Monarch Casino Reports 2013 Second Quarter Results

Marketwired

RENO, NV--(Marketwired - Jul 24, 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 ended June 30, 2013.

The Company reported the following net revenues for the three month periods ended June 30, 2013 and 2012, respectively. Note that Black Hawk was acquired on April 26, 2012 (the "Acquisition Date"); therefore, 2012 Black Hawk information represents only results subsequent to the Acquisition Date.

           
    Three months ended June 30,   Increase  
    2013   2012   $   %  
Net revenue                        
  Atlantis   $ 37,231,961   $ 34,468,122   $ 2,763,839   8.0 %
  Black Hawk     12,419,133     8,003,028     4,416,105   55.2 %
    Net revenue   $ 49,651,094   $ 42,471,150   $ 7,179,944   16.9 %
                             
                             

Atlantis net revenue for the second quarter of 2013 increased primarily due to higher casino and hotel revenue. The increase in Black Hawk net revenue is primarily due to the fact that the 2013 second quarter reflects a complete three-month period (91 days) while the 2012 second quarter only reflects Black Hawk revenue subsequent to the Acquisition Date (65 days). However, for illustration purposes only, Black Hawk second quarter 2013 net revenue for the period subsequent to April 26, 2013 increased 16% when compared to the same period subsequent to the Acquisition Date for the 2012 second quarter. 

           
    Three months ended June 30,   Increase(Decrease)  
    2013   2012   $   %  
Adjusted EBITDA (1)                        
  Atlantis   $ 11,173,417   $ 7,789,198   $ 3,384,219   43.4 %
  Black Hawk     4,821,254     2,546,186     2,275,068   89.4 %
      15,994,671     10,335,384     5,659,287   54.8 %
  Corporate and other expense     (1,159,940 )   (747,950 )   (411,990 ) 55.1 %
    Total Adjusted EBITDA   $ 14,834,731   $ 9,587,434   $ 5,247,297   54.7 %
                         
                         

The Company generated record all-time Adjusted EBITDA of $14.8 million in the second quarter of 2013 representing a "Flow Through Rate"(2) of 73.1%. 

After eliminating the effect of the $560 thousand nonrecurring sales tax benefit described in the consolidated operating expense section below, Atlantis Adjusted EBITDA increased $2.8 million or 36.3% compared to prior year's second quarter. This $2.8 million increase was due primarily to higher net revenue combined with lower selling, general and administrative ("SG&A Expense") expenses. 

The increase in Black Hawk Adjusted EBITDA is primarily due to the fact that the 2013 second quarter reflects a complete three-month period while the 2012 second quarter only reflects results subsequent to the Acquisition Date. However, for illustrative purposes only, Black Hawk second quarter 2013 Adjusted EBITDA for the period subsequent to April 26, 2013 increased 47% when compared to the same period subsequent to the Acquisition Date for the 2012 second quarter. 

The increase in corporate and other expense included in SG&A expense is primarily related to higher salaries and benefits expense.

Consolidated Operating Expense:
Casino operating expense as a percentage of casino revenue ("Casino Expense Margin") improved to 37.5% for the second quarter of 2013 compared to 40.8% for the second quarter of the prior year due primarily to lower Atlantis complimentaries expense and the inclusion of Black Hawk for an entire quarter which has a lower Casino Expense Margin than Atlantis. 

Food and beverage operating expense as a percentage of food and beverage revenue for the 2013 second quarter remained relatively flat at 40.0% for the 2013 second quarter compared to 39.2% for the 2012 second quarter. Hotel operating expense as a percentage of hotel revenue for the 2013 second quarter improved to 27.1% from 29.2% for the comparable prior year quarter due primarily to higher hotel revenue. 

SG&A Expense remained flat at $12.6 million for both the 2013 and 2012 second quarters. The Company recognized a nonrecurring benefit of $560 thousand during the 2013 second quarter from the reversal of accrued sales tax expense related to complimentary and employee meals in response to a ruling by the Nevada Tax Commission (affecting the entire Nevada hotel-casino industry) that complimentary and employee meals were no longer subject to taxation. 

Credit Facility:
During the 2013 second quarter, the Company made net principal payments of $7.0 million reducing the outstanding credit facility to $64.8 million at June 30, 2013. Capital expenditures of $3.0 million in the second quarter of 2013 were funded out of operating cash flow and primarily represent costs related to the Black Hawk master development plan and capital expenditures associated with the ongoing redesign and upgrade of the existing Black Hawk facility.

Interest expense for the 2013 second quarter decreased to $516 thousand from $577 thousand for the second quarter of 2012 due to a lower interest rate combined with lower outstanding debt in the 2013 second quarter compared to the 2012 second quarter. 

Reclassification of 2012 Expenses and Revenues:
Certain promotional allowance, casino, food and beverage, and SG&A expenses and certain casino and food and beverage revenues in the 2012 unaudited consolidated financial statements have been reclassified to conform to the 2013 presentation. These reclassifications had no effect on the previously reported income from operations, net income, consolidated Adjusted EBITDA or statements of cash flows.

John Farahi, Monarch CEO and Co-Chairman Comment:
Monarch's CEO and Co-Chairman John Farahi commented: "Our Atlantis and Black Hawk teams continue to deliver impressive results. On a consolidated basis in the second quarter of 2013, we achieved increased revenues, Adjusted EBITDA and net income, while also achieving a Flow Through rate of 73%." 

Referring to the Black Hawk expansion plans, Mr. Farahi commented: "As we announced last quarter, our master planned expansion was approved by the Black Hawk City Council subject to certain conditions, meanwhile we are in the process of completely redesigning and upgrading the existing Black Hawk facility. Once completed, the approved master plan will nearly double the existing casino space, converting the facility into a full-scale, high end resort including a 335 foot hotel tower with 507 guest rooms and suites, an upscale spa and pool facility, four restaurants, additional bars, and associated support facilities. The planned ten story parking structure, together with existing parking, includes 1,551 parking spaces. Once the detailed design and construction plans are completed, we intend to finalize the cost estimate and construction timeline for the expansion project and secure necessary financing. We remain on-track to announce that cost estimate and construction timeline in late 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 is included in the city approved master planned 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, financing, 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 all forward looking statements, including 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.

(2) "Flow Through Rate" is calculated as the increase in Adjusted EBITDA over the comparable prior year period divided by the increase in net revenue and 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 calculation provides a measure of operational efficiency.

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

   
Monarch Casino & Resort, Inc.  
Consolidated Statements of Income  
(Unaudited)  
   
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2013     2012     2013     2012  
Revenue                                
  Casino   $ 39,792,123     $ 33,452,976     $ 76,787,306     $ 57,175,297  
  Food and beverage     12,494,373       11,788,422       24,385,133       22,092,620  
  Hotel     6,368,349       5,305,178       11,679,577       9,673,620  
  Other     2,314,753       2,245,285       4,644,733       4,382,641  
    Gross revenue     60,969,598       52,791,861       117,496,749       93,324,178  
Less promotional allowances     (11,318,504 )     (10,320,711 )     (22,241,018 )     (17,953,767 )
    Net revenue     49,651,094       42,471,150       95,255,731       75,370,411  
Operating expenses                                
  Casino     14,923,240       13,632,111       29,429,025       23,765,661  
  Food and beverage     4,994,464       4,620,609       9,838,898       9,064,765  
  Hotel     1,728,556       1,546,694       3,132,434       2,841,888  
  Other     813,181       765,841       1,564,824       1,492,065  
  Selling, general and administrative     12,643,311       12,635,327       24,913,865       22,633,511  
  Depreciation and amortization     4,379,873       4,260,205       9,023,308       7,635,289  
  Acquisition expense     -       1,625,930       -       1,700,521  
    Total operating expenses     39,482,625       39,086,717       77,902,354       69,133,700  
    Income from operations     10,168,469       3,384,433       17,353,377       6,236,711  
Other expenses                                
  Interest expense     (516,231 )     (577,000 )     (1,082,327 )     (905,661 )
    Total other expense     (516,231 )     (577,000 )     (1,082,327 )     (905,661 )
    Income before income taxes     9,652,238       2,807,433       16,271,050       5,331,050  
Provision for income taxes     (3,531,994 )     (1,014,675 )     (5,888,810 )     (1,896,925 )
    Net income   $ 6,120,244     $ 1,792,758     $ 10,382,240     $ 3,434,125  
                                 
Earnings per share of common stock                                
  Net income                                
    Basic   $ 0.38     $ 0.11     $ 0.64     $ 0.21  
    Diluted   $ 0.37     $ 0.11     $ 0.63     $ 0.21  
                                 
Weighted average number of common shares and potential common shares outstanding                                
    Basic     16,191,852       16,139,074       16,169,711       16,138,616  
    Diluted     16,702,137       16,249,450       16,537,330       16,253,730  
                                 
                                 
   
Monarch Casino & Resort, Inc.  
Consolidated Balance Sheets  
   
    June 30, 2013     December 31, 2012  
    (unaudited)        
ASSETS                
Current assets                
  Cash and cash equivalents   $ 17,768,818     $ 19,043,213  
  Receivables, net     2,295,188       2,456,883  
  Inventories     2,270,474       2,382,802  
  Prepaid expenses     2,484,506       2,636,422  
  Deferred income taxes     5,425,848       5,425,848  
      Total current assets     30,244,834       31,945,168  
Property and equipment                
  Land     27,914,847       27,914,847  
  Land improvements     6,561,729       6,561,729  
  Buildings     150,843,298       150,843,298  
  Building improvements     11,681,100       11,681,100  
  Furniture and equipment     137,523,457       132,946,374  
  Leasehold improvements     1,346,965       1,346,965  
      335,871,396       331,294,313  
  Less accumulated depreciation and amortization     (160,001,038 )     (152,868,719 )
      Net property and equipment     175,870,358       178,425,594  
Other assets                
      Goodwill     25,110,810       25,110,810  
      Intangible assets, net     9,078,627       10,204,691  
      Deferred income taxes     1,214,113       1,214,113  
      Other assets, net     1,067,020       1,219,579  
Total other assets     36,470,570       37,749,193  
  Total assets   $ 242,585,762     $ 248,119,955  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities                
  Accounts payable   $ 8,068,523     $ 8,061,570  
  Accrued expenses     16,644,425       17,836,194  
  Income taxes payable     13,211       274,401  
      Total current liabilities     24,726,159       26,172,165  
Long-term debt     64,800,000       81,100,000  
      Total liabilities     89,526,159       107,272,165  
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; 16,277,765 outstanding at June 30, 2013 and 16,147,324 at December 31, 2012    

190,963
     

190,963
 
  Additional paid-in capital     32,822,167       34,363,690  
  Treasury stock, 2,818,535 shares at June 30, 2013 and 2,948,976 at December 31, 2012, at cost    
(44,934,950
)    
(48,306,046
)
  Retained earnings     164,981,423       154,599,183  
      Total stockholders' equity     153,059,603       140,847,790  
    Total liability and stockholder's equity   $ 242,585,762     $ 248,119,955  
                 
                 
 
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 June 30,     Six months ended June 30,  
    2013     2012     2013     2012  
Adjusted EBITDA (1)                                
  Atlantis   $ 11,173,417     $ 7,789,198     $ 20,379,488     $ 15,588,817  
  Black Hawk(a)     4,821,254       2,546,186       8,837,949       2,546,186  
      15,994,671       10,335,384       29,217,437       18,135,003  
  Corporate and other expense     (1,159,940 )     (747,950 )     (2,318,497 )     (1,977,130 )
    Total Adjusted EBITDA   $ 14,834,731     $ 9,587,434     $ 26,898,940     $ 16,157,873  
                                 
Expenses                                
  Stock based compensation     (286,389 )     (316,866 )     (522,255 )     (585,352 )
  Depreciation and amortization     (4,379,873 )     (4,260,205 )     (9,023,308 )     (7,635,289 )
  Acquisition expense     -       (1,625,930 )     -       (1,700,521 )
  Interest expense     (516,231 )     (577,000 )     (1,082,327 )     (905,661 )
  Provision for income taxes     (3,531,994 )     (1,014,675 )     (5,888,810 )     (1,896,925 )
    Net income   $ 6,120,244     $ 1,792,758     $ 10,382,240     $ 3,434,125  
                                 
    (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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