SOURCE: Monarch Casino and Resort, Inc.

February 24, 2016 16:05 ET

Monarch Casino & Resort Reports Fourth Quarter Net Revenue of $51.5 Million and Fourth Quarter Adjusted EBITDA of $12.4 Million

Company Reports Record Full Year Adjusted EBITDA of $50.0 Million

RENO, NV--(Marketwired - Feb 24, 2016) - Monarch Casino & Resort, Inc. (NASDAQ: MCRI) ("Monarch" or "the Company") today reported operating results for the fourth quarter and full year ended December 31, 2015, as summarized below:

($ in thousands, except per share data and percentages)

       
  Three Months Ended December 31,   Twelve Months Ended December 31,
  2015   2014   Increase   2015   2014   Increase
Net revenues $ 51,485   $ 45,859   12.3%   $ 202,245   $ 187,767   7.7%
Adjusted EBITDA (1)   12,398     9,536   30.0%     50,041     43,475   15.1%
Net income $ 5,123   $ 3,811   34.4%   $ 20,659   $ 14,185   45.6%
                               
Basic EPS $ 0.30   $ 0.23   30.4%   $ 1.22   $ 0.85   43.6%
Diluted EPS $ 0.29   $ 0.22   31.8%   $ 1.19   $ 0.83   43.4%
                               
(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, "We generated a 12.3% rise in net revenue and a 30.0% increase in Adjusted EBITDA in the 2015 fourth quarter, concluding a strong year for Monarch. Our solid fourth quarter results were driven by top-line and Adjusted EBITDA growth at both Atlantis Casino Resort Spa and Monarch Casino Black Hawk while our 2015 full year Adjusted EBITDA of $50.0 million is an all-time high for Monarch.

"Throughout 2015, we strengthened the competitive position of both of our properties and leveraged the unique growth opportunities presented by each of their markets. In Reno, Atlantis benefited from the city's ongoing renaissance which is attracting new businesses, additional economic activity and increased employment. Consistent with our focus on continuously improving our facilities and their offerings, we plan to bolster Atlantis' position as Northern Nevada's premier casino resort through additional property enhancements over the next two quarters. In March 2016, we expect to open our redesigned and upgraded Toucan Charlie's Buffet. Additionally, we expect to complete the conversion of leased land and buildings adjacent to Atlantis into 300 additional surface parking spaces during the second quarter, increasing the amount of surface parking adjacent to Atlantis by approximately 34%. This new area will provide needed parking, convenient guest access to primary casino floor entrances and a direct route to Atlantis from an additional major local traffic artery. 

"Monarch Black Hawk's strong fourth quarter performance was driven by a full quarter of contribution from the recently completed redesign and upgrade of the gaming floor. After nearly seven quarters of construction, we are again operating with a full complement of gaming positions including approximately 700 slot machines and 14 table games. We remain on-track to complete and open the property's new parking structure late in the second quarter of 2016. Following the completion of the parking structure, we plan to raze the existing parking structure in the third quarter and break ground on the new hotel tower, expanded casino and additional restaurants in the fourth quarter of 2016, with completion of the full project expected in the third quarter of 2018.

"As we look to 2016, we are confident that our focus on guest service, prudent expense management and continuing property upgrades, as well as positive Reno and Black Hawk market trends, position Monarch to generate another year of strong financial results."

Summary of 2015 Fourth Quarter Operating Results
For the 2015 fourth quarter, consolidated net revenues of $51.5 million increased 12.3% year-over-year, driven by growth at both Atlantis and Monarch Black Hawk. Casino revenues rose 11.7% on a year-over-year basis, food and beverage revenues grew 10.7% and hotel revenues increased 14.8%. Consolidated promotional allowances increased $0.9 million, or 9.0%. As a percentage of gross revenues, promotional allowances decreased to 18.0% from 18.4% in the prior year fourth quarter.

Consolidated Adjusted EBITDA increased $2.9 million, or 30.0%, year-over-year to $12.4 million in the fourth quarter of 2015.

Casino operating expenses as a percentage of casino revenues declined to 41.8% for the fourth quarter of 2015 compared to 44.4% in the fourth quarter of 2014 primarily due to higher casino revenues. Food and beverage operating expense as a percentage of food and beverage revenues for the 2015 fourth quarter decreased to 39.0% from 42.4% in the 2014 fourth quarter due primarily to operating cost efficiencies and menu price increases. Hotel operating expenses as a percentage of hotel revenues increased to 35.4% in the fourth quarter of 2015 compared to 28.0% in the prior year due primarily to higher repairs and maintenance expense.

Selling, general and administrative ("SG&A") expenses for the 2015 fourth quarter increased $1.4 million, or 10.7%, over the 2014 fourth quarter, driven primarily by higher payroll and repairs and maintenance expenses.

Monarch Black Hawk Expansion
Summarized below is an update on the Company's ongoing upgrade and expansion of Monarch Black Hawk, including the expected costs and completion dates for the project as well as the amounts spent through December 31, 2015:

               
$ in millions Cost   Total Spent Through December 31, 2015   Left to Spend   Estimated
Completion Date
I. Existing Facility              
Monarch Casino Black Hawk (1) $76   $76   -   Completed
Existing Facility Upgrade (2)(3) $34 - $36   $18   $16 - $18   Interior completed; Exterior 2016-2017
  Total Existing Facility $110 - $112   $94   $16 - $18    
               
II. Expansion              
Acquired Land Parcels $10   $10   -   Completed
Parking Structure (3) $38 - $41   $28   $10 - $13   2Q16
Hotel Tower & Casino (4) $229 - $234   -   $229 - $234   3Q18
Other (3) $8 - $10   $8   $0 - $2   3Q18
  Total Expansion $285 - $295   $46   $239 - $249    
  Total Cost $395 - $407   $140   $255 - $267    
               
(1) The Company paid $76.0 million cash or $69.2 million net of acquired working capital and NOLs when it acquired Monarch Black Hawk (formerly Riviera Black Hawk Casino).
(2) Includes upgrades to interior, which was completed in August 2015, and 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 fourth quarter of 2015, the Company made further progress on construction of the facility's new parking structure. The Company continues to expect that it will complete the structure and open it to the public late in the second quarter of 2016. Following the completion of the new parking structure, the existing parking structure will be razed and construction of the hotel tower and casino expansion will begin with an expected completion date in the third quarter of 2018.

Credit Facility
During the 2015 fourth quarter, the Company made net borrowings of $3.0 million, which increased the amount outstanding on its credit facility to $40.9 million at December 31, 2015. Capital expenditures of $13.4 million in the fourth quarter of 2015 primarily represent costs related to the Monarch Black Hawk master development plan and were funded from a combination of the Company's operating cash flows and credit facility borrowings.

Interest expense for the 2015 fourth quarter decreased to $0.1 million from $0.3 million in the fourth quarter of 2014 due to lower average outstanding borrowings and a lower cost of borrowings in the 2015 fourth quarter compared to the 2014 fourth quarter. 

2016 Annual Stockholders' Meeting Date
The Company's 2016 Annual Meeting of Stockholders will be held on Wednesday, June 8, 2016 at 10:00am PDT at the Atlantis Casino Resort Spa, which is located at 3800 South Virginia Street in Reno, Nevada. The record date for stockholders entitled to vote at the Annual Meeting is April 15, 2016.

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 Atlantis and/or Monarch Black Hawk; and (iv) plans, costs, financing, construction, completion and opening timelines of upgraded, redesigned and/or 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 master development plan and expansion project, 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 expand or replace 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 Casino Black Hawk, the first casino encountered by visitors arriving from Denver on Highway 119, in April 2012. The property features approximately 30,000 square feet of casino space, approximately 700 slot machines, 14 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)        
         
                       
  Three months ended December 31,     Twelve months ended December 31,  
  2015     2014     2015     2014  
  (unaudited)     (unaudited)     (unaudited)        
Revenues                              
  Casino $ 39,459     $ 35,324     $ 156,843     $ 145,134  
  Food and beverage   14,697       13,271       56,500       52,314  
  Hotel   5,418       4,719       22,629       21,733  
  Other   3,207       2,907       11,198       10,394  
    Gross revenues   62,781       56,221       247,170       229,575  
  Less promotional allowances   (11,296 )     (10,362 )     (44,925 )     (41,808 )
    Net revenues   51,485       45,859       202,245       187,767  
                               
Operating expenses                              
  Casino   16,493       15,701       65,970       61,583  
  Food and beverage   5,734       5,629       22,249       21,410  
  Hotel   1,918       1,319       6,787       5,992  
  Other   1,014       891       3,963       3,545  
  Selling, general and administrative   14,534       13,132       54,779       52,987  
  Depreciation and amortization   3,776       4,320       15,933       17,824  
  Loss on disposition of assets   29       94       9       343  
  Colorado ballot initiative costs   -       19       -       1,864  
    Total operating expenses   43,498       41,105       169,690       165,548  
                               
    Income from operations   7,987       4,754       32,555       22,219  
                               
Other expenses                              
  Interest expense, net of amounts capitalized   (142 )     (288 )     (679 )     (1,104 )
    Total other expense   (142 )     (288 )     (679 )     (1,104 )
                               
    Income before income taxes   7,845       4,466       31,876       21,115  
Provision for income taxes   (2,722 )     (655 )     (11,217 )     (6,930 )
    Net income $ 5,123     $ 3,811     $ 20,659     $ 14,185  
                               
Earnings per share of common stock                              
  Net income                              
    Basic $ 0.30     $ 0.23     $ 1.22     $ 0.85  
    Diluted $ 0.29     $ 0.22     $ 1.19     $ 0.83  
                               
Weighted average number of common shares and potential common shares outstanding                              
    Basic   17,094       16,806       16,948       16,734  
    Diluted   17,483       17,097       17,335       17,107  
                                   
                                   
                                   
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands, except shares)  
   
  December 31,     December 31,  
  2015     2014  
ASSETS (unaudited)        
Current assets              
  Cash and cash equivalents $ 21,164     $ 21,583  
  Receivables, net   3,729       3,047  
  Income taxes receivable   611       1,139  
  Inventories   2,881       2,846  
  Prepaid expenses   3,402       4,021  
  Deferred income taxes   -       1,626  
    Total current assets   31,787       34,262  
Property and equipment              
  Land   29,549       29,415  
  Land improvements   6,701       6,701  
  Buildings   150,966       150,821  
  Buildings improvements   23,255       18,142  
  Furniture and equipment   134,704       125,671  
  Construction in progress   37,424       15,672  
  Leasehold improvements   1,347       1,347  
    383,946       347,769  
  Less accumulated depreciation and amortization   (180,792 )     (167,498 )
    Net property and equipment   203,154       180,271  
Other assets              
  Goodwill   25,111       25,111  
  Intangible assets, net   6,200       7,366  
  Deferred income taxes   7,415       4,682  
  Other assets, net   1,179       609  
    Total other assets   39,905       37,768  
      Total assets $ 274,846     $ 252,301  
LIABILITIES AND STOCKHOLDERS' EQUITY              
Current liabilities              
  Current portion of long-term debt $ 40,900     $ -  
  Accounts payable   6,747       7,933  
  Construction accounts payable   1,407       1,790  
  Accrued expenses   21,873       19,327  
    Total current liabilities   70,927       29,050  
Long - term debt   -       46,300  
      Total liabilities   70,927       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; 17,202,699 outstanding at December 31, 2015; 16,812,794 outstanding at December 31, 2014   191       191  
  Additional paid-in capital   22,728       22,985  
  Treasury stock, 1,893,601 shares at December 31, 2015; 2,283,506 shares at December 31, 2014   (26,404 )     (32,970 )
  Retained earnings   207,404       186,745  
      Total stockholders' equity   203,919       176,951  
      Total liabilities and stockholders' equity $ 274,846     $ 252,301  
               
               
               
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES
RECONCILIATIN 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,  
  2015     2014     2015     2014  
    Adjusted EBITDA (1) $ 12,398     $ 9,536     $ 50,041     $ 43,475  
Expenses:                              
  Stock based compensation   (606 )     (349 )     (1,544 )     (1,225 )
  Depreciation and amortization   (3,776 )     (4,320 )     (15,933 )     (17,824 )
  Colorado ballot initiative costs   -       (19 )     -       (1,864 )
  Interest expense, net of amount capitalized   (142 )     (288 )     (679 )     (1,104 )
  Loss on disposition of assets   (29 )     (94 )     (9 )     (343 )
  Provision for income taxes   (2,722 )     (655 )     (11,217 )     (6,930 )
    Net income $ 5,123     $ 3,811     $ 20,659     $ 14,185  
                                   
(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:
    David Farahi
    Chief Operating Officer
    775/825-4700
    Email Contact

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