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SHFL entertainment (NASDAQ:SHFL)

Q1 2013 Earnings Call

March 04, 2013 5:00 pm ET

Executives

Julia Boguslawski - Director of Investor Relations & Corporate Communications

Michael Gavin Isaacs - Chief Executive Officer and Director

Linster W. Fox - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Secretary

Analysts

Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division

Justin T. Sebastiano - Brean Capital LLC, Research Division

Stephen Altebrando - Sidoti & Company, LLC

Todd Eilers - Eilers Research, LLC

Operator

Greetings, and welcome to the SHFL entertainment First Quarter 2013 Earnings Conference Call [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Julia Boguslawski, VP of Investor Relations and Corporate Communications. Thank you. You may begin.

Julia Boguslawski

Thank you. Good afternoon, and thank you all for joining us today for our first quarter 2013 earnings call. I am Julia Boguslawski, VP of Investor Relations and Corporate Communications for SHFL entertainment. With me today are Gavin Isaacs, CEO; and Lin Fox, CFO. Today's call is being simultaneously webcast through our website, http://ir.shfl.com, and will also be archived for the next 30 days. If you haven't done so already, please download the quarterly presentation accompanying the webcast as we'll be referring to specific slides throughout the call.

Before we get started, I would like to remind you that various remarks we make about future expectations, plans and prospects for the company constitute forward-looking statements for purposes of the Safe Harbor provisions under federal securities laws. Actual results may differ materially from these anticipated results. Please see today's press release and our other SEC filings for a complete discussion of risks that may affect our results. The company assumes no obligation to update any forward-looking statements as a result of any new information or future events.

We will also be discussing certain financial measures such as adjusted EBITDA, which is a non-GAAP measure. A definition and reconciliation of this and other financial measures we use and discuss can be found in today's earnings release, as well as our most recent Form 10-Q.

Now I will turn the call over to Gavin Isaacs.

Michael Gavin Isaacs

Thank you, Julia, and good afternoon. There were many significant operational highlights for the quarter, which is summarized on Slides 4 and 5. The first quarter results were mostly positive with strong performance in shufflers helping drive $58.8 million in revenue, a record for Q1. A very encouraging trend was our increasing momentum in Asia, driven largely by our shuffler upgrades and by superior game performance of our slot machine, particularly in Macau.

Recurring revenue was approximately $31.3 million, up 12% year-over-year and grew largely as a result of an additional $1.4 million in Proprietary Table Games. Growth in e-Table and Utility lease revenue also contributed to the year-over-year increase.

Beginning with the EGM segment, our performance in Q1 was not to the levels we expected. Despite exceptional game performance and strong ASPs of over $20,000, we sold fewer units this quarter than in the prior year period. Although there is always seasonality in our business that typically results in a softer first quarter, we believe that our results last quarter are not just due to seasonality but also as a result of execution issues, and we have taken steps to address this. I still feel comfortable that we will achieve our targets in this segment.

There were notable highlights in the EGMs for the quarter such as the performance of DUO FU DUO CAI, which is one of the top performers in Macau. We are confident that our recent acquisition of the design studio ProTec Games in China will enable us to increase the quality and quantity of content to facilitate continued global expansion of our EGM business.

The Flintstones is continuing to help drive installs, contributing roughly $2.5 million in the first quarter, and some of our newer titles, 88 Fortunes, 5 Treasures and our Blaze Pays series, are standout performers in the highly-competitive Australian locals market. Our recent launch into the U.S. has been encouraging, which I'll touch on later.

Moving to Utility. We posted 29% year-over-year growth in the first quarter, driven by increased sales activity and MD3 momentum. The sales came largely from the U.S. as a result of new casino openings in Ohio, as well as several properties replacing old shufflers and adding more shufflers to their floors.

We also saw strong sales of over 250 shufflers in Asia, most of which were replacements. At the end of the first quarter, our total MD3 install base was over 2,200 units, with 50% of the total base on lease. With 472 placements, this quarter marked our largest installs of MD3s to date. Our MD3 rollout strategy has been a key driver of Utility growth since its launch 7 quarters ago. And as of Q1, its contribution is approximately $1.4 million in recurring revenue a quarter.

Our average lease prices are up almost $20 year-over-year, driven by new shuffler leases and newer models ramping up after introductory pricing periods. Recurring revenues in specialty games hit another all-time high of $12.7 million in the quarter, fueled by contributions from every category. Our leased footprint of premium games, side bets, progressives and add-ons grew by 882 units year-over-year.

Many of the placements were driven by our strong side bet offerings such as King's Bounty, Fire Bet and House Money. We placed approximately 140 King's Bounty side bets into Canada in the quarter, replacing a competitor's blackjack side bet. Much of the revenue increase came from premium games, Ultimate Texas Hold'em and Mississippi Stud, both of which continue to grow in placements quarter after quarter as a result of their increasing popularity. Ultimate Texas Hold'em contributes approximately $8.5 million in recurring revenue on an annualized basis, and we've upgraded 160 of those tables with a progressive feature.

Coming off a strong fourth quarter, e-Tables reported modest sales in the first quarter. This was as anticipated. Sales came largely from Vegas Star upgrades and Rapid Fusion additions in Australia. Recurring revenue was up almost $1 million year-over-year but declined sequentially as a result of removals in Maryland as the market begins to transition to live tables.

We continue to make progress in our iGaming segment. In the quarter, we signed an agreement with GameAccount Network, which will allow for distribution of our content across 20 online operator sites for real money gambling in the U.K., Italy and Spain. We enjoyed a successful iShow [ph], which was very well attended. Online gaming was a major area of emphasis and the iGaming corner of our booth had consistent traffic from online operators across the globe.

The quarter recognized approximately $250,000 in settlement fees from online infringes of our IP, which once again shows the strength of our IP and the importance of protecting and defending it.

Overall, our performance in the first quarter had some significant highlights and some areas for improvement. We believe that the diversity and fundamental strength of our business model allows us to deliver strong results to our shareholders, and this is -- and that is one of SHFL's most defining attributes.

With that, I'll turn the call to Lin to go through the financial results.

Linster W. Fox

Thanks, Gavin, and good afternoon, to everyone. On Slide 6, you'll see that Q1 revenue was up 5% year-over-year or 9% when adjusted for $2 million in online settlement fees received in the prior year period.

Slide 7 shows total revenue for Q1 was $58.8 million. Diluted earnings per share were $0.12 as compared to $0.14 in the comparable quarter last year. Adjusting for the online IP settlement fees of $0.03 in the first quarter of last year, EPS grew by $0.01.

Turning to Slide 8. Recurring revenue increased 12% year-over-year to approximately $31.3 million. Slide 10 is a map of our revenue distribution by geography. 50% of first quarter revenue came from outside the United States. Asia represented 14%, up 12% in the year-ago quarter.

On Slide 12, you'll see our slot machine segment drove approximately $13.3 million in revenue in the first quarter, down 8% year-over-year. Total installations of 613 units declined 18% year-over-year, largely driven by fewer placements into New South Wales.

Slide 13 shows our Utility segment performance and highlights recurring revenue of $13.8 million, up 6% year-over-year. Our shuffler lease install base grew 186 units year-over-year but was down sequentially. Approximately 150 shufflers were leases-to-lease upgrades, which has no net effect on the lease base but is still an important long-term driver of recurring revenue. Shuffler sales were very strong in the quarter, up 94% year-over-year.

Moving to Slide 14. Both recurring and total revenue from Proprietary Table Games grew an impressive 12% year-over-year. Effective this quarter, iGaming is now reported separately from our Table Games segment in the 10-Q, and all comparisons have been normalized. Last year's online settlement fee is now recorded in the iGaming segment, as is the online settlement fee received in the current quarter.

Slide 15 shows recurring revenue in Electronic Table Systems grew 29% year-over-year to $4.4 million, but the total revenue declined 14% due to a decrease in sales revenue. The prior year period included a large sale of over 120 Rapid seats to a customer in Australia. Although sales were down in the first quarter, our average sales price improved slightly as a result of new Rapid Fusion placements and the Vegas Star upgrades. We anticipate further removals of Table Master from Maryland next quarter, which will impact our e-Table lease base. However, given our diverse product mix, Maryland presents an opportunity for our Utility and Table Games segments. Like other markets that have transitioned to live gaming such as Pennsylvania and Delaware, our shufflers and table games ultimately provide greater profitability to our business.

Turning to Slide 16. First quarter gross margin grew 50 basis points year-over-year to 64%, largely the result of improved margin in the Utility segment. Utility margin increased 650 basis points to approximately 64%, mostly as a result of the significant increase in shuffler sales revenue.

PTG gross margin grew 60 basis points to 82% as a result of greater recurring revenue. At 42%, ETS gross margins were negatively impacted by reduced sales in the quarter and accelerated depreciation of Table Master units on lease. As the company prepares for the introduction of the next-generation Table Master at G2E Asia and its subsequent launch into the marketplace, we have begun accelerating the depreciation of first-generation units. EGM gross margin declined slightly to 61% from 62% in the prior year period as a result of fewer sales in the quarter. Our ASPs increased 2% year-over-year due to greater premium unit sales such as the Flintstones.

As to operating expenses, Slide 17 shows our R&D investment. In the first quarter, it grew $700,000 year-over-year. The increased R&D investment relates to the development of slot machine content to support global expansion in addition to further development of iGaming content and delivery platforms. Product development for the next-generation Table Master and the DeckMate 2 also contributed to the increase.

This quarter, SG&A increased $2.9 million year-over-year, largely driven by global growth initiatives across the entire company. An increase in legal personnel and litigation expenses related to protecting and defending our intellectual property was approximately $800,000 of the increase. Approximately $700,000 was due to greater sales and profit-driven compensation expenses as a result of more revenues during the current quarter, and to a lesser extent, due to expanding product management to support new products.

Additionally, $600,000 of the increase related to costs associated with iGaming. Sequentially, SG&A was down about $1 million or flat excluding onetime expenses in the fourth quarter. Our Q1 SG&A is consistent with what we communicated on our last earnings call regarding OpEx for the fiscal year.

In Q1, the foreign exchange impact on earnings was de minimis. The Australian dollar remained flat year-over-year, so there was almost no impact -- no effect on revenue gross profit or OpEx. Adjusting for the online settlement fees, operating margin for the first quarter was relatively flat year-over-year at 16%. Net income declined 8% year-over-year to $7.1 million, but adjusted for the online settlement fees, it grew by 11%.

Slides 18 and 19 show our adjusted EBITDA and free cash flow performance. This quarter, adjusted EBITDA of $17.9 million was down 2% year-over-year or up 10% when adjusted for online settlement fees. Free cash flow or adjusted EBITDA less CapEx plus cash taxes was $9.6 million in the first quarter, up 22% year-over-year. The prior year period was impacted by the purchase of intellectual property in our EGM segment. The effective income tax rate was 25.4% in the first quarter as compared to 30.1% in the year-ago quarter. The lower rate is attributable to U.S. R&D tax credits realized in the current year, as well as the shift in our global income mix. We believe that for the fiscal year, our tax rate will be between 28% and 30%.

As to working capital, Q1 inventory turns of 3.72 remained relatively flat from Q1 2012. Inventory levels rose slightly due to our launch of slot machines in the United States. At 72 days, our global DSO for the first quarter increased 11 days from the prior year period, reflecting the popularity of our extended payment sales model in Australia.

U.S. DSO was up 13 days to 48 due to the timing of sales as compared to the prior year period. Operating cash flow for the first quarter was $13.2 million as compared to $16.4 million in the prior year period. The decrease was due in part from the additional $2 million in cash received for online settlement fees in the year-ago quarter in addition to the increase in inventory.

Moving to Slide 21. At $4.3 million, first quarter capital expenditures were $4.4 million lower year-over-year. Most of the decrease was from the purchase of IP in the prior year period in addition to fewer purchases of leased assets in the current quarter.

For the balance of the year, we anticipate CapEx to be within $8 million to $10 million a quarter. The increase will be driven by additional PP&E from our new consolidated facility, which is anticipated to be completed in the early fall.

As of Q1, we had availability of approximately $200 million under our revolver. Total cash on hand exceeded debt by approximately $33 million.

Finally, as we have repeated before, our priority for cash usage remains pursuing avenues to sustain long-term growth. Our balance sheet provides us with the financial flexibility to invest in the business and continue to evaluate compelling growth initiatives including acquisitions.

In the first quarter, we spent approximately $0.5 million evaluating 2 potential deals. If we are unable to find something that makes strategic, financial and cultural sense for our company, we will then assess the best way to return cash to our shareholders.

And with that, I'll turn the call back to Gavin.

Michael Gavin Isaacs

Thanks, Lin. At this time, we're not revising our full year growth rate range of 12% to 19% top line growth. We expect continued strength in our Utility segment driven by MD3s, new opportunities in emerging table markets such as Maryland, and as an overall result of the improving health of our customers.

The DeckMate 2 just received GLI approval and is targeted to begin a careful and selective rollout in May. Although the low-hanging fruit will be lease-to-lease upgrades, investors shouldn't dismiss the importance of these conversions in the long term, as evidenced by our year-over-year increase in ALP. The nearly $20 increase per month we've seen in Q1 attributes to an additional $2 million on an annualized basis. We expect consistent growth in our table games performance and improvement in e-Tables throughout the year.

As for slot machines, our content has never been stronger. With ProTec, which from now on we'll referred to as SHFL China, we believe that we can ramp up our production of exciting, relevant, market-appropriate content.

Australia will still be our major market for slots this year with further placements in Asia, Latin America and our newest market, the U.S. We're currently trialing 40 units in California and Oregon, and some titles are doing well. We're still in the very early stages of our rollout, and we're being very deliberate and thoughtful in our approach. We're in the process of collecting feedback, listening to our customers and learning about the various needs of the markets. That is how you fine-tune your games for sustainable success.

I'm pleased with the progress of our iGaming segment so far and excited about the opportunities that lie ahead, especially given all the recent movement in the U.S. Just last week, New Jersey approved online gaming. Delaware is currently pushing for similar approval, and Nevada approved online poker. The significance of New Jersey is that it will allow for casino games, which is where our Proprietary Table Game content falls. The feedback we've received has led us to believe that no online casino offering is complete without our leading Proprietary Table Games. We are thrilled by the opportunities that New Jersey and Delaware's online markets have the potential to offer. Given the time it will take to officially go live, we believe this will be a 2014 event.

Our licenses are secured. Our core team is in place and is expanding, and our online games are available via our state-of-the-art content delivery platform. We have a key strategic relationship with Amaya for online poker and are exploring all avenues to effectively offer our content. We have economically positioned ourselves for the opportunities ahead, and we are prepared to respond to the pace and constant evolution of the online market. As we stated on the last call, we anticipate revenue contributing in the second half of the year with a potentially modest start in Q2.

I would like to thank the entire SHFL team for delivering another quarter of growth and for the continued commitment to excellence. I'm proud to announce that the Las Vegas Review-Journal recently recognized the efforts we've made to promote a healthy culture at SHFL. We were the only gaming equipment manufacturer selected as a top workplace in Nevada, a designation that is based solely on employee feedback. As a CEO, that is one of the most encouraging honors you can receive and is an indication that your team will go above and beyond for the well being of the company, which I can proudly confirm that they do every single day.

We believe that we have the strength across our team, our businesses, our IP portfolio and our balance sheet to successfully seize the many opportunities that lie ahead for SHFL. And those strengths can drive high-quality, sustainable growth into the future. I look forward to reporting our progress next quarter.

And with that, we will now take questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Steve Wieczynski with Stifel, Nicolaus.

Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division

Gavin, so I guess first with your guidance, I know you basically reaffirmed that at 12% to 19%. But when you look at the EGM guidance, I know -- I think last quarter, it was 18% -- I think it was 18% to 22%. Did you kind of see this coming in terms of the softness in the quarter? And then kind of the second question on that is, is that guidance range still achievable this year just given how soft the first quarter was?

Michael Gavin Isaacs

Steve, we don't give guidance, as you know. We gave some indications is what we expect to be -- to have growth. But having said that, Q1 has always been the weakest. Clearly, the biggest issue was the EGM performance in Australia. We see that more of a timing thing. And frankly, it's a bit of poor execution in that quarter. We are still committed to that result for the full year though because our games are performing so well. And I think it might have been a kick in the ass that maybe we needed.

Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division

So are you basically saying that 12% to 19% range, there could be segments inside of that where you're going to have -- where you're going to outperform and then segments where you're going to underperform?

Michael Gavin Isaacs

No, I'm thinking that the overall -- the actual ones are pretty much as we anticipate at this stage. We don't -- it's very early. It's an annual range only, and it's very early to tell whether or not there's going to be any major changes. But you specifically asked about the slots, and we do anticipate hitting the numbers for the slots for the full year.

Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division

Okay, got you. Turning to Maryland, I know Lin talked about this a little bit. But do you think Maryland will basically be a kind of a breakeven market just given the reduction? And that's a pretty strong ETS market. Do you think the shuffler sales will offset that?

Michael Gavin Isaacs

No, not in the short term. I mean, we planned for this as well. In Maryland, we anticipate the ETS coming out and the shufflers and proprietary tables going in, which over the long term, is a much better result for us. But short term, there is an impact. But again, we knew this was going to happen. This isn't a surprise. So there's no shocks in that number.

Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division

Okay, got you. And last question. I know you talked or Lin talked about you looked at 2 potential acquisitions. Can you give just any more color in terms of what those would have involved?

Michael Gavin Isaacs

Honestly, no. There's about -- I don't know, we possibly have a list of around 6 or 7 companies that interest us. And it's fair to say that when we look at any kind of acquisition, we've constantly said, that's the way we'd like to grow our business. We do a deep dive, and sometimes you find out that either something is not what you expected or for whatever reason, it's not the cultural or strategic fit or financial fit that you would have liked. So we continually do that, and that's something that we are conscious about. But no, it would be unfair to mention the names of those companies. I'm sorry, Steve.

Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division

Yes, yes, that's fine. Sorry, one more if I can sneak a last one in. Are you guys getting a sense that operators are growing more comfortable with purchasing at this point versus leasing?

Michael Gavin Isaacs

Yes, unfortunately, yes. It's a good sign and it's a bad sign. Yes, we see some of them being more comfortable. It seems that they're being a little bit more willing to spend some capital. But given that finance is so cheap, we're seeing them pluck [ph] off things like these. But again, we expect in the long term that our business will maintain its high ratio of recurring revenue because everything that comes out in the online space is also recurring.

Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division

Is that what happened in the sequential change in terms of the lease base on the shufflers going from fourth quarter to first quarter? Did you have -- did you have a customer basically move out of lease and purchase shufflers?

Michael Gavin Isaacs

We did, we had several.

Operator

Our next question comes from the line of Justin Sebastiano with Brean Capital.

Justin T. Sebastiano - Brean Capital LLC, Research Division

So just so I'm clear, those 2 companies, those 2 deals you were looking at in the quarter. They're dead now?

Michael Gavin Isaacs

I wouldn't say dead. I would say they're not being actively pursued at the moment.

Justin T. Sebastiano - Brean Capital LLC, Research Division

Okay. So they weren't acquired by someone else?

Michael Gavin Isaacs

No, no, no.

Justin T. Sebastiano - Brean Capital LLC, Research Division

Okay. And then, Gavin, I guess you had mentioned there were some execution issues in the slot business that you said was responsible for the weak performance, but they've been addressed. Can you give us a little bit more color what exactly were the issues and how did you address them?

Michael Gavin Isaacs

I think the best way to look at it is that we finished our year end on October 31, and that's coming into the summer holiday season in Australia. And potentially, we had such a great year last year. People may have taken their eye off the ball and had a little bit of an early Christmas celebration. And frankly, in 1 month, we had a very poor performance, which was way below what we normally do. And I just don't think that we were out there visiting customers, and we had our finger close enough to the pulse. It's been addressed. Adrian and the team down there fully acknowledged what went wrong, and they're addressing it. And as I said to you, we reaffirmed that we expect to grow annually in the high teens percent, which is guidance -- well, not guidance, which is annual growth indication that we gave, yes.

Justin T. Sebastiano - Brean Capital LLC, Research Division

Right, okay, that's fine. And then you talked a little bit about progress of your field trials in California and Oregon. You're in a collecting of feedback mode right now. But when do you expect to start generating revenue from selling the slots in the U.S.?

Michael Gavin Isaacs

In the next couple of months, I think we'll start to firm up some things. I think that probably early Q3 is when we always anticipated, and I think that's when we will start to see it. We have more equipment due to go out, and we've seen, as I said, some really good performance in some titles and in other titles not so good. We've even tested some features which are very unique to the Americas, which is good and bad. But the bottom line is that we're all systems go, and we're right in accordance with our plan. It's really fact-finding, gathering mode at the moment. I guess one thing that's been really encouraging is that some of our older titles are really resonating well in the market.

Justin T. Sebastiano - Brean Capital LLC, Research Division

Okay. And then just lastly on the online gaming efforts. You talked about U.S., but considering that Europe is already live and you've already got some agreements, I guess, set up there, when can we expect to get some good revenue growth out of that?

Michael Gavin Isaacs

Yes. We've always said we expect that again in the second half starting in Q -- beginning of Q3, and we're on target for that at this stage. And to be clear, as you reiterated, we are looking at Europe first, clearly. With GameAccount Network with their 20-plus sites over there and with Amaya, the benefits of that is that immediately or relatively immediately once that integration is on live and up, our games are available for play. So revenue starts almost straight away. So these things never go ideally as planned, but we're pretty much on target and anticipate late Q2, early Q3 for our revenue there.

Justin T. Sebastiano - Brean Capital LLC, Research Division

Okay. And what are the gross margins you think on that?

Michael Gavin Isaacs

Well, they're high. I mean, how do I explain that except for the fact that you know roughly what our costs are. I would say it's around 70% would be a good guidance.

Justin T. Sebastiano - Brean Capital LLC, Research Division

Okay. You don't offer guidance though?

Michael Gavin Isaacs

We don't give guidance. I've got all these lawyers and people in this room saying, "Don't say guidance." We don't give guidance.

Operator

Our next question comes from the line of Steve Altebrando with Sidoti & Company.

Stephen Altebrando - Sidoti & Company, LLC

I was wondering if you were still expecting kind of a breakeven number for the iGaming initiative. And the revenue contribution, is that specific, kind of locked in from a few contracts that you have already in place?

Michael Gavin Isaacs

No. We are definitely still expecting breakeven. Yes is the answer to that one. And the way these contracts work is that the games are often for play through their platform on operator sites, and as they're played, we get a small fee. So there's no real fixed amount of revenue. But just on our modeling, we anticipate that the revenues that come in will be equal to the costs that we spend during the course of this year.

Stephen Altebrando - Sidoti & Company, LLC

Okay. But those distribution, I guess, agreements are already in place?

Michael Gavin Isaacs

Yes, they are.

Stephen Altebrando - Sidoti & Company, LLC

Okay. And then in terms of the trials in California and Oregon, would the expectation be when you start to go live, it won't be just those 2 markets? Or is it going to start out in those 2?

Michael Gavin Isaacs

No. I mean, clearly, you want to go to markets where there's strong, local play because they do -- that's the kind of good games that we have. But we expect to go to several other markets in the short term as well. I believe we have some products on the way to a couple of other markets at the moment including Minnesota, Arizona, Florida, New Mexico, just to name a few.

Operator

Our next question comes from the line of Todd Eilers with Eilers Research.

Todd Eilers - Eilers Research, LLC

I wanted to start off with what's on the shuffler side and the lease side. I think you mentioned that there were multiple customers that converted from a lease to a sale. Can you indicate how many units that was in the quarter?

Julia Boguslawski

Yes. That was about 90 or so units. And then what you saw -- what we saw last quarter as well is we had about 140 or so lease-to-lease upgrades. So that won't have any net effect to the lease space, but we still were putting MD3s out there on lease. They were just replacing MD2s and MD1s that were on lease.

Todd Eilers - Eilers Research, LLC

Okay, great. And then you also mentioned that you saw some benefits from some of the new openings, I guess, in Ohio. Can you maybe give us a sense for how much of the shuffler sales in the quarter were from new openings versus existing casinos?

Julia Boguslawski

Yes. We had -- I think we've put close to 100 shufflers into the new opening in Ohio. And then really, the rest of what you see, you see a lot of great replacements. We had a lot of strength in Asia this quarter with replacements for replacing old MDs and putting in new MD3s. And then we also saw that in the U.S. as well. We made a number of replacements. So again, these were mostly sales, but we had great contribution even from replacements in Macau of old shufflers with i-Deals. So lots of good progress this quarter globally.

Todd Eilers - Eilers Research, LLC

Okay, great. And then just last question on the e-Table segment. You mentioned that you had some removals in the quarter ahead of, I guess, live tables going live. Can you indicate how many seats were removed in the quarter? And I think you mentioned you might also see some additional removals in 2Q. Can you indicate how many you would expect there?

Julia Boguslawski

Yes, we had about 60 seats removed in Q1, and we'll probably have another 100 or so next quarter.

Operator

There are no further questions at this time. I would like to turn the floor back over to Julia Boguslawski for closing comments.

Julia Boguslawski

Thank you very much, and we look forward to talking to you on our next call. Bye.

Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.

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