Monarch Casino Reports 2009 Fourth Quarter and Full-Year ResultsRENO, NV -- (Marketwire - February 25, 2010) - Monarch Casino & Resort, Inc. (NASDAQ: MCRI) (the "Company"), owner of the Atlantis Casino Resort Spa (the "Atlantis") in Reno, Nevada, today announced fourth-quarter and full-year results for the quarter and year ended December 31, 2009.
RESULTS FOR THE QUARTER ENDED DECEMBER 31, 2009
The Company reported fourth-quarter net revenue of $31.9 million, 3.0% lower than the $32.9 million reported in the fourth quarter of 2008 and announced EBITDA(1) of $4.9 million, 8.9% higher than the $4.5 million reported in the prior year.
As announced in the press release discussing its 2009 third quarter results, the Company launched 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 unredeemed Complimentary point balances. Because of this change, accounting standards required 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 Complimentary points 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 in the Company's policy resulted in a one-time, non-cash charge in the fourth quarter of 2009 of approximately $1.4 million to recognize the liability for unredeemed Complimentary point balances on the date the EZ Comp(SM) program was launched.
This $1.4 million one-time, non-cash charge, was partially offset by operating expense reductions, but still drove income from operations down by $636 thousand or 66.3%. Without the effect of this one-time, non-cash charge, income from operations in the fourth quarter of 2009 would have been $731 thousand, or 76.3%, higher than that reported in the fourth quarter of 2008.
Operating expense in the 'casino,' 'food and beverage' and 'hotel' operating departments was lower than that reported in the fourth quarter of 2008 by approximately $200 thousand, $557 thousand and $28 thousand, respectively, due primarily to lower direct costs from the lower revenue combined with the impact of various cost reduction programs. Finally, selling, general and administrative expense decreased by approximately $715 thousand due primarily to lower bad debt expense, payroll and benefits, repairs expense and professional fees.
The Company announced that during the fourth quarter of 2009, it completed the acquisition of 2.3 acres of land with a 27,508 square foot building (jointly referred to as the "Property") located near the Atlantis on South Virginia Street for approximately $2.0 million.
During the fourth quarter of 2009, after the impact of the real estate transaction discussed above and additional facility maintenance and remodeling, the balance outstanding on the Company's credit facility decreased slightly from $48.7 million at September 30, 2009 to $48.5 million at December 31, 2009.
RESULTS FOR THE YEAR ENDED DECEMBER 31, 2009
For the year, the Company reported net revenue of $133.7 million and EBITDA(1) of $23.0 million, which represent decreases of a 5.4% and 6.4%, respectively, when compared to the prior year.
The lower net revenue combined with the $1.4 million one-time, non-cash charge related to the Company's implementation of its EZ Comp(SM) program previously discussed, both partially offset by other operating expense reductions, drove income from operations and diluted EPS down from $14.7 million and $0.56, respectively, in 2008, to $9.1 million and $0.30, respectively, in 2009.
Lower direct costs resulting, from lower revenue combined with the impact of various cost reduction programs, drove decreases in the operating expenses of the Company's 'casino' and 'food and beverage' operating departments by approximately $1.5 million, or 4.1% and $1.3 million, or 6.8%, respectively. Direct cost in the 'hotel' operating department increased by $163 thousand due primarily to costs associated with the new spa operation and facilities which opened in January of 2009. The Company reported a $3.3 million, or 6.4%, decrease in selling, general and administrative expenses over the prior year due primarily to lower marketing, promotional, payroll and benefits, repairs expense, professional fees and rental expense. Depreciation expense increased by $2.6 million, or 26.4%, due to the completion of the Company's previously announced expansion and remodel projects during the third and fourth quarters of 2008, which resulted in a full year of depreciation expense recognition on these projects in 2009.
Interest income decreased by approximately $246 thousand in 2009 compared to 2008 due to lower invested cash reserves in 2009. Interest expense increased from approximately $539 thousand in 2008 to approximately $2.1 million in 2009 due to higher average balances outstanding under the Company's credit facility to fund the capital projects discussed above. While the average balance outstanding under the credit facility during 2009 was higher than 2008, the outstanding balance at the end of 2009 was $1.5 million lower than the $50 million balance outstanding at December 31, 2008.
Monarch's CEO and Co-Chairman John Farahi commented on the Company's performance: "While the challenging economic environment continued to negatively impact our revenues, we were able to increase fourth quarter EBITDA(1) by approximately 9% over the fourth quarter of 2008 through various operating expense reductions. This was the first increase in EBITDA(1) over the same quarter of a prior year since our third quarter of 2007. We are especially proud that the lower expenses were the result of several ongoing, tactical, efficiency programs, rather than general, across-the-board staff reductions that could have negatively impacted guest service."
Mr. Farahi added: "Today, the quality of our facilities and the efficiency of our operation have given us a strong competitive advantage. We have leveraged that competitive advantage to achieve greater market share."
The Company announced that its 2010 Annual Meeting of Stockholders will be held on Friday, May 21, 2010 at 10am 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 Thursday, March 25, 2010.
Monarch Casino & Resort, Inc., through its subsidiary, Golden Road Motor Inn, Inc., owns and operates the 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; 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.
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.
MONARCH CASINO & RESORT, INC.
Condensed Consolidated Statements of Income
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------------- ----------------------------
2009 2008 2009 2008
------------- ------------- ------------- -------------
Revenues
Casino $ 23,174,218 $ 23,862,676 $ 94,510,933 $ 100,904,355
Food and
beverage 9,206,419 9,574,310 38,172,149 39,465,734
Hotel 4,807,503 4,593,528 22,385,927 22,270,776
Other 1,103,778 1,352,091 4,382,441 4,951,006
------------- ------------- ------------- -------------
Gross
revenues 38,291,918 39,382,605 159,451,450 167,591,871
Less
promotional
allowances (6,440,404) (6,417,493) (25,719,594) (26,222,402)
------------- ------------- ------------- -------------
Net
revenues 31,851,514 32,965,112 133,731,856 141,369,469
------------- ------------- ------------- -------------
Operating
expenses
Casino 9,070,338 9,270,526 35,756,975 37,275,786
Food and
beverage 4,116,412 4,673,193 17,890,429 19,186,872
Hotel 1,794,029 1,822,323 8,042,023 7,879,234
Other 258,694 290,991 1,167,040 1,289,489
Selling,
general and
administrative 11,731,999 12,446,504 47,865,432 51,160,484
Depreciation
and
amortization 3,190,468 3,502,955 12,501,048 9,891,803
Player club
implementation
expense 1,366,614 - 1,366,614 -
------------- ------------- ------------- -------------
Total
operating
expenses 31,528,554 32,006,492 124,589,561 126,683,668
------------- ------------- ------------- -------------
Income from
operations 322,960 958,620 9,142,295 14,685,801
------------- ------------- ------------- -------------
Other expense
Interest
income 16,697 36,943 124,661 370,632
Interest
expense (495,660) (455,703) (2,103,798) (538,684)
------------- ------------- ------------- -------------
Total other
expense (478,963) (418,760) (1,979,137) (168,052)
------------- ------------- ------------- -------------
(Loss)/
income
before
income
taxes (156,003) 539,860 7,163,158 14,517,749
Benefit/
(provision) for
income taxes 239,546 (129,521) (2,321,679) (4,976,781)
------------- ------------- ------------- -------------
Net income $ 83,543 $ 410,339 $ 4,841,479 $ 9,540,968
============= ============= ============= =============
Earnings per
share of
common stock
Net income
Basic $ 0.01 $ 0.03 $ 0.30 $ 0.56
Diluted $ 0.01 $ 0.03 $ 0.30 $ 0.56
Weighted
average number
of common
shares and
potential common
shares outstanding
Basic 16,125,388 16,122,048 16,123,027 16,957,692
Diluted 16,157,105 16,146,209 16,159,415 17,017,859
MONARCH CASINO & RESORT, INC.
Condensed Consolidated Balance Sheets
December 31, December 31,
----------------------------
2009 2008
------------- -------------
ASSETS
Current assets
Cash and cash equivalents $ 14,420,323 $ 11,756,900
Receivables, net 2,294,703 3,344,441
Inventories 1,706,867 1,564,347
Prepaid expenses 2,623,650 2,851,872
Deferred income taxes 1,090,063 429,300
------------- -------------
Total current assets 22,135,606 19,946,860
------------- -------------
Property and equipment
Land 13,172,522 12,162,522
Land improvements 3,511,484 3,511,484
Buildings 140,522,106 133,332,232
Building improvements 10,410,770 10,435,062
Furniture and equipment 107,655,784 96,767,076
Leasehold improvements 1,346,965 1,346,965
------------- -------------
276,619,631 257,555,341
Less accumulated depreciation and
amortization (113,538,145) (101,825,190)
------------- -------------
163,081,486 155,730,151
Construction in progress - 4,026,536
------------- -------------
Net property and equipment 163,081,486 159,756,687
Other assets, net 569,622 2,797,949
------------- -------------
Total assets $ 185,786,714 $ 182,501,496
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Borrowings under credit facility $ 1,000,000 $ 2,500,000
Accounts payable 8,984,010 10,213,418
Construction payable - 5,404,372
Accrued expenses 11,056,079 8,940,110
Federal income taxes payable 46,546 233,736
------------- -------------
Total current liabilities 21,086,635 27,291,636
------------- -------------
Long-term debt, less current maturities 47,500,000 47,500,000
Deferred income taxes 4,695,657 2,115,371
------------- -------------
Total liabilities 73,282,292 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 12/31/09
16,122,048 outstanding at 12/31/08 190,963 190,963
Additional paid-in capital 30,041,083 28,051,009
Treasury stock, 2,970,912 shares at
12/31/09 2,974,252 shares at 12/31/08,
at cost (48,864,979) (48,943,359)
Retained earnings 131,137,355 126,295,876
------------- -------------
Total stockholders' equity 112,504,422 105,594,489
------------- -------------
Total liability and stockholder's
equity $ 185,786,714 $ 182,501,496
============= =============
MONARCH CASINO & RESORT, INC.
Reconciliation of Net Income to EBITDA (1)
Unaudited
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------------- --------------------------
2009 2008 2009 2008
------------ ------------ ------------ ------------
Net Income $ 83,543 $ 410,339 $ 4,841,479 $ 9,540,968
Adjustments
(Benefit)/
provision for
income taxes (239,546) 129,521 2,321,679 4,976,781
Interest expense 495,660 455,703 2,103,798 538,684
Depreciation &
amortization 3,190,468 3,502,955 12,501,048 9,891,803
Interest income (16,697) (36,943) (124,661) (370,632)
Player club
implementation
expense 1,366,614 - 1,366,614 -
------------ ------------ ------------ ------------
EBITDA (1) $ 4,880,042 $ 4,461,575 $ 23,009,957 $ 24,577,604
============ ============ ============ ============
(1) "EBITDA" consists of net income plus provision for income taxes, interest expense, depreciation, player club implementation expense 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
For additional information visit Monarch's web site at monarchcasino.com.
