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 24, 2016
(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 24, 2016, Monarch Casino & Resort, Inc. (the "Company") issued a press release announcing its financial results for the quarter ended December 31, 2015. 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 24, 2016 |
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 24, 2016 |
Company Reports Record Full Year Adjusted EBITDA of $50.0 Million
RENO, NV -- (Marketwired - February 24, 2016) - Monarch Casino & Resort, Inc. (NASDAQ: MCRI) ("Monarch" or "the Company") today reported operating results for the fourth quarter and full year ended December 31, 2015, as summarized below:
($ in thousands, except per share data and percentages)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------------- --------------------------
2015 2014 Increase 2015 2014 Increase
-------- -------- -------- -------- -------- --------
Net revenues $ 51,485 $ 45,859 12.3% $202,245 $187,767 7.7%
Adjusted EBITDA (1) 12,398 9,536 30.0% 50,041 43,475 15.1%
Net income $ 5,123 $ 3,811 34.4% $ 20,659 $ 14,185 45.6%
======== ======== ======== ======== ======== ========
Basic EPS $ 0.30 $ 0.23 30.4% $ 1.22 $ 0.85 43.6%
Diluted EPS $ 0.29 $ 0.22 31.8% $ 1.19 $ 0.83 43.4%
(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, "We generated a 12.3% rise in net revenue and a 30.0% increase in Adjusted EBITDA in the 2015 fourth quarter, concluding a strong year for Monarch. Our solid fourth quarter results were driven by top-line and Adjusted EBITDA growth at both Atlantis Casino Resort Spa and Monarch Casino Black Hawk while our 2015 full year Adjusted EBITDA of $50.0 million is an all-time high for Monarch.
"Throughout 2015, we strengthened the competitive position of both of our properties and leveraged the unique growth opportunities presented by each of their markets. In Reno, Atlantis benefited from the city's ongoing renaissance which is attracting new businesses, additional economic activity and increased employment. Consistent with our focus on continuously improving our facilities and their offerings, we plan to bolster Atlantis' position as Northern Nevada's premier casino resort through additional property enhancements over the next two quarters. In March 2016, we expect to open our redesigned and upgraded Toucan Charlie's Buffet. Additionally, we expect to complete the conversion of leased land and buildings adjacent to Atlantis into 300 additional surface parking spaces during the second quarter, increasing the amount of surface parking adjacent to Atlantis by approximately 34%. This new area will provide needed parking, convenient guest access to primary casino floor entrances and a direct route to Atlantis from an additional major local traffic artery.
"Monarch Black Hawk's strong fourth quarter performance was driven by a full quarter of contribution from the recently completed redesign and upgrade of the gaming floor. After nearly seven quarters of construction, we are again operating with a full complement of gaming positions including approximately 700 slot machines and 14 table games. We remain on-track to complete and open the property's new parking structure late in the second quarter of 2016. Following the completion of the parking structure, we plan to raze the existing parking structure in the third quarter and break ground on the new hotel tower, expanded casino and additional restaurants in the fourth quarter of 2016, with completion of the full project expected in the third quarter of 2018.
"As we look to 2016, we are confident that our focus on guest service, prudent expense management and continuing property upgrades, as well as positive Reno and Black Hawk market trends, position Monarch to generate another year of strong financial results."
Summary of 2015 Fourth Quarter Operating Results
For the 2015 fourth quarter, consolidated net revenues of $51.5 million increased 12.3% year-over-year, driven by growth at both Atlantis and Monarch Black Hawk. Casino revenues rose 11.7% on a year-over-year basis, food and beverage revenues grew 10.7% and hotel revenues increased 14.8%. Consolidated promotional allowances increased $0.9 million, or 9.0%. As a percentage of gross revenues, promotional allowances decreased to 18.0% from 18.4% in the prior year fourth quarter.
Consolidated Adjusted EBITDA increased $2.9 million, or 30.0%, year-over-year to $12.4 million in the fourth quarter of 2015.
Casino operating expenses as a percentage of casino revenues declined to 41.8% for the fourth quarter of 2015 compared to 44.4% in the fourth quarter of 2014 primarily due to higher casino revenues. Food and beverage operating expense as a percentage of food and beverage revenues for the 2015 fourth quarter decreased to 39.0% from 42.4% in the 2014 fourth quarter due primarily to operating cost efficiencies and menu price increases. Hotel operating expenses as a percentage of hotel revenues increased to 35.4% in the fourth quarter of 2015 compared to 28.0% in the prior year due primarily to higher repairs and maintenance expense.
Selling, general and administrative ("SG&A") expenses for the 2015 fourth quarter increased $1.4 million, or 10.7%, over the 2014 fourth quarter, driven primarily by higher payroll and repairs and maintenance expenses.
Monarch Black Hawk Expansion
Summarized below is an update on the Company's ongoing upgrade and expansion of Monarch Black Hawk, including the expected costs and completion dates for the project as well as the amounts spent through December 31, 2015:
-----------------------------------------------------
$ in millions Total Spent
Through Estimated
December 31, Left to Completion
Cost 2015 Spend Date
------------ -------------- ---------- --------------
I. Existing Facility
Monarch Casino Black
Hawk (1) $76 $76 - Completed
Interior
completed;
Existing Facility Exterior 2016-
Upgrade (2)(3) $34 - $36 $18 $16 - $18 2017
--------------------------------------
Total Existing
Facility $110 - $112 $94 $16 - $18
--------------------------------------
II. Expansion
Acquired Land Parcels $10 $10 - Completed
Parking Structure (3) $38 - $41 $28 $10 - $13 2Q16
Hotel Tower & Casino $229 -
(4) $229 - $234 - $234 3Q18
Other (3) $8 - $10 $8 $0 - $2 3Q18
--------------------------------------
$239 -
Total Expansion $285 - $295 $46 $249
--------------------------------------
$255 -
Total Cost $395 - $407 $140 $267
======================================
(1) The Company paid $76.0 million cash or $69.2 million net of acquired
working capital and NOLs when it acquired Monarch Black Hawk (formerly
Riviera Black Hawk Casino).
(2) Includes upgrades to interior, which was completed in August 2015, and
exterior of existing facility to match the design of the master planned
expansion.
(3) The Company expects to fund the amount left to spend primarily from
operating cash flow and, to a lesser extent, from its credit facility.
(4) The Company anticipates funding the hotel tower and casino expansion
from a combination of operating cash flow and an expansion or replacement of
its credit facility.
During the fourth quarter of 2015, the Company made further progress on construction of the facility's new parking structure. The Company continues to expect that it will complete the structure and open it to the public late in the second quarter of 2016. Following the completion of the new parking structure, the existing parking structure will be razed and construction of the hotel tower and casino expansion will begin with an expected completion date in the third quarter of 2018.
Credit Facility
During the 2015 fourth quarter, the Company made net borrowings of $3.0 million, which increased the amount outstanding on its credit facility to $40.9 million at December 31, 2015. Capital expenditures of $13.4 million in the fourth quarter of 2015 primarily represent costs related to the Monarch Black Hawk master development plan and were funded from a combination of the Company's operating cash flows and credit facility borrowings.
Interest expense for the 2015 fourth quarter decreased to $0.1 million from $0.3 million in the fourth quarter of 2014 due to lower average outstanding borrowings and a lower cost of borrowings in the 2015 fourth quarter compared to the 2014 fourth quarter.
2016 Annual Stockholders' Meeting Date
The Company's 2016 Annual Meeting of Stockholders will be held on Wednesday, June 8, 2016 at 10:00am PDT at the Atlantis Casino Resort Spa, which is located at 3800 South Virginia Street in Reno, Nevada. The record date for stockholders entitled to vote at the Annual Meeting is April 15, 2016.
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 Atlantis and/or Monarch Black Hawk; and (iv) plans, costs, financing, construction, completion and opening timelines of upgraded, redesigned and/or 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 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:
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 37 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 Monarch Casino Black Hawk, the first casino encountered by visitors arriving from Denver on Highway 119, in April 2012. The property features approximately 30,000 square feet of casino space, approximately 700 slot machines, 14 table games, a 250 seat buffet-style restaurant, a snack bar and a parking structure with approximately 500 spaces. Once completed, the Monarch 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, a new parking structure and associated support facilities. The planned nine story parking structure will increase total parking on site from approximately 500 spaces to approximately 1,500 parking spaces.
- financial tables follow -
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
------------------------ ------------------------
2015 2014 2015 2014
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
Revenues
Casino $ 39,459 $ 35,324 $ 156,843 $ 145,134
Food and beverage 14,697 13,271 56,500 52,314
Hotel 5,418 4,719 22,629 21,733
Other 3,207 2,907 11,198 10,394
----------- ----------- ----------- -----------
Gross revenues 62,781 56,221 247,170 229,575
Less promotional
allowances (11,296) (10,362) (44,925) (41,808)
----------- ----------- ----------- -----------
Net revenues 51,485 45,859 202,245 187,767
----------- ----------- ----------- -----------
Operating expenses
Casino 16,493 15,701 65,970 61,583
Food and beverage 5,734 5,629 22,249 21,410
Hotel 1,918 1,319 6,787 5,992
Other 1,014 891 3,963 3,545
Selling, general and
administrative 14,534 13,132 54,779 52,987
Depreciation and
amortization 3,776 4,320 15,933 17,824
Loss on disposition of
assets 29 94 9 343
Colorado ballot
initiative costs - 19 - 1,864
----------- ----------- ----------- -----------
Total operating
expenses 43,498 41,105 169,690 165,548
----------- ----------- ----------- -----------
Income from
operations 7,987 4,754 32,555 22,219
----------- ----------- ----------- -----------
Other expenses
Interest expense, net
of amounts capitalized (142) (288) (679) (1,104)
----------- ----------- ----------- -----------
Total other expense (142) (288) (679) (1,104)
----------- ----------- ----------- -----------
Income before income
taxes 7,845 4,466 31,876 21,115
Provision for income
taxes (2,722) (655) (11,217) (6,930)
----------- ----------- ----------- -----------
Net income $ 5,123 $ 3,811 $ 20,659 $ 14,185
=========== =========== =========== ===========
Earnings per share of
common stock
Net income
Basic $ 0.30 $ 0.23 $ 1.22 $ 0.85
Diluted $ 0.29 $ 0.22 $ 1.19 $ 0.83
Weighted average number
of common shares and
potential common shares
outstanding
Basic 17,094 16,806 16,948 16,734
Diluted 17,483 17,097 17,335 17,107
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except shares)
December 31, December 31,
2015 2014
------------ ------------
ASSETS (unaudited)
Current assets
Cash and cash equivalents $ 21,164 $ 21,583
Receivables, net 3,729 3,047
Income taxes receivable 611 1,139
Inventories 2,881 2,846
Prepaid expenses 3,402 4,021
Deferred income taxes - 1,626
------------ ------------
Total current assets 31,787 34,262
------------ ------------
Property and equipment
Land 29,549 29,415
Land improvements 6,701 6,701
Buildings 150,966 150,821
Buildings improvements 23,255 18,142
Furniture and equipment 134,704 125,671
Construction in progress 37,424 15,672
Leasehold improvements 1,347 1,347
------------ ------------
383,946 347,769
Less accumulated depreciation and amortization (180,792) (167,498)
------------ ------------
Net property and equipment 203,154 180,271
------------ ------------
Other assets
Goodwill 25,111 25,111
Intangible assets, net 6,200 7,366
Deferred income taxes 7,415 4,682
Other assets, net 1,179 609
------------ ------------
Total other assets 39,905 37,768
------------ ------------
Total assets $ 274,846 $ 252,301
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 40,900 $ -
Accounts payable 6,747 7,933
Construction accounts payable 1,407 1,790
Accrued expenses 21,873 19,327
------------ ------------
Total current liabilities 70,927 29,050
------------ ------------
Long - term debt - 46,300
------------ ------------
Total liabilities 70,927 75,350
------------ ------------
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;
17,202,699 outstanding at December 31, 2015;
16,812,794 outstanding at December 31, 2014 191 191
Additional paid-in capital 22,728 22,985
Treasury stock, 1,893,601 shares at December
31, 2015; 2,283,506 shares at December 31,
2014 (26,404) (32,970)
Retained earnings 207,404 186,745
------------ ------------
Total stockholders' equity 203,919 176,951
------------ ------------
Total liabilities and stockholders' equity $ 274,846 $ 252,301
============ ============
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES
RECONCILIATIN 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,
---------------------- ----------------------
2015 2014 2015 2014
---------- ---------- ---------- ----------
Adjusted EBITDA (1) $ 12,398 $ 9,536 $ 50,041 $ 43,475
Expenses:
Stock based compensation (606) (349) (1,544) (1,225)
Depreciation and
amortization (3,776) (4,320) (15,933) (17,824)
Colorado ballot initiative
costs - (19) - (1,864)
Interest expense, net of
amount capitalized (142) (288) (679) (1,104)
Loss on disposition of
assets (29) (94) (9) (343)
Provision for income taxes (2,722) (655) (11,217) (6,930)
---------- ---------- ---------- ----------
Net income $ 5,123 $ 3,811 $ 20,659 $ 14,185
========== ========== ========== ==========
(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 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.
Contacts: David Farahi Chief Operating Officer 775/825-4700 dfarahi@monarchcasino.com Joseph Jaffoni, Richard Land, James Leahy JCIR 212/835-8500 mcri@jcir.com