Nevada Gold & Casinos, Inc. Announces Third Quarter Results
HOUSTON, March 1, 2006 -- Nevada Gold & Casinos, Inc. (AMEX: UWN) today announced financial results for the third quarter ended January 22, 2006.
For the third quarter of fiscal 2006, gross revenues increased to $2.9 million compared to $1.3 million in the third quarter ended December 31, 2004. The net loss for the third quarter of fiscal 2006 was $0.8 million compared to net income of $0.8 million in the third quarter of fiscal 2005. The net loss per diluted common share was $0.06, compared to net income per diluted common share of $0.06 in the prior year period.
The third quarter of fiscal 2006 compared to prior quarterly periods was impacted by several extraordinary items, including:
-- IC-BH recorded a $2.1 million loss from the extinguishment of debt due to the refinancing of its credit agreement, which reduced diluted earnings per share by approximately $0.04.
-- Colorado Grande's revenue was significantly impacted in November/December by construction related to the re-grand opening, which reduced earnings by approximately $400,000 or $0.02 per diluted share.
-- River Rock' s business interruption due to flooding and bridge closing
-- The discontinuation of estimated earnings contributions related to Route 66 Casinos, LLC, due to the sale and termination of equipment leases.
H. Thomas Winn, Chairman, CEO of Nevada Gold & Casinos, Inc. commented, "While our financial results were disappointing this quarter, they are primarily a reflection of our heightened business and development strategy and include certain non-recurring financial items. We remain very pleased with the progress we are making on our projects, as we expect to have five additional projects contributing to earnings over the next 2 years. We continue to believe that our transition to an operating company will generate solid long-term returns and enhance shareholder value."
Financial Results
For the third quarter of fiscal 2006, gross revenues increased to $2.9 million compared to $1.3 million in the third quarter ended December 31, 2004. The gross revenue increase was primarily due to $1.1 million in casino revenues and $0.2 million in food and beverage revenues recorded during the third quarter from the Colorado Grande Casino-Cripple Creek, which the Company acquired in April 2005. In addition, revenues increased as a result of a $572,000 or 46% increase in credit enhancement fees from the River Rock project.
Operating expenses increased to $3.8 million from $1.5 million primarily as a result of the inclusion of the casino operations, food and beverage, marketing and administrative, and facility expenses from the Colorado Grande Casino-Cripple Creek and higher corporate expenses. The Company experienced higher corporate expenses due to its pursuit of additional gaming opportunities as well as increase in general and administrative expenses as a result of the Company's transition to an operations focused business model.
The Company's equity in earnings from Isle of Capri-Black Hawk (IC-BH), the Company's joint venture with Isle of Capri Casinos, was $0.4 million for the third quarter ended January 22, 2006, compared to $1.5 million for the third quarter of fiscal 2005. During the quarter, IC-BH recorded a $2.1 million loss due to the refinancing of its credit agreement. IC-BH's third quarter adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), was $10.8 million in the third quarter of fiscal 2006 compared to $8.8 million in the third quarter of fiscal 2005. A reconciliation of EBITDA to operating income is provided in the attached financial statements.
The net loss for the third quarter of fiscal 2006 was $0.8 million compared to net income of $0.8 million in the third quarter of fiscal 2005. The net loss per diluted common share was $0.06, compared to net income per diluted common share of $0.06 in the prior year period. Diluted weighted average common shares outstanding in the third quarter were 13.0 million compared to 14.3 million in the prior year period.
During the third quarter of fiscal 2006, the Company repurchased 105,300 shares of common stock in the open market at an average price of $10.45 per share.
Route 66 Casinos, LLC, Litigation
As previously reported on Form 8-K, the Company recently learned, through discovery in the litigation involving Route 66 Casinos, LLC, that in November, 2005 the Gillmann Group, without Nevada Gold's knowledge or consent, sold to the Laguna Development Corporation (LDC) the gaming devices and other equipment and property leased to the LDC and received $21 million, less certain adjustments. According to testimony taken on February 4, 2006, after liens on the gaming devices were paid off, the Gillmann Group received the net amount of approximately $12.0 million. The equipment leases were terminated in connection with the transaction.
On January 30, 2006, Nevada Gold obtained a Temporary Restraining Order freezing the proceeds of the sale of the equipment and other property subject to the Equipment Leases. Effective October 1, 2005, Nevada Gold discontinued the recording of any estimated earnings related to Route 66 Casinos, LLC due to the sale and the termination of the Equipment Leases and we await the outcome of the litigation.
Financial Presentation
In presenting these results, the Company noted that on June 6, 2005, it changed its fiscal year to end to the last Sunday in April rather than March 31. The Company did not submit financial information for the three months period ended January 22, 2005 in its Form 10-Q because the information was not practical or cost beneficial to prepare. References in this press release to the third quarter of fiscal year 2006 represents the three months ending January 22, 2006, and references to the third quarter of fiscal year 2005 represents the three months ended December 31, 2004. Management believes that the three months ended December 31, 2004 provides a meaningful comparison to the third quarter of fiscal year 2006.
Earnings Conference Call and Webcast
The Company will discuss third quarter financial results via the earnings conference call to be held at 4:30 ET today via the internet at www.nevadagold.com, Investor Relations, Events. If you are unable to participate during the live webcast, the conference call replay will be available by dialing 1-888-203-1112 or 1-719-457-0820 for international callers. Replay Pin Number 2130942. In addition, the call will be archived on the Company's website, http://www.nevadagold.com, through March 15, 2006.
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 Indian 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 and Casinos, Inc. (AMEX:UWN) of Houston, Texas is a developer, owner and operator of gaming facilities and lodging and entertainment facilities in Colorado, California, Oklahoma, New York and New Mexico. The company owns a 43% interest in the Isle of Capri-Black Hawk LLC, which owns Isle of Capri-Black Hawk and Colorado Central Station, both of which are in Black Hawk, Colorado. Colorado Grande Casino in Cripple Creek, Colorado is wholly owned and operated by Nevada Gold. The company owns a 40% interest in the Tioga Downs Raceway in New York State and has a management contract for the facility. The company also works with Native American tribes in a variety of capacities from the right to lease gaming equipment to development and management of their gaming properties. Native American projects consist of River Rock Casino in Sonoma County, California, a casino to be built in Tulsa, Oklahoma for the Muscogee (Creek) Nation, a casino to be built in Pauma Valley, California for the La Jolla Band of Luiseno Indians and a casino to be developed by Buena Vista Development Company, LLC in the city of Ione, California for Buena Vista Rancheria of Me-Wuk Indians. For more information, visit http://www.nevadagold.com.
Nevada Gold & Casinos, Inc.
Consolidated Balance Sheet
January 22, March 31,
2006 2005
----------- ----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 618,063 $ 3,846,195
Accounts receivable 1,560,369 794,435
Notes receivable -
affiliates, current
portion 1,200,000 1,200,000
Income tax receivable -- 113,288
Other current assets 2,046,950 312,220
------------ ------------
Total current assets 5,425,382 6,266,138
------------ ------------
Investments in unconsolidated
affiliates 33,084,408 21,647,329
Investments in development
projects 7,178,161 6,801,637
Notes receivable - affiliates,
net of current portion 2,466,136 2,777,136
Notes receivable - development
projects 24,023,334 6,562,323
Goodwill 6,350,706 --
Property and equipment, net
of accumulated depreciation
of $402,923 and $73,408 at
January 22, 2006,and
March 31, 2005, respectively 2,649,996 110,549
Deferred tax asset -- 618,282
Other 1,464,193 547,120
------------ ------------
Total assets $ 82,642,316 $ 45,330,514
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 1,623,962 $ 1,029,877
Accrued interest payable 265,056 20,453
Other accrued liabilities 681,192 --
Long-term debt, current
portion 3,278,678 3,317,499
Deferred tax liability 412,062 --
------------ ------------
Total current liabilities 6,260,950 4,367,829
------------ ------------
Long-term debt, net of current
portion and discount 46,640,395 9,632,773
Deferred income 670,693 178,835
------------ ------------
Total liabilities 53,572,038 14,179,437
------------ ------------
Commitments and contingencies -- --
Minority interest 420,419 299,884
Stockholders' equity:
Common stock, $0.12 par value
per share; 25,000,000
shares authorized; 13,902,330
and 12,755,203 shares issued
and outstanding at January 22,
2006 and March 31, 2005,
respectively 1,668,279 1,530,624
Additional paid-in capital 18,071,724 14,817,101
Retained earnings 16,294,706 14,419,719
Treasury stock, 725,800 shares
at January 22, 2006 (7,696,819) --
Accumulated other comprehensive
income 311,969 83,749
------------ ------------
Total stockholders' equity 28,649,859 30,851,193
------------ ------------
Total liabilities and
stockholders' equity $ 82,642,316 $ 45,330,514
============ ============
Nevada Gold & Casinos, Inc.
Consolidated Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
----------------------- ------------------------
Jan. 22, Dec. 31, Jan. 22, Dec. 31,
2006 2004 2006 2004
----------- ---------- ----------- -----------
Revenues:
Casino $ 1,083,053 $ -- $ 4,359,820 $ --
Food and beverage 237,657 -- 1,216,868 --
Other 26,508 16,902 96,698 50,707
Credit enhancement
fee 1,810,540 1,238,520 5,463,961 3,655,655
----------- ---------- ----------- -----------
Gross revenues 3,157,758 1,255,422 11,137,347 3,706,362
Less promotional
allowances (236,664) -- (1,169,321) --
----------- ---------- ----------- -----------
Net revenues 2,921,094 1,255,422 9,968,026 3,706,362
Operating expenses:
Casino 626,851 -- 2,167,090 --
Food and beverage 215,882 -- 676,666 --
Marketing and
administrative 542,968 -- 1,483,035 --
Facility 85,546 -- 189,506 --
Corporate expense 2,015,452 1,410,593 5,101,407 3,732,122
Depreciation and
amortization 246,100 39,585 461,927 113,454
Other 28,918 31,782 (29,669) 44,945
----------- ---------- ----------- -----------
Total operating
expenses 3,761,717 1,481,960 10,049,962 3,890,521
----------- ---------- ----------- -----------
Operating income
(loss) (840,623) (226,538) (81,936) (184,159)
Non-operating
income
(expenses):
Earnings from
unconsolidated
affiliates 376,600 1,878,645 5,198,626 6,764,005
Gain on sale of
marketable
securities 105,374 -- -- --
Interest income
(expense), net (559,985) (132,221) (1,347,639) (253,209)
Minority interest (363,403) (184,448) (981,379) (546,272)
----------- ---------- ----------- -----------
Income (loss)
before income tax
(expense) benefit (1,282,037) 1,335,438 2,787,672 5,780,365
----------- ---------- ----------- -----------
Income tax
(expense) benefit 483,541 (507,466) (994,694) (2,121,792)
----------- ---------- ----------- -----------
Net income (loss) $ (798,496) $ 827,972 $ 1,792,978 $ 3,658,573
=========== ========== =========== ===========
Per share infor-
mation:
Net income (loss)
per common share
- basic $ (0.06) $ 0.06 $ 0.14 $ 0.29
=========== ========== =========== ===========
Net income (loss)
per common share
- diluted $ (0.06) $ 0.06 $ 0.13 $ 0.26
=========== ========== =========== ===========
Basic weighted
average number
of shares
outstanding 13,028,525 12,837,107 12,946,118 12,799,385
=========== ========== =========== ===========
Diluted weighted
average number
of shares
outstanding 13,028,525 14,286,637 13,671,636 14,793,284
=========== ========== =========== ===========
24 Days Ended
------------
April 24,
2005
------------
Revenues:
Casino $ --
Food and beverage --
Other 4,507
Credit enhancement fee 702,305
------------
Gross revenues 706,812
Less promotional allowances --
------------
Net revenues 706,812
Operating expenses:
Casino --
Food and beverage --
Marketing and administrative --
Facility --
Corporate expense 408,982
Depreciation and amortization 18,509
Other 345
------------
Total operating expenses 427,836
------------
Operating income (loss) 278,976
Non-operating income (expenses):
Earnings from unconsolidated affiliates --
Gain on sale of marketable securities --
Interest income (expense), net (38,733)
Minority interest (106,420)
------------
Income (loss) before income
tax (expense) benefit 133,823
------------
Income tax (expense) benefit (51,814)
------------
Net income (loss) $ 82,009
============
Per share information:
Net income (loss) per common
share - basic $ 0.01
============
Net income (loss) per common
share - diluted $ 0.01
============
Basic weighted average number
of shares outstanding 12,755,203
============
Diluted weighted average
number of shares outstanding 14,247,762
============
Isle of Capri Black Hawk, L.L.C.
Comparative Financial Highlights on Continuing
Operations by Casino Property
(In thousands)
Three Months Ended
------------------------------------
January 22, 2006
------------------------------------
Adjusted
EBITDA
Net Adjusted Margin %
Revenues(a) EBITDA(b) (c)
---------- -------- --------
Isle-Black Hawk $ 27,987 $ 8,933 31.9%
Colorado Central Station 10,360 1,869 18.0%
---------- -------- --------
Total $ 38,347 $ 10,802 28.2%
========== ======== ========
------------------------------------
January 23, 2006
------------------------------------
Adjusted
EBITDA
Net Adjusted Margin %
Revenues(a) EBITDA(b) (c)
---------- -------- --------
Isle-Black Hawk $ 24,760 $ 8,526 34.4%
Colorado Central Station 7,228 282 3.9%
---------- -------- --------
Total $ 31,988 $ 8,808 27.5%
========== ======== ========
Nine Months Ended
------------------------------------
January 22, 2006
------------------------------------
Adjusted
EBITDA
Net Adjusted Margin %
Revenues(a) EBITDA(b) (c)
---------- -------- --------
Isle-Black Hawk $ 86,453 $ 28,653 33.1%
Colorado Central Station 30,882 7,114 23.0%
---------- -------- --------
Total $ 117,335 $ 35,767 30.5%
========== ======== ========
------------------------------------
January 23, 2006
------------------------------------
Adjusted
EBITDA
Net Adjusted Margin %
Revenues(a) EBITDA(b) (c)
---------- -------- --------
Isle-Black Hawk $ 76,605 $ 27,564 36.0%
Colorado Central Station 23,644 1,212 5.1%
---------- -------- --------
Total $ 100,249 $ 28,776 28.7%
========= ======== ========
Isle of Capri Black Hawk, L.L.C.
Reconciliation of Adjusted EBITDA to
Net Income (Loss) by Casino Property
(In thousands)
Three Months Ended Nine Months Ended
------------------- -------------------
Jan. 22, Jan. 23, Jan. 22, Jan. 23,
2006 2005 2006 2005
-------- -------- -------- --------
Isle-Black Hawk:
Adjusted EBITDA $ 8,933 $ 8,526 $ 28,653 $ 27,564
Depreciation and
amortization (2,387) (1,802) (6,680) (5,276)
Interest expense,
net (1,425) (695) (4,641) (2,256)
Management fee (1,293) (1,211) (4,039) (3,683)
Loss on
extinguishment of debt (2,110) -- (2,110) --
-------- -------- -------- --------
Net income $ 1,718 $ 4,818 $ 11,183 $ 16,349
======== ======== ======== ========
Net income margin %(c) 6.1% 19.5% 12.9% 21.3%
======== ======== ======== ========
Colorado Central Station:
Adjusted EBITDA $ 1,869 $ 282 $ 7,114 $ 1,212
Depreciation and
amortization (1,167) (636) (3,193) (1,864)
Interest expense, net (1,357) (1,365) (4,064) (4,100)
Management fee (471) (215) (1,468) (734)
Income tax benefit 431 747 628 2,097
-------- -------- -------- --------
Net loss $ (695) $ (1,187) $ (983) $ (3,389)
======== ======== ======== ========
Net loss margin %(c) -6.7% -16.4% -3.2% -14.3%
======== ======== ======== ========
(a) Net revenues are presented net of complimentaries, slot points
expense and cash coupon redemptions.
(b) EBITDA is “earnings before interest, income taxes,
depreciation and amortization.” Adjusted EBITDA for each property
was calculated by adding preopening expense, management fees and
non-cash items to EBITDA. Adjusted EBITDA is presented solely as
a supplemental disclosure because management believes that it is
1) a widely used measure of operating performance in the gaming
industry, and 2) a principal basis for valuation of gaming
companies. Management uses property level Adjusted EBITDA as the
primary measure of the properties’ performance. Adjusted EBITDA
should not be construed as an alternative to net income, as an
indicator of the Company’s operating performance; or as an
alternative to any other measure determined in accordance with
accounting principles generally accepted in the United States.
The properties have significant uses of cash flows, including
capital expenditures, interest payments, taxes and debt principal
repayment, which are not reflected in Adjusted EBITDA. Also,
other gaming companies that report Adjusted EBITDA information
may calculate Adjusted EBITDA in a different manner than the
Company. Adjusted EBITDA Margin is calculated by dividing
Adjusted EBITDA by net revenue. Reconciliations of net income
(loss) to Adjusted EBITDA are included in the financial schedules
accompanying this release.
(c) Net income (loss) margin was calculated by dividing net income
(loss) by net revenue.
CONTACTS: Nevada Gold & Casinos, Inc.
H. Thomas Winn
(713) 621-2245
Alan Greenstein
(713) 621-2245
Integrated Corporate Relations
Don Duffy
(203) 682-8200
