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Mar 19, 2018

Nevada Gold & Casinos Reports Third Quarter Results

LAS VEGAS, March 19, 2018 (GLOBE NEWSWIRE) -- Nevada Gold & Casinos, Inc. (NYSE MKT:UWN) today announced financial results for the third quarter ended January 31, 2018. The Company will host a conference call at 4:30 PM ET (1:30 PM PT) today to discuss these results and provide a corporate update.

For the third quarter of fiscal 2018, net revenue increased to $18.1 million compared to $17.9 million in the third quarter of fiscal 2017.  This increase was primarily driven by a $0.4 million increase in Washington, partially offset by a $0.2 million decrease from Club Fortune Casino.  Operating expenses were $17.5 million compared to $18.4 million in the prior year period, which included a $1.1 million impairment loss.  Operating income was $0.6 million compared to an operating loss of $0.5 million in the prior year period.  The Company recorded a non-cash tax expense adjustment of $0.3 million as a result of the new corporate tax rate.  Net income was $0.2 million compared to net loss of $0.7 million in the prior year period. 

Net revenues from the Washington state gaming operations were $13.6 million compared to $13.2 million in the prior year.  This increase was primarily due to repositioning one location as a poker only operation.  Poker revenues increased $0.3 million while other gaming revenue was unchanged for the period, despite removing 10 tables as a result of the poker move.  Marketing expenses increased $0.2 million in the quarter related to the repositioning, and coupled with increased wages, caused Adjusted EBITDA to decrease to $1.5 million compared to $1.6 million in the prior year period. 

Club Fortune net revenues were $3.3 million compared to $3.5 million in the prior year.  A slot hold variance of approximately 50 basis points was the primary reason for both the revenue and EBITDA declines.  Adjusted EBITDA was $0.4 million compared to $0.6 million in the prior year.

South Dakota revenues were $1.2 million in both periods, and Adjusted EBITDA was unchanged at $0.1 million.

Corporate expenses were $0.6 million, comparable to the prior year.  On a consolidated basis, adjusted EBITDA was $1.2 million compared to $1.4 million in the prior year period.

"Our strategic poker repositioning in Washington has performed well, and as we reduce our target marketing in support of this move, we expect increased EBITDA contributions from the Washington portfolio,” stated President and CEO Michael Shaunnessy.  “Club Fortune was up against a strong prior year comparable, and a lower slot hold hampered the current year’s performance.”

The Company paid down $1.3 million in debt during the quarter.  The unrestricted cash balance at January 31, 2018 was $8.6 million, and total outstanding borrowing was $9.3 million.

During the third quarter the Company did not purchase any shares.  Since inception of the share repurchase program, approximately 1,085,000 shares have been acquired at a cost of approximately $2.3 million.  

For the nine month period of fiscal 2018, net revenues were $56.1 million compared to $54.6 million in fiscal year 2017. Operating expenses were $54.1 million, compared to $54.7 million in the prior period, which included the $1.1 million impairment charge. Operating income was $2.0 million compared to an operating loss of $0.1 million in fiscal 2017.  Net income was $1.0 million compared to net loss of $0.6 million in the prior year.

Conference Call and Webcast

The Company will host a conference call today at 4:30 PM ET (1:30 PM PT).  The call can be accessed live by dialing (800) 281-7973.  International callers can access the call by dialing (323) 794-2093.

A telephone replay of the conference call will be available after 7:30 pm ET and can be accessed by dialing (844) 512-2921. International callers can access the replay by dialing (412) 317-6671; the pin number is 3589855. The replay will be available through March 26, 2018.  

(1) Non-GAAP Information
The term "adjusted EBITDA" is used by us in presentations, quarterly earnings calls, and other instances as appropriate.  Adjusted EBITDA is defined as net income before interest, change in swap fair value, income taxes, depreciation and amortization, goodwill and other long-lived asset impairment charges, write-offs of project development costs and acquisition expenses, litigation charges, non-cash stock grants, non-cash employee stock purchase plan discounts, amortization of deferred rent, and net losses/gains from asset dispositions. Adjusted EBITDA does not take into account greater or less than expected hold percentages in the gaming operations. Adjusted EBITDA is presented because it is a required component of financial ratios reported by us to our lenders, and it is also frequently used by securities analysts, investors, and other interested parties, in addition to and not in lieu of, U.S. Generally Accepted Accounting Principles ("GAAP") results to compare to the performance of other companies that also publicize this information.  Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net income as an indicator of our operating performance or any other measure of performance derived in accordance with GAAP.

Adjusted EBITDA reconciliations for the three months and nine months ended January 31, 2018 and January 31, 2017 are shown below:

Reconciliation of net income (loss) to Adjusted EBITDA:
  For the three months ended
  January 31, 2018   January 31, 2017
           
Net income (loss)  $ 193,327    $ (683,046 )
Adjustments:          
Net interest expense and change in swap fair value   42,545     8,418  
Income tax expense   397,861     189,738  
Depreciation and amortization   538,907     756,606  
Stock compensation   14,760     1,787  
Loss on disposal of assets   308     42,574  
Impairment of goodwill   -     1,101,471  
Amortization of deferred rent   8,027     8,946  
Adjusted EBITDA $ 1,195,735   $ 1,426,494  
           


Reconciliation of net income (loss) to Adjusted EBITDA:
  For the nine months ended
  January 31, 2018   January 31, 2017
           
Net income (loss)  $ 956,305    $ (636,596 )
Adjustments:          
Net interest expense and change in swap fair value   298,747     290,253  
Income tax expense   718,496     212,592  
Depreciation and amortization   1,848,490     2,306,628  
Acquisition expenses -     113,900  
Stock compensation 89,438     117,363  
Loss on disposal of assets   5,773     56,490  
Impairment of goodwill   -     1,101,471  
Amortization of deferred rent   6,076     30,899  
Adjusted EBITDA $ 3,923,325   $ 3,597,030  
           

Forward-Looking Statements

This release contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We use words such as "anticipate," "believe," "expect," "future," "intend," "plan," and similar expressions to identify forward-looking statements. Forward-looking statements include, without limitation, our ability to increase income streams, to grow revenue and earnings, and to obtain additional gaming and other projects. These statements are only predictions and are subject to certain risks, uncertainties and assumptions, which are identified and described in the Company's public filings with the Securities and Exchange Commission.

About Nevada Gold & Casinos

Nevada Gold & Casinos, Inc. (NYSE MKT:UWN) of Las Vegas, Nevada is a developer, owner and operator of 9 gaming operations in Washington (wagoldcasinos.com), a local casino in Henderson, Nevada (clubfortunecasino.com) and a slot route operation in Deadwood, South Dakota (dakotaplayersclub.com). For more information, visit www.nevadagold.com.

Contacts:

Nevada Gold & Casinos, Inc.
Michael P. Shaunnessy / James Meier
(702) 685-1000 

Stonegate Capital Partners
Preston Graham
(972) 850-2001

Nevada Gold & Casinos, Inc. 
Consolidated Statements of Operations 
(unaudited)
 
  January 31,   April 30,
  2018     2017  
   (unaudited)
     
           
ASSETS 
Current assets:      
Cash and cash equivalents $   8,598,633     $   10,631,903  
Restricted cash     2,058,849         1,994,312  
Accounts receivable, net of allowances     362,770         808,484  
Prepaid expenses     1,669,377         1,209,507  
Notes receivable, current portion     35,205         383,093  
Inventory and other current assets     444,319         423,113  
Total current assets     13,169,153         15,450,412  
           
Real estate held for sale     750,000         750,000  
Goodwill     16,923,588         16,923,588  
Intangible assets, net of accumulated amortization     3,708,355         4,107,328  
Property and equipment, net of accumulated depreciation     13,261,285         13,958,715  
Deferred tax asset     838,974         1,557,470  
Other assets     167,097         70,000  
Total assets $ 48,818,452     $  52,817,513  
           
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities:          
Accounts payable and accrued liabilities $ 1,470,127     $ 1,303,571  
Accrued payroll and related     1,407,486         1,925,592  
Accrued player's club points and progressive jackpots     2,301,566         2,348,068  
Total current liabilities   5,179,179       5,577,231  
Long-term debt   9,134,370       12,061,411  
Other long-term liabilities     633,340         667,110  
Total liabilities   14,946,889       18,305,752  
           
Stockholders' equity:          
Common stock, $0.12 par value per share; 50,000,000 shares          
authorized; 18,715,985 and 18,627,167 shares issued and           
16,848,182 and 17,547,665 shares outstanding at January 31, 2018,          
and April 30, 2017, respectively    2,245,927       2,235,269  
Additional paid-in capital   27,542,449       27,449,319  
Retained earnings   13,277,119       12,320,814  
Treasury stock, 1,867,803 and 1,079,502 shares at January 31, 2018,          
and April 30, 2017, respectively, at cost   (9,193,932 )     (7,493,641 )
Total stockholders' equity   33,871,563       34,511,761  
Total liabilities and stockholders' equity $ 48,818,452     $ 52,817,513  
           

 

 
    Three Months Ended
  Nine Months Ended
 
  January 31,
  January 31,
    January 31,
  January 31,
 
  2018
  2017
    2018
  2017
 
Revenues:                          
Casino $ 15,822,508     $ 15,714,538     $ 49,595,806     $ 48,231,536  
Food and beverage   3,399,975       3,383,641         9,817,883       10,014,949  
Other   480,802       534,011         1,484,566         1,622,271  
Gross revenues   19,703,285       19,632,190       60,898,255       59,868,756  
Less promotional allowances    (1,605,069 )      (1,722,078 )      (4,831,292 )      (5,251,980 )
Net revenues   18,098,216       17,910,112       56,066,963       54,616,776  
                 
 Expenses:                 
Casino   8,631,595       8,550,102       27,697,584       27,180,611  
Food and beverage   1,766,663       1,573,445         5,011,269         4,588,060  
Other   51,467       46,321         156,841         153,055  
Marketing and administrative   5,378,939       5,149,807       15,961,424       15,583,962  
Facility   518,234       547,123         1,502,303         1,627,828  
Corporate   578,370       627,553         1,909,731         2,148,422  
Depreciation and amortization     538,907         756,606         1,848,490         2,306,628  
Loss on disposal of assets     308         42,574         5,773         56,490  
Impairment of goodwill     -          1,101,471         -          1,101,471  
Total operating expenses   17,464,483        18,395,002       54,093,415        54,746,527  
Operating income (loss)     633,733         (484,890 )       1,973,548         (129,751 )
Non-operating income (expenses):                
Interest income     10,749         19,149         37,424         65,241  
Interest expense and amortization of loan issue costs     (145,280 )       (207,626 )       (469,615 )       (582,014 )
Change in swap fair value     91,986         180,059         133,444         226,520  
Income (loss) before income tax expense     591,188         (493,308 )       1,674,801         (420,004 )
Income tax expense     (397,861 )       (189,738 )       (718,496 )       (212,592 )
Net income (loss)  $   193,327     $   (683,046 )   $   956,305     $   (632,596 )
Per share information:                            
Net income (loss) per common share - basic $   0.01     $   (0.04 )   $   0.06     $  (0.04 )
                         
Net income (loss) per common share - diluted $   0.01     $   (0.04 )   $   0.05     $   (0.04 )
                     

 

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Source: Nevada Gold & Casinos, Inc.

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NEVADA GOLD & CASINOS, INC.

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