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: February 26, 2014
(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)
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Item 2.02. Results of Operations and Financial Condition On February 26, 2014, Monarch Casino & Resort, Inc. (the "Company") issued a press release announcing its financial results for the year and quarter ended December 31, 2013. A copy of the press release is attached to this Current Report as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
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: February 26, 2014 |
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 February 26, 2014 |
Full Year 2013 Net Revenue Increases 15.6% Driving 34.1% Growth in Adjusted EBITDA to Company Record $48.5 Million
RENO, NV -- (Marketwired - February 26, 2014) - Monarch Casino & Resort, Inc. (NASDAQ: MCRI) ("Monarch" or "the Company") today reported operating results for the fourth quarter and full year ended December 31, 2013, as summarized below:
($ in
thousands,
except per
share data Twelve Months
and Three Months Ended Increase/ Ended Increase/
percentage) December 31, (Decrease) December 31, (Decrease)
2013 2012 2013 2012
-------- -------- ---------- -------- -------- ----------
Net revenue
Atlantis $ 32,868 $ 31,373 4.8% $141,298 $133,624 5.7%
Monarch Black
Hawk(1) 11,636 10,531 10.5% 47,451 29,678 59.9%
-------- -------- ---------- -------- -------- ----------
Total net
revenue(1) $ 44,504 $ 41,904 6.2% $188,749 $163,302 15.6%
======== ======== ========== ======== ======== ==========
Adjusted
EBITDA(2)
Atlantis $ 6,327 $ 5,560 13.8% $ 36,444 $ 30,109 21.0%
Monarch Black
Hawk(1) 3,569 2,999 19.0% 16,496 9,630 71.3%
Corporate and
other (1,088) (892) (22.0)% (4,451) (3,582) (24.3)%
-------- -------- ---------- -------- -------- ----------
Total Adjusted
EBITDA(1) $ 8,808 $ 7,667 14.9% $ 48,489 $ 36,157 34.1%
======== ======== ========== ======== ======== ==========
Net income $ 2,059 $ 1,340 53.7% $ 17,961 $ 8,911 101.6%
======== ======== ========== ======== ======== ==========
Basic EPS $ 0.12 $ 0.08 50.0% $ 1.10 $ 0.55 100.0%
Diluted EPS $ 0.12 $ 0.08 50.0% $ 1.06 $ 0.55 92.7%
(1) Monarch Black Hawk net revenue and Adjusted EBITDA and Total net revenue
and Adjusted EBITDA for the twelve months ended December 31, 2012,
include Monarch Black Hawk's financial results following its acquisition
by the Company on April 26, 2012.
(2) 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, "The rise in fourth quarter net revenue and Adjusted EBITDA concluded a strong year financially for both of our properties and overall, 2013 represented the best year in the Company's history.
"Fourth quarter net revenue and Adjusted EBITDA growth at Atlantis reflect our property-wide enhancements and the continued dedication of our staff to excellence in a very competitive market. The Reno market has largely stabilized and is growing at modest rates and Atlantis is positioned for further growth without the need for significant additional capital expenditures. Monarch Black Hawk also delivered a solid quarter with strong net revenue and Adjusted EBITDA gains which reflect the upgrades we have made to the property's gaming floor and non-gaming amenities.
"We continue working through a phased renovation of the entire Monarch Black Hawk casino floor to upgrade the existing facility to match the quality of our planned expansion. The renovation has been planned to minimize guest disruption and we believe our financial results throughout 2013 demonstrate the effectiveness of this approach. In December, we opened a new second floor casino which has been well received by our guests while allowing us to close off one-third of the main casino floor to completely redesign and upgrade that section.
"We continue to move ahead in finalizing the construction plans and budget of the Monarch Black Hawk expansion. The property presents significant potential given the strength of the Denver feeder market, a metropolitan area of over two million residents with low unemployment and thriving commercial and residential construction. Seen first by guests entering Black Hawk on the main artery, Monarch Black Hawk has the market's most favorable location which is protected by the city's boundaries. The Black Hawk City Council has approved our master plan subject to certain conditions and we expect our planned expansion to grow both the market and Monarch Black Hawk's market share over time. We believe our project will transform Monarch Black Hawk from a pure gaming facility with no hotel rooms into a full-scale resort. Once completed, we will nearly double the casino space while adding a 22 story hotel tower with 507 guest rooms and suites, an upscale spa and pool facility, four restaurants, additional bars, a new parking structure and associated support facilities. The planned ten story parking structure will increase total parking on site from approximately 500 spaces to approximately 1,551 parking spaces.
"We recently began site work on the new parking garage on the 1.5 acre land parcel contiguous to the existing facility as we move toward the full-scale start of construction. We look forward to finalizing our design and construction plans with our contractors and architects, and establishing a fixed budget and timeline for the project. In doing so, we will ensure that Monarch Black Hawk will provide best in class gaming, lodging and food and beverage offerings to our guests while delivering an attractive return on investment."
Summary of 2013 Fourth Quarter Operating Results
For the 2013 fourth quarter, net revenue at Atlantis of $32.9 million grew 4.8% year over year driven by growth across each of our revenue centers offset slightly by an increase in promotional allowances which declined as a percentage of gross revenue. The 10.5% increase in Monarch Black Hawk net revenue to $11.6 million was due to strong growth in food revenue and significantly lower promotional allowances during the quarter. On a consolidated basis, promotional allowance decreased $1.0 million or 8.8%.
The Company generated consolidated Adjusted EBITDA of $8.8 million in the fourth quarter of 2013, an increase of $1.1 million, or 14.9%, over the same period a year ago. The increase in Corporate and other expense was primarily related to higher salaries, wages and benefits.
Casino operating expense as a percentage of casino revenue was 42.8% for the fourth quarter of 2013 compared to 42.6% in the fourth quarter of 2012. Food and beverage operating expense as a percentage of food and beverage revenue for the 2013 fourth quarter decreased to 40.7% from 41.4% in the 2012 fourth quarter. Hotel operating expense as a percentage of hotel revenue increased to 29.7% for the fourth quarter of 2013 compared to 28.9% for the prior year.
Selling, general and administrative ("SG&A") expenses for the 2013 fourth quarter increased $0.9 million, or 6.7%, over the 2012 fourth quarter. This increase was driven primarily by higher marketing, salaries and wages, utilities, and repair and maintenance expenses.
Credit Facility
During the 2013 fourth quarter, the Company made net principal payments of $2.5 million, which reduced the amount outstanding on its credit facility to $53.8 million at December 31, 2013 which compares with $81.1 million outstanding as of December 31, 2012. Capital expenditures of $4.2 million in the fourth quarter of 2013 were funded from operating cash flows and primarily represent costs related to the Monarch Black Hawk master development plan including the ongoing redesign and upgrade of the facility.
Interest expense for the 2013 fourth quarter decreased to $0.4 million from $0.6 million for the fourth quarter of 2012 due to a lower interest rate driven by our lower leverage combined with lower outstanding borrowings in the 2013 fourth quarter compared to the 2012 fourth quarter.
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) future operating performance; (ii) economic and market conditions; (iii) plans, objectives and expectations regarding Monarch Black Hawk; (iv) integration of Monarch Black Hawk; and (v) plans, costs, financing, construction, completion and opening timelines of redesigned and expanded facilities at Monarch 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 Black Hawk redesign and expansion projects, important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation:
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 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.
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 (formerly the Riviera Black Hawk Casino) 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 Company acquired the Monarch Casino Black Hawk, the first casino encountered by visitors arriving from Denver on Highway 119, in April 2012. The property features approximately 32,000 square feet of casino space, approximately 600 slot machines, 9 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 Monarch Casino Black Hawk which is zoned for gaming and is included in the city approved master planned expansion.
- financial tables follow -
Monarch Casino & Resort, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2013 2012 2013 2012
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
Revenue
Casino $ 35,091 $ 34,707 $ 149,916 $ 128,831
Food and beverage 12,465 11,541 49,642 45,966
Hotel 4,397 4,352 22,679 20,199
Other 2,589 2,305 9,680 8,994
----------- ----------- ----------- -----------
Gross revenue 54,542 52,905 231,917 203,990
Less promotional
allowances (10,038) (11,001) (43,168) (40,688)
----------- ----------- ----------- -----------
Net revenue 44,504 41,904 188,749 163,302
----------- ----------- ----------- -----------
Operating expenses
Casino 15,016 14,779 59,646 53,331
Food and beverage 5,075 4,782 20,077 18,487
Hotel 1,306 1,258 6,241 5,578
Other 878 725 3,260 3,001
Selling, general and
administrative 14,000 13,123 52,432 48,115
Depreciation and
amortization 4,066 4,368 16,638 16,651
Acquisition expenses - - - 2,156
----------- ----------- ----------- -----------
Total operating expenses 40,341 39,035 158,294 147,319
----------- ----------- ----------- -----------
Income from operations 4,163 2,869 30,455 15,983
----------- ----------- ----------- -----------
Other expenses
Interest expense (367) (628) (1,860) (2,024)
----------- ----------- ----------- -----------
Total other expenses (367) (628) (1,860) (2,024)
----------- ----------- ----------- -----------
Income before income
taxes 3,796 2,241 28,595 13,959
Provision for income
taxes (1,737) (901) (10,634) (5,048)
----------- ----------- ----------- -----------
Net income $ 2,059 $ 1,340 $ 17,961 $ 8,911
=========== =========== =========== ===========
Earnings per share
Basic $ 0.12 $ 0.08 $ 1.10 $ 0.55
Diluted $ 0.12 $ 0.08 $ 1.06 $ 0.55
Weighted average shares
outstanding
Basic 16,474 16,142 16,302 16,140
Diluted 17,273 16,258 16,944 16,250
Monarch Casino & Resort, Inc.
Consolidated Balance Sheets
(In thousands)
December 31,
--------------------------
2013 2012
------------ ------------
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 19,330 $ 19,043
Receivables, net 2,628 2,457
Income taxes receivable 608 -
Inventories 2,675 2,383
Prepaid expenses 2,830 2,636
Deferred income taxes 5,909 5,426
------------ ------------
Total current assets 33,980 31,945
------------ ------------
Property and equipment
Land 28,680 27,915
Land improvements 6,562 6,562
Buildings 150,828 150,843
Buildings improvements 15,897 11,681
Furniture and equipment 134,425 132,946
Construction in progress 4,891 -
Leasehold improvements 1,347 1,347
------------ ------------
342,630 331,294
Less accumulated depreciation and amortization (166,993) (152,869)
------------ ------------
Net property and equipment 175,637 178,425
Other assets
Goodwill 25,111 25,111
Intangible assets, net 8,531 10,205
Deferred income taxes 350 1,214
Other assets, net 914 1,220
------------ ------------
Total other assets 34,906 37,750
------------ ------------
Total assets $ 244,523 $ 248,120
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 8,666 $ 8,062
Accrued expenses 18,177 17,836
Income taxes payable - 274
------------ ------------
Total current liabilities 26,843 26,172
------------ ------------
Long-term debt 53,800 81,100
------------ ------------
Total liabilities 80,643 107,272
------------ ------------
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;
16,482,768 outstanding at December 31, 2013
and 16,147,324 outstanding at December 31,
2012 191 191
Additional paid - in capital 30,926 34,364
Treasury stock, 2,613,532 shares at December
31, 2013 and 2,948,976 shares at December 31,
2012 (39,797) (48,306)
Retained earnings 172,560 154,599
------------ ------------
Total stockholders' equity 163,880 140,848
------------ ------------
Total liabilities and stockholders' equity $ 244,523 $ 248,120
============ ============
Monarch Casino & Resort, Inc.
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 Twelve Months Ended
December 31, December 31,
2013 2012 2013 2012
----------- ----------- ----------- -----------
Adjusted EBITDA(1):
Atlantis $ 6,327 $ 5,560 $ 36,444 $ 30,109
Monarch Black Hawk(2) 3,569 2,999 16,496 9,630
----------- ----------- ----------- -----------
9,896 8,559 52,940 39,739
Corporate and other (1,088) (892) (4,451) (3,582)
----------- ----------- ----------- -----------
Total Adjusted EBITDA(2) $ 8,808 $ 7,667 $ 48,489 $ 36,157
Expenses:
Stock-based compensation $ (404) $ (430) $ (1,220) $ (1,367)
Depreciation and
amortization (4,066) (4,368) (16,638) (16,651)
Acquisition expenses - - - (2,156)
Interest expense (367) (628) (1,860) (2,024)
(Loss) gain on asset
sale (175) - (176) -
Provision for income
taxes (1,737) (901) (10,634) (5,048)
----------- ----------- ----------- -----------
Net income(2) $ 2,059 $ 1,340 $ 17,961 $ 8,911
=========== =========== =========== ===========
(1) "Adjusted EBITDA", a non-GAAP financial measure, 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.
(2) Monarch Black Hawk Adjusted EBITDA, and Total Adjusted EBITDA and Net
income for the twelve months ended December 31, 2012, include Monarch
Black Hawk's financial results following its acquisition by the Company
on April 26, 2012.
Contact: Ron Rowan Chief Financial Officer 775/825-4700 rrowan@monarchcasino.com Joseph Jaffoni, Richard Land, James Leahy JCIR 212/835-8500 mcri@jcir.com