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  $  -