The Sands Regent (Nasdaq: SNDS) today announced financial results for its second quarter and first six months of fiscal 2006, ended December 31, 2005 and the results of its independent investigation of certain accounting matters.
For the second quarter ended December 31, 2005, revenues rose 15.0% year over year, to $22.3 million, versus $19.4 million for the second quarter ended December 31, 2004. Dayton Depot, acquired on September 1, 2005, contributed $1.5 million of the increase in net revenue, and the balance of the increase was attributable to same-store net revenue growth of 7.3%. The Company's income from operations, after adding back the one-time, non-cash charge of $419,000 relating to the loss on early termination of its Rail City land lease, improved 31.4% year over year, from $1.4 million in the fiscal 2005 second quarter to $1.8 million in the fiscal 2006 quarter. Net income for the fiscal 2006 second quarter was $603,000, or $0.09 per basic share, $0.08 diluted, a 21.1% increase as compared to net income of $498,000, or $0.08 per share basic, $0.07 diluted for the prior-year period.
Quarterly EBITDAR increased 15.7% year over year, from $3.3 million in the second quarter of fiscal 2005 to $3.8 million in the second quarter of fiscal 2006.
For the six months ended December 31, 2005, revenues rose 12.5%, to $46.4 million, from $41.2 million for the corresponding prior-year period. The Company's income from operations, after adding back the one-time, non-cash charge of $419,000 relating to the loss on early termination of its Rail City land lease, improved 12.6%, to $5.1 million in the six months ended December 31, 2005, compared to $4.5 million in the corresponding prior-year period. Net income for the six months ended December 31, 2005 was $2.5 million, or $0.35 per basic share, $0.33 diluted, as compared to net income of $2.1 million, or $0.36 per share basic, $0.33 diluted for the corresponding prior-year period.
Net income for the quarter and six months ended December 31, 2005 was adversely impacted by a one-time, non-cash charge of $419,000 pre-tax, $277,000 after-tax, or ($0.04) per basic and diluted share, relating to the early termination of the Rail City under-market land lease resulting from the Company's purchase of the property in December 2005.
Net income for the quarter and the six months ended December 31, 2005 were favorably impacted by the results of operations of Dayton Depot, acquired on September 1, 2005. Dayton's contribution to net income for the quarter was $166,000, or $0.02 per basic and diluted share. For the six months ended December 31, 2005, Dayton contributed $188,000, or $0.03 basic and $0.02 diluted, to net income.
EBITDAR for the six months ended December 31, 2005 increased 9.4% year over year, from $8.1 million in the six months ended December 31, 2004 to $8.9 million in the six months ended December 31, 2005.
Ferenc B. Szony, President and CEO of The Sands Regent, commented, "Aided by a strong Northern Nevada economy, Rail City and the Sands Regency achieved increases in revenue of 6.2% and 4.8% respectively. Operating income margins, after adding back the loss on early termination of land lease, improved at Rail City to 28.4% from 25.7%. Sands Regency experienced a slight decline it its operating income margin. At Gold Ranch, continued weakness in weekend traffic counts on Interstate 80 combined with high gasoline prices resulted in a decrease in gallons pumped. Gold Ranch reported an increase in revenue while operating income decreased $51,000 from the second quarter of fiscal 2005."
Mr. Szony concluded, "Early results from our most recent acquisition, Dayton Depot, have exceeded expectations. Customers are responding to the upgraded slot product. On January 16, 2006 we installed a slot player tracking system that will facilitate marketing opportunities. We expect to begin remodeling of the restaurant in the spring. On December 20, 2005 we completed the acquisition of the land required for the expansion of Rail City. Groundbreaking on the Rail City expansion is expected within the next few months. Completion of the expanded casino space and additional brew pub restaurant and bar are expected in late 2006."
The Company's Audit Committee has completed its independent investigation it announced it would undertake in its press release of February 14, 2006. The Audit Committee was aided in its review by outside counsel and a forensic accountant. During its investigation the Audit Committee did not become aware of any facts that caused it to believe that there was any material misstatement or omission in the Company's previously issued financial statements or that otherwise would necessitate a restatement of any of the Company's previously issued financial statements. Consequently, no restatement of any previously issued financial statements will be made. The Company filed its Quarterly Report on Form 10-Q for the quarter ended December 31, 2005 on March 22, 2006. With the filing of the Form 10-Q, the Company expects to regain compliance with Marketplace Rule 4310(c)(14), and will notify the Nasdaq Listing Qualifications Panel of this development.
Management of The Sands Regent will host a conference call to discuss its second-quarter and six-month financial results today, March 23, 2006 at 1:30 p.m. Pacific Time. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (800) 399-7496. International callers should dial (706) 634-6508. There is no pass code required for this call.
If you are unable to participate in the call at this time, a replay will be available on March 23 at approximately 2:30 p.m. PT through March 30 at 9:00 p.m. PT; call (800) 642-1687 and enter the conference ID number 7025734. International callers should call (706) 645-9291.
About The Sands Regent
The Sands Regent owns and operates Rail City Casino in Sparks, Nevada, Sands Regency Casino and Hotel in downtown Reno, Nevada, Gold Ranch Casino and RV Resort in Verdi, Nevada, and the Depot Casino and Red Hawk Sports Bar in Dayton, Nevada.
Rail City Casino, located in Sparks, Nevada, has approximately 16,600 square feet of gaming space housing slot machines, table games, keno, a sports book, and the City Cafe family-style restaurant. Located near Victorian Square at 2121 Victorian Avenue in Sparks, it is the first casino a motorist encounters when exiting Interstate 80 at the Rock Boulevard exit (Exit 16).
The Sands Regency is an 833-room hotel and casino with 29,000 square feet of gaming space offering table games, a sports book, poker room, keno, bingo and slot machines. In addition to the amenities and on-site brand name restaurants, the Company's property also includes a 12,000 square foot convention and meeting center which seats close to 1,000 people.
The Gold Ranch Casino and RV Resort is located in Verdi, Nevada, twelve miles west of Reno. Gold Ranch offers slot machines in an 8,000 square foot casino, a sports book, two restaurants, a 105-space RV park, a California lottery station, an ARCO gas station and a convenience store.
The Depot Casino and the Red Hawk Sports Bar, acquired on September 1, 2005, are located in Dayton, Nevada. The Depot Casino has approximately 16,000 square feet of restaurant and casino space with 250 slots, a restaurant and two bars. The Red Hawk Sports Bar, across the street from Depot Casino, has 33 slots, a convenience store and a bar.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain words such as "may", "will", "project", "might", "expect", "believe", "anticipate", "intend", "could", "would", "estimate", "continue", or "pursue", or the negative or other variations thereof or comparable terminology. In particular, they include statements relating to, among other things, future actions, strategies, future performance and future financial results of the Company. The forward-looking statements contained in this release are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements. Such risks and uncertainties include, among others, the future performance of the Company's management team, general economic financial and business conditions, overall conditions in the gaming and entertainment industries, our ability to successfully integrate the operations of casinos that we acquire and realize the expected benefits of these acquisitions, and other factors discussed in our Annual Report on Form 10-K for the year ended June 30, 2005, subsequent Forms 10-Q and other filings with the Securities and Exchange Commission. The Sands is providing this information as of the date of this release and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or other wise.
ISIN: US8000911003
Contact:
Ferenc B. Szony, President and Chief Executive Officer
The Sands Regent
(775) 348-2210
or
Sean Collins, Partner
CCG Investor Relations
(310) 477-9800
THE SANDS REGENT
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
THREE MONTHS SIX MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
(Dollars in thousands, 2005 2004 2005 2004
except per share
amounts)
Operating revenues
Gaming $14,170 $ 11,907 $27,589 $24,331
Lodging 1,864 1,809 5,050 4,863
Food and beverage 2,912 2,786 5,958 5,833
Fuel and convenience
store 4,693 4,080 10,658 8,783
Other 483 470 985 949
Gross revenues 24,122 21,052 50,240 44,759
Promotional allowances 1,858 1,695 3,846 3,527
Net revenues 22,264 19,357 46,394 41,232
Operating expenses
Gaming 5,574 4,806 10,869 9,801
Lodging 952 936 2,026 2,041
Food and beverage 2,075 1,865 4,154 3,803
Fuel and convenience
store 4,528 3,915 10,266 8,388
Other 196 143 357 300
Maintenance and
utilities 1,511 1,382 3,084 2,874
General and
administrative 3,837 3,424 7,137 6,469
Depreciation and
amortization 1,791 1,516 3,440 3,061
Loss on early
termination of
land lease 419 -- 419 --
20,883 17,987 41,752 36,737
Income from operations 1,381 1,370 4,642 4,495
Other income (expense)
Interest expense (434) (799) (862) (1,405)
Insurance settlement -- 200 -- 200
Other, net (43) (18) (34) (64)
(477) (617) (896) (1,269)
Income before
income taxes 904 753 3,746 3,226
Income tax provision (301) (255) (1,262) (1,088)
Net income $603 $498 $2,484 $2,138
Net income per share
Basic $0.09 $0.08 $0.35 $0.36
Diluted $0.08 $0.07 $0.33 $0.33
Weighted average
of shares
outstanding
Basic 7,095,103 6,327,852 7,087,453 5,987,204
Diluted 7,539,993 6,921,535 7,533,118 6,529,771
THE SANDS REGENT
FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands except per share amounts)
Three months ended Year to date
December 31, December 31,
2005 2004 2005 2004
Net revenues $22,264 $19,357 $46,394 $41,232
Income from operations $1,381 $1,370 $4,642 $4,495
Net income $603 $498 $2,484 $2,138
Reconciliation of Income
from operations to
Adjusted income from
operations
Income from
operations $1,381 $1,370 $4,642 $4,495
Loss on early
termination of
below-market land
lease $419 $-- $419 $--
Adjusted income
from operations (1) $1,800 $1,370 $5,061 $4,495
Reconciliation of net
income to EBITDAR
Net income $603 $498 $2,484 $2,138
Interest expense $434 $799 $862 $1,405
Income tax provision $301 $255 $1,262 $1,088
Loss on disposal of
property and equipment $43 $18 $34 $64
Loss on early
termination
of below market
land lease $419 $-- $419 $--
Rent and management
fees $200 $191 $399 $382
Depreciation and
amortization $1,791 $1,516 $3,440 $3,061
EBITDAR (2) $3,791 $3,277 $8,900 $8,138
Earnings per share
Basic $0.09 $0.08 $0.35 $0.36
Diluted $0.08 $0.07 $0.33 $0.33
(1) Adjusted income from operations includes an add-back for the loss on early termination of the below market land lease at Rail City Casino. Adjusted income from operations is not a calculation determined pursuant to generally accepted accounting principles and is not an alternative to operating income or net income, and is not a measure of liquidity. Since not all companies calculate this measure in the same manner, the Company's adjusted income from operations measure may not be comparable to similarly titled measures reported by other companies. The Company believes that this disclosure enhances the understanding of the day-to-day operating performance.
(2) EBITDAR includes earnings before depreciation and amortization, interest expense, income taxes, rent, gain or (loss) on the sale or disposal of property of subsidiaries and loss on early termination of below market land lease. EBITDAR is not a calculation determined pursuant to generally accepted accounting principles and is not an alternative to operating income or net income, and is not a measure of liquidity. Since not all companies calculate this measure in the same manner, the Company's EBITDAR measure may not be comparable to similarly titled measures reported by other companies. The Company believes that this disclosure enhances the understanding of the financial performance of a company with substantial interest expense, depreciation and amortization. Prior to the Gold Ranch acquisition, the Company reported "EBITDA" data. Gold Ranch has a substantial real property rent component and the Company believes EBITDAR provides a more complete depiction of the Company's financial position and performance. Moreover, if the option of the Company to purchase the Gold Ranch real property is exercised, which can happen at the Company's sole discretion, the rental expense would be available for other uses by the Company.
THE SANDS REGENT
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
DECEMBER 31, JUNE 30,
(Dollars in thousands except share data) 2005 2005
ASSETS
Cash and cash equivalents $6,285 $3,272
Accounts receivable, net 876 580
Inventories 685 692
Prepaid expenses and other assets 2,240 1,805
Total current assets 10,086 6,349
Property and equipment:
Land 13,208 10,007
Buildings and improvements 47,323 43,597
Equipment, furniture and fixtures 29,222 27,264
Leasehold improvements 178 178
Construction in progress 1,848 854
Total property and equipment 91,779 81,900
Less accumulated depreciation and amortization 45,933 42,992
Property and equipment, net 45,846 38,908
Other assets:
Goodwill 33,388 28,642
Other intangibles 12,168 12,426
Other 979 1,202
Total other assets 46,535 42,270
Total assets $102,467 $87,527
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $2,509 $2,578
Accrued salaries, wages and benefits 2,198 1,884
Other accrued expenses 1,431 398
Federal income tax payable 1,092 774
Deferred federal income tax liability 388 338
Current maturities of long-term debt 3,992 2,198
Total current liabilities 11,610 8,170
Long-term debt 25,953 17,744
Deferred federal income tax liability 2,330 2,209
Total liabilities 39,893 28,123
Common stock ($.10 par value, 20,000,000 shares
authorized; 9,518,204 and 9,376,766 shares
issued) 952 938
Additional paid-in capital 28,034 26,938
Unearned compensation (424) --
Retained earnings 56,370 53,886
84,932 81,762
Treasury stock (at cost; 2,403,000 shares) (22,358) (22,358)
Total stockholders' equity 62,574 59,404
Total liabilities and stockholders' equity $102,467 $87,527
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