MCRI
$29.75
Monarch Casino
($.51)
(1.69%)
Earnings Details
1st Quarter March 2017
Tuesday, April 25, 2017 4:02:14 PM
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Summary

Monarch Casino (MCRI) Recent Earnings

Monarch Casino (MCRI) reported 1st Quarter March 2017 earnings of $0.27 per share on revenue of $53.4 million. The consensus earnings estimate was $0.30 per share on revenue of $51.9 million. Revenue grew 7.4% on a year-over-year basis.

Monarch Casino & Resort Inc owns and operates the Atlantis Casino Resort Spa, a hotel or casino facility in Reno, Nevada; the Monarch Casino Black Hawk in Black Hawk, Colorado and real estate proximate to the Atlantis and Monarch Casino Black Hawk.

Results
Reported Earnings
$0.27
Earnings Whisper
-
Consensus Estimate
$0.30
Reported Revenue
$53.4 Mil
Revenue Estimate
$51.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Monarch Casino & Resort Reports First Quarter Net Revenue of $53.4 Million, Net Income of $4.9 Million and Adjusted EBITDA of $12.1 Million

RENO, NV--(Marketwired - Apr 25, 2017) - Monarch Casino & Resort, Inc. (MCRI) ("Monarch" or "the Company") today reported operating results for the first quarter ended March 31, 2017, as summarized below:

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

 
 
 
Three Months Ended March 31,
 
2017
  2016
  Increase
Net revenues
$
53,414   $
49,749   7.4%
Adjusted EBITDA (1)(2)   12,115     11,042   9.7%
Net income (3)
$
4,872
  $
4,575
  6.5%
 
             
Basic EPS
$
0.28
  $
0.27
  3.7%
Diluted EPS (3)
$
0.27
  $
0.26
  3.8%
(1) Definitions, disclosures and reconciliations of non-GAAP financial information are included later in the release.
(2) Adjusted EBITDA for the quarter ended March 31, 2016 includes approximately $1.4 million of redesign and upgrade costs that were expensed during the period.
(3) The effect of the $1.4 million redesign and upgrade costs, expensed during the quarter, on Net income and Diluted EPS for the three months ended March 31, 2016, was a decrease in Net income by $0.9 million and a decrease in Diluted EPS by $0.05.

CEO Comment John Farahi, Co-Chairman and Chief Executive Officer of Monarch, commented: "Monarch continued to deliver positive operating performance in the first quarter, marked by net revenue and adjusted EBITDA growth of 7% and 10%, respectively, despite disruptive weather in Reno and Black Hawk and an unfavorable calendar. By offering premium gaming and entertainment experience to our guests at both Atlantis and Monarch Casino Black Hawk, we continue to grow market share and improve our operating results. We remain confident in the potential for further growth at Atlantis as we benefit from the expanding local economy. In the first quarter, we broke ground for our hotel tower and casino expansion in Black Hawk, commencing the final phase of the property’s redevelopment into a world-class casino resort spa destination.

"Our focus on continuous improvement at Atlantis elevates the guest experience and positions Monarch to benefit from Reno’s ongoing renaissance and economic expansion. The redesign and upgrade of Toucan Charlie’s buffet, which was closed during most of last year’s first quarter, drove a double-digit improvement year over year in food and beverage revenue in the first quarter of 2017. Effective management of our hotel room inventory led to a double-digit increase in hotel revenue. In addition, we continue to make capital investments, to retain our position as Reno’s premier destination for casino entertainment, world-class dining, spa and other resort amenities. For example, we replaced the casino floor carpeting at Atlantis in the first quarter of 2017, resulting in a fresh and distinct new look.

"Monarch Casino Black Hawk, likewise, generated revenue growth in the first quarter of 2017, and we continue to implement and benefit from our master planned expansion of the property. The opening of the new parking structure adding 1,350 incremental parking spaces in late 2016, coupled with the effectiveness of our shuttle service to compensate for the lack of direct pedestrian access from the garage to the casino floor, presents us with new opportunities to deliver our signature premium guest experience. The significant additional parking capacity at the property also gives us more flexibility to satisfy guest demand at peak periods, which we believe benefits our business and more than offsets the incremental cost of the shuttle service and the construction disruption.

"Monarch Casino Black Hawk’s transformation into a world-class resort is in full swing. Our solid financial performance has enabled us to fund more of the development costs from operating cash flow, thereby reducing our reliance on our credit facility. We remain highly confident about the prospects for long-term success in Black Hawk and look forward to continue to provide our guests with the experiences and levels of service they have come to expect from Monarch."

Summary of 2017 First Quarter Operating Results For the 2017 first quarter, consolidated net revenues of $53.4 million increased 7.4% from $49.7 million in the prior year, driven by growth at both Atlantis and Monarch Casino Black Hawk. Casino revenues rose 4.0% year over year, food and beverage revenues grew 15.5% and hotel revenues increased 10.5%. Consolidated promotional allowances increased $0.6 million, or 5.7%. As a percentage of gross revenues, promotional allowances decreased to 18.1% from 18.3% a year ago.

The Company generated consolidated Adjusted EBITDA of $12.1 million in the first quarter of 2017, an increase of $1.1 million, or 9.7%, over the same period a year ago. The prior year period included $1.4 million in expenses related to the redesign and upgrade of Toucan Charlie’s Buffet at Atlantis.

Casino operating expense as a percentage of casino revenue decreased to 42.8% for the first quarter of 2017 compared to 43.6% in the first quarter of 2016 due to higher revenue in the current period combined with operating cost efficiencies. Food and beverage operating expense as a percentage of food and beverage revenue decreased to 40.4% during the first quarter of 2017 from 43.1% a year ago primarily driven by the prior year expenses related to the Toucan Charlie’s buffet redesign and upgrade. Hotel operating expense as a percentage of hotel revenue increased to 39.1% for the first quarter of 2017 compared to 31.6% for the same period in the prior year primarily as a result of higher payroll and employee benefit expenses as well as the incremental costs associated with the shuttle service implemented at Monarch Casino Black Hawk.

Selling, general and administrative ("SG&A") expenses for the 2017 first quarter were $14.6 million compared to $13.2 million in the prior year period. As a percentage of net revenue, SG&A expenses increased to 27.4% compared to 26.4% a year ago driven primarily by higher payroll and marketing expenses.

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 March 31, 2017:

 
 
   
   
   
 
$ in millions
Cost
  Total Spent Through March 31, 2017   Left to Spend   Estimated
 
Completion Date
I. Existing Facility
 
   
   
   
 
  Monarch Casino Black Hawk (1)
$76
  $76
  -
  Completed
 
  Existing Facility Upgrade (2)(3)
$34 - $36
  $20
  $14 - $16
  Interior completed; Exterior 2017-2018  
   
Total Existing Facility $110 - $112   $96
  $14 - $16
   
 
 
 
   
   
   
 
II. Expansion
 
   
   
   
 
  Acquired Land Parcels
$10
  $10
  -
  Completed
 
  Parking Structure
$38 - $41
  $41
  -
  Completed
 
  Hotel Tower & Casino (3)
$229 - $234   $9
  $220 - $225
  2Q19
 
  Other (4)
$8 - $10
  $9
  $0 - $1
  2Q19
 
   
Total Expansion
$285 - $295   $69
  $220 - $226
   
 
   
Total Cost
$395 - $407   $165
  $234 - $242
   
 

(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) in 2012. (2) Includes upgrades to interior, which were completed in August 2015, demolition of the original garage, and upgrades to the 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 early February, Monarch broke ground on the hotel tower and casino expansion. The Company will open the expansion in phases, beginning with the casino expansion and additional restaurants, followed by floors of the hotel tower sequentially as they are finished. The targeted completion date of the entire project remains the second quarter of 2019.

Credit Facility and Liquidity In the first quarter of 2017, the Company did not make any principal borrowings or payments to the Amended Credit Facility. The amount outstanding on the Company’s credit facility as of March 31, 2017 remained $26.2 million. Capital expenditures of $12.2 million in the first quarter of 2017 represent costs related to the Monarch Casino Black Hawk master development plan as well as ongoing capital maintenance spending in Reno and Black Hawk. Capital expenditures in the first quarter were funded entirely from the Company’s operating cash flow.

Interest expense for the 2017 first quarter increased to $272 thousand from $85 thousand in the same quarter of 2016 primarily due to higher bank commitment fees related to the Amended Credit Facility and increased amortization of deferred loan costs.

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 740 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)
 
(Unaudited)
 
 
 
     
 
 
Three months ended March 31,
 
 
2017
    2016
 
Revenues
   
       
 
 
Casino
$
41,310
    $
39,732
 
 
Food and beverage
  15,490
      13,414
 
 
Hotel
  5,640
      5,103
 
 
Other
  2,778
      2,671
 
 
 
Gross revenues
  65,218
      60,920
 
 
Less promotional allowances
  (11,804 )
    (11,171 )
 
 
Net revenues
  53,414
      49,749
 
 
   
       
 
Operating expenses
   
       
 
 
Casino
  17,680
      17,330
 
 
Food and beverage
  6,252
      5,780
 
 
Hotel
  2,208
      1,614
 
 
Other
  985
      959
 
 
Selling, general and administrative
  14,639
      13,151
 
 
Depreciation and amortization
  3,906
      3,700
 
 
Loss on disposition of assets
  18
      56
 
 
 
Total operating expenses
  45,688
      42,590
 
 
   
       
 
 
 
Income from operations
  7,726
      7,159
 
 
   
       
 
Other expenses
   
       
 
 
Interest expense, net of amounts capitalized
  (272
)
    (85
)
 
 
Total other expense
  (272
)
    (85
)
 
   
       
 
 
 
Income before income taxes
  7,454
      7,074
 
Provision for income taxes
  (2,582
)
    (2,499
)
 
 
Net income
$
4,872
    $
4,575
 
 
   
       
 
Earnings per share of common stock
   
       
 
 
 
Net income Basic
$
0.28
    $
0.27
 
 
 
Diluted
$
0.27
    $
0.26
 
 
   
       
 
Weighted average number of common shares and potential common shares outstanding
   
       
 
Basic
  17,477
      17,211
 
Diluted
  18,021
      17,540
 
 
   
       
 
 
   
       
 
 
   
       
 
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(In thousands, except shares)
 
 
March 31,
    December 31,
 
 
2017
    2016
 
ASSETS
(unaudited)
     
 
Current assets
   
       
 
 
Cash and cash equivalents
$
24,538
    $
26,383
 
 
Receivables, net
  4,407
      5,036
 
 
Income taxes receivable
  -
      408
 
 
Inventories
  2,904
      3,097
 
 
Prepaid expenses
  4,113
      4,487
 
 
 
 
Total current assets
  35,962
      39,411
 
Property and equipment
   
       
 
 
Land
  29,549
      29,549
 
 
Land improvements
  6,914
      6,914
 
 
Buildings
  191,370
      191,370
 
 
Buildings improvements
  24,511
      24,511
 
 
Furniture and equipment
  136,059
      134,603
 
 
Construction in progress
  20,486
      9,767
 
 
Leasehold improvements
  2,688
      2,688
 
 
  411,577
      399,402
 
 
Less accumulated depreciation and amortization
  (188,065 )
    (184,503 )
 
 
 
Net property and equipment
  223,512
      214,899
 
Other assets
   
       
 
 
Goodwill
  25,111
      25,111
 
 
Intangible assets, net
  4,743
      5,035
 
 
Deferred income taxes
  7,354
      7,354
 
 
Other assets, net
  3,221
      3,355
 
 
 
 
Total other assets
  40,429
      40,855
 
 
 
 
 
Total assets
$
299,903
    $
295,165
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
   
       
 
Current liabilities
   
       
 
 
Accounts payable
$
7,496
    $
8,720
 
 
Construction accounts payable
  2,695
      2,605
 
 
Accrued expenses
  21,521
      23,795
 
 
Income taxes payable
  2,312
      -
 
 
 
 
Total current liabilities
  34,024
      35,120
 
Long - term debt
  26,200
      26,200
 
 
 
 
 
Total liabilities
  60,224
      61,320
 
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; 17,504,633 outstanding at March 31, 2017;
   
       
 
 
 
17,468,269 outstanding at December 31, 2016
   
       
 
 
Additional paid-in capital
  24,299
      23,834
 
 
Treasury stock, 1,591,667 shares at March 31, 2017; 1,628,031 shares at December 31, 2016
  (21,661
)
    (22,158
)
 
Retained earnings
  236,850
      231,978
 
 
 
 
 
Total stockholders’ equity
  239,679
      233,845
 
 
 
 
 
Total liabilities and stockholders’ equity $
299,903
    $
295,165
 
 
 
 
 
 
   
       
 
 
 
 
 
 
   
       
 
 
 
 
 
 
   
       
 
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 March 31,
 
 
2017
 
 
2016
 
 
 
Adjusted EBITDA (1)
$
12,115
 
 
$
11,042
 
Expenses:
 
 
 
 
 
 
 
 
Stock based compensation
 
(465
)
 
 
(127
)
 
Depreciation and amortization
 
(3,906
)
 
 
(3,700
)
 
Interest expense, net of amount capitalized  
(272
)
 
 
(85
)
 
Loss on disposition of assets
 
(18
)
 
 
(56
)
 
Provision for income taxes
 
(2,582
)
 
 
(2,499
)
 
 
Net income
$
4,872
 
 
$
4,575
 
 
 
 
 
 
 
 
 
(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.
   

Contacts: David Farahi Chief Operating Officer 775/825-4700 Email Contact Joseph Jaffoni, Richard Land, James Leahy JCIR 212/835-8500 Email Contact