Monarch Casino Reports 2009 Third Quarter ResultsRENO, NV -- (Marketwire - October 21, 2009) - Monarch Casino & Resort, Inc. (NASDAQ: MCRI) (the "Company"), owner of the Atlantis Casino Resort Spa (the "Atlantis") in Reno, Nevada, today announced results for the quarter ended September 30, 2009.
The Company reported net revenue of $34.8 million, 10.3% lower than the $38.8 million reported for the comparative quarter in 2008. The Company announced quarterly income from operations of $3.6 million, EBITDA(1) of $6.6 million and diluted EPS of $0.13 which represent decreases of 41.9%, 22.3% and 48.0%, respectively, when compared to the prior year's third quarter. Revenue generated in the casino and food and beverage departments decreased by 11.7% and 9.8%, respectively, while revenue from the hotel department remained flat.
As a percentage of casino revenue, casino operating expense of 36.6% is consistent with the prior year's third quarter of 36.2%. Operating expense in the food and beverage department as a percentage of revenue improved to 48.2% for the third quarter as compared to 49.3% in the third quarter of the prior year, driven primarily by lower food and other commodity prices. Hotel operating expense as a percentage of revenue increased to 34.8% from the 31.5% reported in prior year's third quarter due to an increase in operating expense of $211 thousand related primarily to costs incurred as part of the Company's ongoing hotel facilities upgrade project.
The Company reported that selling, general and administrative expense decreased by $529 thousand, or 4.2%, primarily due to reductions in marketing and other general expense. Depreciation expense increased by $681 thousand, or 28.9%, over prior year's third quarter due to the completion of the Company's previously announced expansion, facilities upgrade and Atlantis Convention Center Skybridge capital projects.
The Company announced that during the third quarter, it completed the acquisition of 5.3 acres of land for $3.25 million financed by a draw down from its credit facility. The land is located on the eastern perimeter of the current Atlantis footprint immediately across Coliseum Way. A portion of the parcel includes a 14,376-square-foot building that has been leased back to the seller, but the leased portion is intended to be available for future alternative parking, or other, facilities as the Company's development needs require.
During the quarter, after the impact of the real estate transaction discussed above, the Company continued to pay down the balance outstanding under its credit facility by $3.45 million which decreased the outstanding balance of the credit facility from $52.1 million at June 30, 2009 to $48.65 million at September 30, 2009. Increased borrowing levels compared to the prior year drove an increase in interest expense from the $83 thousand incurred in the prior year's third quarter to $487 thousand in the current quarter.
In response to industry practices and requests from its guests, the Company announced the launch of its new EZ Comp(SM) program on October 6, 2009. This technology allows Atlantis patrons to redeem complimentary food, beverages and other services ("Complimentaries") directly at Atlantis food outlets or other points of service throughout the casino. Before the launch of EZ Comp(SM), Atlantis patrons were required to obtain vouchers from Atlantis service personnel prior to redeeming a Complimentary. The new EZ Comp(SM) system also allows Atlantis patrons to see their respective unredeemed Complimentary point balances. Because of this change, accounting standards require that the Company modify its accounting treatment related to Complimentaries expense recognition timing. Prior to the launch of the EZ Comp(SM) program, the Company recognized expense at the time points for Complimentaries were redeemed. Under the new program, the Company must recognize Complimentaries expense at the time points are earned which occurs commensurate with casino patron play. This change will result in a one-time, non-cash charge in the fourth quarter of 2009 of approximately $1.8 to $2.1 million to recognize the liability for unredeemed Complimentary point balances on the date the EZ Comp(SM) program was launched. The Company also announced that because of the increased convenience of the EZ Comp(SM) program, Complimentaries expense in future periods could increase.
Monarch's CEO and Co-Chairman John Farahi commented on the Company's performance: "The challenging economic environment continues to have a significant negative impact. While we increased our market share and achieved meaningful expense reductions, we could not offset the erosion of the market as a whole, the result of which was lower net revenue and profitability compared to the third quarter of 2008."
Mr. Farahi continued: "We are pleased to have completed the 5.3-acre land acquisition, thus securing a key element of our master development plan. This purchase provides an alternative location for convenient Atlantis parking facilities. When we deem the time is right, we can relocate existing surface parking, rendering our twenty acres located on the west side of South Virginia Street available for immediate development."
Monarch Casino & Resort, Inc., through its subsidiary, Golden Road Motor Inn, Inc., owns and operates the tropically-themed Atlantis Casino Resort Spa, a hotel/casino facility in Reno, Nevada which features approximately 61,000 square feet of casino space; approximately 1,000 guest rooms; ten food outlets; 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 sports book and a poker room. The company was founded in 1972.
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 (iii) the liquidity requirements of the Company. 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.
For additional information visit Monarch's web site at monarchcasino.com.
MONARCH CASINO & RESORT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Revenues
Casino $24,385,970 $27,612,822 $71,336,715 $77,041,679
Food and beverage 9,546,449 10,582,809 28,965,730 29,891,424
Hotel 6,314,048 6,301,547 17,578,424 17,677,248
Other 1,005,075 1,181,343 3,278,663 3,598,915
----------- ----------- ----------- -----------
Gross revenues 41,251,542 45,678,521 121,159,532 128,209,266
Less promotional
allowances (6,405,742) (6,891,322) (19,279,190) (19,804,909)
----------- ----------- ----------- -----------
Net revenues 34,845,800 38,787,199 101,880,342 108,404,357
----------- ----------- ----------- -----------
Operating expenses
Casino 8,923,845 9,991,844 26,686,637 28,005,260
Food and beverage 4,600,471 5,218,032 13,774,017 14,513,679
Hotel 2,194,823 1,983,818 6,247,994 6,056,911
Other 303,106 338,847 908,346 998,498
Selling, general and
administrative 12,203,807 12,732,367 36,133,433 38,713,980
Depreciation and
amortization 3,034,674 2,353,562 9,310,580 6,388,848
----------- ----------- ----------- -----------
Total operating
expenses 31,260,726 32,618,470 93,061,007 94,677,176
----------- ----------- ----------- -----------
Income from
operations 3,585,074 6,168,729 8,819,335 13,727,181
----------- ----------- ----------- -----------
Other (expense) income
Interest income 36,205 36,107 107,964 333,689
Interest expense (486,921) (82,981) (1,608,138) (82,981)
----------- ----------- ----------- -----------
Total other
(expense) income (450,716) (46,874) (1,500,174) 250,708
----------- ----------- ----------- -----------
Income before
income taxes 3,134,358 6,121,855 7,319,161 13,977,889
Provision for income
taxes (1,096,500) (2,096,160) (2,561,225) (4,847,260)
----------- ----------- ----------- -----------
Net income $ 2,037,858 $ 4,025,695 $ 4,757,936 $ 9,130,629
=========== =========== =========== ===========
Earnings per share of
common stock
Net income
Basic $ 0.13 $ 0.25 $ 0.30 $ 0.53
Diluted $ 0.13 $ 0.25 $ 0.29 $ 0.53
Weighted average number
of common shares and
potential common shares
outstanding
Basic 16,122,593 16,122,048 16,122,232 17,238,273
Diluted 16,180,168 16,141,830 16,159,669 17,314,438
MONARCH CASINO & RESORT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
------------- -------------
2009 2008
------------- -------------
ASSETS (UNAUDITED)
Current assets
Cash and cash equivalents $ 11,186,772 $ 11,756,900
Receivables, net 2,699,250 3,344,441
Federal income tax refund receivable 446,372 -
Inventories 1,514,146 1,564,347
Prepaid expenses 3,062,464 2,851,872
Deferred income taxes 429,300 429,300
------------- -------------
Total current assets 19,338,304 19,946,860
------------- -------------
Property and equipment
Land 12,712,522 12,162,522
Land improvements 3,511,484 3,511,484
Buildings 136,374,918 133,332,232
Building improvements 10,435,062 10,435,062
Furniture and equipment 105,808,017 96,767,076
Leasehold improvements 1,346,965 1,346,965
------------- -------------
270,188,968 257,555,341
Less accumulated depreciation and
amortization (110,347,678) (101,825,190)
------------- -------------
159,841,290 155,730,151
Construction in progress - 4,026,536
------------- -------------
Net property and equipment 159,841,290 159,756,687
Other assets, net 3,369,450 2,797,949
------------- -------------
Total assets $ 182,549,044 $ 182,501,496
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Borrowings under credit facility $ - $ 2,500,000
Accounts payable 7,140,764 10,213,418
Construction payable - 5,404,372
Accrued expenses 10,180,192 8,940,110
Federal income taxes payable - 233,736
------------- -------------
Total current liabilities 17,320,956 27,291,636
------------- -------------
Long-term debt, less current maturities 48,650,000 47,500,000
Deferred income taxes 4,610,031 2,115,371
------------- -------------
Total Liabilities 70,580,987 76,907,007
------------- -------------
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; 16,125,388 outstanding at 9/30/09
16,122,048 outstanding at 12/31/08 190,963 190,963
Additional paid-in capital 29,588,261 28,051,009
Treasury stock, 2,970,912 shares at 9/30/09
2,974,252 shares at 12/31/08, at cost (48,864,979) (48,943,359)
Retained earnings 131,053,812 126,295,876
------------- -------------
Total stockholders' equity 111,968,057 105,594,489
------------- -------------
Total liability and stockholder's equity $ 182,549,044 $ 182,501,496
============= =============
MONARCH CASINO & RESORT, INC.
RECONCILIATION OF NET INCOME TO EBITDA (1)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Net income $ 2,037,858 $ 4,025,695 $ 4,757,936 $ 9,130,629
Adjustments
Provision for income
taxes 1,096,500 2,096,160 2,561,225 4,847,260
Interest expense 486,921 82,981 1,608,138 82,981
Depreciation &
amortization 3,034,674 2,353,562 9,310,580 6,388,848
Interest income (36,205) (36,107) (107,964) (333,689)
----------- ----------- ----------- -----------
EBITDA (1) $ 6,619,748 $ 8,522,291 $18,129,915 $20,116,029
=========== =========== =========== ===========
(1) "EBITDA" consists of net income plus provision for income taxes,
interest expense, depreciation and amortization less interest income.
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 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
(775) 825-4700
RRowan@monarchcasino.com
John Farahi
CEO
(775) 825-4700
JohnFarahi@monarchcasino.com
