Monarch Casino and Resort Q1 2007 Earnings Results

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934


Date of Report (Date of earliest event reported):
April 25, 2007
 
Monarch Casino & Resort, Inc.
(Exact name of registrant as specified in its charter)

 
Nevada
 
0-22088
 
88-0300760
 
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification No.)

 
3800 South Virginia Street, Reno, Nevada
 
89502
(Address of principal executive offices)
(Zip Code)
   
Registrant’s telephone number, including area code:
(775) 335-4600
 
Not applicable.
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 


Item 2.02 Results of Operations and Financial Condition

MONARCH CASINO REPORTS RECORD BREAKING FIRST- QUARTER RESULTS

·  
Net revenue of $37.8 million
·  
Income from operations of $8.2 million
·  
EBITDA(1) of $10.3 million
·  
Diluted EPS of 28 cents

RENO, NV - April 25, 2007 - Monarch Casino & Resort, Inc. (NASDAQ: MCRI) (the "Company"), owner of the Atlantis Casino Resort Spa in Reno, Nevada, today announced record first-quarter results for net revenue, income from operations, EBITDA(1) and diluted EPS.
The Company reported record net revenue for a first-quarter of $37.8 million, a 6.1% increase over the first quarter of 2006, and announced that the gross revenue generated by each of its revenue centers was also the highest ever reported for a first quarter. Specifically, casino, food and beverage and hotel operations each drove gross revenue increases over the same quarter of the prior year of 4.9%, 7.8% and 13.2%, respectively.
The Company announced quarterly income from operations of $8.2 million, EBITDA(1) of $10.3 million and diluted EPS of 28 cents, each of which were also the highest ever reported for a first quarter.
The Company reported a $689 thousand, or 6.4%, increase in selling, general and administrative expenses over the same quarter of the prior year. The primary drivers of this increase were increased marketing and promotional expense and increased payroll costs.
The Company announced that it remained debt-free during the quarter and increased its cash balance to $44.2 million as of March 31, 2007.
 Monarch’s CEO and Co-Chairman John Farahi commented on the Company’s performance:
“These results represent another in a series of record breaking quarters for our team. We are very pleased. This sustained, strong performance is a tribute to our team’s efforts and ability to deliver a high-quality experience to our guests.” Mr. Farahi added, “We remain on-track to break ground on our previously announced expansion in the second quarter and expect construction to be completed in the second quarter of 2008.”
Monarch Casino & Resort, Inc., through its wholly-owned subsidiary, owns and operates the tropically-themed Atlantis Casino Resort Spa in Reno, Nevada. The Atlantis is the closest hotel-casino to, and is directly across the street from, the Reno-Sparks Convention Center. The Atlantis features a Sky Terrace, a unique structure rising approximately 55 feet above street level and spanning 160 feet across Virginia Street with no intermediate support pillars. The Sky Terrace connects the Atlantis to a 16-acre parcel of land owned by the Company, that is compliant with all casino zoning requirements and is suitable and available for future expansion and growth. Currently, the Company uses it as additional paved parking for the Atlantis. The existing Atlantis site offers almost 1,000 guest rooms in three contiguous high-rise hotel towers and a motor lodge. The Atlantis features approximately 51,000 square feet of high-energy casino space with 38 table games and approximately 1,450 slot and video poker machines, a sports book, Keno and a poker room, and offers a variety of dining choices in the form of nine high-quality food outlets.
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 and (ii) future expansion plans. The actual results 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.

Contacts: Ron Rowan, CFO at (775) 825-4700 or rrowan@monarchcasino.com
John Farahi, CEO at (775) 825-4700 or JohnFarahi@monarchcasino.com

For additional information visit Monarch's web site at monarchcasino.com.



(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.


Monarch Casino & Resort, Inc.
Condensed Consolidated Statements of Income

       
Three Months Ended
       
March 31,
       
2007
  
2006
       
(UNAUDITED)
  
(UNAUDITED)
Revenues
        
 
Casino
  
$25,298,272
 
$24,124,047
 
Food and beverage
  
10,504,215
 
9,744,817
 
Hotel
  
6,827,967
 
6,033,935
 
Other
  
1,188,623
 
1,090,050
   
Gross revenues
  
43,819,077
 
40,992,849
Less promotional allowances
  
(6,037,486)
  
(5,387,714)
   
Net revenues
  
37,781,591
 
35,605,135
Operating expenses
        
 
Casino
  
8,469,337
 
8,012,162
 
Food and beverage
  
4,968,717
 
4,790,771
 
Hotel
  
2,143,340
 
2,103,723
 
Other
  
363,620
 
314,454
 
Selling, general and administrative
  
11,530,773
 
10,841,486
 
Gaming development costs
  
30
 
43,765
 
Depreciation and amortization
  
2,075,446
 
2,146,758
   
Total operating expenses
  
29,551,263
 
28,253,119
   
Income from operations
  
8,230,328
 
7,352,016
             
Other income (expense)
        
 
Interest income
  
343,884
 
526
 
Interest expense
  
(149,100)
  
(59,444)
   
Total other income (expense)
  
194,784
 
(58,918)
   
Income before income taxes
  
8,425,112
 
7,293,098
Provision for income taxes
  
(2,930,000)
 
(2,525,000)
   
Net income
  
$ 5,495,112
 
$ 4,768,098
             
Earnings per share of common stock
        
 
Net income
        
   
Basic
  
$ 0.29
 
$ 0.25
   
Diluted
  
$ 0.28
 
$ 0.25
             
Weighted average number of common shares and potential common shares outstanding
        
   
Basic
  
19,070,472
  
18,885,595
   
Diluted
  
19,323,646
  
19,252,277
             
             
 
 
 
MONARCH CASINO & RESORT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
           
     
March 31,
 
December 31,
     
2007
  
2006
ASSETS
(UNAUDITED)
    
Current assets
      
 
Cash
$ 44,191,405
 
$ 36,985,187
 
Receivables, net
3,182,040
 
3,268,970
 
Inventories
1,409,531
 
1,471,667
 
Prepaid expenses
3,017,152
 
2,833,126
 
Deferred income taxes
1,139,985
 
965,025
   
Total current assets
52,940,113
 
45,523,975
           
Property and equipment
      
 
Land
10,339,530
 
10,339,530
 
Land improvements
3,166,107
 
3,166,107
 
Buildings
78,955,538
 
78,955,538
 
Building improvements
10,435,062
 
10,435,062
 
Furniture & equipment
74,936,335
 
72,708,061
 
Leasehold improvements
1,346,965
 
1,346,965
     
179,179,537
 
176,951,263
 
Less accumulated depreciation and amortization
(86,401,024)
  
(84,325,578)
   
Net property and equipment
92,778,513
 
92,625,685
Other assets, net
89,648
 
231,247
 
Total assets
$ 145,808,274
 
$ 138,380,907
           
LIABILITIES AND STOCKHOLDERS' EQUITY
      
Current liabilities
      
 
Accounts payable
$ 8,051,155
 
$ 8,590,669
 
Accrued expenses
8,562,964
 
9,878,851
 
Federal income taxes payable
3,187,051
 
16,457
   
Total current liabilities
19,801,170
 
18,485,977
           
Deferred income taxes
4,047,614
 
4,248,614
           
Stockholders' equity
      
 
authorized; none issued
-
 
-
 
Common stock, $.01 par value, 30,000,000 shares
      
 
authorized; 19,072,550 shares issued;
      
 
19,086,434 outstanding at 3/31/07
      
 
19,065,968 outstanding at 12/31/06
190,864
 
190,726
 
Additional paid-in capital
23,998,824
 
23,205,045
 
Treasury stock, 0 shares at 3/31/07
      
 
6,582 shares at 12/31/06, at cost
-
 
(24,145)
 
Retained earnings
97,769,802
 
92,274,690
   
Total stockholders' equity
121,959,490
 
115,646,316
 
Total liability and stockholder's equity
$ 145,808,274
 
$ 138,380,907
           

 
 
 

 
Monarch Casino & Resort, Inc.
Reconciliation of Net Income to EBITDA (1)



 
Three Months Ended
  
 
March 31,
 
2007
  
2006
    
 
(UNAUDITED)
  
(UNAUDITED)
    
Net Income
$ 5,495,112
 
$ 4,768,098
   
Adjustments
          
Provision for income taxes
2,930,000
 
2,525,000
   
Interest expense
149,100
 
59,444
   
Depreciation & amortization
2,075,446
 
2,146,758
   
Interest income
(343,884)
  
(526)
    
EBITDA(1)
$ 10,305,774
  
$ 9,498,774
   
           
         
             
             
         
         
           
           
           
           
         











(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.