Nevada Gold & Casinos, Inc. (UWN)

UWN 
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Industry: Consumer Services
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Nevada Gold & Casinos (UWN)

Q3 2013 Earnings Call

March 12, 2013 11:00 am ET

Executives

Harriet C. Fried - Senior Vice President - New York Office

Michael P. Shaunnessy - Chief Executive Officer and President

James J. Kohn - Chief Financial Officer, Principal Accounting Officer, Executive Vice President, Secretary and Treasurer

Analysts

Vincent Staunton - WEDBUSH

Presentation

Operator

Good day, and welcome to the Nevada Gold & Casinos Incorporated Third Quarter Fiscal 2013 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Harriet Fried. Please go ahead.

Harriet C. Fried

Good morning, everyone, and thank you for joining Nevada Gold's conference call. With us today from management are Michael Shaunnessy, President and Chief Executive Officer; and Jim Kohn, Executive Vice President and Chief Financial Officer. Before we begin, I'd like to remind you that today's webcast and call will be archived on the company's website at www.nevadagold.com.

I'd also like to remind everyone that part of today's call includes forward-looking statements. These statements are not guarantees of future performance and therefore, undue reliance should not be placed on them. The company undertakes no obligation to update these forward-looking statements. We refer all of you to the company's filings with the SEC for a more detailed discussion of the risks that can impact the company's future operating results and financial condition.

The company's earnings release contains non-GAAP financial measures within the measure -- excuse me, within the meaning of regulation G promulgated by the SEC. Included in this morning's release is a reconciliation of these non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP. With that introduction, I'd now like to turn the call over to Mike Shaunnessy Go ahead, please, Mike.

Michael P. Shaunnessy

Thank you, Harriet. Good morning, everyone. Thanks for joining our call. It's great to be talking to you all again. For those of you who don't know, I joined Nevada Gold & Casinos at the beginning of December from MGM Resorts International, where I was Executive Vice President of Operations, and I've been in the industry about 30 years in various operations and finance positions, and believe my experience in the past is a great fit for Nevada Gold and its business plan going forward.

When we spoke in December, just after I joined the company, I outlined 2 broad goals. The first, to deliver consistent positive performance at our properties in Washington and South Dakota, 2 markets where we are already established as a significant participant. And second, to concentrate on practical growth opportunities, whether they be acquisitions or management contracts or other things that may come down the line. Today, I'd like to update you on those goals as well as give you a sense of some our other priorities.

Starting with our current portfolio, the financial results for the past quarter clearly show the strong cash flow potential of Nevada Gold's current portfolio. For the first time, we have a full trailing 12 month financial picture that I think clearly demonstrates the strength of our assets. Adjusted EBITDA totaled $5.6 million over that trailing 12 month period, and we expect to build on this solid foundation. In my first 4 months with the company, I've been visiting or reviewing the operations in all the properties in our portfolio. And we've undertaken some repositioning of several of our operations in the Washington Gold Casinos and identified places where we can fine tune our business, change the mix of games we offer, enhance some of our marketing efficiencies and we've already seen some improved results from a couple of specific properties there, and we'll be continuing our efforts in the coming months.

We are also in the midst of a strategic review of our South Dakota slot machine route operation and in making sure everything there is operating as smoothly as possible. In total, we have 950 slots in the route, the vast majority, in fact most all of which, we acquired in January of 2012. So now that we have a full year of operations behind us, it's an excellent time to review each of the route locations, assess their profitability and do some fine tuning where necessary. In addition, as we begin to move into the more active spring and summer months for tourism and gaming in South Dakota, we want to be sure we're operating in top efficiency and maximizing the route's potential.

Based on the company's performance to date this year, our outlook for the remainder of the fiscal 2013, I'm happy to say we're in a good position to meet the previously stated goal of generating $5 million plus in adjusted EBITDA. So we're in a good position as we move into the fourth quarter of our fiscal year.

Bringing you up to date on a couple of other activities, the cost reduction program that we announced last year in December, okay, designed to save Nevada Gold more than $750,000 annually has been fully implemented at this point, and we expect to realize that $750,000 on an annualized run rate going forward on a relatively permanent basis. Part of the cost reduction plan was to relocate our offices from Houston to Las Vegas and we are literally in the final stages of doing that as we talk. At our next quarterly conference call, Jim and I will be both talking to you from Las Vegas rather than Houston. Nevada Gold already had an office there, but we've now expanded our footprint, and this whole position is better for both efficiencies and future opportunities.

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