Monarch Casino & Resort Reports 2012 Third Quarter Results

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