Monarch Casino & Resort Reports 2012 Second Quarter Results

RENO, NV--(Marketwire -07/26/12)- Monarch Casino & Resort, Inc. (MCRI) ("Monarch" or the "Company"), owner of the Atlantis Casino Resort Spa (the "Atlantis") in Reno, Nevada, and the Riviera Black Hawk Casino in Black Hawk, Colorado, today announced results for the quarter ended June 30, 2012.

This is the first quarterly results announcement after completion of the Company's April 26, 2012 acquisition (the "Acquisition") of Riviera Black Hawk, Inc., owner of the Riviera Black Hawk Casino ("Black Hawk"). The Company's second quarter 2012 results include the operations of Black Hawk only since April 26, 2012 (the "Acquisition Date") and the Company's prior periods do not reflect any of Black Hawk's operations.

Net Revenue:

  Three months ended June 30, Increase/(Decrease) --------------------------- --------------------- 2012 2011 $ % ------------- ------------- ------------ -------- Atlantis $ 36,292,531 $ 37,159,873 $ (867,342) (2.3%) Riviera Black Hawk 9,549,251 - 9,549,251 n/a ------------- ------------- ------------ -------- Total net revenue $ 45,841,782 $ 37,159,873 $ 8,681,909 23.4% ============= ============= ============ ========

The 2012 second quarter Atlantis net revenue decreased due to lower casino and hotel revenue combined with higher promotional allowance from increased complimentary food, beverage and other services provided to casino patrons ("Complimentaries").

Adjusted EBITDA(1):

  Three months ended June 30, Increase/(Decrease) ----------------------------- --------------------- 2012 2011 $ % -------------- -------------- ------------ -------- Atlantis $ 7,767,747 $ 10,233,788 $(2,466,041) (24.1%) Riviera Black Hawk 2,546,186 - 2,546,186 n/a -------------- -------------- ------------ -------- 10,313,933 10,233,788 80,145 0.8% Corporate and other expense (726,499) (716,032) (10,467) 1.5% -------------- -------------- ------------ -------- Total Adjusted EBITDA $ 9,587,434 $ 9,517,756 $ 69,678 0.7% ============== ============== ============ ========

The 2012 second quarter Atlantis Adjusted EBITDA decreased due to lower net revenue, higher casino expense, principally due to increased Complimentaries expense, and higher selling general and administrative expense.

Operating Expense:
As a percentage of casino revenue, 2012 second quarter casino operating expense increased to 39.7% from 36.8% primarily due to increased Complimentaries expense. 2012 second quarter food and beverage operating expense as a percentage of food and beverage revenue decreased to 41.6% as compared to 44.9% in the 2011 second quarter primarily due to menu price increases driven by higher commodity costs. 2012 second quarter hotel operating expense as a percentage of hotel revenue increased slightly to 29.2% from 28.6% in the 2011 second quarter.

Selling, general and administrative expense ("SG&A Expense") for the 2012 second quarter increased by $4.1 million, $2.8 million of which represents SG&A Expense from the Black Hawk operation for the period from the Acquisition date through June 30, 2012. The primary drivers of the remaining $1.3 million of increased Atlantis SG&A are: higher marketing expense, bad debt expense and higher use tax expense due to a ruling from the Nevada Department of Taxation that complimentary meals are subject to use tax effective February 2012. Similar to others in the industry, the Company did not recognize use tax on complimentary meals in the prior year.

During the 2012 second quarter, the Company incurred $1.6 million of non-recurring acquisition expense, comprised primarily of professional fees, directly related to the Acquisition of the Riviera Black Hawk Casino.

Credit Facility:
To fund the Acquisition, the Company drew funds under its credit facility, increasing the amount due thereunder from $18.98 million at March 31, 2012 to $88.0 million at June 30, 2012. The higher amounts due under the credit facility caused 2012 second quarter interest expense to increase from $329 thousand in the 2012 first quarter to $577 thousand in the second quarter of 2012.

John Farahi, Monarch CEO Comment:
Monarch's CEO and Co-Chairman John Farahi commented: "We are very excited about the successful completion of our acquisition of the Riviera Black Hawk Casino. Since the Acquisition Date, we have focused on integrating the two companies and are pleased with the progress we have made thus far, particularly with respect to identifying opportunities to achieve efficiencies and reduce expenses. Despite owning the operation for only a portion of the quarter, the $2.5 million of Adjusted EBITDA that Black Hawk contributed exceeded what it generated for the entire second quarter of 2011 and it did so despite the fact that the primary highway artery into the city of Black Hawk was closed for construction during a significant portion of the time subsequent to our Acquisition. Over the remainder of the year, we plan on enhancing the Black Hawk guest experience through improvements to product and service."

Mr. Farahi continued: "The ongoing economic difficulties in northern Nevada specifically, and in the national economy generally, had a material impact on Atlantis operations during the 2012 second quarter. The northern Nevada gaming market has shrunk in the aggregate, and our competitors have continued aggressive promotional programs. We anticipate that the ongoing macroeconomic weakness combined with the aggressive marketing programs of our northern Nevada competitors, will continue to apply downward pressure on Atlantis revenue."

About Monarch:
Monarch Casino & Resort, Inc., through its subsidiaries owns and operates the Atlantis Casino Resort Spa, a hotel/casino facility in Reno, Nevada the Riviera Black Hawk casino in Black Hawk, Colorado. Black Hawk is approximately 40 miles west of Denver.

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.

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, 750 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.

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 the Acquisition, and (vi) integration of the Acquisition. 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 and Comprehensive Income (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------------ -------------------------- 2012 2011 2012 2011 ----------- ----------- ------------ ------------ Revenues Casino $34,876,560 $26,076,953 $ 60,048,116 $ 49,289,639 Food and beverage 12,110,284 10,933,018 22,696,078 21,025,756 Hotel 5,305,178 5,490,621 9,673,620 10,494,662 Other 2,245,285 1,930,784 4,382,641 3,830,046 ----------- ----------- ------------ ------------ Gross revenues 54,537,307 44,431,376 96,800,455 84,640,103 Less promotional allowances (8,695,525) (7,271,503) (16,328,581) (14,194,414) ----------- ----------- ------------ ------------ Net revenues 45,841,782 37,159,873 80,471,874 70,445,689 ----------- ----------- ------------ ------------ Operating expenses Casino 13,853,725 9,589,732 23,749,312 19,066,039 Food and beverage 5,042,444 4,903,568 9,768,197 9,592,125 Hotel 1,546,694 1,568,538 2,841,888 2,997,491 Other 765,841 719,231 1,492,065 1,453,177 Selling, general and administrative 15,362,510 11,274,007 27,047,891 22,181,235 Depreciation and amortization 4,260,205 3,436,015 7,635,289 6,830,401 Acquisition expense 1,625,930 - 1,700,521 - ----------- ----------- ------------ ------------ Total operating expenses 42,457,349 31,491,091 74,235,163 62,120,468 ----------- ----------- ------------ ------------ Income from operations 3,384,433 5,668,782 6,236,711 8,325,221 ----------- ----------- ------------ ------------ Other expenses Interest expense (577,000) (194,746) (905,661) (483,268) ----------- ----------- ------------ ------------ Total other expense (577,000) (194,746) (905,661) (483,268) ----------- ----------- ------------ ------------ Income before income taxes 2,807,433 5,474,036 5,331,050 7,841,953 Provision for income taxes (1,014,675) (1,915,900) (1,896,925) (2,744,671) ----------- ----------- ------------ ------------ Net income 1,792,758 3,558,136 3,434,125 5,097,282 ----------- ----------- ------------ ------------ Other comprehensive income - - - - Comprehensive income $ 1,792,758 $ 3,558,136 $ 3,434,125 $ 5,097,282 =========== =========== ============ ============ Earnings per share of common stock Net income Basic $ 0.11 $ 0.22 $ 0.21 $ 0.32 Diluted $ 0.11 $ 0.22 $ 0.21 $ 0.31 Weighted average number of common shares and potential common shares outstanding Basic 16,139,074 16,138,158 16,138,616 16,138,158 Diluted 16,249,450 16,223,488 16,253,730 16,223,207 Monarch Casino & Resort, Inc. Condensed Consolidated Balance Sheets June 30, December 31, ------------- ------------- 2012 2011 ------------- ------------- ASSETS (Unaudited) Current assets Cash and cash equivalents $ 16,375,815 $ 13,582,659 Receivables, net 2,794,221 2,299,847 Inventories 2,265,773 2,165,109 Prepaid expenses 2,742,518 6,198,882 Deferred income taxes 554,612 615,912 ------------- ------------- Total current assets 24,732,939 24,862,409 ------------- ------------- Property and equipment Land 27,914,847 19,214,847 Land improvements 6,389,279 6,359,279 Buildings 150,843,298 135,643,298 Building improvements 11,575,883 11,575,883 Furniture and equipment 128,022,083 117,300,741 Leasehold improvements 1,346,965 1,346,965 ------------- ------------- 326,092,355 291,441,013 Less accumulated depreciation and amortization (145,247,727) (138,227,868) ------------- ------------- Net property and equipment 180,844,628 153,213,145 Other assets Goodwill 26,575,592 - Intangible assets, net 11,582,469 - Deferred tax asset 3,965,414 - Other assets, net 1,372,138 1,524,050 ------------- ------------- Total other assets 43,495,613 1,524,050 Total assets $ 249,073,180 $ 179,599,604 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 10,474,620 $ 8,693,395 Accrued expenses 15,087,187 13,829,540 Federal income taxes payable 962,579 768,640 ------------- ------------- Total current liabilities 26,524,386 23,291,575 ------------- ------------- Long-term debt 88,000,000 24,680,000 Deferred income taxes - 1,112,049 ------------- ------------- Total liabilities 114,524,386 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; 16,141,492 outstanding at June 30, 2012 and 16,138,158 at December 31, 2011 190,963 190,963 Additional paid-in capital 33,691,331 33,178,345 Treasury stock, 2,954,808 shares at June 30, 2012 and 2,958,142 at December 31, 2011, at cost (48,455,960) (48,541,663) Retained earnings 149,122,460 145,688,335 ------------- ------------- Total stockholders' equity 134,548,794 130,515,980 ------------- ------------- Total liabilities and stockholder's equity $ 249,073,180 $ 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 June Six months ended June 30, 30, ------------------------ ------------------------ 2012 2011 2012 2011 ----------- ----------- ----------- ----------- Adjusted EBITDA(1): Atlantis $ 7,767,747 $10,233,788 $15,588,817 $18,117,812 Riviera Black Hawk (a) 2,546,186 - 2,546,186 - ----------- ----------- ----------- ----------- 10,313,933 10,233,788 18,135,003 18,117,812 Corporate and other expense (726,499) (716,032) (1,977,130) (2,084,350) ----------- ----------- ----------- ----------- Total Adjusted EBITDA(1) $ 9,587,434 $ 9,517,756 $16,157,873 $16,033,462 Expenses: Stock based compensation (316,866) (412,959) (585,352) (877,840) Depreciation and amortization (4,260,205) (3,436,015) (7,635,289) (6,830,401) Acquisition expense (1,625,930) - (1,700,521) - Interest expense (577,000) (194,746) (905,661) (483,268) Provision for income taxes (1,014,675) (1,915,900) (1,896,925) (2,744,671) ----------- ----------- ----------- ----------- Net income $ 1,792,758 $ 3,558,136 $ 3,434,125 $ 5,097,282 =========== =========== =========== ===========

(a) We acquired Riviera Black Hawk 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.