Monarch Casino Reports 2012 Fourth Quarter and Full Year Results

Monarch Casino Reports 2012 Fourth Quarter and Full Year Results 
RENO, NV -- (Marketwire) -- 02/28/13 --  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 quarter and year ended December 31,
2012. 
RESULTS FOR THE QUARTER ENDED DECEMBER 31, 2012
 This is the third
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 subsequent to the Acquisition Date. Periods
prior to that date exclude Black Hawk's operations.  
Net Revenue: 


 
                                                                            
                                Three months ended                          
                                   December 31,         Increase/(Decrease) 
                            --------------------------  ------------------- 
                                2012          2011           $          %   
                            ------------  ------------  -----------  ------ 
  Atlantis                  $ 33,175,496  $ 34,012,130  $  (836,634)   -2.5%
  Black Hawk                  10,473,071             -   10,473,071     n/a 
                            ------------  ------------  -----------  ------ 
    Total net revenue       $ 43,648,567  $ 34,012,130  $ 9,636,437    28.3%
                            ============  ============  ===========  ====== 

 
Each of Atlantis' revenue centers experienced lower revenue in the
2012 fourth quarter. Black Hawk net revenue of $10.5 million
represents 14.1% growth over the $9.2 million the property generated
during the same quarter of the prior year before it was acquired by
Monarch. 
Adjusted EBITDA(1): 


 
                                                                            
                               Three months ended                           
                                  December 31,          Increase/(Decrease) 
                         
  --------------------------  -------------------- 
                               2012          2011            $          %   
                           ------------  ------------  ------------  ------ 
Atlantis                   $  5,850,257  $  6,453,391  $   (603,134)   -9.3%
Black Hawk                    2,998,758             -     2,998,758     n/a 
                           ------------  ------------  ------------  ------ 
                              8,849,015     6,453,391     2,395,624    37.1%
Corporate and other                                                         
 expense                     (1,182,305)   (1,008,395)     (173,910)   17.2%
                           ------------  ------------  ------------  ------ 
  Total Adjusted EBITDA    $  7,666,710  $  5,444,996  $  2,221,714    40.8%
                           ============  ============  ============  ====== 

 
Atlantis Adjusted EBITDA for the 2012 fourth quarter decreased due to
lower gross revenue; higher complimentary food, beverage and other
services provided to casino patrons ("Complimentaries") and higher
use tax expense; partially offset by lower bad debt and marketing
expense. 
Black Hawk Adjusted EBITDA for the 2012 fourth quarter of $3.0
million grew $800 thousand, or 36.4% over the $2.2 million Adjusted
EBITDA reported for Black Hawk during the same quarter in 2011 before
it was acquired by Monarch. 
Consolidated corporate and other expense increased $174 thousand due
primarily to higher payroll and benefits expense. 
Consolidated Operating Expense:
 Casino operating expense as a
percentage of casino revenue was relatively flat at 40.0% for the
fourth quarter of 2012 compared to 40.3% for the fourth quarter of
the prior year. Food and beverage operating expense as a percentage
of food and beverage revenue for the 2012 fourth quarter improved to
43.1% as compared to 46.5% for the 2011 fourth quarter primarily due
to operational efficiencies combined with menu pricing strategies in
anticipation of higher commodity costs. Hotel operating expense as a
percentage of hotel revenue for the 2012 fourth quarter increased
slightly to 28.9% from 27.6% for the comparable prior quarter due to
lower hotel revenue.  
Selling, general and administrative expense ("SG&A Expense") for the
2012 fourth quarter increased $2.6 million, $2.5 million of which
represents SG&A Expense from the Black Hawk operation for which the
fourth quarter of the prior year reflects no expense. The primary
drivers of the remaining $100 thousand of increased Monarch corporate
and Atlantis SG&A Expense are: higher Monarch corporate payroll and
benefits expense and higher use tax expense partially offset by lower
bad debt and lower marketing expense. Use tax expense increased $115
thousand as a result of the Nevada Department of Taxation ruling
which subjects complimentary meals 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 fourth quarter, the Company made
net principal payments of $1.0 million against the outstanding credit
facility, decreasing it to $81.1 million at December 31, 2012.
Capital expenditures of $2.4 million in the fourth quarter of 2012,
primarily related to redesign and upgrade of the Black Hawk facility,
were funded out of operating cash flow. 
Interest expense for the 2012 fourth quarter increased to $627
thousand from $271 thousand for the fourth quarter of 2011 due to
higher amounts of debt outstanding under the credit facility in the
2012 fourth quarter compared to the 2011 fourth quarter.  
RESULTS FOR THE YEAR ENDED DECEMBER 31, 2012
 The Company's financial
results include the Black Hawk operations subsequent to the
Acquisition Date. Periods prior to that date exclude Black Hawk's
operations.  
Net Revenue: 


 
                                 Twelve months ended                        
                                     December 31,             Increase      
                              ------------------------- ------------------- 
                                  2012         2011           $         %   
                              ------------ ------------ ------------ ------ 
  Atlantis                    $140,928,245 $140,632,205 $    296,040    0.2%
  Black Hawk                    29,428,719            -   29,428,719    n/a 
                              ------------ ------------ ------------ ------ 
    Total net revenue         $170,356,964 $140,632,205 $ 29,724,759   21.1%
                              ============ ============ ============ ====== 

 
The increase in Atlantis net revenue for 2012 was due to higher
casino, food and beverage and other revenue partially offset by lower
hotel revenue and higher promotional allowance from increased
Complimentaries. Black Hawk net revenue of $29.4 million represents
11.4% growth over the $26.4 million the property generated during the
comparable prior year period before it was acquired by Monarch. 
Adjusted EBITDA(1): 


 
                                                                            
              
                   Twelve months ended                        
                                    December 31,        Increase/(Decrease) 
                              ------------------------  ------------------- 
                                  2012         2011          $          %   
                              -----------  -----------  -----------  ------ 
  Atlantis                    $31,111,370  $33,310,003  $(2,198,633)   -6.6%
  Black Hawk (2)                9,630,100            -    9,630,100     n/a 
                              -----------  -----------  -----------  ------ 
                               40,741,470   33,310,003    7,431,467    22.3%
  Corporate and other expense  (4,584,220)  (4,047,823)    (536,397)   13.3%
                              -----------  -----------  -----------  ------ 
    Total Adjusted EBITDA     $36,157,250  $29,262,180  $ 6,895,070    23.6%
                              ===========  ===========  ===========  ====== 

 
(2) Represents Adjusted EBITDA from April 26, 2012 through December
31, 2012. 
Atlantis Adjusted EBITDA for 2012 decreased due primarily to higher
Complimentaries and marketing expense partially offset by higher
gross revenue. Black Hawk adjusted EBITDA represents the period from
April 26, 2012 through December 31, 2012. Black Hawk adjusted EBITDA
of $9.6
 million reflects 45.6% growth over the $6.6 million Adjusted
EBITDA reported for Black Hawk during the comparable period of 2011
before it was acquired by Monarch. Consolidated corporate and other
expense increased $536 thousand due primarily to higher payroll and
benefits expense. 
Consolidated Operating Expense:
 Casino operating expense as a
percentage of casino revenue improved slightly to 38.6% for 2012
compared to 39.3% for the prior year due primarily to higher casino
revenue. Food and beverage operating expense as a percentage of food
and beverage revenue for 2012 improved significantly to 41.9% as
compared to 46.3% for 2011 primarily due to operational efficiencies
combined with menu pricing strategies in anticipation of higher
commodity costs. Hotel operating expense as a percentage of hotel
revenue for 2012 increased slightly to 27.7% from 27.2% for 2011 due
to lower hotel revenue.  
SG&A Expense for 2012 increased by $9.1 million, $6.6 million of
which represents SG&A Expense from the Black Hawk operation for which
the prior year reflects no expense. The primary drivers of the
remaining $2.5 million of increased Monarch corporate and Atlantis
SG&A Expense are: higher marketing and higher Monarch corporate
salaries and benefits.  
Credit Facility:
 The balance outstanding under the Company's credit
facility increased from $24.7 million at December 31, 2011 to $81.1
million at December 31, 2012. The $56.4 million increase in the
outstanding balance relates to advances drawn in the 2012 second
quarter to complete the acquisition of Black Hawk. As a result of the
higher balance outstanding, interest expense in 2012 increased to
$2.0 million from $914 thousand for 2011.  
John Farahi, Monarch CEO Comment:
 Monarch's CEO and Co-Chairman John
Farahi commented: "Our fourth quarter and annual results for Atlantis
continue to reflect the ongoing difficult national and northern
Nevada economic climate. While we increased our market share in both
the fourth quarter and full year of 2012, higher Complimentaries and
marketing expense drove Adjusted EBITDA lower than the prior year for
both periods."  
Referring to the Company's Black Hawk property, Mr. Farahi added:
"The integration of the Black Hawk operation has gone very well. In
the short time that we have owned the property, we have increased net
revenue and Adjusted EBITDA by 11.4% and 45.6%, respectively, over
the results achieved under the prior ownership."  
"We are in the process of completely redesigning and upgrading the
existing Black Hawk facility. We also are close to finalizing
conceptual plans that will utilize our adjacent land parcel to expand
the existing casino and convert the facility to an upscale
casino-resort. The plans include the addition of a hotel, a new and
larger parking structure, additional restaurants and other resort
amenities." 
The Company's 2013 Annual Meeting of Stockholders will be held on
Friday, May
 10, 2013 at 10:00 am local time at the Company's Atlantis
Casino Resort Spa, 3800 South Virginia Street in Reno, Nevada. The
record date for stockholders entitled to vote at the Annual Meeting
is Tuesday, March 12, 2013.  
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,
approximately 700 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, (iv)
integration of Black Hawk; and (v) plans, construction, completion
and opening of new and expanded facilities at 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. 
For additional information visit Monarch's website at
MonarchCasino.com 


 
                                                                            
                       Monarch Casino & Resort, Inc.                        
                Condensed Consolidated Statements of Income                 
                                (Unaudited)                                 
                                                                            
                         Three Months Ended          Twelve Months Ended    
                            December 31,                December 31,        
                     --------------------------  -------------------------- 
                         2012          2011          2012          2011     
                     ------------  ------------  ------------  ------------ 
                      (unaudited)   (unaudited)   (unaudited)               
Revenues                                                                    
  Casino             $ 36,117,315  $ 23,930,400  $134,613,470  $ 97,367,121 
  Food and beverage    11,875,467    10,835,969    47,238,348    42,933,675 
  Hotel                 4,351,560     4,611,374    20,199,517    21,438,854 
  Other                 2,305,198     2,197,984     8,994,127     8,025,571 
                     ------------  ------------  ------------  ------------ 
    Gross revenues     54,649,540    41,575,727   211,045,462   169,765,221 
Less promotional                                                            
 allowances           (11,000,973)   (7,563,597)  (40,688,498)  (29,133,016)
                     -----------
-  ------------  ------------  ------------ 
    Net revenues       43,648,567    34,012,130   170,356,964   140,632,205 
                     ------------  ------------  ------------  ------------ 
Operating expenses                                                          
  Casino               14,451,256     9,636,182    52,000,036    38,275,637 
  Food and beverage     5,116,629     5,040,700    19,774,844    19,861,195 
  Hotel                 1,257,809     1,272,614     5,585,800     5,824,382 
  Other                   724,874       714,164     2,978,007     2,891,231 
  Selling, general                                                          
   and                                                                      
   administrative      14,860,998    12,284,155    55,228,994    46,137,232 
  Depreciation and                                                          
   amortization         4,368,313     3,234,539    16,650,604    13,379,538 
  Building                                                                  
   demolition                                                               
   expense                      -             -             -     3,519,148 
  Acquisition                                                               
   expense                      -       536,207     2,155,521       973,607 
                     ------------  ------------  ------------  ------------ 
    Total operating                                                         
     expenses          40,779,879    32,718,561   154,373,806   130,861,970 
                     ------------  ------------  ------------  ------------ 
    Income from                                                             
     operations         2,868,688     1,293,569    15,983,158     9,770,235 
                     ------------  ------------  ------------  ------------ 
Other expenses                                                              
  Interest expense       (627,325)     (270,803)   (2,023,957)     (914,308)
                     ------------  ------------  ------------  ------------ 
    Total other                                                             
     expense             (627,325)     (270,803)   (2,023,957)     (914,308)
                     ------------  ------------  ------------  ------------ 
    Income before                                                           
     income taxes       2,241,363     1,022,766    13,959,201     8,855,927 
Provision for income                                                        
 taxes                   (901,720)     (455,473)   (5,048,353)   (3,180,073)
                     ------------  ------------  ------------  ------------ 
    Net income       $  1,339,643  $    567,293  $  8,910,848  $  5,675,854 
                     ============  ============  ============  ============ 
                                                                            
Earnings per share                                                          
 of common stock                                                            
  Net income                                                                
    Basic            $       0.08  $       0.04  $       0.55  $       0.35 
    Diluted          $       0.08  $       0.03  $       0.55  $       0.35 
                                                                            
Weighted average                                                            
 number of common                                                           
 shares and                                                                 
 potential common                                                           
 shares outstanding                                                         
    Basic              16,141,555    16,138,158    16,140,078    16,138,158 
    Diluted            16,257,986    16,245,649    16,250,088    16,231,325 
                                                                            
                                                                            
                       Monarch Casino & Resort, Inc.                        
                   Condensed Consolidated Balance Sheets                    
                                                                            
                                                       December 31,         
                                               ---------------------------- 
                                                    2012           2011     
                                               -------------  ------------- 
ASSETS                                          (unaudited)                 
Current assets                                                              
     Cash and cash equivalents                 $  19,043,213  $  13,582,659 
     Receivables, net                              2,456,883      2,299,847 
     Inventories                                   2,382,802      2,165,109 
     Prepaid expenses and other current assets     2,636,422      6,198,882 
     Deferred income taxes                         5,425,848        615,912 
                                               -------------  ------------- 
       Total current assets                       31,945,168     24,862,409 
                                               -------------  ------------- 
Property and equipment                                                      
     Land                                         27,914,847     19,214,847 
     Land improvements                             6,561,729      6,359,279 
     Buildings                                   150,843,298    135,643,298 
     Building improvements                        11,681,100     11,575,883 
     Furniture and equipment                     132,946,374    117,300,741 
     Leasehold improvements                        1,346,965      1,346,965 
                                               -------------  ------------- 
                                                 331,294,313    291,441,013 
     Less accumulated depreciation and                                      
     amortization                               (152,868,719)  (138,227,868)
                                               -------------  ------------- 
       Net property and equipment                178,425,594    153,213,145 
Other assets                                                                
     Goodwill                                     25,110,810              - 
     Intangible assets, net                       10,204,691              - 
     Deferred income taxes                         1,214,113              - 
     Other assets, net                             1,219,579      1,524,050 
                                               -------------  ------------- 
     Total other assets             
              37,749,193      1,524,050 
                                               -------------  ------------- 
       Total assets                            $ 248,119,955  $ 179,599,604 
                                               =============  ============= 
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current liabilities                                                         
     Accounts payable                          $   8,061,570  $   8,693,395 
     Accrued expenses                             17,836,194     13,829,540 
     Federal income taxes payable                    274,401        768,640 
                                               -------------  ------------- 
       Total current liabilities                  26,172,165     23,291,575 
                                               -------------  ------------- 
Long-term debt                                    81,100,000     24,680,000 
Deferred income taxes                                      -      1,112,049 
                                               -------------  ------------- 
       Total liabilities                         107,272,165     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; 16,147,324 outstanding at December                               
   31, 2012 and 16,138,158 at December 31,                                  
   2011                                              190,963        190,963 
  Additional paid-in capital                      34,363,690     33,178,345 
  Treasury stock, 2,948,976 shares at December                              
   31, 2012 and 2,958,142 at December 31,                                   
   2011, at cost                                 (48,306,046)   (48,541,663)
  Retained earnings                              154,599,183    145,688,335 
                                               -------------  ------------- 
        Total stockholders' equity               140,847,790    130,515,980 
                                               -------------  ------------- 
    Total liability and stockholder's equity   $ 248,119,955  $ 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         Twelve months ended    
                             December 31,               December 31,        
                       ------------------------  -------------------------- 
                           2012         2011         2012          2011     
                       -----------  -----------  ------------  ------------ 
Adjusted EBITDA                                                             
  Atlantis             $ 5,850,257  $ 6,453,391  $ 31,111,370  $ 33,310,003 
  Black Hawk (a)         2,998,758            -     9,630,100             - 
                       -----------  -----------  ------------  ------------ 
                         8,849,015    6,453,391    40,741,470    33,310,003 
  Corporate and other                                                       
   expense              (1,182,305)  (1,008,395)   (4,584,220)   (4,047,823)
                       -----------  -----------  ------------  ------------ 
    Total Adjusted                                                          
     EBITDA            $ 7,666,710  $ 5,444,996  $ 36,157,250  $ 29,262,180 
                                                                            
Expenses:                                                                   
  Stock based                                                               
   compensation           (429,709)    (380,681)   (1,367,967)   (1,619,652)
  Depreciation and                                                          
   amortization         (4,368,313)  (3,234,539)  (16,650,604)  (13,379,538)
  Acquisition expense            -     (536,207)   (2,155,521)     (973,607)
  Building demolition                                                       
   expense                       -            -             -    (3,519,148)
  Interest expense        (627,325)    (270,803)   (2,023,957)     (914,308)
  Provision for income                                                      
   taxes                  (901,720)    (455,473)   (5,048,353)   (3,180,073)
                       -----------  -----------  ------------  ------------ 
      Net income       $ 1,339,643  $   567,293  $  8,910,848  $  5,675,854 
                       ===========  ===========  ============  ============ 

 
(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. 
Contacts:
Ron Rowan
CFO of Monarch 
(775) 825-4700 
RRowan@MonarchCasino.com 
John Farahi
CEO of Monarch 
(775) 825-4700 
JFarahi@MonarchCasino.com