SOURCE: Monarch Casino and Resort, Inc.

April 22, 2015 16:05 ET

Monarch Casino & Resort Reports First Quarter Net Revenue of $47.2 Million and Adjusted EBITDA of $10.9 Million

RENO, NV--(Marketwired - Apr 22, 2015) -   Monarch Casino & Resort, Inc. (NASDAQ: MCRI) ("Monarch" or "the Company") today reported operating results for the first quarter ended March 31, 2015, as summarized below:

           
($ in thousands, except per share data and percentage)   Three Months Ended March 31,      
    2015   2014   Increase  
                   
Net revenue   $ 47,171   $ 45,508   3.7 %
                   
Total Adjusted EBITDA(1)     10,875     10,287   5.7 %
                   
Net income   $ 4,043   $ 3,276   23.4 %
                   
Basic EPS   $ 0.24   $ 0.20   20.0 %
Diluted EPS   $ 0.24   $ 0.19   26.3 %
                   
(1) 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: "Our 2015 first quarter results represent a strong start to what we expect will be an important year for Monarch as the Reno economy continues to grow and we make progress on the upgrade and transformation of Monarch Black Hawk into a full-scale casino resort.

"First quarter results reflect top-line growth at both Atlantis and Monarch Black Hawk, which offset increased promotional activity in Reno and ongoing construction disruption in Black Hawk. Our 3.7% rise in quarterly revenue drove an Adjusted EBITDA increase of 5.7% to $10.9 million, with rising casino, food and beverage, and hotel costs partially offset by lower SG&A expenses. 

"We remain encouraged by the ongoing economic recovery in Reno and believe that the city and region are in the early stages of a new period of sustainable long-term growth. Tesla's recent decision to invest billions in the Reno area has elevated awareness of the city's many attributes and has led several other businesses to explore the benefits that Reno has to offer, resulting in further investment across a number of industries including the technology sector. As the operator of Northern Nevada's premier casino resort situated in Reno's prime location, we believe that we are well positioned to benefit from these economic improvements and are excited for the future.

"Work on our upgrade and expansion of Monarch Black Hawk is ongoing and we continue to make excellent progress throughout the property. Construction is now above ground on the new nine story parking structure. Also, we opened the second phase of the existing facility upgrade to the public in March, including a new customer service area and upgraded table game offerings. We are now underway with the third and final phase of the existing building's upgrade which is on target for completion in the third quarter of 2015. Since beginning the multi-stage upgrade, we have had to temporarily reduce our slot count, which currently stands at 560 machines, 21% lower than our steady state slot floor count. Once the third phase of the upgrade project is complete, we intend to restore the number of slot machines back to approximately 710.

"The estimated total cost of the Monarch Black Hawk expansion, including the cost of the acquired land, new parking structure, hotel tower, expanded casino and additional restaurants remains approximately $285-$295 million, of which $229-$234 million represents the expected cost to complete the hotel tower, expanded casino and additional restaurants. Through March 31, 2015, we have spent $26 million on the expansion, leaving remaining completion costs of approximately $259-$269 million. We expect to fund the remaining cost of the expansion from a combination of cash flow from operations and an increase in, or replacement of, our credit facility and remain on track to complete the entire project in late 2017.

"As our 2015 first quarter results indicate, we have been able to mitigate much of the negative impact of both the construction disruption and temporary reduction in the number of slot machines on Monarch Black Hawk's guest experience and financial results." 

Summary of 2015 First Quarter Operating Results
For the 2015 first quarter, consolidated net revenue of $47.2 million increased 3.7% year over year, driven by growth at both Atlantis and Monarch Black Hawk. The Company's food and beverage revenue rose 6.8% on a year-over-year basis, casino revenue was up 3.9% and hotel revenue increased 2.0%. Consolidated promotional allowance increased by $0.8 million or 8.0%.

The Company generated consolidated Adjusted EBITDA of $10.9 million in the first quarter of 2015, an increase of $0.6 million, or 5.7%, over the same period a year ago.

Casino operating expense as a percentage of casino revenue was 43.6% for the first quarter of 2015 compared to 41.7% in the first quarter of 2014. Food and beverage operating expense as a percentage of food and beverage revenue for the 2015 first quarter decreased to 39.8% from 40.5% in the 2014 first quarter. Hotel operating expense as a percentage of hotel revenue increased to 32.1% for the first quarter of 2015 compared to 29.8% for the prior year. The increase in casino operating expense as a percentage of revenue is due primarily to higher complimentaries expense while the increase in hotel operating expense as a percentage of hotel revenue is due primarily to higher equipment and miscellaneous replacement expense.

Selling, general and administrative ("SG&A") expenses for the 2015 first quarter decreased $0.7 million, or 4.9%, over the 2014 first quarter, driven primarily by lower marketing and personnel expense.

Monarch Black Hawk Expansion Update
Today, the Company provided an update on its ongoing upgrade and expansion of Monarch Black Hawk. Summarized below are the expected costs and completion dates for the project as well as the amounts spent through March 31, 2015:

               
$ in millions Cost   Total Spent Through March 31, 2015   Left to Spend   Estimated
Completion Date
I. Existing Facility              
  Riviera Black Hawk Casino (1) $76   $76   -   Complete
  Existing Facility Upgrade (2)(3) $34 - $36   $18   $16 - $18   Interior Q3 2015; Exterior 2015-2016
    Total Existing Facility $110 - $112   $94   $16 - $18    
               
II. Expansion              
  Acquired Land Parcels $10   $10   -   Complete
  Parking Structure (3) $38 - $41   $9   $29 - $32   Late 2015
  Hotel Tower & Casino (4) $229 - $234   -   $229 - $234   Late 2017
  Other (3) $8 - $10   $7   $1 - $3   2016-2017
    Total Expansion $285 - $295   $26   $259 - $269    
    Total Cost $395 - $407   $120   $275 - $287    
   
(1) The Company paid $76.0 million cash or $69.2 million net of acquired working capital and NOLs when it acquired Riviera Black Hawk.
(2) Includes upgrade to exterior of existing facility to match the design of the master planned expansion.
(3) The Company expects to fund the amount left to spend primarily from operating cash flow and, to a lesser extent, from its credit facility.
(4) The Company anticipates funding the hotel tower and casino expansion from a combination of operating cash flow and an expansion or replacement of its credit facility.
   

During the first quarter of 2015, Monarch completed and opened to the public the second phase of its existing facility upgrade, including a new customer service area and upgraded table game offerings. The Company expects to complete work on the third and final phase of the upgrade in the 2015 third quarter. Monarch also made progress in the first quarter on the facility's new parking structure, with construction now above ground. 

Credit Facility
During the 2015 first quarter, the Company made net principal payments of $4.3 million which reduced the amount outstanding on its credit facility to $42.0 million at March 31, 2015, compared to $46.3 million outstanding as of December 31, 2014. Capital expenditures of $7.8 million in the first quarter of 2015 were funded from operating cash flows and primarily represent costs related to the ongoing redesign and expansion project at Monarch Black Hawk.

Interest expense for the 2015 first quarter decreased to $0.2 million from $0.3 million for the first quarter of 2014 due to lower outstanding borrowings in the 2015 first quarter compared to the 2014 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 and outlooks; (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 37 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 Monarch 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 710 slot machines (temporarily reduced to approximately 560 to accommodate redesign and upgrade work on the facility), 9 table games, a 250 seat buffet-style restaurant, a snack bar and a parking structure with approximately 500 spaces. Once completed, the Monarch Black Hawk expansion will nearly double the casino space and will add a 23 story hotel tower with approximately 500 guest rooms and suites, an upscale spa and pool facility, three restaurants (bringing the total to four restaurants), additional bars, a new parking structure and associated support facilities. The planned nine story parking structure will increase total parking on site from approximately 500 spaces to approximately 1,500 parking spaces.

- financial tables follow -

   
   
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
(In thousands, except per share data)  
(unaudited)  
             
    Three months ended
March 31,
 
    2015     2014  
Revenues                
  Casino   $ 37,439     $ 36,034  
  Food and beverage     13,103       12,265  
  Hotel     4,737       4,644  
  Other     2,600       2,479  
    Gross revenues     57,879       55,422  
  Less promotional allowances     (10,708 )     (9,914 )
    Net revenues     47,171       45,508  
                 
Operating expenses                
  Casino     16,336       15,022  
  Food and beverage     5,219       4,971  
  Hotel     1,519       1,384  
  Other     934       875  
  Selling, general and administrative     12,579       13,231  
  Depreciation and amortization     4,131       4,694  
  Gain on disposition of assets     (18 )     -  
    Total operating expenses     40,700       40,177  
    Income from operations     6,471       5,331  
                 
Other expenses                
  Interest expense, net of amounts capitalized     (219 )     (287 )
    Total other expense     (219 )     (287 )
                 
    Income before income taxes     6,252       5,044  
Provision for income taxes     (2,209 )     (1,768 )
    Net income   $ 4,043     $ 3,276  
                 
Earnings per share of common stock                
  Net income                
    Basic   $ 0.24     $ 0.20  
    Diluted   $ 0.24     $ 0.19  
                 
Weighted average number of common shares and potential common shares outstanding                
Basic     16,821       16,536  
Diluted     17,198       17,259  
                 
                 
                 
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands, except shares)  
   
    March 31,     December 31,  
    2015     2014  
    (unaudited)        
ASSETS                
Current assets                
  Cash and cash equivalents   $ 18,470     $ 21,583  
  Receivables, net     2,888       3,047  
  Income taxes receivable     -       1,139  
  Inventories     2,854       2,846  
  Prepaid expenses     4,336       4,021  
  Deferred income taxes     1,626       1,626  
    Total current assets     30,174       34,262  
Property and equipment                
  Land     29,415       29,415  
  Land improvements     6,701       6,701  
  Buildings     150,771       150,821  
  Buildings improvements     19,858       18,142  
  Furniture and equipment     126,694       125,671  
  Construction in progress     20,189       15,672  
  Leasehold improvements     1,347       1,347  
      354,975       347,769  
  Less accumulated depreciation and amortization     (170,765 )     (167,498 )
    Net property and equipment     184,210       180,271  
Other assets                
  Goodwill     25,111       25,111  
  Intangible assets, net     7,074       7,366  
  Deferred income taxes     4,682       4,682  
  Other assets, net     533       609  
    Total other assets     37,400       37,768  
      Total assets   $ 251,784     $ 252,301  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities                
  Accounts payable   $ 6,259     $ 7,933  
  Construction accounts payable     2,201       1,790  
  Accrued expenses     18,672       19,327  
  Income taxes payable     1,070       -  
    Total current liabilities     28,202       29,050  
Long-term debt     42,000       46,300  
    Total liabilities     70,202       75,350  
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; 16,843,349 outstanding at March 31, 2015; 16,812,794 outstanding at December 31, 2014     191       191  
  Additional paid - in capital     23,071       22,985  
  Treasury stock, 2,252,951 shares at March 31, 2015; 2,283,506 shares at December 31, 2014     (32,468 )     (32,970 )
  Retained earnings     190,788       186,745  
    Total stockholders' equity     181,582       176,951  
    Total liabilities and stockholders' equity   $ 251,784     $ 252,301  
                 
                 
                 
Monarch Casino & Resort, Inc. and Subsidiaries
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,
 
    2015     2014  
Adjusted EBITDA (1)   $ 10,875     $ 10,287  
Expenses:                
  Stock based compensation     (291 )     (262 )
  Depreciation and amortization     (4,131 )     (4,694 )
  Interest expense     (219 )     (287 )
  Gain on disposition of assets     18       -  
  Provision for income taxes     (2,209 )     (1,768 )
    Net income   $ 4,043     $ 3,276  
                     
(1) Adjusted EBITDA, a non-GAAP financial measure, consists of net income plus loss on disposal of assets, provision for income taxes, stock based compensation expense, other one-time charges, interest expense, depreciation and amortization less interest income, any benefit for income taxes and gain on disposal of assets. 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 or Email Contact

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