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 | ||||