hold’em o build and capitalize on brands o pursue legalized internet gaming opportunities o new development for online games – Shuffle Interactive • play-for-fun games and apps across PC and mobile platforms • creates foundation for i-gaming when legalized in the US • first game – Ultimate Texas Hold’em • social media presence: player engagement and brand awareness • over 1,600 “likes” on our Facebook pages • over 960 followers on our Twitter accounts Twitter account for IR news and updates 16
  • 17. WHO WE ARE 4GROWTH AHEAD 10FINANCIALS 17WHY INVEST IN US 21
  • 18. third quarter 2011 financials Q3 2011 Q3 2010 y-o-y actual actual increase (in millions, except per share and % amounts)total revenue $58.3 $51.5 13%recurring revenue $26.6 $24.0 11%gross margin 62.1% 61.4% 70 bpscapex $5.2 $5.5 -5%adjusted ebitda $19.5 $15.5 26%earnings per share $0.17 $0.11 55%net debt $38.6 $63.9 -40% 18
  • 19. total revenue $201.3 $190.0 $178.9 $179.4 (in millions) $163.0 21% 21% $112.9 $84.8 20% $58.4 38% slot machines e-Tables proprietary table games utility products 19
  • 20. gross margin 75% 70% 65%lease & sales 60% 55% 50% 45% 40% 35% 30% 25% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2009 2010 2011 all products lease sales 85% by product segment 75% 65% 55% 45% 35% 25% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2009 2010 2011 all products utility table games e-Tables slot machines 20
  • 21. WHO WE ARE 4GROWTH AHEAD 10FINANCIALS 17WHY INVEST IN US 21
  • 22. growing recurring revenue$27 $26.6 $26.1 $25.4$25 $24.7 $24.0 (in millions) $23.4$23 $22.4 eleven $22.1 consecutive $21.0 quarters of recurring $20.3 $20.5$21 $20.3 revenue $19.2 $20.2 growth $18.8$19$17 22
  • 23. long-term earnings potential :: growth :: :: margin :: cash flow :: improvement :: • upgrade opportunity for • invest in lease both shufflers and slot • grow lease base business: capex machines • new market openings • supply chain • invest in R&D • new content for table improvements games, e-Tables and slot • debt pay-down machines • content licensing • new product innovation • international • evaluate buybacks • expense management opportunities • internet gaming and • accretive M&A online opportunities • execution & delivery key investment considerations:: market leader :: diversified product portfolio :: high-margin business:: growing recurring revenue :: executive level strength & stability :: high barriers to entry :: positioned for global gaming growth 23
  • 24. shuffle master “delivers more” at G2E – booth #1241 equinox cabinet i-Table Roulette i-Table with new side bets shuffle interactive md3 vegas star roulette live new premium specialty titles & progressivesquestions & answers 24

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