Nevada Gold & Casinos Reports Third Quarter Results

LAS VEGAS, March 16, 2017 (GLOBE NEWSWIRE) — Nevada Gold & Casinos, Inc. (NYSE MKT:UWN) today announced financial results for the third quarter ended January 31, 2017. 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 2017, net revenue decreased to $18.0 million compared to $18.4 million in the third quarter of fiscal 2016.  This decrease was primarily driven by a $1.4 million decline in Washington, partially offset by a $1.2 million increase from Club Fortune Casino, which was acquired on December 1, 2015.  Operating expenses were $18.5 million compared to $17.2 million in the prior year period.  The Company recorded an impairment loss of $1.1 million, writing off the remaining goodwill associated with its South Dakota operation. Operating loss was $0.5 million compared to $1.2 million in the prior year period.  Net loss was $0.7 million compared to net income of $0.5 million in the prior year period. 

For the third quarter of fiscal 2017, the Company reported adjusted EBITDA of $1.4 million compared to a record $2.3 million in the prior year quarter.  This decrease was due to a challenging environment in the Washington portfolio, but was aided by three full months of operations of Club Fortune Casino, compared to two months for the third quarter of 2016.

“Our Washington portfolio endured harsh weather conditions beginning in mid-December and continued into mid-February,” stated President and CEO Michael Shaunnessy.  “The growth in volumes we had seen in the first two quarters stalled, and we continued to be plagued by a softer than normal hold percentage, particularly compared to the prior year. On a more positive note, Club Fortune generated its highest quarterly revenue and EBITDA since acquisition.”

Net revenues from the Washington state gaming operations decreased to $13.2 million compared to $14.6 million in the prior year.  Of the $1.4 million revenue decline, lower table drop was responsible for $0.5 million, lower hold percentage for $0.6 million and poker for $0.3 million.  Adjusted EBITDA decreased to $1.6 million compared to a record $2.8 million in the prior year period. 

Club Fortune net revenues were $3.6 million and adjusted EBITDA was $0.6 million compared to prior year’s first two months of operations which yielded $2.4 million in revenues and adjusted EBITDA of $0.3 million

South Dakota revenues declined $174,000 to $1.2 million, which was partially offset by operating expense reductions leading to a $48,000 decrease in EBITDA compared to the prior year.

Corporate expenses were $0.6 million compared to $0.8 million, net of acquisition expenses in the prior period.  On a consolidated basis, adjusted EBITDA was $1.4 million compared to $2.3 million in the prior year period.

The Company paid down $1.5 million in debt during the quarter.  The unrestricted cash balance at January 31, 2017 was $9.6 million, and total outstanding borrowing was $14.0 million.

In July 2016, the Board authorized a $2.0 million stock repurchase program.  During the quarter the Company acquired 68,188 shares for $132,443, an average cost of $1.94.  Since inception approximately 258,000 shares have been acquired at a cost of approximately $477,000, leaving $1.5 million available under this authorization.

For the nine month period of fiscal 2017, net revenues were $54.8 million compared to $50.4 million in fiscal year 2016. Operating expenses were $55.0 million, which includes the $1.1 million impairment charge, compared to $47.5 million in the prior period. Operating income decreased to $0.1 million compared to $3.0 million in fiscal 2016.  Net loss was $0.6 million compared to net income of $1.5 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 (888) 724-9513.  International callers can access the call by dialing (913) 312-1500.

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 8993337. The replay will be available through March 23, 2017.  The archived webcast will also be available on the company’s website.

(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, 2017 and January 31, 2016 are shown below:

Reconciliation of net (loss) income to Adjusted EBITDA:
  For the three months ended
  January 31, 2017   January 31, 2016
           
Net (loss) income $ (683,046 )   $ 466,351  
Adjustments:          
Net interest expense and change in swap fair value   8,418       432,252  
Income tax expense   189,738       283,592  
Depreciation and amortization   756,606       739,699  
Acquisition expenses         368,824  
Stock compensation and employee stock purchases   1,787       30,177  
Loss (gain) on disposal of assets   42,574       (2,271 )
Impairment of goodwill   1,101,471        
Amortization of deferred rent   8,946       11,639  
Adjusted  EBITDA $ 1,426,494     $ 2,330,263  
           

Reconciliation of net (loss) income to Adjusted EBITDA:
  For the nine months ended
  January 31, 2017   January 31, 2016
           
Net (loss) income $ (632,596 )   $ 1,542,338  
Adjustments:          
Net interest expense and change in swap fair value   290,253       623,484  
Income tax expense   212,592       812,226  
Depreciation and amortization   2,306,628       1,739,902  
Acquisition expenses 113,900       629,603  
Stock compensation and employee stock purchases 117,393       90,672  
Loss (gain) on disposal of assets   56,490       (163,702 )
Impairment of goodwill   1,101,471        
Amortization of deferred rent   30,899       24,502  
Adjusted  EBITDA $ 3,597,030     $ 5,298,325  
           

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.

 
Nevada Gold & Casinos, Inc.
Consolidated Balance Sheets
         
    January 31,   April 30,
    2017   2016
      (unaudited)      
             
ASSETS
Current assets:        
Cash and cash equivalents   $ 9,583,671     $ 11,583,107  
Restricted cash     1,722,247       1,433,728  
Accounts receivable, net of allowances     362,644       665,549  
Prepaid expenses     1,338,878       1,206,825  
Notes receivable, current portion     499,361       208,294  
Inventory and other current assets     415,773       416,022  
Total current assets     13,922,574       15,513,525  
             
Real estate held for sale     750,000       750,000  
Notes receivable, net of current portion     4,650       900,775  
Goodwill     16,923,588       18,025,059  
Intangible assets, net of accumulated amortization     4,320,863       5,003,981  
Property and equipment, net of accumulated depreciation     14,384,547       15,147,061  
Deferred tax asset     2,135,707       2,348,299  
Other assets     70,000       70,000  
Total assets   $   52,511,929     $   57,758,700  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:            
Accounts payable and accrued liabilities   $ 1,361,973     $ 1,702,366  
Accrued payroll and related     1,250,576       2,094,250  
Accrued player’s club points and progressive jackpots     2,085,896       1,872,566  
Total current liabilities     4,698,445       5,669,182  
Long-term debt     13,735,976       16,839,148  
Other long-term liabilities     685,807       881,426  
Total liabilities     19,120,228       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
17,584,354 and 17,788,856 shares outstanding at January 31, 2017,
and April 30, 2016, respectively
    2,235,028       2,228,612  
Additional paid-in capital     27,441,270       27,315,517  
Retained earnings     11,124,254       11,756,850  
Treasury stock, 1,040,813 and 782,837 shares at January 31, 2017 and            
April 30, 2016, respectively, at cost     (7,408,851 )     (6,932,035 )
Total stockholders’ equity     33,391,701       34,368,944  
Total liabilities and stockholders’ equity   $ 52,511,929     $ 57,758,700  
             

Nevada Gold & Casinos, Inc.
Consolidated Statements of Operations
(unaudited)
           
      Three Months Ended   Nine Months Ended
    January 31,   January 31,   January 31,   January 31,
    2017   2016   2017   2016
Revenues:                        
Casino   $ 15,791,598     $ 16,217,164     $ 48,441,682     $ 44,578,057  
Food and beverage     3,383,641       3,294,142       10,014,949       8,216,330  
Other     534,011       529,568       1,622,271       1,437,452  
Gross revenues     19,709,250       20,040,874       60,078,902       54,231,839  
Less promotional allowances     (1,722,078 )     (1,680,127 )     (5,251,980 )     (3,794,103 )
Net revenues     17,987,172       18,360,747       54,826,922       50,437,736  
 Expenses:                         
Casino     8,612,371       8,323,508       27,327,792       24,128,321  
Food and beverage     1,573,445       1,508,918       4,588,565       4,117,607  
Other     61,112       76,050       215,515       179,965  
Marketing and administrative     5,149,807       4,886,618       15,583,962       13,335,935  
Facility     547,123       524,892       1,627,828       1,510,113  
Corporate     627,553       1,121,138       2,148,422       2,612,247  
Depreciation and amortization     756,606       739,699       2,306,628       1,739,202  
Loss (gain) on disposal of assets     42,574       (2,271 )     56,490       (163,702 )
Impairment of goodwill     1,101,471             1,101,471        
Total operating expenses     18,472,062       17,178,552       54,956,673       47,459,688  
Operating (loss) income     (484,890 )     1,182,195       (129,751 )     2,978,048  
Non-operating income (expenses):                        
Interest income     19,149       22,794       65,241       73,424  
Interest expense and amortization of loan issue costs     (178,100 )     (187,894 )     (482,432 )     (401,514 )
Interest rate swap expense     (29,526 )     (21,006 )     (99,582 )     (51,332 )
Change in swap fair value     180,059       (246,146 )     226,520       (244,062 )
(Loss) income before income tax expense     (493,308 )     749,943       (420,004 )     2,354,564  
Income tax expense     (189,738 )     (283,592 )     (212,592 )     (812,226 )
Net (loss) income   $ (683,046 )   $ 466,351     $ (632,596 )   $ 1,542,338  
Per share information:                        
Net (loss) income per common share – basic and diluted   $ (0.04 )   $ 0.03     $ (0.04 )   $ 0.09  
                         

CONTACT: 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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