Monarch Casino & Resort Reports 2012 Third Quarter Results

Marketwired

RENO, NV--(Marketwire - Oct 24, 2012) - 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 third quarter ended September 30, 2012.

This is the second 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 only subsequent to the Acquisition Date. Periods prior to that date exclude Black Hawk's operations. 

Net Revenue:

         
  Three months ended September 30,   Increase/(Decrease)  
  2012   2011   $   %  
Atlantis $ 36,830,127   $ 36,174,386   $ 655,741   1.8 %
Black Hawk   11,031,584     -     11,031,584   n/a  
  Total net revenue $ 47,861,711   $ 36,174,386   $ 11,687,325   32.3 %
                         

Atlantis net revenue for the 2012 third quarter increased primarily due to higher casino revenue partially offset by higher promotional allowance from increased complimentary food, beverage and other services provided to casino patrons ("Complimentaries").

Black Hawk net revenue of $11.0 million was 6.8% greater than the $10.3 million the property generated during the same quarter of the prior year before it was acquired by Monarch.

Adjusted EBITDA(1):

           
  Three months ended September 30,     Increase/(Decrease)  
  2012     2011     $     %  
Atlantis $ 9,170,407     $ 8,602,316     $ 568,091     6.6 %
Black Hawk   4,085,155       -       4,085,155     n/a  
    13,255,562       8,602,316       4,653,246     54.1 %
Corporate and other expense   (934,397 )     (818,594 )     (115,803 )   14.1 %
  Total Adjusted EBITDA $ 12,321,165     $ 7,783,722     $ 4,537,443     58.3 %
                               

The Atlantis Adjusted EBITDA for the 2012 third quarter increased due to higher net revenue partially offset by higher casino expense, which higher expense was principally due to increased Complimentaries expense and higher selling, general and administrative expense.

Black Hawk Adjusted EBITDA for the 2012 third quarter of $4.1 million is $1.2 million, or 41.4%, more than the $2.9 million Adjusted EBITDA reported for Black Hawk during the same quarter in 2011 before it was acquired by Monarch.

Operating Expense:
Casino operating expense as a percentage of casino revenue ("Casino Operating Margin") decreased to 37.4% for the third quarter of 2012 from 39.6% for the third quarter of the prior year primarily due to the inclusion of Black Hawk. Black Hawk has a lower Casino Operating Margin than Atlantis. Food and beverage operating expense as a percentage of food and beverage revenue for the 2012 third quarter decreased to 39.3% as compared to 47.2% for the 2011 third quarter primarily due to operational efficiencies combined with menu price increases in response to higher commodity costs. Hotel operating expense as a percentage of hotel revenue for the 2012 third quarter decreased slightly to 23.9% from 24.5% for the 2011 third quarter. 

Selling, general and administrative expense ("SG&A Expense") for the 2012 third quarter increased by $2.6 million, $2.2 million of which represents SG&A Expense from the Black Hawk operation for which the third quarter of the prior year reflects no expense. The primary drivers of the remaining $400 thousand of increased Atlantis SG&A Expense are: higher marketing expense and higher use tax expense partially offset by lower utilities and bad debt expense. The higher use tax expense totaled $120 thousand and is the result of a ruling from the Nevada Department of Taxation that complimentary meals are subject 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 third quarter, the Company made net principal payments of $5.9 million against the outstanding credit facility, decreasing the principal amount due thereunder from $88.0 million at June 30, 2012 to $82.1 million at September 30, 2012. 

Interest expense for the 2012 third quarter increased to $480 thousand from $160 thousand for the third quarter of 2011 due to higher amounts of debt outstanding under the credit facility in the 2012 third quarter compared to the 2011 third quarter. Advances were drawn under the credit facility in the 2012 second quarter to complete the acquisition of Black Hawk.

John Farahi, Monarch CEO, Comment:
Monarch's CEO and Co-Chairman John Farahi commented: "The integration of the Black Hawk operation has gone very well. The 41.4% increase in Black Hawk's Adjusted EBITDA compared to prior year's same quarter is a reflection of the initial improvements we've made in the short time we've owned the property and such results are a tribute to our team. I'm confident that the recently announced Black Hawk management additions will bring even greater strength to the team."

Mr. Farahi added: "We've begun work that will completely redesign and upgrade our facility in Black Hawk. We intend to complete that work in a manner that minimizes disruption to our guests' experience." 

Referring to the Company's Atlantis property, Mr. Farahi added: "We continue to increase our market share despite the ongoing competitive and economic pressures in northern Nevada. We were honored to receive the prestigious AAA Four Diamond Award in August of 2012. Only 4.8 percent of the nearly 31,000 AAA rated lodging properties receive the coveted AAA Four Diamond Award. It is a well-deserved tribute to each Atlantis team member's efforts to consistently exceed our guests' expectations." 

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, 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. 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, and (iv) integration of the 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.

   
   
Monarch Casino & Resort, Inc.  
Condensed Consolidated Statements of Income  
(Unaudited)  
   
      Three Months Ended     Nine Months Ended  
      September 30,     September 30,  
      2012     2011     2012     2011  
Revenues                              
  Casino $ 38,448,040     $ 24,147,082     $ 98,496,155     $ 73,436,721  
  Food and beverage   12,666,803       11,071,950       35,362,881       32,097,706  
  Hotel   6,174,337       6,332,818       15,847,957       16,827,480  
  Other   2,306,289       1,997,541       6,688,929       5,827,587  
    Gross revenues   59,595,469       43,549,391       156,395,922       128,189,494  
Less promotional allowances   (11,733,758 )     (7,375,005 )     (29,687,525 )     (21,569,419 )
    Net revenues   47,861,711       36,174,386       126,708,397       106,620,075  
Operating expenses                              
  Casino   14,386,595       9,573,416       37,548,779       28,639,455  
  Food and beverage   4,973,984       5,228,370       14,658,215       14,820,495  
  Hotel   1,478,601       1,554,277       4,327,991       4,551,768  
  Other   784,576       723,890       2,253,133       2,177,067  
  Selling, general and administrative   14,269,691       11,671,842       40,367,996       33,853,077  
  Depreciation and amortization   4,647,002       3,314,598       12,282,291       10,144,999  
  Adventure Inn demolition   -       3,519,148       -       3,519,148  
  Acquisition expense   454,701       437,400       2,155,522       437,400  
    Total operating expenses   40,995,150       36,022,941       113,593,927       98,143,409  
    Income from operations   6,866,561       151,445       13,114,470       8,476,666  
Other expenses                              
  Interest expense   (479,772 )     (160,237 )     (1,396,632 )     (643,505 )
    Total other expense   (479,772 )     (160,237 )     (1,396,632 )     (643,505 )
    Income (loss) before income taxes   6,386,789       (8,792 )     11,717,838       7,833,161  
(Provision) benefit for income taxes   (2,249,708 )     20,071       (4,146,633 )     (2,724,600 )
    Net income $ 4,137,081     $ 11,279     $ 7,571,205     $ 5,108,561  
                                   
Earnings per share of common stock                              
  Net income                              
    Basic $ 0.26     $ 0.00     $ 0.47     $ 0.32  
    Diluted $ 0.25     $ 0.00     $ 0.47     $ 0.31  
                                   
Weighted average number of common shares and potential common shares outstanding                              
    Basic   16,141,492       16,138,158       16,139,582       16,138,158  
    Diluted   16,234,158       16,234,443       16,248,588       16,226,844  
                                   
   
   
Monarch Casino & Resort, Inc.  
Condensed Consolidated Balance Sheets  
   
    September 30,   December 31,  
    2012   2011  
ASSETS   (Unaudited)      
Current assets              
  Cash and cash equivalents   $ 17,009,507   $ 13,582,659  
  Receivables, net     2,367,304     2,299,847  
  Federal income tax receivable     282,472     -  
  Inventories     2,139,202     2,165,109  
  Prepaid expenses     2,805,293     6,198,882  
  Deferred income taxes     554,612     615,912  
    Total current assets     25,158,390     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     11,564,850     11,575,883  
  Furniture and equipment     130,874,200     117,300,741  
  Leasehold improvements     1,346,965     1,346,965  
      328,933,439     291,441,013  
  Less accumulated depreciation and amortization     (149,202,728 )   (138,227,868 )
    Net property and equipment     179,730,711     153,213,145  
Other assets              
    Goodwill     26,575,592     -  
    Intangible assets, net     10,893,580     -  
    Deferred tax asset     3,965,414     -  
    Other assets, net     1,295,859     1,524,050  
  Total other assets     42,730,445     1,524,050  
    Total assets   $ 247,619,546   $ 179,599,604  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
Current liabilities              
  Accounts payable   $ 9,108,497   $ 8,693,395  
  Accrued expenses     17,372,276     13,829,540  
  Federal income taxes payable     -     768,640  
    Total current liabilities     26,480,773     23,291,575  
Long-term debt     82,100,000     24,680,000  
Deferred income taxes     -     1,112,049  
    Total liabilities     108,580,773     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 September 30, 2012 and 16,138,158 at December 31, 2011    


190,963
   


190,963
 
  Additional paid-in capital     34,044,230     33,178,345  
  Treasury stock, 2,954,808 shares at September 30, 2012 and 2,958,142 at December 31, 2011, at cost    
(48,455,960
)  
(48,541,663
)
  Retained earnings     153,259,540     145,688,335  
    Total stockholders' equity     139,038,773     130,515,980  
    Total liability and stockholder's equity   $ 247,619,546   $ 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 September 30,   Nine months ended September 30,  
    2012   2011   2012   2011  
Adjusted EBITDA (1)                        
  Atlantis $ 9,170,407   $ 8,602,316   $ 25,177,650   $ 27,217,220  
  Black Hawk (a)   4,085,155     -     6,631,341     -  
      13,255,562     8,602,316     31,808,991     27,217,220  
  Corporate and other expense   (934,397 )   (818,594 )   (3,318,457 )   (3,400,035 )
    Total Adjusted EBITDA $ 12,321,165   $ 7,783,722   $ 28,490,534   $ 23,817,185  
                         
Expenses:                        
  Stock based compensation   (352,901 )   (361,131 )   (938,252 )   (1,238,972 )
  Depreciation and amortization   (4,647,002 )   (3,314,598 )   (12,282,291 )   (10,144,999 )
  Acquisition expense   (454,701 )   (437,400 )   (2,155,521 )   (437,400 )
  Adventure Inn demolition   -     (3,519,148 )   -     (3,519,148 )
  Interest expense   (479,772 )   (160,237 )   (1,396,632 )   (643,505 )
  (Provision) benefit for income taxes   (2,249,708 )   20,071     (4,146,633 )   (2,724,600 )
    Net income $ 4,137,081   $ 11,279   $ 7,571,205   $ 5,108,561  
 
(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.

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

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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