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 Nine months ended
September 30, 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
Contacts: Ron Rowan CFO of Monarch (775) 825-4700 Email Contact
John Farahi CEO of Monarch (775) 825-4700 Email Contact
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