Exhibit 99.1
| For information contact Mary Beth Higgins
Herbst Gaming
(702) 740-4576
|
HERBST GAMING REPORTS THIRD QUARTER EARNINGS
(LAS VEGAS) November 7, 2006 – Herbst Gaming, Inc. and Subsidiaries (“HGI” or “Company”) today announced the results of their operations for the third quarter and nine-month period ended September 30, 2006.
The Company reported revenues of $146.3 million for the three months ended September 30, 2006, an increase of 5%, or $6.8 million, compared with $139.5 million in the prior year’s quarter. The Company recorded net income of $8.2 million for the three months ended September 30, 2006, compared with net income of $7.6 million in the prior year’s quarter. The Company’s consolidated earnings before interest, taxes, depreciation and amortization (“Consolidated EBITDA”) was $27.9 million for the quarter ended September 30, 2006, compared with Consolidated EBITDA of $29.2 million for the same quarter in 2005.
The Company reported revenues of $446.0 million for the nine months ended September 30, 2006, an increase of 8%, or $34.3 million, compared with $411.7 million in the prior year period. Net income was $36.7 million for the nine months ended September 30, 2006, compared with net income of $38.0 million in the prior year period. Consolidated EBITDA was $92.6 million for the nine months ended September 30, 2006, a decrease of 1%, or $0.5 million, compared with Consolidated EBITDA of $93.1 million for the same period in 2005.
See footnote (6) to “Selected Financial Information” below for a detailed definition of Consolidated EBITDA and a discussion of the reasons the Company uses Consolidated EBITDA as a performance measure. Included in the Selected Financial Information is a reconciliation of Consolidated EBITDA, a non-GAAP measure, to net income.
Conference Call Information
The Company will host a conference call to discuss its third quarter 2006 financial results on Wednesday, November 8, 2006 beginning at 1 p.m. Eastern/10 a.m. Pacific Time. Interested participants may access the call by dialing into our conference operator at (866) 203-2528, PIN No. 60096761. International participants dial (617) 213-8847, PIN No. 60096761.
A replay of the call will be available beginning one hour after the completion of the call and until Wednesday, November 15, 2006 at 8 p.m. Eastern/5 p.m. Pacific Time. To access the replay, call (888) 286-8010, PIN No. 27318040. International participants dial (617) 801-6888, PIN No. 27318040. A copy of the third quarter earnings call will be available on the Company’s web site, www.herbstgaming.com, in the “Investors Relations” section, which will be accessible on the Company’s web site for a period of at least 12 months.
HERBST GAMING
SELECTED FINANCIAL INFORMATION
(unaudited)
| | Three Months Ended
September 30, | | Nine months Ended
September 30, | |
| | 2005 | | 2006 | | 2005 | | 2006 | |
| | (dollars in thousands) | |
Income Statement Data | | | | | | | | | |
Revenues | | | | | | | | | |
Route operations | | $ | 83,581 | | $ | 83,730 | | $ | 250,188 | | $ | 261,624 | |
Casino operations | | | | | | | | | |
Nevada | | 22,553 | | 23,255 | | 71,175 | | 71,164 | |
Other states | | 31,794 | | 35,940 | | 86,119 | | 105,332 | |
Other | | 1,528 | | 3,376 | | 4,255 | | 7,866 | |
Total revenues | | 139,456 | | 146,301 | | 411,737 | | 445,986 | |
Promotional allowances—route | | (69 | ) | (23 | ) | (152 | ) | (60 | ) |
Promotional allowances—casino | | | | | | | | | |
Nevada | | (3,128 | ) | (3,305 | ) | (9,273 | ) | (9,870 | ) |
Other states | | (2,302 | ) | (4,877 | ) | (6,177 | ) | (14,256 | ) |
| | (5,499 | ) | (8,205 | ) | (15,602 | ) | (24,186 | ) |
| | | | | | | | | |
Net revenues | | 133,957 | | 138,096 | | 396,135 | | 421,800 | |
Cost of revenues | | | | | | | | | |
Route operations | | 64,923 | | 66,251 | | 190,459 | | 202,018 | |
Casino operations | | | | | | | | | |
Nevada | | 14,829 | | 15,317 | | 44,292 | | 45,078 | |
Other states | | 21,485 | | 22,006 | | 57,449 | | 65,375 | |
Other operations | | — | | 2,247 | | — | | 4,403 | |
Depreciation and amortization | | 8,673 | | 9,764 | | 24,436 | | 27,253 | |
General and administrative | | 3,622 | | 4,606 | | 11,433 | | 12,870 | |
Loss on retirement of assets | | 3,360 | | — | | 3,360 | | — | |
Total costs and expenses | | 116,892 | | 120,191 | | 331,429 | | 356,997 | |
| | | | | | | | | |
Income from operations | | 17,065 | | 17,905 | | 64,706 | | 64,803 | |
Interest income | | 143 | | 183 | | 563 | | 579 | |
Interest expense (net of capitalized interest) | | (9,413 | ) | (9,888 | ) | (27,091 | ) | (28,674 | ) |
Loss on early retirement of debt | | (221 | ) | | | (221 | ) | | |
| | | | | | | | | |
Net income | | $ | 7,574 | | $ | 8,200 | | $ | 37,957 | | $ | 36,708 | |
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| | December 31, | | September 30, | |
| | 2005 | | 2006 | |
| | (dollars in thousands) | |
| | | | | |
Balance Sheet Data | | | | | |
Cash and cash equivalents | | $ | 73,849 | | $ | 72,106 | |
Total assets | | 534,930 | | 575,277 | |
Total debt (1) | | 500,593 | | 522,867 | |
Stockholders’ equity | | $ | 7,981 | | $ | 15,291 | |
| | Nine-months ended | |
| | September 30, | |
| | 2005 | | 2006 | |
Other data: | | | | | |
Ratio of earnings to fixed charges (2) | | 2.5 | X | 2.2 | X |
Net cash provided by operating activities | | $ | 73,674 | | $ | 70,888 | |
Net cash used in investing activities | | (299,405 | ) | (65,396 | ) |
Net cash provided by (used in) financing activities | | 158,882 | | (7,235 | ) |
Capital expenditures | | 34,205 | | 53,870 | |
| | | | | | | |
| | Three months ended | | Nine-months ended | |
| | September 30, | | September 30, | |
| | 2005 | | 2006 | | 2005 | | 2006 | |
| | | | | | | | | |
Route EBITDA (3) | | $ | 18,589 | | $ | 17,456 | | $ | 59,577 | | $ | 59,546 | |
Casino EBITDA (4) | | | | | | | | | |
Nevada (4) | | 4,596 | | 4,633 | | 17,610 | | 16,216 | |
Other states (4) | | 8,007 | | 9,057 | | 22,493 | | 25,701 | |
| | 31,192 | | 31,146 | | 99,680 | | 101,463 | |
Other and Corporate Adjusted (5) | | (1,951 | ) | (3,294 | ) | (6,615 | ) | (8,828 | ) |
Consolidated EBITDA (6) | | $ | 29,241 | | $ | 27,852 | | $ | 93,065 | | $ | 92,635 | |
(1) Total debt consists of the current and long-term portions of long-term debt for all periods presented.
(2) For purposes of determining the ratio of earnings to fixed charges, earnings are defined as earnings before fixed charges. Fixed charges consist of interest expensed and capitalized.
(3) Route EBITDA consists of net income plus depreciation and amortization and interest expense, net of capitalized interest, and is calculated before allocation of overhead.
(4) Casino EBITDA consists of net income plus depreciation and amortization, interest expense, net of capitalized interest and costs associated with the retirement of assets. Casino EBITDA for casinos in Nevada and other states are calculated before allocation of overhead.
(5) Other and Corporate Adjusted consists of other non-gaming revenues and expenses, general and administrative expenses and interest income.
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(6) Consolidated EBITDA consists of the Company’s consolidated net income plus depreciation and amortization and interest expense, net of capitalized interest. Consolidated EBITDA is presented because it is used as a performance measure to analyze the performance of our business segments and because it is frequently used by securities analysts, investors and others in the evaluation of companies in our industry. However, other companies in our industry may calculate Consolidated EBITDA differently. Consolidated EBITDA is not a measurement of financial performance under generally accepted accounting principles and should not be considered as an alternative to cash flow from operating activities, as a measure of liquidity, as an alternative to net income or as an indicator of operating performance or any other measure of performance derived in accordance with generally accepted accounting principles.
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The following table is a reconciliation of net income to EBITDA.
| | Three months ended | | Nine months ended | |
| | September 30, | | September 30, | |
| | 2005 | | 2006 | | 2005 | | 2006 | |
| | (dollars in thousands) | | (dollars in thousands) | |
| | | | | | | | | |
Net Income | | $ | 7,574 | | $ | 8,200 | | $ | 37,957 | | $ | 36,708 | |
Loss on early retirement of debt | | 221 | | | | 221 | | | |
Loss on retirement of assets | | 3,360 | | | | 3,360 | | | |
Interest expense | | 9,413 | | 9,888 | | 27,091 | | 28,674 | |
Depreciation and amortization | | 8,673 | | 9,764 | | 24,436 | | 27,253 | |
Consolidated EBITDA | | $ | 29,241 | | $ | 27,852 | | $ | 93,065 | | $ | 92,635 | |
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