Monarch Casino Reports 2012 Fourth Quarter and Full Year Results

Marketwired

RENO, NV--(Marketwire - Feb 28, 2013) - Monarch Casino & Resort, Inc. (NASDAQ: MCRI) ("Monarch" or the "Company"), owner of the Atlantis Casino Resort Spa (the "Atlantis") in Reno, Nevada, and the Riviera Black Hawk Casino ("Black Hawk") in Black Hawk, Colorado, today announced results for the quarter and year ended December 31, 2012.

RESULTS FOR THE QUARTER ENDED DECEMBER 31, 2012
This is the third quarterly earnings announcement to include results from the Company's Black Hawk Casino which was acquired on April 26, 2012 (the "Acquisition Date"). The Company's financial results include the Black Hawk operations subsequent to the Acquisition Date. Periods prior to that date exclude Black Hawk's operations. 

Net Revenue:

           
    Three months ended December 31,   Increase/(Decrease)  
    2012   2011   $     %  
  Atlantis   $ 33,175,496   $ 34,012,130   $ (836,634 )   -2.5 %
  Black Hawk     10,473,071     -     10,473,071     n/a  
    Total net revenue   $ 43,648,567   $ 34,012,130   $ 9,636,437     28.3 %
                           

Each of Atlantis' revenue centers experienced lower revenue in the 2012 fourth quarter. Black Hawk net revenue of $10.5 million represents 14.1% growth over the $9.2 million the property generated during the same quarter of the prior year before it was acquired by Monarch.

Adjusted EBITDA(1):

             
    Three months ended December 31,     Increase/(Decrease)  
    2012     2011     $     %  
Atlantis   $ 5,850,257     $ 6,453,391     $ (603,134 )   -9.3 %
Black Hawk     2,998,758       -       2,998,758     n/a  
      8,849,015       6,453,391       2,395,624     37.1 %
Corporate and other expense     (1,182,305 )     (1,008,395 )     (173,910 )   17.2 %
  Total Adjusted EBITDA   $ 7,666,710     $ 5,444,996     $ 2,221,714     40.8 %
                               

Atlantis Adjusted EBITDA for the 2012 fourth quarter decreased due to lower gross revenue; higher complimentary food, beverage and other services provided to casino patrons ("Complimentaries") and higher use tax expense; partially offset by lower bad debt and marketing expense.

Black Hawk Adjusted EBITDA for the 2012 fourth quarter of $3.0 million grew $800 thousand, or 36.4% over the $2.2 million Adjusted EBITDA reported for Black Hawk during the same quarter in 2011 before it was acquired by Monarch.

Consolidated corporate and other expense increased $174 thousand due primarily to higher payroll and benefits expense.

Consolidated Operating Expense:
Casino operating expense as a percentage of casino revenue was relatively flat at 40.0% for the fourth quarter of 2012 compared to 40.3% for the fourth quarter of the prior year. Food and beverage operating expense as a percentage of food and beverage revenue for the 2012 fourth quarter improved to 43.1% as compared to 46.5% for the 2011 fourth quarter primarily due to operational efficiencies combined with menu pricing strategies in anticipation of higher commodity costs. Hotel operating expense as a percentage of hotel revenue for the 2012 fourth quarter increased slightly to 28.9% from 27.6% for the comparable prior quarter due to lower hotel revenue. 

Selling, general and administrative expense ("SG&A Expense") for the 2012 fourth quarter increased $2.6 million, $2.5 million of which represents SG&A Expense from the Black Hawk operation for which the fourth quarter of the prior year reflects no expense. The primary drivers of the remaining $100 thousand of increased Monarch corporate and Atlantis SG&A Expense are: higher Monarch corporate payroll and benefits expense and higher use tax expense partially offset by lower bad debt and lower marketing expense. Use tax expense increased $115 thousand as a result of the Nevada Department of Taxation ruling which subjects complimentary meals to use tax effective February 2012. Following Nevada casino industry practice, the Company did not recognize use tax on complimentary meals in the prior year.

Credit Facility:
During the 2012 fourth quarter, the Company made net principal payments of $1.0 million against the outstanding credit facility, decreasing it to $81.1 million at December 31, 2012. Capital expenditures of $2.4 million in the fourth quarter of 2012, primarily related to redesign and upgrade of the Black Hawk facility, were funded out of operating cash flow.

Interest expense for the 2012 fourth quarter increased to $627 thousand from $271 thousand for the fourth quarter of 2011 due to higher amounts of debt outstanding under the credit facility in the 2012 fourth quarter compared to the 2011 fourth quarter. 

RESULTS FOR THE YEAR ENDED DECEMBER 31, 2012
The Company's financial results include the Black Hawk operations subsequent to the Acquisition Date. Periods prior to that date exclude Black Hawk's operations. 

Net Revenue:

    Twelve months ended December 31,   Increase  
    2012   2011   $   %  
  Atlantis   $ 140,928,245   $ 140,632,205   $ 296,040   0.2 %
  Black Hawk     29,428,719     -     29,428,719   n/a  
    Total net revenue   $ 170,356,964   $ 140,632,205   $ 29,724,759   21.1 %

The increase in Atlantis net revenue for 2012 was due to higher casino, food and beverage and other revenue partially offset by lower hotel revenue and higher promotional allowance from increased Complimentaries. Black Hawk net revenue of $29.4 million represents 11.4% growth over the $26.4 million the property generated during the comparable prior year period before it was acquired by Monarch.

Adjusted EBITDA(1):

             
    Twelve months ended December 31,     Increase/(Decrease)  
    2012     2011     $     %  
  Atlantis   $ 31,111,370     $ 33,310,003     $ (2,198,633 )   -6.6 %
  Black Hawk (2)     9,630,100       -       9,630,100     n/a  
        40,741,470       33,310,003       7,431,467     22.3 %
  Corporate and other expense     (4,584,220 )     (4,047,823 )     (536,397 )   13.3 %
    Total Adjusted EBITDA   $ 36,157,250     $ 29,262,180     $ 6,895,070     23.6 %
                                   

(2) Represents Adjusted EBITDA from April 26, 2012 through December 31, 2012.

Atlantis Adjusted EBITDA for 2012 decreased due primarily to higher Complimentaries and marketing expense partially offset by higher gross revenue. Black Hawk adjusted EBITDA represents the period from April 26, 2012 through December 31, 2012. Black Hawk adjusted EBITDA of $9.6 million reflects 45.6% growth over the $6.6 million Adjusted EBITDA reported for Black Hawk during the comparable period of 2011 before it was acquired by Monarch. Consolidated corporate and other expense increased $536 thousand due primarily to higher payroll and benefits expense.

Consolidated Operating Expense:
Casino operating expense as a percentage of casino revenue improved slightly to 38.6% for 2012 compared to 39.3% for the prior year due primarily to higher casino revenue. Food and beverage operating expense as a percentage of food and beverage revenue for 2012 improved significantly to 41.9% as compared to 46.3% for 2011 primarily due to operational efficiencies combined with menu pricing strategies in anticipation of higher commodity costs. Hotel operating expense as a percentage of hotel revenue for 2012 increased slightly to 27.7% from 27.2% for 2011 due to lower hotel revenue. 

SG&A Expense for 2012 increased by $9.1 million, $6.6 million of which represents SG&A Expense from the Black Hawk operation for which the prior year reflects no expense. The primary drivers of the remaining $2.5 million of increased Monarch corporate and Atlantis SG&A Expense are: higher marketing and higher Monarch corporate salaries and benefits.

Credit Facility:
The balance outstanding under the Company's credit facility increased from $24.7 million at December 31, 2011 to $81.1 million at December 31, 2012. The $56.4 million increase in the outstanding balance relates to advances drawn in the 2012 second quarter to complete the acquisition of Black Hawk. As a result of the higher balance outstanding, interest expense in 2012 increased to $2.0 million from $914 thousand for 2011. 

John Farahi, Monarch CEO Comment:
Monarch's CEO and Co-Chairman John Farahi commented: "Our fourth quarter and annual results for Atlantis continue to reflect the ongoing difficult national and northern Nevada economic climate. While we increased our market share in both the fourth quarter and full year of 2012, higher Complimentaries and marketing expense drove Adjusted EBITDA lower than the prior year for both periods."

Referring to the Company's Black Hawk property, Mr. Farahi added: "The integration of the Black Hawk operation has gone very well. In the short time that we have owned the property, we have increased net revenue and Adjusted EBITDA by 11.4% and 45.6%, respectively, over the results achieved under the prior ownership." 

"We are in the process of completely redesigning and upgrading the existing Black Hawk facility. We also are close to finalizing conceptual plans that will utilize our adjacent land parcel to expand the existing casino and convert the facility to an upscale casino-resort. The plans include the addition of a hotel, a new and larger parking structure, additional restaurants and other resort amenities."

The Company's 2013 Annual Meeting of Stockholders will be held on Friday, May 10, 2013 at 10:00 am local time at the Company's Atlantis Casino Resort Spa, 3800 South Virginia Street in Reno, Nevada. The record date for stockholders entitled to vote at the Annual Meeting is Tuesday, March 12, 2013.

About Monarch Casino & Resort, Inc. (NASDAQ: MCRI):
Monarch Casino & Resort, Inc., through its subsidiaries, owns and operates the Atlantis Casino Resort Spa, a hotel/casino facility in Reno, Nevada, and the Riviera Black Hawk casino in Black Hawk, Colorado. Black Hawk is approximately 40 miles west of Denver. For additional information on Monarch, visit Monarch's website at www.MonarchCasino.com.

The Atlantis features approximately 61,000 square feet of casino space; 824 guest rooms; eight food outlets; two espresso and pastry bars; a 30,000 square foot health spa and salon with an enclosed year-round pool; two retail outlets offering clothing and traditional gift shop merchandise; an 8,000 square-foot family entertainment center; and approximately 52,000 square feet of banquet, convention and meeting room space. The casino features approximately 1,450 slot and video poker machines; approximately 38 table games, including blackjack, craps, roulette, and others; a race and sports book; a 24-hour live keno lounge and a poker room. The Company and its predecessors have operated a facility on the Atlantis site since 1972. For more Atlantis Casino Resort Spa information, please visit www.atlantiscasino.com or call 800.723.6500. Also see Atlantis on Facebook, www.facebook.com/AtlantisCasinoResortSpa or on Twitter at @AtlantisCasino.

The Riviera Black Hawk Casino, which opened in 2000, is the first casino encountered by visitors arriving from Denver on Highway 119 and features approximately 32,000 square feet of casino space, approximately 700 slot machines, 10 table games, a 250 seat buffet-style restaurant, a snack bar and a parking structure with approximately 500 spaces. Monarch owns a 1.5 acre land parcel contiguous to the Riviera Black Hawk Casino which is zoned for gaming and can be utilized for future expansion. For more Riviera Black Hawk information, please visit www.rivierablackhawk.com or call 303.582.1000. Also see Riviera Black Hawk on Facebook, www.facebook.com/RivieraCasino or on Twitter at @RivieraCasino.

Forward-Looking Information:
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 which are subject to change, including, but not limited to, comments relating to (i) future operating performance; (ii) economic and market conditions, (iii) plans, objectives and expectations regarding Black Hawk, (iv) integration of Black Hawk; and (v) plans, construction, completion and opening of new and expanded facilities at Black Hawk. Actual results and future events and conditions may differ materially from those described in any forward-looking statements. Additional information concerning potential factors that could affect the Company's financial results is included in the Company's Securities and Exchange Commission filings, which are available on the Company's web site at www.monarchcasino.com.

(1) "Adjusted EBITDA" - see the separate Reconciliation of Net Income to Adjusted EBITDA. Adjusted EBITDA should not be construed as an alternative to operating income (as determined in accordance with generally accepted accounting principles) as an indicator of the Company's operating performance, as an alternative to cash flows from operating activities (as determined in accordance with generally accepted accounting principles) or as a measure of liquidity. This item enables comparison of the Company's performance with the performance of other companies that report Adjusted EBITDA, although some companies do not calculate this measure in the same manner and therefore, the measure as presented may not be comparable to similarly titled measures presented by other companies.

For additional information visit Monarch's website at MonarchCasino.com

   
Monarch Casino & Resort, Inc.  
Condensed Consolidated Statements of Income  
(Unaudited)  
   
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2012     2011     2012     2011  
    (unaudited)     (unaudited)     (unaudited)        
Revenues                                
  Casino   $ 36,117,315     $ 23,930,400     $ 134,613,470     $ 97,367,121  
  Food and beverage     11,875,467       10,835,969       47,238,348       42,933,675  
  Hotel     4,351,560       4,611,374       20,199,517       21,438,854  
  Other     2,305,198       2,197,984       8,994,127       8,025,571  
    Gross revenues     54,649,540       41,575,727       211,045,462       169,765,221  
Less promotional allowances     (11,000,973 )     (7,563,597 )     (40,688,498 )     (29,133,016 )
    Net revenues     43,648,567       34,012,130       170,356,964       140,632,205  
Operating expenses                                
  Casino     14,451,256       9,636,182       52,000,036       38,275,637  
  Food and beverage     5,116,629       5,040,700       19,774,844       19,861,195  
  Hotel     1,257,809       1,272,614       5,585,800       5,824,382  
  Other     724,874       714,164       2,978,007       2,891,231  
  Selling, general and administrative     14,860,998       12,284,155       55,228,994       46,137,232  
  Depreciation and amortization     4,368,313       3,234,539       16,650,604       13,379,538  
  Building demolition expense     -       -       -       3,519,148  
  Acquisition expense     -       536,207       2,155,521       973,607  
    Total operating expenses     40,779,879       32,718,561       154,373,806       130,861,970  
    Income from operations     2,868,688       1,293,569       15,983,158       9,770,235  
Other expenses                                
  Interest expense     (627,325 )     (270,803 )     (2,023,957 )     (914,308 )
    Total other expense     (627,325 )     (270,803 )     (2,023,957 )     (914,308 )
    Income before income taxes     2,241,363       1,022,766       13,959,201       8,855,927  
Provision for income taxes     (901,720 )     (455,473 )     (5,048,353 )     (3,180,073 )
    Net income   $ 1,339,643     $ 567,293     $ 8,910,848     $ 5,675,854  
                                 
Earnings per share of common stock                                
  Net income                                
    Basic   $ 0.08     $ 0.04     $ 0.55     $ 0.35  
    Diluted   $ 0.08     $ 0.03     $ 0.55     $ 0.35  
                                 
Weighted average number of common shares and potential common shares outstanding                                
    Basic     16,141,555       16,138,158       16,140,078       16,138,158  
    Diluted     16,257,986       16,245,649       16,250,088       16,231,325  
   
   
Monarch Casino & Resort, Inc.  
Condensed Consolidated Balance Sheets  
   
    December 31,  
    2012     2011  
ASSETS   (unaudited)        
Current assets                
     Cash and cash equivalents   $ 19,043,213     $ 13,582,659  
     Receivables, net     2,456,883       2,299,847  
     Inventories     2,382,802       2,165,109  
     Prepaid expenses and other current assets     2,636,422       6,198,882  
     Deferred income taxes     5,425,848       615,912  
       Total current assets     31,945,168       24,862,409  
Property and equipment                
     Land     27,914,847       19,214,847  
     Land improvements     6,561,729       6,359,279  
     Buildings     150,843,298       135,643,298  
     Building improvements     11,681,100       11,575,883  
     Furniture and equipment     132,946,374       117,300,741  
     Leasehold improvements     1,346,965       1,346,965  
      331,294,313       291,441,013  
     Less accumulated depreciation and amortization     (152,868,719 )     (138,227,868 )
       Net property and equipment     178,425,594       153,213,145  
Other assets                
     Goodwill     25,110,810       -  
     Intangible assets, net     10,204,691       -  
     Deferred income taxes     1,214,113       -  
     Other assets, net     1,219,579       1,524,050  
     Total other assets     37,749,193       1,524,050  
       Total assets   $ 248,119,955     $ 179,599,604  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities                
     Accounts payable   $ 8,061,570     $ 8,693,395  
     Accrued expenses     17,836,194       13,829,540  
     Federal income taxes payable     274,401       768,640  
       Total current liabilities     26,172,165       23,291,575  
Long-term debt     81,100,000       24,680,000  
Deferred income taxes     -       1,112,049  
       Total liabilities     107,272,165       49,083,624  
Stockholders' equity                
  Preferred stock, $.01 par value, 10,000,000 shares authorized; none issued     -       -  
  Common stock, $.01 par value, 30,000,000 shares authorized; 19,096,300 shares issued; 16,147,324 outstanding at December 31, 2012 and 16,138,158 at December 31, 2011     190,963       190,963  
  Additional paid-in capital     34,363,690       33,178,345  
  Treasury stock, 2,948,976 shares at December 31, 2012 and 2,958,142 at December 31, 2011, at cost     (48,306,046 )     (48,541,663 )
  Retained earnings     154,599,183       145,688,335  
        Total stockholders' equity     140,847,790       130,515,980  
    Total liability and stockholder's equity   $ 248,119,955     $ 179,599,604  
   
   
Monarch Casino & Resort, Inc.  
Reconciliation of Adjusted EBITDA (1) to Net Income  
(Unaudited)  
   
The following table sets forth a reconciliation of Adjusted EBITDA(1), a non-GAAP financial measure, to net income, a GAAP financial measure.  
   
    Three months ended December 31,     Twelve months ended December 31,  
    2012     2011     2012     2011  
Adjusted EBITDA                                
  Atlantis   $ 5,850,257     $ 6,453,391     $ 31,111,370     $ 33,310,003  
  Black Hawk (a)     2,998,758       -       9,630,100       -  
        8,849,015       6,453,391       40,741,470       33,310,003  
  Corporate and other expense     (1,182,305 )     (1,008,395 )     (4,584,220 )     (4,047,823 )
    Total Adjusted EBITDA   $ 7,666,710     $ 5,444,996     $ 36,157,250     $ 29,262,180  
                                 
Expenses:                                
  Stock based compensation     (429,709 )     (380,681 )     (1,367,967 )     (1,619,652 )
  Depreciation and amortization     (4,368,313 )     (3,234,539 )     (16,650,604 )     (13,379,538 )
  Acquisition expense     -       (536,207 )     (2,155,521 )     (973,607 )
  Building demolition expense     -       -       -       (3,519,148 )
  Interest expense     (627,325 )     (270,803 )     (2,023,957 )     (914,308 )
  Provision for income taxes     (901,720 )     (455,473 )     (5,048,353 )     (3,180,073 )
      Net income   $ 1,339,643     $ 567,293     $ 8,910,848     $ 5,675,854  
                                 

(a) We acquired Riviera Black Hawk Casino on April 26, 2012.

(1) "Adjusted EBITDA" consists of net income plus provision for income taxes, stock based compensation expense, other one-time non-cash charges, interest expense, depreciation and amortization less interest income and any benefit for income taxes. Adjusted EBITDA should not be construed as an alternative to operating income (as determined in accordance with generally accepted accounting principles) as an indicator of the Company's operating performance, as an alternative to cash flows from operating activities (as determined in accordance with generally accepted accounting principles) or as a measure of liquidity. This item enables comparison of the Company's performance with the performance of other companies that report Adjusted EBITDA, although some companies do not calculate this measure in the same manner and therefore, the measure as presented may not be comparable to similarly titled measures presented by other companies.

Contact:

Ron Rowan
CFO of Monarch
(775) 825-4700
Email Contact

John Farahi
CEO of Monarch
(775) 825-4700
Email Contact

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