Nevada Gold & Casinos Reports First Quarter 2019 Financial Results

LAS VEGAS, Sept. 13, 2018 (GLOBE NEWSWIRE) -- Nevada Gold & Casinos, Inc. (NYSE:UWN) today announced financial results for the first quarter ended July 31, 2018.

New Revenue Recognition Standard
On May 1, 2018, the Company adopted accounting standard update No. 2014-09 ("ASC 606") and all the related amendments to all contracts ("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. The opening retained earnings adjustment related to the change in the accounting for the Company's point liability from the immediate revenue/cost method to a deferred revenue method.

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 months ended July 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 months ended July 31, 2018 at the end of this release.

In addition, with the sale of the South Dakota route, which closed June 30, 2018, the current period reflects two months of operations compared to three months in the prior year.  On July 27, 2018 we signed an agreement to sell Club Fortune and those operations are now segregated as discontinued operations and the associated assets and liabilities are now classified as ‘Held for Sale."

For the first quarter of fiscal 2019, the Company reported net revenues of $14.9 million compared to $15.0 million in the first quarter of fiscal 2018. Operating expenses were $14.7 million in both periods.  Operating income was $0.2 million compared to $0.3 million, while income from continuing operations was $0.1 in both periods.

Net revenues from the Washington State gaming operations increased to $14.1 million from $13.1 million in the prior year period.  A higher table games hold percentage, although normal in both periods, was responsible for approximately $0.4 million in additional revenue for the quarter and poker revenue increased $0.5 million.  Adjusted EBITDA increased to $1.8 million compared to $1.2 million in the prior year. 

Club Fortune revenues were $3.2 million compared to $3.4 million in the prior year and adjusted EBITDA declined by the same $0.2 million.  South Dakota route revenues were $0.8 million compared to $1.9 million in the prior period and adjusted EBITDA declined $0.3 million due primarily to one month less of operations.  Corporate adjusted EBITDA was negative $0.7 million compared to negative $0.6 million in the prior period and on a consolidated basis, adjusted EBITDA was $1.0 million compared to $1.1 million in the prior year period.

"Last year our Washington operations were challenged with beautiful weather, and while this year did not have much rain either, the unusually warm temperatures and high humidity tempered the draw of enjoying the beautiful outdoors," said Michael P. Shaunnessy, President and CEO.

The Company's outstanding bank debt was $6.9 million as of July 31, 2018, and unrestricted cash on hand was $8.4 million.

The exclusive negotiations for the sale of the Company are ongoing.

Conference Call and Webcast 
The Company will host a conference call at 4:30 PM ET (1:30 PM PT), today, September 13, 2018 to discuss the financial results and to provide a corporate update.   The call can be accessed live by dialing (800) 289-0438. International callers can access the call by dialing (323) 794-2423.
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 2679122. The replay will be available through September 20, 2018.

(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, income taxes, depreciation and amortization, non-cash goodwill and other long-lived asset impairment charges, write-offs of project development costs, litigation charges, non-cash stock grants, non-cash employee stock purchase plan discounts, exclusion of net income or loss from operations held for sale, 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 table reconciles net income from continuing operations to Adjusted EBITDA from continuing operations for the three months ended July 31, 2018 and 2017:

 
          For the three months ended
            July 31, 2018     July 31, 2017
                   
Net income from continuing operations          $ 85,594      $ 73,015
Adjustments:                  
Net interest expense and change in swap fair value   107,226       152,015
Income tax expense           24,207       35,918
Depreciation and amortization           130,439       337,938
Sale related expenses             482,202       -
Stock compensation   12,570       58,537
Gain on sale of assets             (57,692 )     -
Amortization of deferred rent           (14,883 )     724
Adjusted EBITDA from continuing operations         $ 769,663     $ 658,147
                   

   Adjusted EBITDA from discontinued operations was $246,494 and $452,651 for the three months ended July 31, 2018 and 2017, respectively.

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:UWN) of Las Vegas, Nevada is a developer, owner and operator of nine gaming operations in Washington (wagoldcasinos.com), and a local casino in Henderson, Nevada (clubfortune.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 Balance Sheets

    July 31,   April 30,
    2018   2018
      (unaudited)      
             
ASSETS
Current assets:        
Cash and cash equivalents   $ 8,423,498     $ 9,508,931  
Restricted cash     2,517,272       2,369,063  
Accounts receivable, net of allowances     297,858       345,403  
Prepaid expenses     1,015,129       1,058,726  
Inventory and other current assets     344,096       341,299  
Assets held for sale     13,791,349       607,180  
Total current assets     26,389,202       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     3,215,451       3,254,367  
Deferred tax asset     718,495       704,044  
Assets held for sale     -       13,597,772  
Other assets     208,861       204,672  
Total assets   $ 47,648,667     $ 49,123,096  
             
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:            
Accounts payable and accrued liabilities   $ 1,410,571     $ 1,350,263  
Accrued payroll and related     1,302,381       1,810,626  
Accrued player's club points and progressive jackpots     2,461,002       2,273,655  
Liabilities held for sale     853,721       902,720  
Total current liabilities     6,027,675       6,337,264  
Long-term debt     6,817,794       7,895,240  
Other long-term liabilities     622,322       637,207  
Total liabilities     13,467,791       14,869,711  
             
             
Stockholders' equity:            
Common stock, $0.12 par value per share; 50,000,000 shares            
authorized; 18,715,985 shares issued and 16,848,182 shares outstanding at July 31, 2018, and April 30, 2018.     2,245,927       2,245,927  
Additional paid-in capital     27,571,911       27,557,151  
Retained earnings     13,556,970       13,644,239  
Treasury stock, 1,867,803 and 1,867,803 shares at July 31, 2018,            
and April 30, 2018, respectively, at cost     (9,193,932 )     (9,193,932 )
Total stockholders' equity     34,180,876       34,253,385  
Total liabilities and stockholders' equity   $ 47,648,667     $ 49,123,096  
             

 

Nevada Gold & Casinos, Inc.
Consolidated Statements of Operations
(unaudited)

      Three Months Ended
    July 31,   July 31,
    2018   2017
Revenues:            
Casino   $ 12,012,719     $ 13,251,312  
Food and beverage     2,489,377       2,360,414  
Other     378,073       411,596  
Gross revenues     14,880,169       16,023,322  
Less promotional allowances     -       (1,021,392 )
Net revenues     14,880,169       15,001,930  
 Expenses:             
Casino     6,172,939       7,717,485  
Food and beverage     2,203,490       1,241,092  
Other     58,779       25,869  
Marketing and administrative     4,474,984       4,359,431  
Facility     448,474       419,783  
Corporate     1,231,729       639,384  
Depreciation and amortization     130,439       337,938  
Gain on sale of assets     (57,692 )     -  
Total operating expenses     14,663,142       14,740,982  
Operating income     217,027       260,948  
Non-operating income (expenses):            
Interest income     8,438       12,465  
Interest expense and amortization of loan issue costs     (119,853 )     (160,515 )
Change in swap fair value     4,189       (3,965 )
Income from continuing operations before income tax expense     109,801       108,933  
Income tax expense     (24,207 )     (35,918 )
Income from continuing operations   $ 85,594     $ 73,015  
(Loss) Income from discontinued operations, net of taxes   (137,438 )     50,987  
Net (loss) income    $ (51,844 )   $ 124,002  
Per share information:            
Income from continuing operations per common share - basic   $ 0.01     $ 0.01  
Income from continuing operations per common share - diluted   $ -     $ -  
Income from discontinued operations per common share - basic and diluted   $ (0.01 )   $ -  
             
Net income per common share - basic and diluted   $ -     $ 0.01  
             

 The amount by which each line item in continuing operations in our unaudited Condensed Consolidated Statement of Operations for the three months ended July 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 July 31, 2018
      As Reported -
With Adoption of ASC 606
  As Adjusted -
Without Adoption of ASC 606
  Effect of Accounting
Change
Increase/(Decrease)
  Revenues:          
    Casino $ 12,012,719     $ 12,985,848     $ (973,129 )
    Food and beverage   2,489,377       2,489,377       -  
    Other   378,073       378,073       -  
    Gross revenues   14,880,169       15,853,298       (973,129 )
    Less promotional allowances   -       (976,807 )     976,807  
    Net revenues   14,880,169       14,876,491       3,678  
               
  Expenses:          
    Casino   6,172,939       6,986,273       (813,334 )
    Food and beverage   2,203,490       1,417,389       786,101  
    Other   58,779       27,868       30,911  
    Marketing and administrative   4,474,984       4,474,984       -  
    Facility   448,474       448,474       -  
    Corporate   1,231,729       1,231,729       -  
    Depreciation and amortization   130,439       130,439       -  
    Gain on sale of assets   (57,692 )     (57,692 )     -  
    Total operating expenses   14,663,142       14,659,464       3,678  
  Operating income $ 217,027     $ 217,027     $ -  
               
  Net loss $ (51,844 )   $ (51,844 )   $ -  

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