Monarch Casino & Resort Fourth Quarter Net Revenue Rises 6.2% to $44.5 Million and Adjusted EBITDA Increases 14.9% to $8.8 Million

RENO, NV--(Marketwired - Feb 26, 2014) - Monarch Casino & Resort, Inc. (NASDAQ: MCRI) ("Monarch" or "the Company") today reported operating results for the fourth quarter and full year ended December 31, 2013, as summarized below:

($ in thousands, except per share data and percentage)			Three Months Ended December 31,								Increase/ (Decrease)		Twelve Months Ended December 31,								Increase/ (Decrease)
			2013				2012						2013				2012
Net revenue
	Atlantis		$	32,868			$	31,373			4.8%		$	141,298			$	133,624			5.7%
	Monarch Black Hawk(1)			11,636				10,531			10.5%			47,451				29,678			59.9%
Total net revenue(1)			$	44,504			$	41,904			6.2%		$	188,749			$	163,302			15.6%
Adjusted EBITDA(2)
	Atlantis		$	6,327			$	5,560			13.8%		$	36,444			$	30,109			21.0%
	Monarch Black Hawk(1)			3,569				2,999			19.0%			16,496				9,630			71.3%
	Corporate and other			(1,088	)			(892	)		(22.0)%			(4,451	)			(3,582	)		(24.3)%
Total Adjusted EBITDA(1)			$	8,808			$	7,667			14.9%		$	48,489			$	36,157			34.1%
Net income			$	2,059			$	1,340			53.7%		$	17,961			$	8,911			101.6%
Basic EPS			$	0.12			$	0.08			50.0%		$	1.10			$	0.55			100.0%
Diluted EPS			$	0.12			$	0.08			50.0%		$	1.06			$	0.55			92.7%

(1)	Monarch Black Hawk net revenue and Adjusted EBITDA and Total net revenue and Adjusted EBITDA for the twelve months ended December 31, 2012, include Monarch Black Hawk's financial results following its acquisition by the Company on April 26, 2012.
(2)	Definitions, disclosures and reconciliations of non-GAAP financial information are included later in the release.

CEO Comment
John Farahi, Co-Chairman and Chief Executive Officer of Monarch, commented, "The rise in fourth quarter net revenue and Adjusted EBITDA concluded a strong year financially for both of our properties and overall, 2013 represented the best year in the Company's history.

"Fourth quarter net revenue and Adjusted EBITDA growth at Atlantis reflect our property-wide enhancements and the continued dedication of our staff to excellence in a very competitive market. The Reno market has largely stabilized and is growing at modest rates and Atlantis is positioned for further growth without the need for significant additional capital expenditures. Monarch Black Hawk also delivered a solid quarter with strong net revenue and Adjusted EBITDA gains which reflect the upgrades we have made to the property's gaming floor and non-gaming amenities.

"We continue working through a phased renovation of the entire Monarch Black Hawk casino floor to upgrade the existing facility to match the quality of our planned expansion. The renovation has been planned to minimize guest disruption and we believe our financial results throughout 2013 demonstrate the effectiveness of this approach. In December, we opened a new second floor casino which has been well received by our guests while allowing us to close off one-third of the main casino floor to completely redesign and upgrade that section.

"We continue to move ahead in finalizing the construction plans and budget of the Monarch Black Hawk expansion. The property presents significant potential given the strength of the Denver feeder market, a metropolitan area of over two million residents with low unemployment and thriving commercial and residential construction. Seen first by guests entering Black Hawk on the main artery, Monarch Black Hawk has the market's most favorable location which is protected by the city's boundaries. The Black Hawk City Council has approved our master plan subject to certain conditions and we expect our planned expansion to grow both the market and Monarch Black Hawk's market share over time. We believe our project will transform Monarch Black Hawk from a pure gaming facility with no hotel rooms into a full-scale resort. Once completed, we will nearly double the casino space while adding a 22 story hotel tower with 507 guest rooms and suites, an upscale spa and pool facility, four restaurants, additional bars, a new parking structure and associated support facilities. The planned ten story parking structure will increase total parking on site from approximately 500 spaces to approximately 1,551 parking spaces. 

"We recently began site work on the new parking garage on the 1.5 acre land parcel contiguous to the existing facility as we move toward the full-scale start of construction. We look forward to finalizing our design and construction plans with our contractors and architects, and establishing a fixed budget and timeline for the project. In doing so, we will ensure that Monarch Black Hawk will provide best in class gaming, lodging and food and beverage offerings to our guests while delivering an attractive return on investment."

Summary of 2013 Fourth Quarter Operating Results
For the 2013 fourth quarter, net revenue at Atlantis of $32.9 million grew 4.8% year over year driven by growth across each of our revenue centers offset slightly by an increase in promotional allowances which declined as a percentage of gross revenue. The 10.5% increase in Monarch Black Hawk net revenue to $11.6 million was due to strong growth in food revenue and significantly lower promotional allowances during the quarter. On a consolidated basis, promotional allowance decreased $1.0 million or 8.8%.

The Company generated consolidated Adjusted EBITDA of $8.8 million in the fourth quarter of 2013, an increase of $1.1 million, or 14.9%, over the same period a year ago. The increase in Corporate and other expense was primarily related to higher salaries, wages and benefits.

Casino operating expense as a percentage of casino revenue was 42.8% for the fourth quarter of 2013 compared to 42.6% in the fourth quarter of 2012. Food and beverage operating expense as a percentage of food and beverage revenue for the 2013 fourth quarter decreased to 40.7% from 41.4% in the 2012 fourth quarter. Hotel operating expense as a percentage of hotel revenue increased to 29.7% for the fourth quarter of 2013 compared to 28.9% for the prior year.

Selling, general and administrative ("SG&A") expenses for the 2013 fourth quarter increased $0.9 million, or 6.7%, over the 2012 fourth quarter. This increase was driven primarily by higher marketing, salaries and wages, utilities, and repair and maintenance expenses.

Credit Facility
During the 2013 fourth quarter, the Company made net principal payments of $2.5 million, which reduced the amount outstanding on its credit facility to $53.8 million at December 31, 2013 which compares with $81.1 million outstanding as of December 31, 2012. Capital expenditures of $4.2 million in the fourth quarter of 2013 were funded from operating cash flows and primarily represent costs related to the Monarch Black Hawk master development plan including the ongoing redesign and upgrade of the facility.

Interest expense for the 2013 fourth quarter decreased to $0.4 million from $0.6 million for the fourth quarter of 2012 due to a lower interest rate driven by our lower leverage combined with lower outstanding borrowings in the 2013 fourth quarter compared to the 2012 fourth quarter. 

Forward-Looking Statements
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 Monarch Black Hawk; (iv) integration of Monarch Black Hawk; and (v) plans, costs, financing, construction, completion and opening timelines of redesigned and expanded facilities at Monarch Black Hawk. Actual results and future events and conditions may differ materially from those described in any forward-looking statements. With respect to the Monarch Black Hawk redesign and expansion projects, important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation:

• construction factors, including delays, increased costs of labor and materials, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters and building permit issues;
• access to available and reasonable financing on a timely basis, including the ability of the Company to restructure its credit facility on acceptable terms; and
• the effects of local and national economic, credit and capital market conditions on the economy, in general, and on the gaming industry, in particular. 
  

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 website at www.MonarchCasino.com.

Non-GAAP Financial Measures
Please see the separate Reconciliation of Adjusted EBITDA to Net Income (unaudited) below. 

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.

About Monarch Casino & Resort, Inc.
Monarch Casino & Resort, Inc., through its subsidiaries, owns and operates the Atlantis Casino Resort Spa, a hotel/casino facility in Reno, Nevada, and the Monarch Casino Black Hawk (formerly the Riviera Black Hawk Casino) in Black Hawk, Colorado, 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 acquired the Monarch Casino Black Hawk, the first casino encountered by visitors arriving from Denver on Highway 119, in April 2012. The property features approximately 32,000 square feet of casino space, approximately 600 slot machines, 9 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 Monarch Casino Black Hawk which is zoned for gaming and is included in the city approved master planned expansion.

- financial tables follow -

Monarch Casino & Resort, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
			Three Months Ended December 31,								Twelve Months Ended December 31,
			2013				2012				2013				2012
			(unaudited)				(unaudited)				(unaudited)
Revenue
Casino			$	35,091			$	34,707			$	149,916			$	128,831
Food and beverage				12,465				11,541				49,642				45,966
Hotel				4,397				4,352				22,679				20,199
Other				2,589				2,305				9,680				8,994
Gross revenue				54,542				52,905				231,917				203,990
	Less promotional allowances			(10,038	)			(11,001	)			(43,168	)			(40,688	)
Net revenue				44,504				41,904				188,749				163,302
Operating expenses
Casino				15,016				14,779				59,646				53,331
Food and beverage				5,075				4,782				20,077				18,487
Hotel				1,306				1,258				6,241				5,578
Other				878				725				3,260				3,001
Selling, general and administrative				14,000				13,123				52,432				48,115
Depreciation and amortization				4,066				4,368				16,638				16,651
Acquisition expenses				-				-				-				2,156
Total operating expenses				40,341				39,035				158,294				147,319
Income from operations				4,163				2,869				30,455				15,983
Other expenses
Interest expense				(367	)			(628	)			(1,860	)			(2,024	)
Total other expenses				(367	)			(628	)			(1,860	)			(2,024	)
Income before income taxes				3,796				2,241				28,595				13,959
Provision for income taxes				(1,737	)			(901	)			(10,634	)			(5,048	)
Net income			$	2,059			$	1,340			$	17,961			$	8,911
Earnings per share
Basic			$	0.12			$	0.08			$	1.10			$	0.55
Diluted			$	0.12			$	0.08			$	1.06			$	0.55
Weighted average shares outstanding
Basic				16,474				16,142				16,302				16,140
Diluted				17,273				16,258				16,944				16,250

Monarch Casino & Resort, Inc.
Consolidated Balance Sheets
(In thousands)
					December 31,
					2013				2012
					(unaudited)
ASSETS
Current assets
	Cash and cash equivalents				$	19,330			$	19,043
	Receivables, net					2,628				2,457
	Income taxes receivable					608				-
	Inventories					2,675				2,383
	Prepaid expenses					2,830				2,636
	Deferred income taxes					5,909				5,426
			Total current assets			33,980				31,945
Property and equipment
	Land					28,680				27,915
	Land improvements					6,562				6,562
	Buildings					150,828				150,843
	Buildings improvements					15,897				11,681
	Furniture and equipment					134,425				132,946
	Construction in progress					4,891				-
	Leasehold improvements					1,347				1,347
						342,630				331,294
	Less accumulated depreciation and amortization					(166,993	)			(152,869	)
			Net property and equipment			175,637				178,425
Other assets
	Goodwill					25,111				25,111
	Intangible assets, net					8,531				10,205
	Deferred income taxes					350				1,214
	Other assets, net					914				1,220
			Total other assets			34,906				37,750
			Total assets		$	244,523			$	248,120
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
	Accounts payable				$	8,666			$	8,062
	Accrued expenses					18,177				17,836
	Income taxes payable					-				274
			Total current liabilities			26,843				26,172
	Long-term debt					53,800				81,100
			Total liabilities			80,643				107,272
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; 16,482,768 outstanding at December 31, 2013 and 16,147,324 outstanding at December 31, 2012					191				191
	Additional paid - in capital					30,926				34,364
	Treasury stock, 2,613,532 shares at December 31, 2013 and 2,948,976 shares at December 31, 2012					(39,797	)			(48,306	)
	Retained earnings					172,560				154,599
			Total stockholders' equity			163,880				140,848
			Total liabilities and stockholders' equity		$	244,523			$	248,120

Monarch Casino & Resort, Inc.

Reconciliation of Adjusted EBITDA to Net Income

(In thousands, unaudited)

The following table sets forth a reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to net income, a GAAP financial measure:

			Three Months Ended December 31,								Twelve Months Ended December 31,
			2013				2012				2013				2012
Adjusted EBITDA(1):
Atlantis			$	6,327			$	5,560			$	36,444			$	30,109
Monarch Black Hawk(2)				3,569				2,999				16,496				9,630
				9,896				8,559				52,940				39,739
	Corporate and other			(1,088	)			(892	)			(4,451	)			(3,582	)
Total Adjusted EBITDA(2)			$	8,808			$	7,667			$	48,489			$	36,157
Expenses:
Stock-based compensation			$	(404	)		$	(430	)		$	(1,220	)		$	(1,367	)
Depreciation and amortization				(4,066	)			(4,368	)			(16,638	)			(16,651	)
Acquisition expenses				-				-				-				(2,156	)
Interest expense				(367	)			(628	)			(1,860	)			(2,024	)
(Loss) gain on asset sale				(175	)			-				(176	)			-
Provision for income taxes				(1,737	)			(901	)			(10,634	)			(5,048	)
Net income(2)			$	2,059			$	1,340			$	17,961			$	8,911

(1)	"Adjusted EBITDA", a non-GAAP financial measure, 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.
(2)	Monarch Black Hawk Adjusted EBITDA, and Total Adjusted EBITDA and Net income for the twelve months ended December 31, 2012, include Monarch Black Hawk's financial results following its acquisition by the Company on April 26, 2012.