Nevada Gold & Casinos, Inc. (UWN)

UWN 
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Nevada Gold & Casinos, Inc. (UWN)

F1Q09 Earnings Call

September 10, 2008 9:00 am ET

Executives

James J. Kohn - Chief Financial Officer, Senior Vice President, Treasurer

Robert B. Sturges - Chief Executive Officer, Director

Analysts

Michael Friedman - Noble Financial Group

Vincent Staunton - Wedbush

Mitchell Sacks - Grand Slam

Presentation

Operator

Welcome to the Nevada Gold & Casinos, Inc. first quarter 2009 earnings conference call. (Operator Instructions) For opening remarks and introductions I would like to turn the call over to Jim Kohn, Chief Financial Officer.

James J. Kohn

With me today is Bob Sturges, our Chief Executive Officer.

A webcast of today's call will be archived on the company's website at NevadaGold.com. If you have not already received a copy of yesterday's press release, it is also available on the website.

Before we begin, I would like to remind everyone that part of today's call will include forward-looking statements. These statements are not guarantees of the future performance and therefore undue reliance should not be placed on them. 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.

With that, I would like to turn the call over to Bob Sturges.

Robert B. Sturges

We're happy to have the opportunity to speak with you again and to talk about our first quarter results and our ongoing progress in positioning Nevada Gold for the future.

Jim will walk you through the financial results in a moment, but I would like to briefly highlight one important point and that is the strength of our cash position, which exceeded $18 million at the end of August. We believe this leaves us very well positioned to aggressively pursue compelling growth opportunities and we are regularly evaluating both acquisitions and management contract opportunities.

There are a number of interesting acquisition prospects in today's market that we are actively reviewing. While we do not have any specific prospects or management contract agreements to talk about today, we are confident that the company will effectively use its healthy cash position to move forward as we identify those projects that will form the cornerstone of Nevada Gold's future growth.

We continue to make progress in divesting non-core assets, and we are working diligently to finish streamlining our portfolio. Last month we announced that Restaurant Connections International or RCI sold Internacional Restaurantes do Brasil Ltd., a majority owned subsidiary, to another Brazilian company for $5.5 million. Nevada Gold is a founding shareholder of RCI and currently owns 56% of RCI. IRB owns 16 Pizza Hut restaurants in Sao Paulo, Brazil.

From the proceeds of the sale, RCI repaid the promissory note and accrued interest due Nevada Gold in the amount of $4.7 million. The RCI note to Nevada Gold replaced the notes and accrued interest previously due from Clay County Holdings and Service Interactive. We received the $4.7 million on August 12, 2008 and we believe this represents another key step that will be another boost of our liquidity and enable us to focus on our core strengths in casino acquisitions and management contracts.

Turning now to our current project portfolio, we have been spending a great deal of time evaluating our planned acquisition of the Horizon Casino Hotel from Tropicana Entertainment. Due to the confluence of several factors, we are no longer planning to acquire this property under the previously negotiated terms and conditions. We are currently in discussions with Tropicana regarding how best to proceed, and we are considering several options. We cannot comment in detail regarding the status of these discussions as they are ongoing, but we look forward to keeping you apprised in the future.

Overall, we are happy with our ongoing progress. We believe we are building a sustainable platform for the future and we will continue to implement initiatives that will result in a compelling growth oriented portfolio of projects that will return value to our shareholders.

With that, I'll turn it over to Jim Kohn for our financial review.

James J. Kohn

Looking at the first quarter results, we recorded a loss of $800,000 or $0.06 per share compared to net income of $500,000 or $0.04 per share a year ago. If earnings per share were adjusted to account for the sale of American Racing, which resulted in the company recording a $1.3 million gain in the prior year quarter, as well as the sale of our interest in Isle of Capri Black Hawk, we would have reported an adjusted earnings per share loss of $0.06 in the first quarter of this year compared to a loss of $0.09 a year ago.

Our net revenues came in at $1.6 million compared to $2.0 million a year ago, primarily due to the impact of the statewide smoking ban enacted in January 2008 on our Colorado Grande casino.

Operating expenses decreased to $3 million from $3.2 million.

As we've noted previously, with the sale of the Isle of Capri Black Hawk property, complete as of January 27, 2008, our future financials will not include earnings from this property.

With regards to Cripple Creek, EBITDA for the first quarter was $100,000 compared to $400,000 in the prior year. This property, like so many others in the market, has been subject to challenges, driven not only by the smoking ban but by new competition as well as general macroeconomic factors that are impacting the gaming industry, including gas prices and decreased discretionary spending.

Read the rest of this transcript for free on seekingalpha.com