MCRI
$26.65
Monarch Casino
$1.07
4.18%
Earnings Details
4th Quarter December 2016
Wednesday, February 22, 2017 4:02:30 PM
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Summary

Monarch Casino (MCRI) Recent Earnings

Monarch Casino (MCRI) reported 4th Quarter December 2016 earnings of $0.36 per share on revenue of $55.6 million. The consensus earnings estimate was $0.31 per share on revenue of $53.7 million. Revenue grew 8.0% 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
$0.36
Earnings Whisper
-
Consensus Estimate
$0.31
Reported Revenue
$55.6 Mil
Revenue Estimate
$53.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

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

RENO, NV--(Marketwired - Feb 22, 2017) - Monarch Casino & Resort, Inc. (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.
   

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