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Monarch Casino Reports 2009 Second Quarter Results
Marketwire
Jul 22, 2009
RENO, NV -- (Marketwire) -- 07/22/09 -- 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 June 30, 2009.
The Company reported net revenue of $34.5 million and EBITDA(1) of $6.4 million which were 2.5% lower and 1.3% higher, respectively, when compared with the second quarter of 2008. The Company announced quarterly income from operations of $3.3 million and diluted EPS of $0.11 which represent decreases of 25.3% and 31.3%, respectively, compared to the prior year's second quarter. Revenue generated in the casino department decreased by 6.0% while revenue from the food and beverage and hotel departments increased by 2.9% and 6.1%, respectively.
As a percentage of casino revenue, casino operating expense of 36.7% remained relatively flat with the prior year's second quarter of 36.1%. Increased food and beverage revenue, combined with a $68 thousand, or 1.5%, decrease in expense, drove the operating expense from that department as a percentage of revenue down from 48.2% in the second quarter of the prior year to 46.2% in the current quarter. Hotel operating expense as a percentage of hotel revenue decreased to 34.8% from the 35.5% reported in prior year's second quarter due primarily to the increase in hotel revenue partially offset by an increase in hotel operating expense of $80 thousand, or 4.0%.
The Company reported that selling, general and administrative expense decreased by approximately $568 thousand, or 4.4%, due to reductions in payroll, benefits, marketing, and other general expense, all of which were the result of various cost reduction programs, partially offset by higher bad debt and utilities expense. Depreciation expense increased by approximately $1.2 million, or 63.5%, over prior year's second quarter due to the completion of the Company's previously announced expansion, remodel and Atlantis Convention Center Skybridge capital projects.
During the quarter, the Company paid down $3.8 million of the balance outstanding under its credit facility which reduced the balance outstanding at June 30, 2009 to $52.1 million. Increased borrowing levels resulted in an increase in interest expense from the $131 thousand reported in prior year's second quarter to $571 thousand in the current quarter.
Monarch's CEO and Co-Chairman John Farahi commented on the Company's performance: "The challenging economic environment we experienced throughout 2008 has continued though the first half of 2009. Even though we successfully increased revenue in our food and beverage and hotel departments, and increased our gaming market share, we could not overcome the erosion of the gaming market as a whole, the result of which was lower net revenue compared to the second quarter of 2008."
Mr. Farahi continued: "Despite the disappointing decline in net revenue, we are pleased with the reduction in expenses we achieved. With the implementation of numerous cost reduction programs, and the completion of our expansion and skybridge capital projects, we were able to drive selling, general and administrative expenses down throughout the Company, which allowed us to achieve an EBITDA level consistent with that of the prior year's second quarter and for that we are pleased."
In July of 2008, the Company completed and opened several new phases of an expansion project which include over 10,000 square feet, or approximately 20%, of new casino space on the first floor comprised of a significantly upgraded and expanded race and sports book, an enlarged and upgraded poker room and additional general gaming space. The casino expansion also includes the new "Manhattan deli," a New York deli-style restaurant, and a casino lounge. The expanded facilities on the second floor include approximately 27,000 square feet of new ballroom and convention space, in a seamless addition to the pre-expansion ballroom and meeting facilities, incorporating high end design and state-of-the-art audio-visual technology.
In November 2008, the Company completed and opened the Atlantis Convention Center Skybridge providing guests with a convenient, traffic-free stroll between the Atlantis and the 500,000 square-foot Reno-Sparks Convention Center. Next, in January 2009, the Company opened the final phase of the expansion project, Spa Atlantis, featuring an upscale atmosphere, amenities and treatments that are unique from any other offering in the Company's market. During construction of the expansion project, many of the pre-expansion areas of the Atlantis were remodeled to be consistent with the upgraded look and feel of the new facilities.
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 www.monarchcasino.com.
MONARCH CASINO & RESORT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Revenues
Casino $24,146,246 $25,672,907 $46,950,745 $49,428,857
Food and beverage 9,826,213 9,547,395 19,419,281 19,308,615
Hotel 5,884,634 5,545,006 11,264,376 11,375,701
Other 1,140,138 1,185,503 2,273,588 2,417,572
----------- ----------- ----------- -----------
Gross revenues 40,997,231 41,950,811 79,907,990 82,530,745
Less promotional
allowances (6,541,873) (6,607,046) (12,873,448) (12,913,587)
----------- ----------- ----------- -----------
Net revenues 34,455,358 35,343,765 67,034,542 69,617,158
----------- ----------- ----------- -----------
Operating expenses
Casino 8,855,900 9,266,916 17,762,792 18,013,416
Food and beverage 4,538,149 4,606,282 9,173,546 9,295,647
Hotel 2,047,251 1,967,720 4,053,171 4,073,093
Other 308,469 312,997 605,240 659,651
Selling, general and
administrative 12,309,904 12,877,513 23,929,626 25,981,613
Depreciation and
amortization 3,094,951 1,893,237 6,275,906 3,899,794
----------- ----------- ----------- -----------
Total operating
expenses 31,154,624 30,924,665 61,800,281 61,923,214
----------- ----------- ----------- -----------
Income from
operations 3,300,734 4,419,100 5,234,261 7,693,944
----------- ----------- ----------- -----------
Other (expense) income
Interest income 36,341 46,238 71,759 297,582
Interest expense (571,007) (131,335) (1,121,217) (135,492)
----------- ----------- ----------- -----------
Total other (expense)
income (534,666) (85,097) (1,049,458) 162,090
----------- ----------- ----------- -----------
Income before income
taxes 2,766,068 4,334,003 4,184,803 7,856,034
Provision for income
taxes (968,150) (1,531,100) (1,464,725) (2,751,100)
----------- ----------- ----------- -----------
Net income $ 1,797,918 $ 2,802,903 $ 2,720,078 $ 5,104,934
=========== =========== =========== ===========
Earnings per share of
common stock
Net income
Basic $ 0.11 $ 0.16 $ 0.17 $ 0.29
Diluted $ 0.11 $ 0.16 $ 0.17 $ 0.29
Weighted average number
of common shares and
potential common shares
outstanding
Basic 16,122,048 17,189,200 16,122,048 17,802,518
Diluted 16,151,412 17,253,109 16,150,060 17,899,384
MONARCH CASINO & RESORT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
------------- -------------
2009 2008
------------- -------------
ASSETS (UNAUDITED)
Current assets
Cash and cash equivalents $ 11,026,479 $ 11,756,900
Receivables, net 3,007,001 3,344,441
Inventories 1,429,987 1,564,347
Prepaid expenses 2,841,640 2,851,872
Deferred income taxes 429,300 429,300
------------- -------------
Total current assets 18,734,407 19,946,860
------------- -------------
Property and equipment
Land 12,162,522 12,162,522
Land improvements 3,511,484 3,511,484
Buildings 133,674,917 133,332,232
Building improvements 10,435,062 10,435,062
Furniture and equipment 104,763,183 96,767,076
Leasehold improvements 1,346,965 1,346,965
------------- -------------
265,894,133 257,555,341
Less accumulated depreciation and
amortization (107,313,004) (101,825,190)
------------- -------------
158,581,129 155,730,151
Construction in progress - 4,026,536
------------- -------------
Net property and equipment 158,581,129 159,756,687
Other assets, net 3,433,845 2,797,949
------------- -------------
Total assets $ 180,749,381 $ 182,501,496
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Borrowings under credit facility $ - $ 2,500,000
Accounts payable 7,615,778 10,213,418
Construction payable - 5,404,372
Accrued expenses 8,591,667 8,940,110
Federal income taxes payable 958,461 233,736
------------- -------------
Total current liabilities 17,165,906 27,291,636
------------- -------------
Long-term debt, less current maturities 52,100,000 47,500,000
Deferred income taxes 2,115,371 2,115,371
------------- -------------
Total Liabilities 71,381,277 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;
16,122,048 outstanding at 6/30/09
16,122,048 outstanding at 12/31/08 190,963 190,963
Additional paid-in capital 29,104,546 28,051,009
Treasury stock, 2,974,252 shares at 6/30/09
2,974,252 shares at 12/31/08, at cost (48,943,359) (48,943,359)
Retained earnings 129,015,954 126,295,876
------------- -------------
Total stockholders' equity 109,368,104 105,594,489
------------- -------------
Total liability and stockholder's equity $ 180,749,381 $ 182,501,496
============= =============
MONARCH CASINO & RESORT, INC.
RECONCILIATION OF NET INCOME TO EBITDA (1)
(UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- --------------------------
2009 2008 2009 2008
------------ ------------ ------------ ------------
Net income $ 1,797,918 $ 2,802,903 $ 2,720,078 $ 5,104,934
Adjustments
Provision for
income taxes 968,150 1,531,100 1,464,725 2,751,100
Interest expense 571,007 131,335 1,121,217 135,492
Depreciation &
amortization 3,094,951 1,893,237 6,275,906 3,899,794
Interest income (36,341) (46,238) (71,759) (297,582)
------------ ------------ ------------ ------------
EBITDA(1)(unaudited)$ 6,395,685 $ 6,312,337 $ 11,510,167 $ 11,593,738
============ ============ ============ ============
(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.
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