NEVADA GOLD ANNOUNCES THIRD QUARTER RESULTS
HOUSTON, March 12, 2007 -- Nevada Gold & Casinos, Inc. (AMEX:UWN) today announced financial results for the third quarter ended January 28, 2007.
For the third quarter of fiscal 2007, net revenues increased to $3.8 million compared to $2.9 million in the third quarter of fiscal 2006. The net loss for the third quarter of fiscal 2007 was $1.5 million compared to a net loss of $0.8 million in the third quarter of fiscal 2006. The net loss per diluted common share was $0.12, compared to net loss per diluted common share of $0.06 in the prior year period.
Robert Sturges, Chief Executive Officer of Nevada Gold & Casinos, Inc., commented, “We have taken several key steps in executing our operating initiatives and in positioning the company for the future. Most recently, we accepted a cash buyout for all of River Rock’s remaining credit enhancement fees, generating net proceeds to us of $8.1 million, which enhanced our financial flexibility. We are very committed to disposing non-core assets, as evidenced by our decision to retain an auctioneer to assist us in divesting our 260-acre parcel of land in Black Hawk. We remain focused on reducing costs throughout the organization and on building our Native American consulting services business. We also revised American Racing’s business plan to improve operating performance. While it may take some time for our initiatives to take hold and have a measurable impact on our financial results, we are optimistic about the progress we are making and about Nevada Gold’s prospects for growth.”
Financial Results
For the third quarter of fiscal 2007, net revenues increased to $3.8 million compared to $2.9 million in the third quarter of fiscal 2006. The revenue increase was primarily due to a $0.5 million increase in enhancement fees, and a $0.3 million increase in net revenues from the Colorado Grande Casino-Cripple Creek.
Operating expenses decreased to $3.5 million from $3.8 million. The decrease reflects lower operating costs related to Colorado Grande, decreased legal expenses and decreased corporate expenses despite recording one time expenses of $100,000 for employee search fees and $205,000 of severance costs related to headcount reductions made at the corporate offices during the quarter.
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 $0.6 million for the third quarter ended January 28, 2007, compared to $0.5 million a year ago. IC-BH's third quarter adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), was $10.0 million in the third quarter of fiscal 2007 compared to $10.8 million in the prior year period. A reconciliation of EBITDA to operating income is provided in the attached financial statements. The Company’s equity in earnings from American Racing resulted in a loss of $2.1 million during the third quarter, primarily due to pre-opening expenses related to the Tioga Downs and Vernon Downs projects. Excluding the impact of American Racing’s loss, the Company’s net loss for the third quarter of fiscal 2007 would have been $164,000.
The Company also recorded a $250,000 gain related to the termination of our development agreement with the Muscogee Nation - Tulsa during the third quarter of fiscal 2007.
The net loss for the third quarter of fiscal 2007 was $1.5 million compared to a net loss of $0.8 million in the third quarter of fiscal 2006. The net loss per diluted common share was $0.12, compared to net loss per diluted common share of $0.06 in the prior year period. The net loss per diluted common share in the third quarter of fiscal 2007 included the following significant items:
| Net loss as reported | | | ($0.12 | ) |
| American Racing Pre-Opening Expenses | | | $0.05 | |
| Severance and search fees | | | $0.02 | |
| Muscogee termination fee | | | ($0.01 | ) |
| Adjusted net loss per diluted share | | | ($0.06 | ) |
Diluted weighted average common shares outstanding in the third quarter were 12.9 million compared to 13.0 million in the prior year period.
Recent Events
On March 5, 2007, the Company announced that Dry Creek Casino, LLC, in which Nevada Gold owns a 69% interest, had reached an agreement with the River Rock Entertainment Authority to accept a cash buyout of $11.35 million for all remaining credit enhancement fees. Nevada Gold’s portion of the cash buyout was approximately $8.1 million. Under the terms of the Original Agreement, credit enhancement fees were payable to Dry Creek Casino, LLC, for a period of five years, commencing June 1, 2003, and ending on May 31, 2008. In exercising its buy-out option, the River Rock Entertainment Authority would have had to pay a fixed monthly payment over the number of months remaining in the Original Agreement. Both parties agreed to a cash buyout in lieu of the fixed monthly payments. On a go forward basis our revenue is going to decrease by approximately $2.0 million quarterly.
On February 22, 2007, Nevada Gold announced it engaged Sheldon Good & Company, one of the country’s leading real estate auction firms, to develop a real estate auction strategy for the approximately 260 acres of land it owns in Gilpin County near Black Hawk, Colorado. Nevada Gold expects Sheldon Good & Company to recommend a course of action by the end of April.
On March 8, 2007, the Company repaid a $3.3 million note that was classified as a current portion of long-term debt.
Earnings Conference Call and Webcast
The Company will discuss third quarter financial results via a conference call to be held at 9:00 ET on Monday, March 12, 2007. To access the webcast, please visit www.nevadagold.com and click on ‘Investor Relations’ and then ‘Events.’ The dial-in number for the call is 877-704-5380; please call approximately 10 minutes in advance to ensure that you are connected prior to the presentation. A replay of the call will be available until March 19, 2007 by dialing 888-203-1112; password 3041813.
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 & Casinos, Inc. (AMEX:UWN) of Houston, Texas is a developer, owner and operator of gaming facilities and lodging entertainment facilities in Colorado, California, and New York. 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 25% interest in the Tioga Downs Racetrack & Vernon Downs Racetrack in New York State and has a management contract for both facilities. The Company also works with Native American tribes in a variety of capacities. Native American projects consist of a casino to be built in Pauma Valley, California for the La Jolla Band of Luiseño 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 www.nevadagold.com.
Nevada Gold & Casinos, Inc.
Consolidated Balance Sheets
| | January 28, | | April 30, | |
| | | 2007 | | 2006 | |
| | | (unaudited) | | | |
| | | | | | |
ASSETS | |
Current assets: | | | | | |
| Cash and cash equivalents | | $ | 1,478,677 | | $ | 4,296,154 | |
| Restricted cash | | | 1,050,000 | | | -- | |
| Accounts receivable | | | 1,005,836 | | | 940,177 | |
| Accounts receivable - affiliates | | | 227,186 | | | 499,999 | |
| Other current assets | | | 423,726 | | | 428,532 | |
Total current assets | | | 4,185,425 | | | 6,164,862 | |
| | | | | | | | |
| Investments in unconsolidated affiliates | | | 36,241,271 | | | 35,691,747 | |
| Investments in development projects | | | 4,734,144 | | | 6,876,527 | |
| Notes receivable - affiliates | | | 3,521,066 | | | 3,637,099 | |
| Notes receivable - development projects | | | 19,336,380 | | | 22,667,272 | |
| Goodwill | | | 5,462,918 | | | 5,462,918 | |
| Property and equipment, net of accumulated depreciation | | | | | | | |
| of $1,126,820 and $622,876 at January 28, 2007 and | | | | | | | |
| April 30, 2006, respectively | | | 2,241,546 | | | 2,580,093 | |
| Deferred tax asset | | | 5,678,620 | | | 1,460,722 | |
| Other assets | | | 4,476,498 | | | 3,601,850 | |
Total assets | | $ | 85,877,868 | | $ | 88,143,090 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
Current liabilities: | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 1,123,079 | | $ | 1,550,405 | |
| Accrued interest payable | | | -- | | | 41,737 | |
| Other accrued liabilities | | | 278,935 | | | 358,159 | |
| Guaranty liabilities | | | 4,610,000 | | | -- | |
| Long-term debt, current portion | | | 6,164,555 | | | 7,051,845 | |
Total current liabilities | | | 12,176,569 | | | 9,002,146 | |
| | | | | | | | |
| Long-term debt, net of current portion | | | 55,022,923 | | | 53,414,815 | |
| Deferred income | | | 11,359 | | | 406,632 | |
| Other liabilities | | | 749,652 | | | 157,633 | |
Total liabilities | | | 67,960,503 | | | 62,981,226 | |
| | | | | | | | |
Commitments and contingencies | | | -- | | | -- | |
| | | | | | | | |
Minority interest | | | 246,200 | | | 278,674 | |
| | | | | | | | |
Stockholders' equity: | | | | | | | |
| Common stock, $0.12 par value per share; 25,000,000 | | | | | | | |
| shares authorized; 13,935,330 and 13,912,330 shares | | | | | | | |
| issued and 12,939,130 and 12,970,330 shares outstanding | | | | | | | |
| at January 28, 2007 and April 30, 2006, respectively | | | 1,672,240 | | | 1,669,479 | |
| Additional paid-in capital | | | 18,438,720 | | | 18,122,632 | |
| Retained earnings | | | 7,774,979 | | | 14,873,589 | |
| Treasury stock, 996,200 and 942,000 shares at January 28, | | | | | | | |
| 2007 and April 30, 2006, respectively | | | (10,216,950 | ) | | (9,781,669 | ) |
| Accumulated other comprehensive income (loss) | | | 2,176 | | | (841 | ) |
Total stockholders' equity | | | 17,671,165 | | | 24,883,190 | |
Total liabilities and stockholders' equity | | $ | 85,877,868 | | $ | 88,143,090 | |
Nevada Gold & Casinos, Inc.
Consolidated Statements of Operations
(unaudited)
| | | | Three Months Ended | | | Nine Months Ended | |
| | | | January 28, | | | Janaury 22, | | | January 28, | | | Janaury 22, | |
| | | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Revenues: | | | | | | | | | | | | | |
| Casino | | $ | 1,417,141 | | $ | 1,083,053 | | $ | 4,608,249 | | $ | 4,359,820 | |
| Food and beverage | | | 246,647 | | | 237,657 | | | 1,000,966 | | | 1,216,868 | |
| Other | | | 32,111 | | | 26,508 | | | 102,510 | | | 96,698 | |
| Management fee | | | 27,056 | | | -- | | | 124,200 | | | -- | |
| Credit enhancement fee | | | 2,304,796 | | | 1,810,540 | | | 6,458,342 | | | 5,463,961 | |
Gross revenues | | | 4,027,751 | | | 3,157,758 | | | 12,294,267 | | | 11,137,347 | |
| Less promotional allowances | | | (263,949 | ) | | (236,664 | ) | | (944,491 | ) | | (1,169,321 | ) |
Net revenues | | | 3,763,802 | | | 2,921,094 | | | 11,349,776 | | | 9,968,026 | |
| | | | | | | | | | | | | | |
Expenses: | | | | | | | | | | | | | |
| Casino | | | 428,364 | | | 626,851 | | | 1,238,340 | | | 2,152,800 | |
| Food and beverage | | | 118,335 | | | 215,882 | | | 599,306 | | | 690,093 | |
| Marketing and administrative | | | 753,523 | | | 542,968 | | | 2,348,391 | | | 1,483,035 | |
| Facility | | | 74,740 | | | 85,546 | | | 246,251 | | | 189,506 | |
| Corporate expense | | | 1,581,033 | | | 1,615,425 | | | 4,868,959 | | | 4,226,455 | |
| Legal expense | | | 270,388 | | | 400,027 | | | 1,223,604 | | | 874,952 | |
| Depreciation and amortization | | | 276,183 | | | 246,100 | | | 812,685 | | | 461,927 | |
| Write-off of notes receivable related to | | | | | | | | | | | | | |
| Native American gaming projects | | | -- | | | -- | | | 3,171,958 | | | -- | |
| Write-off of project development cost | | | 15,000 | | | -- | | | 388,100 | | | -- | |
| Other | | | 22,301 | | | 28,918 | | | 74,710 | | | 76,568 | |
| Total operating expenses | | | 3,539,867 | | | 3,761,717 | | | 14,972,304 | | | 10,155,336 | |
Operating income (loss) | | | 223,935 | | | (840,623 | ) | | (3,622,528 | ) | | (187,310 | ) |
Non-operating income (expenses): | | | | | | | | | | | | | |
| Earnings (loss) from unconsolidated affiliates | | | (1,411,615 | ) | | 428,118 | | | (3,812,476 | ) | | 5,686,882 | |
| Interest expense, net | | | (948,707 | ) | | (559,985 | ) | | (2,720,960 | ) | | (1,347,639 | ) |
| Gain on sale of marketable securities | | | 11,849 | | | 105,374 | | | 48,646 | | | 105,374 | |
| Gain on termination of development contract | | | 249,894 | | | -- | | | 249,894 | | | -- | |
| Minority interest | | | (460,092 | ) | | (363,403 | ) | | (1,286,831 | ) | | (981,379 | ) |
Income (loss) before income | | | | | | | | | | | | | |
tax (expense) benefit | | | (2,334,736 | ) | | (1,230,519 | ) | | (11,144,255 | ) | | 3,275,928 | |
Income tax (expense) benefit | | | 845,320 | | | 465,124 | | | 4,045,646 | | | (1,169,235 | ) |
Net income (loss) | | $ | (1,489,416 | ) | $ | (765,395 | ) | $ | (7,098,609 | ) | $ | 2,106,693 | |
| | | | | | | | | | | | | | |
Per share information: | | | | | | | | | | | | | |
| Net income (loss) per common share - basic | | $ | (0.12 | ) | $ | (0.06 | ) | $ | (0.55 | ) | $ | 0.16 | |
| Net income (loss) per common share - | | | | | | | | | | | | | |
| diluted | | $ | (0.12 | ) | $ | (0.06 | ) | $ | (0.55 | ) | $ | 0.16 | |
| | | | | | | | | | | | | | |
| Basic weighted average number of shares | | | | | | | | | | | | | |
| | | 12,937,427 | | | 13,028,525 | | | 12,937,004 | | | 12,946,118 | |
| Diluted weighted average number of shares | | | | | | | | | | | | | |
| outstanding | | | 12,937,427 | | | 13,028,525 | | | 12,937,004 | | | 13,690,800 | |
Isle of Capri Black Hawk, L.L.C.
Comparative Financial Highlights on Continuing
(In thousands)
| | | Three Months Ended | | Nine Months Ended | |
| | | January 28, 2007 | | January 22, 2006 | | January 28, 2007 | | January 22, 2006 | |
| | | | | | | | | | |
| Net Revenue (1) | | $ | 34,787 | | $ | 38,347 | | $ | 113,904 | | $ | 117,335 | |
| Adjusted EBITDA (2) | | $ | 9,962 | | $ | 10,803 | | $ | 31,203 | | $ | 35,706 | |
| Adjusted EBITDA Margin % (3) | | | 28.6 | % | | 28.2 | % | | 27.4 | % | | 30.4 | % |
Isle of Capri Black Hawk, L.L.C.
Reconciliation of Adjusted EBITDA to Net Income
(In thousands)
| | | Three Months Ended | | Nine Months Ended | |
| | | January 28, 2007 | | January 22, 2006 | | January 28, 2007 | | January 22, 2006 | |
| | | | | | | | | | |
| Adjusted EBITDA | | $ | 9,962 | | $ | 10,803 | | $ | 31,203 | | $ | 35,706 | |
| Depreciation and amortization | | | 3,976 | | | 3,554 | | | 11,921 | | | 9,873 | |
| Interest expense, net | | | 3,675 | | | 2,783 | | | 11,118 | | | 8,706 | |
| Management fee | | | 1,584 | | | 1,764 | | | 5,118 | | | 5,445 | |
| Loss on extinguishment of debt | | | - | | | 2,110 | | | - | | | 2,110 | |
| Other Income | | | - | | | (119 | ) | | - | | | (1,135 | ) |
| Income tax benefit | | | (663 | ) | | (431 | ) | | (2,107 | ) | | (628 | ) |
Net income | | $ | 1,390 | | $ | 1,142 | | $ | 5,153 | | $ | 11,335 | |
| | | | | | | | | | | | | | |
Net income margin % (4) | | | 4.0 | % | | 3.0 | % | | 4.5 | % | | 9.7 | % |
(1) Net revenues are presented net of complimentaries, slot points expense and cash coupon redemptions.
(2) EBITDA is "earnings before interest, income taxes, depreciation and amortization." Adjusted EBITDA 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 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 U.S. generally accepted accounting principles. The Company has 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 Adjusted EBITDA to net income are included in the financial schedules above accompanying this press release.
(3) Adjusted EBITDA margin % was calculated by dividing adjusted EBITDA by net revenue.
(4) Net income margin % was calculated by dividing net income by net revenue.
CONTACT: Nevada Gold & Casinos, Inc.
Robert B. Sturges
(713) 621-2245
Integrated Corporate Relations
Don Duffy
(203) 682-8200
