SOURCE: Monarch Casino and Resort, Inc.

February 22, 2017 16:02 ET

Monarch Casino & Resort's Fourth Quarter Net Revenues Rise 8.0% to $55.6 Million, Net Income Increases 26.3% to $6.5 Million and Adjusted EBITDA Grows 17.8% to $14.6 Million -- Full Year 2016 Net Revenues Increase 7.3%, Driving 19.0% Rise in Net Income and 11.4% Growth In Adjusted EBITDA

RENO, NV--(Marketwired - Feb 22, 2017) - Monarch Casino & Resort, Inc. (NASDAQ: MCRI) ("Monarch" or "the Company") today reported operating results for the fourth quarter and full year ended December 31, 2016, as summarized below:

       
($ in thousands, except per share data and percentages) Three Months Ended December 31,   Twelve Months Ended December 31,
  2016   2015   Increase   2016   2015   Increase
  Net revenue $ 55,596   $ 51,485   8.0%   $ 217,032   $ 202,245   7.3%
                               
  Adjusted EBITDA (1)   14,600     12,398   17.8%     55,741     50,041   11.4%
                               
  Net income $ 6,470   $ 5,123   26.3%   $ 24,574   $ 20,659   19.0%
                               
  Basic EPS $ 0.37   $ 0.30   23.3%   $ 1.42   $ 1.22   16.4%
  Diluted EPS $ 0.36   $ 0.29   24.1%   $ 1.39   $ 1.19   16.8%

(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: "I am very pleased with our record fourth quarter financial results, which marks the conclusion of another active and successful year of organic growth for the Company. Strong fourth quarter results in Reno and Black Hawk led to an 8% increase in quarterly net revenue, driving a 17.8% rise in fourth quarter adjusted EBITDA. Through the determined and dedicated work of our operating teams, we are consistently elevating our guest service and amenities while growing market share. At the same time, we continue to focus on operational efficiency, which resulted in higher margins on revenue and contributed to our ninth consecutive quarter of double digit net income growth. 

"The expansion and diversification of the Reno economy is lifting the market's gaming revenue and combined with our operating initiatives, resulted in another quarter of market share and revenue growth at Atlantis. The implementation of operational initiatives at Atlantis; an increased use of analytics to enhance the facility's attractiveness to guests and improve our operating efficiencies; and Monarch's 2016 capital investments in the Atlantis property, which included the addition of convenient surface parking as well as the complete redesign and upgrade of Toucan Charlie's Buffet, all contributed to our financial success at Atlantis.

"We also are pleased with Monarch Casino Black Hawk's 2016 operating performance, as we grow revenue, profit and market share, despite the ongoing construction at the property and increased competition in the market. We recently opened the property's new parking structure and safely demolished the original garage. We also implemented a shuttle service between the new parking structure and the casino to mitigate the impact from ongoing construction, which is being well received by guests. Our ability to drive revenue and adjusted EBITDA growth during the fourth quarter while undertaking these significant construction projects reflects the quality of the upgrades and other improvements we have made since acquiring it in 2012 and demonstrates the value that the Black Hawk property brings to the Monarch portfolio.

"We started 2017 by breaking ground on the hotel tower and casino expansion, which represents the final phase of Monarch Casino Black Hawk's transformation into an integrated, amenity rich, casino resort spa. At the heart of this transformation is our company-wide focus on the guest-friendly professional service that comprises the core of every Monarch owned and managed property. The entire Monarch family is energized and excited by the Company's near and long-term prospects and we look to another year of growth in 2017."

Summary of 2016 Fourth Quarter Operating Results
For the 2016 fourth quarter, consolidated net revenue of $55.6 million grew 8.0% year over year, reflecting strong performance at both Atlantis and Monarch Casino Black Hawk. Revenue from the Company's casino operations rose 9.6% year over year and food and beverage revenue increased 6.7%, offsetting a 1.5% decline in hotel revenue. Consolidated promotional allowance increased $0.6 million, or 5.6%. As a percentage of gross revenues, promotional allowances decreased to 17.7% from 18.0% in the prior year fourth quarter.

The Company generated consolidated Adjusted EBITDA of $14.6 million in the fourth quarter of 2016, an increase of $2.2 million, or 17.8%, over the same period a year ago.

Casino operating expense as a percentage of casino revenue decreased to 39.5% for the fourth quarter of 2016 compared to 41.8% in the fourth quarter of 2015 due to increased casino revenues combined with operating cost efficiencies. Food and beverage operating expense as a percentage of food and beverage revenue increased to 40.1% during the fourth quarter of 2016 from 39.0% a year ago primarily driven by higher labor cost. Hotel operating expense as a percentage of hotel revenue decreased to 33.6% for the fourth quarter of 2016 compared to 35.4% for the same period in the prior year primarily as a result of lower equipment and miscellaneous replacement expense.

Selling, general and administrative ("SG&A") expenses for the 2016 fourth quarter were $15.6 million compared to $14.5 million in the prior year period; SG&A slightly improved as a percentage of net revenue at 28.1% compared to 28.2% a year ago.

Monarch Black Hawk Expansion
Summarized below is an update on the Company's ongoing upgrade and expansion of Monarch Casino Black Hawk, including the expected costs and completion dates for the project as well as the amounts spent through December 31, 2016:

               
$ in millions Cost   Total Spent Through December 31, 2016   Left to Spend   Estimated
Completion Date
I. Existing Facility              
  Monarch Casino Black Hawk (1) $76   $76   -   Completed
  Existing Facility Upgrade (2)(3) $34 - $36   $19   $15 - $17   Interior completed; Exterior 2017-2018
    Total Existing Facility $110 - $112   $95   $15 - $17    
               
II. Expansion              
    Acquired Land Parcels $10   $10   -   Completed
  Parking Structure $38 - $41   $40   $0 - $1   Completed
  Hotel Tower & Casino (3) $229 - $234   $1   $228 - $233   2Q19
  Other (4) $8 - $10   $9   $0 - $1   2Q19
    Total Expansion $285 - $295   $60   $228 - $235    
    Total Cost $395 - $407   $155   $243 - $252    

(1) The Company paid $76.0 million cash, or $69.2 million net of acquired working capital and NOLs, when it acquired Monarch Casino Black Hawk (formerly Riviera Black Hawk Casino).   
(2) Includes upgrades to interior, which were completed in August 2015, demolition of the original garage, and upgrades to exterior of the existing facility to match the design of the master planned expansion.
(3) The Company anticipates funding the hotel tower and casino expansion, as well as the existing facility exterior upgrades, from a combination of operating cash flow and the Amended Credit Facility.   
(4) The Company will fund the amount left to spend from operating cash flow.                                     

The Company continues to make progress with its Monarch Casino Black Hawk expansion project. In mid-November 2016, the Company completed and opened the new parking structure and, in late December, began the demolition and removal of the original parking structure with a successful controlled implosion of the structure. On February 8, 2017, Monarch broke ground on the hotel tower and casino expansion, which the Company expects to open in phases, beginning with the casino expansion and additional restaurants, followed by floors of the hotel tower as they are finished. The targeted completion date of the entire project remains the second quarter of 2019.

Credit Facility
During the 2016 fourth quarter, the Company made net principal payments of $3.7 million, which reduced the amount outstanding on its credit facility to $26.2 million as of December 31, 2016. Capital expenditures of $5.1 million in the fourth quarter of 2016 represent costs related to the Monarch Casino Black Hawk master development plan and ongoing maintenance spending in Reno and Black Hawk. Capital expenditures in the fourth quarter were funded from the Company's operating cash flows.

Interest expense for the 2016 fourth quarter increased to $341 thousand from $142 thousand in the same quarter of 2015 primarily due to higher bank commitment fees related to the Amended Credit Facility and increased amortization of deferred loan costs.

2017 Annual Stockholders' Meeting Date
The Company's 2017 Annual Meeting of Stockholders will be held on June 14, 2017 at 10am PDT at the Atlantis Casino Resort Spa, located at 3800 South Virginia Street in Reno, Nevada. The record date for stockholders entitled to vote at the Annual Meeting is April 17, 2017.

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) plans, objectives and expectations regarding Atlantis Casino Resort Spa and Monarch Casino Black Hawk; and (ii) plans, costs, financing, construction, completion and opening timelines of upgraded, redesigned and/or expanded facilities at Monarch Casino 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 Casino 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;
  • 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 US 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 US 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 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 Monarch Casino Black Hawk features approximately 30,000 square feet of casino space, approximately 720 slot machines, 14 table games, a 250 seat buffet-style restaurant, a snack bar and a new, nine story parking structure with approximately 1,350 spaces, plus additional existing valet parking bringing total parking capacity to 1,500 spaces. Once completed, the Monarch Casino 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, and associated support facilities.

- 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,  
    2016     2015     2016     2015  
    (unaudited)     (unaudited)     (unaudited)        
Revenues                                
  Casino   $ 43,248     $ 39,459     $ 168,861     $ 156,843  
  Food and beverage     15,688       14,697       60,269       56,500  
  Hotel     5,336       5,418       23,374       22,629  
  Other     3,250       3,207       11,640       11,198  
    Gross revenues     67,522       62,781       264,144       247,170  
  Less promotional allowances     (11,926 )     (11,296 )     (47,112 )     (44,925 )
    Net revenues     55,596       51,485       217,032       202,245  
                                 
Operating expenses                                
  Casino     17,080       16,493       69,529       65,970  
  Food and beverage     6,284       5,734       24,627       22,249  
  Hotel     1,793       1,918       7,231       6,787  
  Other     933       1,014       3,855       3,963  
  Selling, general and administrative     15,604       14,534       57,730       54,779  
  Depreciation and amortization     3,701       3,776       14,835       15,933  
  Loss on disposition of assets     9       29       677       9  
    Total operating expenses     45,404       43,498       178,484       169,690  
                                 
    Income from operations     10,192       7,987       38,548       32,555  
                                 
Other expenses                                
  Interest expense, net of amounts capitalized     (341 )     (142 )     (616 )     (679 )
    Total other expense     (341 )     (142 )     (616 )     (679 )
                                 
    Income before income taxes     9,851       7,845       37,932       31,876  
Provision for income taxes     (3,381 )     (2,722 )     (13,358 )     (11,217 )
    Net income   $ 6,470     $ 5,123     $ 24,574     $ 20,659  
                                 
Earnings per share of common stock                                
  Net income                                
    Basic   $ 0.37     $ 0.30     $ 1.42     $ 1.22  
    Diluted   $ 0.36     $ 0.29     $ 1.39     $ 1.19  
                                 
Weighted average number of common shares and potential common shares outstanding                                
    Basic     17,412       17,094       17,305       16,948  
    Diluted     17,815       17,483       17,664       17,335  
                                     
                                     
                                     
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands, except shares)  
   
    December 31,     December 31,  
    2016     2015  
ASSETS   (unaudited)          
Current assets                
  Cash and cash equivalents   $ 26,383     $ 21,164  
  Receivables, net     5,036       3,729  
  Income taxes receivable     408       611  
  Inventories     3,097       2,881  
  Prepaid expenses     4,487       3,402  
    Total current assets     39,411       31,787  
Property and equipment                
  Land     29,549       29,549  
  Land improvements     6,914       6,701  
  Buildings     191,370       150,966  
  Buildings improvements     24,511       23,255  
  Furniture and equipment     134,603       134,704  
  Construction in progress     9,767       37,424  
  Leasehold improvements     2,688       1,347  
      399,402       383,946  
  Less accumulated depreciation and amortization     (184,503 )     (180,792 )
    Net property and equipment     214,899       203,154  
Other assets                
  Goodwill     25,111       25,111  
  Intangible assets, net     5,035       6,200  
  Deferred income taxes     7,354       7,415  
  Other assets, net     3,355       1,179  
    Total other assets     40,855       39,905  
      Total assets   $ 295,165     $ 274,846  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities                
  Current portion of long-term debt   $ -     $ 40,900  
  Accounts payable     8,720       6,747  
  Construction accounts payable     2,605       1,407  
  Accrued expenses     23,795       21,873  
    Total current liabilities     35,120       70,927  
Long - term debt     26,200       -  
      Total liabilities     61,320       70,927  
Stockholders' equity                
  Preferred stock, $.01 par value, 10,000,000 shares authorized; none issued     -       -  
  Common stock, $.01 par value, 30,000,000 shares authorized;     191       191  
    19,096,300 shares issued; 17,468,269 outstanding at December 31, 2016;                
    17,202,699 outstanding at December 31, 2015                
  Additional paid-in capital     23,834       22,728  
  Treasury stock, 1,628,031 shares at December 31, 2016; 1,893,601 shares at December 31, 2015     (22,158 )     (26,404 )
  Retained earnings     231,978       207,404  
      Total stockholders' equity     233,845       203,919  
      Total liabilities and stockholders' equity   $ 295,165     $ 274,846  
                       
                       
                       
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 December 31,     Twelve Months Ended December 31,  
  2016     2015     2016     2015  
    Adjusted EBITDA (1) $ 14,600     $ 12,398     $ 55,741     $ 50,041  
Expenses:                              
  Stock based compensation   (698 )     (606 )     (1,681 )     (1,544 )
  Depreciation and amortization   (3,701 )     (3,776 )     (14,835 )     (15,933 )
  Interest expense, net of amount capitalized   (341 )     (142 )     (616 )     (679 )
  Loss on disposition of assets   (9 )     (29 )     (677 )     (9 )
  Provision for income taxes   (3,381 )     (2,722 )     (13,358 )     (11,217 )
    Net income $ 6,470     $ 5,123     $ 24,574     $ 20,659  
(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 US 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 US GAAP 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