SOURCE: Monarch Casino and Resort, Inc.

April 23, 2014 16:05 ET

Monarch Casino & Resort Reports First Quarter Net Revenue of $45.5 Million and Adjusted EBITDA Of $10.3 Million

RENO, NV--(Marketwired - Apr 23, 2014) -  Monarch Casino & Resort, Inc. (NASDAQ: MCRI) ("Monarch" or "the Company") today reported operating results for the first quarter ended March 31, 2014, as summarized below:

           
($ in thousands, except per share data and percentage)   Three Months Ended
March 31,
     
    2014   2013   Decrease  
                   
Net revenue (1)   $ 45,508   $ 45,605   (0.2 %)
                   
Total Adjusted EBITDA(1) (2)     10,287     12,064   (14.7 %)
                   
Net income   $ 3,276   $ 4,262   (23.1 %)
                   
Basic EPS   $ 0.20   $ 0.26   (23.1 %)
Diluted EPS   $ 0.19   $ 0.26   (26.9 %)
                   
(1) Commencing with the 2014 first quarter, the Company is reporting consolidated results rather than results for each of its two facilities.
(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, "Higher operating expenses at both Atlantis and Monarch Black Hawk, combined with flat consolidated revenue, drove declines in Adjusted EBITDA and net income in the first quarter of 2014 compared to the same quarter last year. The severe winter weather adversely impacted our Monarch Black Hawk operations throughout the quarter. Black Hawk had 50% more snow days than last year's first quarter and all but one weekend during the 2014 first quarter was impacted by adverse weather.

"Our redesign and upgrade of the Monarch Black Hawk casino facility is progressing as planned. To accommodate construction, we have had to reduce the number of slot machines on the gaming floor by approximately 13%. To minimize additional disruption, we are staging the work in three equal phases. Completion of each phase will take approximately six to seven months and we expect to finish the first phase in the third quarter of 2014. 

"We have also begun excavation work on the 1.5 acre land parcel contiguous to the Monarch Black Hawk facility to build a new parking structure. Construction of the new parking structure is the first step in our city approved master plan to transform Monarch Black Hawk into a full-scale casino resort. 

"Finalization of the master plan's detailed design has taken longer than originally anticipated due to modifications we are making to further enhance and value engineer the project. Once the detailed plans are completed, we will announce the project's cost estimate and construction timeline. 

"Upon completion of the expansion, we believe Monarch Black Hawk will present best in class gaming, lodging and food and beverage offerings to our Black Hawk guests while providing an attractive return on investment for our investors."

Summary of 2014 First Quarter Operating Results
For the 2014 first quarter, consolidated net revenue of $45.5 million declined 0.2% year over year driven by lower revenue from Monarch Black Hawk. The 3.1% increase in revenue from the Company's food and beverage operations was more than offset by a 2.6% decline in casino revenue and a 12.6% decline in hotel revenue during the quarter. The decline in hotel revenue was driven primarily by the loss of a large convention in Reno. Consolidated promotional allowance decreased by $1.0 million or 9.2%.

The Company generated consolidated Adjusted EBITDA of $10.3 million in the first quarter of 2014, a decline of $1.8 million, or 14.7%, over the same period a year ago.

Casino operating expense as a percentage of casino revenue was 41.7% for the first quarter of 2014 compared to 39.2% in the first quarter of 2013. Food and beverage operating expense as a percentage of food and beverage revenue for the 2014 first quarter decreased slightly to 40.5% from 40.7% in the 2013 first quarter. Hotel operating expense as a percentage of hotel revenue increased to 29.8% for the first quarter of 2014 compared to 26.4% for the prior year.

Selling, general and administrative ("SG&A") expenses for the 2014 first quarter increased $1.0 million, or 7.8%, over the 2013 first quarter, driven primarily by higher salaries, wages and benefits; repairs and maintenance; marketing; and, utilities expense.

Credit Facility
During the 2014 first quarter, the Company made net principal payments of $4.9 million which reduced the amount outstanding on its credit facility to $48.9 million at March 31, 2014, compared to $71.8 million outstanding as of March 31, 2013. Capital expenditures of $5.0 million in the first quarter of 2014 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 existing facility.

Interest expense for the 2014 first quarter decreased to $0.3 million from $0.6 million for the first quarter of 2013 due to a lower interest rate driven by our lower leverage combined with lower outstanding borrowings in the 2014 first quarter compared to the 2013 first 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; and (iv) 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;
  • changes in laws and regulations permitting expanded and other forms of gaming in our key markets; 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. Once completed, the master plan will nearly double the casino space and will add 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 1,550 parking spaces.

 
- financial tables follow -
 
Monarch Casino & Resort, Inc.  
Condensed Consolidated Statements of Operations  
(In thousands, except per share data)  
       
    Three Months Ended
March 31,
 
    2014     2013  
    (unaudited)     (unaudited)  
Revenues                
Casino   $ 36,034     $ 36,995  
Food and beverage     12,265       11,891  
Hotel     4,644       5,311  
Other     2,479       2,330  
Gross revenues     55,422       56,527  
  Less promotional allowances     (9,914 )     (10,922 )
Net revenues     45,508       45,605  
                 
Operating expenses                
Casino     15,022       14,506  
Food and beverage     4,971       4,844  
Hotel     1,384       1,404  
Other     875       752  
Selling, general and administrative     13,231       12,271  
Depreciation and amortization     4,694       4,643  
Total operating expenses     40,177       38,420  
                 
Income from operations     5,331       7,185  
                 
Other expenses                
Interest expense     (287 )     (566 )
Total other expenses     (287 )     (566 )
                 
Income before income taxes     5,044       6,619  
Provision for income taxes     (1,768 )     (2,357 )
Net income   $ 3,276     $ 4,262  
                 
Earnings per share of common stock                
Basic   $ 0.20     $ 0.26  
Diluted   $ 0.19     $ 0.26  
                 
Weighted average shares outstanding          
Basic     16,536       16,147  
Diluted     17,259       16,275  
   
   
   
Monarch Casino & Resort, Inc.  
Condensed Consolidated Balance Sheets  
(In thousands)  
   
    March 31,     December 31,  
    2014     2013  
    (unaudited)        
ASSETS                
Current assets                
  Cash and cash equivalents   $ 17,093     $ 19,330  
  Receivables, net     2,380       2,628  
  Income taxes receivable     -       608  
  Inventories     2,394       2,675  
  Prepaid expenses     3,768       2,830  
  Deferred income taxes     5,909       5,909  
    Total current assets     31,544       33,980  
Property and equipment                
  Land     28,680       28,680  
  Land improvements     6,562       6,562  
  Buildings     150,828       150,828  
  Buildings improvements     15,897       15,897  
  Furniture & equipment     135,456       134,425  
  Construction in progress     8,118       4,891  
  Leasehold improvements     1,347       1,347  
      346,888       342,630  
  Less accumulated depreciation and amortization     (170,694 )     (166,993 )
    Net properties and equipment     176,194       175,637  
Other assets                
  Goodwill     25,111       25,111  
  Intangible assets, net     8,240       8,531  
  Differed income taxes     350       350  
  Other assets, net     838       914  
    Total other assets     34,539       34,906  
    Total assets   $ 242,277     $ 244,523  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities                
  Accounts payable   $ 7,363     $ 8,666  
  Construction accounts payable     1,204       -  
  Accrued expenses     17,661       18,177  
  Income taxes payable     1,160       -  
    Total current liabilities     27,388       26,843  
Long-term debt     48,900       53,800  
    Total liabilities     76,288       80,643  
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; 16,669,170 outstanding at March 31, 2014;16,482,768 outstanding at December 31, 2013     191       191  
  Additional paid - in capital     25,339       30,926  
  Treasury stock, 2,427,130 shares at March 31, 2014, 2,613,532 shares at December 31, 2013     (35,377 )     (39,797 )
  Retained earnings     175,836       172,560  
    Total stockholders' equity     165,989       163,880  
    Total liabilities and stockholders' equity   $ 242,277     $ 244,523  
 
 
 
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  
    March 31,  
    2014     2013  
                 
    Total Adjusted EBITDA   $ 10,287     $ 12,064  
                 
Expenses:                
  Stock based compensation     (262 )     (236 )
  Depreciation and amortization     (4,694 )     (4,643 )
  Interest expense     (287 )     (566 )
  Provision for income taxes     (1,768 )     (2,357 )
    Net Income   $ 3,276     $ 4,262  
   
(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.

Contact Information

  • Contacts:
    Ron Rowan
    Chief Financial Officer
    775/825-4700
    Email Contact

    Joseph Jaffoni, Richard Land, James Leahy
    JCIR
    212/835-8500
    Email Contact