UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K CURRENT REPORT
Pursuant to Section 13 or 15(d) of the |
Date of Report: October 24, 2012
(Date of earliest event reported)
Monarch Casino and Resort, Inc.
(Exact name of registrant as specified in its charter)
NV
(State or other jurisdiction
of incorporation)
0-22088
(Commission File Number)
88-0300760
(IRS Employer
Identification Number)
3800 S. Virginia Street
(Address of principal executive offices)
89502
(Zip Code)
775-335-4600
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if changed since last report)
Item 2.02. Results of Operations and Financial Condition On October 24, 2012, Monarch Casino & Resort, Inc. (the "Company") issued a press release announcing its financial results for the quarter ended September 30, 2012. A copy of the press release is attached to this Current Report as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
(a) Financial statements:
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: October 24, 2012 |
MONARCH CASINO AND RESORT, INC.
By: /s/ Ronald Rowan |
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Exhibit No. | Description |
99.1 | Press Release of Monarch Casino and Resort, Inc. dated October 24, 2012 |
RENO, NV -- (Marketwire - October 24, 2012) - Monarch Casino & Resort, Inc. (NASDAQ: MCRI) ("Monarch" or the "Company"), owner of the Atlantis Casino Resort Spa (the "Atlantis") in Reno, Nevada, and the Riviera Black Hawk Casino ("Black Hawk") in Black Hawk, Colorado, today announced results for the third quarter ended September 30, 2012.
This is the second quarterly earnings announcement to include results from the Company's Black Hawk Casino which was acquired on April 26, 2012 (the "Acquisition Date"). The Company's financial results include the Black Hawk operations only subsequent to the Acquisition Date. Periods prior to that date exclude Black Hawk's operations.
Net Revenue:
Three months ended September 30, Increase/(Decrease) --------------------------------- --------------------- 2012 2011 $ % ---------------- ---------------- ---------------- ---- Atlantis $ 36,830,127 $ 36,174,386 $ 655,741 1.8% Black Hawk 11,031,584 - 11,031,584 n/a ---------------- ---------------- ---------------- ---- Total net revenue $ 47,861,711 $ 36,174,386 $ 11,687,325 32.3% ================ ================ ================ ====
Atlantis net revenue for the 2012 third quarter increased primarily due to higher casino revenue partially offset by higher promotional allowance from increased complimentary food, beverage and other services provided to casino patrons ("Complimentaries").
Black Hawk net revenue of $11.0 million was 6.8% greater than the $10.3 million the property generated during the same quarter of the prior year before it was acquired by Monarch.
Adjusted EBITDA(1):
Three months ended September 30, Increase/(Decrease) ---------------------------------- ---------------------- 2012 2011 $ % ---------------- ---------------- ---------------- ---- Atlantis $ 9,170,407 $ 8,602,316 $ 568,091 6.6% Black Hawk 4,085,155 - 4,085,155 n/a ---------------- ---------------- ---------------- ---- 13,255,562 8,602,316 4,653,246 54.1% Corporate and other expense (934,397) (818,594) (115,803) 14.1% ---------------- ---------------- ---------------- ---- Total Adjusted EBITDA $ 12,321,165 $ 7,783,722 $ 4,537,443 58.3% ================ ================ ================ ====
The Atlantis Adjusted EBITDA for the 2012 third quarter increased due to higher net revenue partially offset by higher casino expense, which higher expense was principally due to increased Complimentaries expense and higher selling, general and administrative expense.
Black Hawk Adjusted EBITDA for the 2012 third quarter of $4.1 million is $1.2 million, or 41.4%, more than the $2.9 million Adjusted EBITDA reported for Black Hawk during the same quarter in 2011 before it was acquired by Monarch.
Operating Expense:
Casino operating expense as a percentage of casino revenue ("Casino Operating Margin") decreased to 37.4% for the third quarter of 2012 from 39.6% for the third quarter of the prior year primarily due to the inclusion of Black Hawk. Black Hawk has a lower Casino Operating Margin than Atlantis. Food and beverage operating expense as a percentage of food and beverage revenue for the 2012 third quarter decreased to 39.3% as compared to 47.2% for the 2011 third quarter primarily due to operational efficiencies combined with menu price increases in response to higher commodity costs. Hotel operating expense as a percentage of hotel revenue for the 2012 third quarter decreased slightly to 23.9% from 24.5% for the 2011 third quarter.
Selling, general and administrative expense ("SG&A Expense") for the 2012 third quarter increased by $2.6 million, $2.2 million of which represents SG&A Expense from the Black Hawk operation for which the third quarter of the prior year reflects no expense. The primary drivers of the remaining $400 thousand of increased Atlantis SG&A Expense are: higher marketing expense and higher use tax expense partially offset by lower utilities and bad debt expense. The higher use tax expense totaled $120 thousand and is the result of a ruling from the Nevada Department of Taxation that complimentary meals are subject to use tax effective February 2012. Following Nevada casino industry practice, the Company did not recognize use tax on complimentary meals in the prior year.
Credit Facility:
During the 2012 third quarter, the Company made net principal payments of $5.9 million against the outstanding credit facility, decreasing the principal amount due thereunder from $88.0 million at June 30, 2012 to $82.1 million at September 30, 2012.
Interest expense for the 2012 third quarter increased to $480 thousand from $160 thousand for the third quarter of 2011 due to higher amounts of debt outstanding under the credit facility in the 2012 third quarter compared to the 2011 third quarter. Advances were drawn under the credit facility in the 2012 second quarter to complete the acquisition of Black Hawk.
John Farahi, Monarch CEO, Comment:
Monarch's CEO and Co-Chairman John Farahi commented: "The integration of the Black Hawk operation has gone very well. The 41.4% increase in Black Hawk's Adjusted EBITDA compared to prior year's same quarter is a reflection of the initial improvements we've made in the short time we've owned the property and such results are a tribute to our team. I'm confident that the recently announced Black Hawk management additions will bring even greater strength to the team."
Mr. Farahi added: "We've begun work that will completely redesign and upgrade our facility in Black Hawk. We intend to complete that work in a manner that minimizes disruption to our guests' experience."
Referring to the Company's Atlantis property, Mr. Farahi added: "We continue to increase our market share despite the ongoing competitive and economic pressures in northern Nevada. We were honored to receive the prestigious AAA Four Diamond Award in August of 2012. Only 4.8 percent of the nearly 31,000 AAA rated lodging properties receive the coveted AAA Four Diamond Award. It is a well-deserved tribute to each Atlantis team member's efforts to consistently exceed our guests' expectations."
About Monarch Casino & Resort, Inc. (NASDAQ: MCRI):
Monarch Casino & Resort, Inc., through its subsidiaries, owns and operates the Atlantis Casino Resort Spa, a hotel/casino facility in Reno, Nevada, and the Riviera Black Hawk casino in Black Hawk, Colorado. Black Hawk is 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 Company and its predecessors have operated a facility on the Atlantis site since 1972. For more Atlantis Casino Resort Spa information, please visit www.atlantiscasino.com or call 800.723.6500. Also see Atlantis on Facebook, www.facebook.com/AtlantisCasinoResortSpa or on Twitter at @AtlantisCasino.
The Riviera Black Hawk Casino, which opened in 2000, is the first casino encountered by visitors arriving from Denver on Highway 119 and features approximately 32,000 square feet of casino space, 750 slot machines, 10 table games, a 250 seat buffet-style restaurant, a snack bar and a parking structure with approximately 500 spaces. Monarch owns a 1.5 acre land parcel contiguous to the Riviera Black Hawk Casino which is zoned for gaming and can be utilized for future expansion. For more Riviera Black Hawk information, please visit www.rivierablackhawk.com or call 303.582.1000. Also see Riviera Black Hawk on Facebook, www.facebook.com/RivieraCasino or on Twitter at @RivieraCasino.
Forward-Looking Information:
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, (iii) plans, objectives and expectations regarding Black Hawk, and (iv) integration of the Black Hawk. 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.
(1) "Adjusted EBITDA" - see the separate Reconciliation of Net Income to Adjusted EBITDA. Adjusted 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 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.
Monarch Casino & Resort, Inc. Condensed Consolidated Statements of Income (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, -------------------------- -------------------------- 2012 2011 2012 2011 ------------ ------------ ------------ ------------ Revenues Casino $ 38,448,040 $ 24,147,082 $ 98,496,155 $ 73,436,721 Food and beverage 12,666,803 11,071,950 35,362,881 32,097,706 Hotel 6,174,337 6,332,818 15,847,957 16,827,480 Other 2,306,289 1,997,541 6,688,929 5,827,587 ------------ ------------ ------------ ------------ Gross revenues 59,595,469 43,549,391 156,395,922 128,189,494 Less promotional allowances (11,733,758) (7,375,005) (29,687,525) (21,569,419) ------------ ------------ ------------ ------------ Net revenues 47,861,711 36,174,386 126,708,397 106,620,075 ------------ ------------ ------------ ------------ Operating expenses Casino 14,386,595 9,573,416 37,548,779 28,639,455 Food and beverage 4,973,984 5,228,370 14,658,215 14,820,495 Hotel 1,478,601 1,554,277 4,327,991 4,551,768 Other 784,576 723,890 2,253,133 2,177,067 Selling, general and administrative 14,269,691 11,671,842 40,367,996 33,853,077 Depreciation and amortization 4,647,002 3,314,598 12,282,291 10,144,999 Adventure Inn demolition - 3,519,148 - 3,519,148 Acquisition expense 454,701 437,400 2,155,522 437,400 ------------ ------------ ------------ ------------ Total operating expenses 40,995,150 36,022,941 113,593,927 98,143,409 ------------ ------------ ------------ ------------ Income from operations 6,866,561 151,445 13,114,470 8,476,666 ------------ ------------ ------------ ------------ Other expenses Interest expense (479,772) (160,237) (1,396,632) (643,505) ------------ ------------ ------------ ------------ Total other expense (479,772) (160,237) (1,396,632) (643,505) ------------ ------------ ------------ ------------ Income (loss) before income taxes 6,386,789 (8,792) 11,717,838 7,833,161 (Provision) benefit for income taxes (2,249,708) 20,071 (4,146,633) (2,724,600) ------------ ------------ ------------ ------------ Net income $ 4,137,081 $ 11,279 $ 7,571,205 $ 5,108,561 ============ ============ ============ ============ Earnings per share of common stock Net income Basic $ 0.26 $ 0.00 $ 0.47 $ 0.32 Diluted $ 0.25 $ 0.00 $ 0.47 $ 0.31 Weighted average number of common shares and potential common shares outstanding Basic 16,141,492 16,138,158 16,139,582 16,138,158 Diluted 16,234,158 16,234,443 16,248,588 16,226,844 Monarch Casino & Resort, Inc. Condensed Consolidated Balance Sheets September 30, December 31, ------------- ------------- 2012 2011 ------------- ------------- ASSETS (Unaudited) Current assets Cash and cash equivalents $ 17,009,507 $ 13,582,659 Receivables, net 2,367,304 2,299,847 Federal income tax receivable 282,472 - Inventories 2,139,202 2,165,109 Prepaid expenses 2,805,293 6,198,882 Deferred income taxes 554,612 615,912 ------------- ------------- Total current assets 25,158,390 24,862,409 ------------- ------------- Property and equipment Land 27,914,847 19,214,847 Land improvements 6,389,279 6,359,279 Buildings 150,843,298 135,643,298 Building improvements 11,564,850 11,575,883 Furniture and equipment 130,874,200 117,300,741 Leasehold improvements 1,346,965 1,346,965 ------------- ------------- 328,933,439 291,441,013 Less accumulated depreciation and amortization (149,202,728) (138,227,868) ------------- ------------- Net property and equipment 179,730,711 153,213,145 Other assets Goodwill 26,575,592 - Intangible assets, net 10,893,580 - Deferred tax asset 3,965,414 - Other assets, net 1,295,859 1,524,050 ------------- ------------- Total other assets 42,730,445 1,524,050 ------------- ------------- Total assets $ 247,619,546 $ 179,599,604 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 9,108,497 $ 8,693,395 Accrued expenses 17,372,276 13,829,540 Federal income taxes payable - 768,640 ------------- ------------- Total current liabilities 26,480,773 23,291,575 ------------- ------------- Long-term debt 82,100,000 24,680,000 Deferred income taxes - 1,112,049 ------------- ------------- Total liabilities 108,580,773 49,083,624 ------------- ------------- 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; 16,141,492 outstanding at September 30, 2012 and 16,138,158 at December 31, 2011 190,963 190,963 Additional paid-in capital 34,044,230 33,178,345 Treasury stock, 2,954,808 shares at September 30, 2012 and 2,958,142 at December 31, 2011, at cost (48,455,960) (48,541,663) Retained earnings 153,259,540 145,688,335 ------------- ------------- Total stockholders' equity 139,038,773 130,515,980 ------------- ------------- Total liability and stockholder's equity $ 247,619,546 $ 179,599,604 ============= ============= Monarch Casino & Resort, Inc. Reconciliation of Adjusted EBITDA (1) to Net Income (Unaudited) The following table sets forth a reconciliation of Adjusted EBITDA(1), a non-GAAP financial measure, to net income, a GAAP financial measure. Three months ended Nine months ended September 30, September 30, ------------------------- ------------------------- 2012 2011 2012 2011 ------------ ------------ ------------ ------------ Adjusted EBITDA (1) Atlantis $ 9,170,407 $ 8,602,316 $ 25,177,650 $ 27,217,220 Black Hawk (a) 4,085,155 - 6,631,341 - ------------ ------------ ------------ ------------ 13,255,562 8,602,316 31,808,991 27,217,220 Corporate and other expense (934,397) (818,594) (3,318,457) (3,400,035) ------------ ------------ ------------ ------------ Total Adjusted EBITDA$ 12,321,165 $ 7,783,722 $ 28,490,534 $ 23,817,185 Expenses: Stock based compensation (352,901) (361,131) (938,252) (1,238,972) Depreciation and amortization (4,647,002) (3,314,598) (12,282,291) (10,144,999) Acquisition expense (454,701) (437,400) (2,155,521) (437,400) Adventure Inn demolition - (3,519,148) - (3,519,148) Interest expense (479,772) (160,237) (1,396,632) (643,505) (Provision) benefit for income taxes (2,249,708) 20,071 (4,146,633) (2,724,600) ------------ ------------ ------------ ------------ Net income $ 4,137,081 $ 11,279 $ 7,571,205 $ 5,108,561 ============ ============ ============ ============ (a) We acquired Riviera Black Hawk Casino on April 26, 2012.
(1) "Adjusted EBITDA" consists of net income plus provision for income taxes, stock based compensation expense, other one-time non-cash charges, interest expense, depreciation and amortization less interest income and any benefit for income taxes. Adjusted 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 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.
For additional information visit Monarch's website at MonarchCasino.com
Contacts: Ron Rowan CFO of Monarch (775) 825-4700 RRowan@MonarchCasino.com John Farahi CEO of Monarch (775) 825-4700 JFarahi@MonarchCasino.com