December 15, 2016

Nevada Gold & Casinos Reports Second Quarter 2017 Results

LAS VEGAS, Dec. 15, 2016 (GLOBE NEWSWIRE) -- Nevada Gold & Casinos, Inc. (NYSE MKT:UWN) today announced financial results for the second quarter ended October 31, 2016.

For the second quarter of fiscal 2017, the Company reported net revenues of $18.5 million compared to $16.1 million in the second quarter of fiscal 2016. Operating expenses were $18.3 million compared to $15.1 million in the prior year period.  Operating income was $0.3 million compared to $1.0 million, and net income was $0.2 million, or $0.01 per share, compared to net income of $0.6 million, or $0.04 per share, in the prior year period.

Net revenues from the Washington state gaming operations decreased to $13.2 million, from $13.7 million in the prior year period, and adjusted EBITDA decreased to $1.5 million compared to $2.0 million in the prior year. Although general business volumes were stable, a lower table games hold percentage, although normal, was responsible for approximately $0.2 million in both the revenue and EBITDA shortfalls.  As a result of declining poker business, the Company decided to consolidate its poker operations and closed the poker tables at two locations.  Poker revenue represented approximately $0.3 million in both the revenue and EBITDA declines in the quarter.

The state of Washington passed a ballot measure increasing the minimum wage to $11.00 per hour effective January 1, 2017.  The Company anticipates that current payroll expense will increase by approximately $1.2 million in calendar year 2017.  The Company has identified numerous cost and operating initiatives intended to offset approximately $0.8 million of this wage impact.  At the end of November, a competitor in the tri-cities market in eastern Washington, which generated approximately $2.4 million in annual gaming revenue, ceased operations.  The Company operates two of the remaining three facilities in that market and anticipates an increase in business as a result of this closure.

Club Fortune revenues were $3.1 million and adjusted EBITDA was $0.1 million.  Road construction outside the facility, which was completed the last week of October, continued to negatively impact revenue during the quarter.  With the construction completed, November revenues returned to pre-construction levels. 

South Dakota slot route operations net revenue was $2.2 million compared to $2.4 million in the prior-year period and adjusted EBITDA was $213,000 compared to $252,000.

On a consolidated basis, adjusted EBITDA was $1.2 million, compared to $1.7 million in the prior-year period.  The Company paid down $1.0 million in debt during the quarter.  The unrestricted cash balance at October 31, 2016 was $10.2 million, and total outstanding borrowing was $15.5 million.

In July 2016, the Board authorized a $2.0 million stock repurchase program.  During the quarter the Company acquired 189,788 shares for $344,372, an average cost of $1.81.  Approximately $1.7 million remains available under this authorization.

"Despite some of the challenges we experienced in the first half of the year, we are encouraged by the changes and catalysts now in place for both Washington and Club Fortune casino operations as we enter the seasonally stronger portion of the year," stated Michael P. Shaunnessy, President and CEO. "We continue to pay down debt, have been active with our share repurchase program, and are focused on cost reductions and efficiencies to increase shareholder value."

For the six month period, net revenues were $36.8 million compared to $32.1 million in fiscal year 2016. Operating expenses were $36.5 million compared to $30.3 million in the prior year. Operating income was $0.4 million compared to $1.8 million in fiscal 2016.  Net income was $0.1 million, or $0.00 per share, compared to $1.1 million, or $0.07 per share, in the prior year.

Conference Call
The Company will host a conference call at 4:30 PM ET (1:30 PM PT) on December 15, 2016 to discuss the financial results and provide a corporate update.  The call can be accessed live by dialing (888) 282-4019.  International callers can access the call by dialing (913) 312-0653.

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 2469123.  The replay will be available through December 22, 2016.

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 six months ended October 31, 2016 and October 31, 2015 are shown below:

Adjusted EBITDA reconciliation to net income:
  For the three months ended
  October 31, 2016 October 31, 2015
       
Net income $150,022 $617,988
Adjustments:      
Net interest expense and change in swap fair value 64,103  91,125
Income tax expense  70,842  301,122
Depreciation and amortization  773,510  488,709
Acquisition expenses  -  80,660
Stock compensation and employee stock purchases 85,143  80,300
Loss on sale of assets  5,546  2,050
Amortization of deferred rent  9,455  4,952
Adjusted  EBITDA $1,158,621 $1,666,906
       


  For the six months ended
  October 31, 2016 October 31, 2015
       
Net income $50,450 $1,075,985 
Adjustments:      
Net interest expense and change in swap fair value 281,833  191,232 
Income tax expense  22,854  528,634 
Depreciation and amortization  1,550,022  999,503 
Acquisition expenses  113,900  260,780 
Stock compensation and employee stock purchases 115,606  110,495 
Loss (gain) on sale of assets  13,916  (161,430)
Amortization of deferred rent  21,955  12,863 
Adjusted  EBITDA $2,170,536 $3,018,062 
       

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 locals casino in Henderson, Nevada (clubfortunecasino.com) and a slot route operation in Deadwood, South Dakota (dakotaplayersclub.com). For more information, visit www.nevadagold.com.


 
Nevada Gold & Casinos, Inc.
Consolidated Statements of Operations
(unaudited)
 
   Three Months Ended  Six Months Ended
  October 31, October 31, October 31, October 31,
  2016  2015  2016  2015 
Revenues:          
Casino $16,412,381  $14,262,197  $  32,650,083  $  28,360,893 
Food and beverage  3,329,915   2,479,077     6,631,308     4,922,187 
Other   547,545   455,212     1,088,260      907,884 
Gross revenues  20,289,841   17,196,486     40,369,651     34,190,964 
Less promotional allowances    (1,747,069)    (1,062,273)    (3,529,902)    (2,113,975)
Net revenues  18,542,772   16,134,213     36,839,749     32,076,989 
Expenses:             
Casino  9,490,195   7,929,335     18,715,421     15,924,636 
Food and beverage  1,482,778   1,295,320      3,015,120     2,608,689 
Other  70,394    63,000     154,403     110,999 
Marketing and administrative  5,163,876   4,114,503     10,434,156     8,325,058 
Facility  547,370   492,066     1,080,705     985,221 
Corporate  724,136   738,995     1,520,869     1,488,462 
Depreciation and amortization    773,510     488,709     1,550,022     999,503 
Loss (gain) on disposal of assets    5,546     2,050     13,916     (161,430)
Total operating expenses    18,257,805     15,123,978     36,484,612     30,281,138 
Operating income    284,967     1,010,235     355,137     1,795,851 
Non-operating income (expenses):             
Interest income    23,124     24,749     46,092     50,630 
Interest expense and amortization of loan issue costs    (150,812)    (94,027)    (304,331)    (213,620)
Interest rate swap expense    (33,591)     (12,714)    (70,056)    (30,326)
Change in swap fair value    97,176     (9,133)    46,462     2,084 
Income before income tax expense    220,864     919,110     73,304     1,604,619 
Income tax expense    (70,842)    (301,122)     (22,854)    (528,634)
Net income $  150,022  $  617,988  $  50,450  $  1,075,985 
Per share information:            
Net income per common share - basic and diluted $  0.01  $  0.04  $  0.00  $  0.07 
             
             

 

Nevada Gold & Casinos, Inc.
Consolidated Balance Sheets
     
  October 31, April 30,
  2016  2016 
  (unaudited)
   
       
ASSETS
Current assets:    
Cash and cash equivalents $10,237,713  $11,583,107 
Restricted cash  1,518,888   1,433,728 
Accounts receivable, net of allowances  468,795   665,549 
Prepaid expenses  1,529,350   1,206,825 
Notes receivable, current portion  620,929   208,294 
Inventory and other current assets  406,144   416,022 
Total current assets  14,781,819   15,513,525 
       
Real estate held for sale  750,000   750,000 
Notes receivable, net of current portion  7,500   900,775 
Goodwill  18,025,059   18,025,059 
Intangible assets, net of accumulated amortization  4,534,399   5,003,981 
Property and equipment, net of accumulated depreciation  14,850,636   15,147,061 
Deferred tax asset  2,325,445   2,348,299 
Other assets  70,000   70,000 
Total assets $  55,344,858   $  57,758,700  
       
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:      
Accounts payable and accrued liabilities $1,331,378   $1,702,366 
Accrued payroll and related  1,852,582   2,094,250 
Accrued player's club points and progressive jackpots  1,886,958   1,872,566 
Total current liabilities  5,070,918   5,669,182 
Long-term debt  15,209,829   16,839,148 
Other long-term liabilities  856,920    881,426 
Total liabilities  21,137,667   23,389,756 
       
       
Stockholders' equity:      
Common stock, $0.12 par value per share; 50,000,000      
shares authorized; 18,625,167 and 18,571,693 shares issued and
17,652,542 and 17,788,856 shares outstanding at October 31,
2016, and April 30, 2016, respectively
  2,235,028   2,228,612 
Additional paid-in capital  27,441,270   27,315,517 
Retained earnings  11,807,300   11,756,850 
Treasury stock, 972,625 and 782,837 shares at October 31, 2016 and April 30, 2016,      
respectively, at cost  (7,276,407)  (6,932,035)
Total stockholders' equity  34,207,191   34,368,944 
Total liabilities and stockholders' equity $55,344,858  $57,758,700 
       


Contacts:



Nevada Gold & Casinos, Inc.

Michael P. Shaunnessy / James Meier

(702) 685-1000



Stonegate Capital Partners

Casey Stegman

(214) 987-4121

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