Monarch Casino Reports 2012 Fourth Quarter and Full Year Results

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.