U.S. Markets open in 7 hrs 45 mins

Nevada Gold & Casinos Reports Second Quarter 2019 Results

LAS VEGAS, Dec. 17, 2018 (GLOBE NEWSWIRE) -- Nevada Gold & Casinos, Inc. (NYSE MKT: UWN) today announced financial results for the second quarter ended October 31, 2018.

Financial results for the three and six months ended October 31, 2018 are impacted by the sale of the South Dakota route, which closed June 30, 2018, and the agreement to sell Club Fortune, signed on July 27, 2018.  Only two months of South Dakota operations are reflected in the current year and the Club Fortune operations are segregated as discontinued operations with the associated assets and liabilities classified as ‘Held for Sale.”

For the second quarter of fiscal 2018, the Company reported net revenues of $14.4 million compared to $16.0 million in the second quarter of fiscal 2018. Operating expenses were $13.8 million compared to $15.0 million in the prior year period.  Operating income was $0.5 million compared to $1.0 million, and net income was $0.5 million, or $0.03 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 increased to $14.4 million, from $13.8 million in the prior year period, and adjusted EBITDA increased to $2.0 million compared to $1.7 million in the prior year.  Increased poker revenue and a higher table games hold percentage, although in the normal range, was responsible for the majority of the revenue gain.  Operating cost increases were primarily attributable to the increased minimum wage.

South Dakota slot route operations provided no revenue or EBITDA in the current quarter compared to revenue of $2.2 million and adjusted EBITDA of $0.2 in the prior year quarter. Corporate adjusted EBITDA was ($0.7) million compared to ($0.6) million in the prior year and on a consolidated basis adjusted EBITDA from continuing operations was $1.4 million compared to $1.3 million in the prior year.

Club Fortune revenues were $3.2 million compared to $3.4 million in the prior year period, and adjusted EBITDA decreased to $0.2 million compared to $0.4 million in the prior year.

The Company paid down $1.1 million in debt during the fiscal year.  The unrestricted cash balance at October 31, 2018 was $9.8 million, and total outstanding borrowing was $6.9 million.

On December 3, 2018 the Company filed a preliminary proxy statement concerning the merger / acquisition transaction with Maverick Casinos, LLC. 

On December 5, 2018 the Nevada Gaming Control Board unanimously recommended approval of the Club Fortune sale transaction with Truckee Gaming, LLC.  The matter now moves to the Nevada Gaming Commission for final consideration on December 20, 2018.

The Company anticipates closing on the Club Fortune sale on December 31, 2018, and the Maverick merger / acquisition transaction in the first calendar quarter of 2019.

For the six month period ended October 31, 2018, net revenues were $29.2 million compared to $31.0 million in the prior year period.  Operating expenses were $28.5 million compared to $29.8 million in the prior year.  Operating income was $0.7 million compared to $1.2 million in fiscal 2018.  Net income was $0.5 million, or $0.03 per share, compared to $0.8 million, or $0.04 per share, in the prior year.

Conference Call
The Company will host a conference call at 4:30 PM ET (1:30 PM PT) the same afternoon to discuss the financial results and provide a corporate update.  The call can be accessed live by dialing (888) 394-8218.  International callers can access the call by dialing (323) 701-0225.

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 5792658.  The replay will be available through December 24, 2018.

New Revenue Recognition Standard
On May 1, 2018, the Company adopted accounting standard update No. 2014-09 (“ASC 606”) (“new revenue standard”). The Company adopted ASC 606 using the modified retrospective method and recognized the cumulative effect of the initial application of the new revenue standard as an adjustment to the opening balance of retained earnings as of May 1, 2018.

The new revenue standard also resulted in reclassifications to and from revenues, promotional allowances and operating expenses. Pursuant to ASC 606, food and beverage and other complimentaries are now included as revenues within their respective categories, with a corresponding decrease in casino revenues, as the offsetting amount historically included in promotional allowances has been eliminated.  In addition, the cost of providing these complimentary goods and services are now included as expenses within their respective categories.

Financial results for the three and six months ended October 31, 2017 have not been restated and are reported under the accounting standards in effect during that period.  The Company has provided a reconciliation between the new revenue standard and the old revenue standard for the three and six months ended October 31, 2018 at the end of this release.

Non-GAAP Information
The term "adjusted EBITDA" is used by the Company 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, sale related 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.

The following tables reconcile net income from continuing operations to Adjusted EBITDA from continuing operations for the three months and six months ended October 31, 2018 and 2017:

 
    For the three months ended
    October 31, 2018   October 31, 2017
                 
Net income from continuing operations   $ 344,900      $ 626,148  
Adjustments:                
Net interest expense and change in swap fair value     75,322       104,187  
Income tax expense     97,933       257,359  
Depreciation and amortization     114,218       224,651  
Sale related expenses     715,614       -  
Loss on sale of assets     23,335       5,465  
Stock compensation     12,201       65,382  
Amortization of deferred rent     (18,371 )     (2,675 )
Adjusted EBITDA from continuing operations   $ 1,365,152     $ 1,280,517  


                 
    For the six months ended
    October 31, 2018
  October 31, 2017
                 
Net income from continuing operations   $ 430,494      $ 699,162  
Adjustments:                
Net interest expense and change in swap fair value     182,548       256,202  
Income tax expense     122,140       293,277  
Depreciation and amortization     244,657       562,589  
Sale related expenses       1,197,815       -  
(Gain) Loss on sale of assets     (34,356 )     5,465  
Stock compensation     24,771       67,171  
Amortization of deferred rent     (33,256 )     (1,952 )
Adjusted EBITDA from continuing operations   $ 2,134,813     $ 1,881,914  
                 

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 nine gaming operations in Washington (wagoldcasinos.com) and a locals casino in Henderson, Nevada (clubfortunecasino.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)

      Three Months Ended   Six Months Ended
    October 31,   October 31,   October 31,   October 31,
    2018     2017     2018     2017  
Revenues:                    
Casino   $ 11,491,669     $ 14,205,937     $   23,504,388     $   27,457,249  
Food and beverage     2,520,548       2,470,121         5,009,925         4,830,535  
Other     342,237       387,414         720,310         799,011  
Gross revenues     14,354,454       17,063,472         29,234,623         33,086,795  
Less promotional allowances       -         (1,043,293 )       -          (2,064,685 )
Net revenues     14,354,454       16,020,179         29,234,623         31,022,110  
 Expenses:                         
Casino     5,169,139       7,974,289         11,342,078         15,691,086  
Food and beverage     2,244,719       1,293,078         4,448,208         2,534,873  
Other     55,040       24,082         113,820         49,936  
Marketing and administrative     4,393,961       4,357,146         8,868,945         8,716,577  
Facility     437,086       461,798         885,559         881,581  
Corporate     1,398,801       691,976         2,630,530         1,331,361  
Depreciation and amortization       114,218         224,651         244,657         562,589  
Loss on sale of assets       23,335         5,465         (34,356 )       5,465  
Total operating expenses       13,836,299         15,032,485         28,499,441         29,773,468  
Operating income       518,155         987,694         735,182         1,248,642  
Non-operating income (expenses):                        
Interest income       8,438         14,211         16,875         26,675  
Interest expense and amortization of loan issue costs       (88,591 )       (163,820 )       (208,443 )       (324,335 )
Change in swap fair value       4,831         45,422         9,020         41,458  
Income from continuing operations before income tax expense       442,833         883,507         552,634         992,440  
Income tax expense       (97,933 )       (257,359 )       (122,140 )       (293,278 )
Income from continuing operations       344,900         626,148         430,494         699,162  
Income from discontinued operations, net of taxes       194,190         12,829         56,752         63,816  
Net income    $   539,090     $   638,977     $   487,246     $   762,978  
Per share information:                        
Income from continuing operations per common share - basic and diluted   $   0.02     $   0.04     $   0.03     $   0.04  
Income from discontinued operations per common share - basic and diluted   $   0.01     $   -      $   -      $   -   
                         
Net income per common share - basic and diluted   $   0.03     $   0.04     $   0.03     $   0.04  
                         
                         

Nevada Gold & Casinos, Inc.
Consolidated Balance Sheets

    October 31,   April 30,
    2018
  2018
         
    (unaudited)      
             
ASSETS 
Current assets:        
Cash and cash equivalents   $   9,784,582     $   9,508,931  
Restricted cash       2,726,550         2,369,063  
Accounts receivable, net of allowances       291,101         345,403  
Prepaid expenses       1,034,600         1,058,726  
Inventory and other current assets       345,337         341,299  
Assets held for sale       13,890,758         607,180  
Total current assets       28,072,928         14,230,602  
             
Real estate held for sale       750,000         750,000  
Goodwill       14,092,154         14,092,154  
Intangible assets, net of accumulated amortization       2,274,504         2,289,485  
Property and equipment, net of accumulated depreciation       3,142,651         3,254,367  
Deferred tax asset       568,216         704,044  
Assets held for sale       -          13,597,772  
Other assets       213,692         204,672  
Total assets   $   49,114,145     $   49,123,096  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities:            
Accounts payable and accrued liabilities   $ 1,424,200     $ 1,350,263  
Accrued payroll and related       1,997,081         1,810,626  
Accrued player's club points and progressive jackpots       2,606,088         2,273,655  
Liabilities held for sale       925,544         902,720  
Total current liabilities     6,952,913       6,337,264  
Long-term debt       6,822,924         7,895,240  
Other long-term liabilities       603,951         637,207  
Total liabilities     14,379,788       14,869,711  
             
             
Stockholders' equity:            
Common stock, $0.12 par value per share; 50,000,000 shares            
authorized; 18,743,185 and 18,715,985 shares issued and 16,875,382 and 16,848,182 shares outstanding at October 31, 2018, and April 30, 2018, respectively.      2,249,191       2,245,927  
Additional paid-in capital     27,583,038       27,557,151  
Retained earnings     14,096,060       13,644,239  
Treasury stock, 1,867,803 shares at October 31, 2018, and April 30, 2018, at cost.       (9,193,932 )       (9,193,932 )
Total stockholders' equity     34,734,357       34,253,385  
Total liabilities and stockholders' equity   $ 49,114,145     $ 49,123,096  
             
             

The amount by which each line item in continuing operations in our unaudited Condensed Consolidated Statement of Operations for the three and six months ended October 31, 2018, was affected by the new revenue standard as compared with the accounting guidance that was in effect before the change was as follows:

    For the three months ended October 31, 2018
    As Reported - With Adoption of ASC 606   As Adjusted - Without Adoption of ASC 606   Effect of Accounting Change Increase/(Decrease)
Revenues:          
  Casino $   11,491,669   $   12,466,911     $   (975,242 )
  Food and beverage     2,520,548       2,520,548         -  
  Other     342,237       342,237         -  
  Gross revenues     14,354,454       15,329,696         (975,242 )
  Less promotional allowances     -       (975,242 )       975,242  
  Net revenues     14,354,454       14,354,454         -  
             
Expenses:          
  Casino     5,169,139       5,990,982         (821,843 )
  Food and beverage     2,244,719       1,454,091         790,628  
  Other     55,040       23,825         31,215  
  Marketing and administrative     4,393,961       4,393,961         -  
  Facility     437,086       437,086         -  
  Corporate     1,398,801       1,398,801         -  
  Depreciation and amortization     114,218       114,218         -  
  Loss on sale of assets     23,335       23,335         -  
  Total operating expenses     13,836,299       13,836,299         -  
Operating income $   518,155   $   518,155     $   -  
             
Net income $   344,900   $   344,900     $   -