Nevada Gold & Casinos reports 3Q results

For the third quarter of fiscal 2016, net revenue increased to $18.4 million compared to $15.8 million in the third quarter of fiscal 2015. This increase was primarily driven by $2.4 million in revenue from Club Fortune Casino which was acquired on December 1, 2015. Operating expenses were $17.2 million compared to $15.0 million in the prior year period. Operating income improved to $1.2 million compared to $0.8 million in the prior year period. Net income was $0.5 million compared $0.4 million in the prior year period.

For the third quarter of fiscal 2016, the Company reported adjusted EBITDA of $2.3 million compared to $1.5 million in the prior year quarter. This improvement was due to continued strong performance in the Washington portfolio, aided by two months of operations of Club Fortune Casino.

Third quarter results were impacted by the non-recurring Club Fortune transaction costs of $0.4 million, and the initial swap valuation non-cash charge of $0.2 million related to the amended bank financing. Adjusting for these items, Adjusted Net Income was $0.9 million, or $.05 per share, compared to $0.4 million or $.03 per share in the prior year period.

"During the third quarter, our Washington portfolio continued the growth we had seen in the first two quarters, and with the addition of Club Fortune, we generated significant year-over-year improvement,” said President and CEO Michael Shaunnessy.

“We are quickly integrating the Club Fortune acquisition and are pleased with the early performance and its expected future contribution to earnings and cash flow.”

Net revenues from the Washington state gaming operations increased slightly to $14.6 million, but on a comparable unit basis, Washington revenues increased $0.9 million, or 6.5%. This revenue increase was primarily driven by an increase in table game drop (amount wagered). EBITDA increased to $2.8 million compared to $2.1 million in the prior year period.

Club Fortune net revenues were $2.4 million for the first two months of operations, and EBITDA was $327,000.

South Dakota net revenues declined $112,000 to $1.3 million, which was partially offset by operating expense reductions leading to a $63,000 EBITDA loss compared to EBITDA of $10,000 in the prior year.

Corporate expenses, net of acquisition expenses, were $0.8 million compared to $0.7 million in the prior period. On a consolidated basis, adjusted EBITDA was $2.3 million compared to $1.5 million in the prior year period.

The Company borrowed $14.0 million during the quarter to close the Club Fortune acquisition and has since repaid $2.0 million. The current outstanding bank debt is $18.7 million, which coupled with strong operating performance, has reduced the pro forma leverage ratio below 2.0 times. Accordingly, the interest rate at the first adjustment date of April 1, 2016 should decrease by 100 basis points.

For the nine month period of fiscal 2016, net revenues were $50.4 million compared to $48.1 million in fiscal year 2015. Operating expenses were $47.5 million compared to $45.8 million in the prior period. Operating income increased to $3.0 million compared to $2.3 million in fiscal 2015. Net income increased to $1.5 million compared to $1.2 million in the prior year. Adjusted EBITDA increased to $5.3 million from $4.1 million in the prior year.

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