EBITDA Improves 22.2%; Net Income Increases 27.6%
Monarch Casino & Resort, Inc. (NASDAQ:MCRI), owner of the Atlantis Casino Resort in Reno, Nevada, today announced an all-time quarterly record for its third quarter ended September 30, 2005.
The Company reported 2005 third quarter EBITDA (1), of $13.3 million, a new all-time Company quarterly record and a 22.2% improvement over the $10.9 million EBITDA (1) in the 2004 third quarter. The improvement was driven by record net revenue and improved operating margins and beat published consensus analysts' estimates of $12.0 million. Net revenues at the Company's Atlantis Casino Resort were $38.3 million during the quarter, a 9.4% increase from $35.1 million during the same period in 2004. The record net revenues were driven primarily by a 12.2% increase in casino revenues, which reached an all- time Company quarterly record of $25.4 million during the three months ended September 30, 2005. Hotel revenues increased 3.9%, food and beverage revenues improved 4.9% and other revenue centers grew 19.3% in the third quarter of 2005 compared to the third quarter of 2004. The 9.4% increase in net revenues, combined with across-the-board operating margin improvements and an increase of only 3.6% in operating costs and expenses, led to a 26.6% increase in income from operations for the three months ended September 30, 2005, as compared to the same period in 2004.
Net income for the 2005 third quarter was a record $7.1 million, a 27.6% increase from net income of $5.6 million for the same period a year earlier and translated into earnings per diluted share (EPS) of $0.37 versus $0.30 for the same period last year. The Company's third quarter 2005 EPS of $0.37 beat published consensus analysts' estimates of $0.33. During the 2005 third quarter, the Company achieved 71.2% flow through of incremental net revenue to income from operations leading to an operating margin of 29.1% for the period, compared to 25.1% during last year's third quarter.
Monarch's CEO and Co-Chairman John Farahi commented on the Company's third quarter performance: "I believe our record results stem from a confluence of favorable factors. The vitality of our market manifested by the area's strong economy and continuing population growth combined with our great location and product drives these remarkable numbers. Our management team has done a superb job taking advantage of these opportunities."
Mr. Farahi continued: "Our improving balance sheet also opens the possibilities for new growth opportunities for Monarch which includes current planning for the next phase of our expansion at Atlantis." During the third quarter, the Company reduced the unpaid principal balance under its credit facility, bringing its outstanding balance to $11.9 million at September 30, 2005 from $32.4 million at December 31, 2004.
Monarch Casino & Resort, Inc., through its wholly-owned subsidiary, owns and operates the tropically-themed Atlantis Casino Resort 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 is recognizable due to its Sky Terrace, a unique structure rising approximately 55 feet from 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 of the Atlantis facilities and is currently being used by the Company 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 tropically-themed 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.
Monarch Casino & Resort, Inc.
Condensed Consolidated Statements of Income
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Revenues
Casino $25,397,320 $22,642,767 $70,322,452 $63,490,456
Food and beverage 10,164,356 9,689,843 28,595,670 27,956,559
Hotel 7,296,627 7,021,432 18,668,109 18,974,036
Other 1,272,052 1,066,081 3,460,808 2,874,923
Gross revenues 44,130,355 40,420,123 121,047,039 113,295,974
Less promotional
allowances (5,782,463) (5,359,370) (16,154,058) (15,035,242)
Net revenues 38,347,892 35,060,753 104,892,981 98,260,732
Operating expenses
Casino 8,189,181 7,870,607 23,676,274 22,977,956
Food and beverage 4,862,299 4,912,576 14,030,259 14,122,051
Hotel 2,024,190 1,949,466 5,863,026 6,006,341
Other 354,625 352,855 999,689 1,047,509
Selling, general
and
administrative 9,640,312 9,117,102 28,222,479 25,972,178
Gaming
development cost 13,382 -- 274,090 --
Depreciation and
amortization 2,113,060 2,047,706 6,251,172 7,687,196
Total operating
expenses 27,197,049 26,250,312 79,316,989 77,813,231
Income from
operations 11,150,843 8,810,441 25,575,992 20,447,501
Other expense
Interest expense (301,629) (333,483) (890,966) (1,125,121)
Stockholder
guarantee fee
expense -- -- -- (136,164)
Total other
expense (301,629) (333,483) (890,966) (1,261,285)
Income before
income taxes 10,849,214 8,476,958 24,685,026 19,186,216
Provision for
income taxes 3,762,000 2,924,520 8,550,000 6,523,520
Net income $7,087,214 $5,552,438 $16,135,026 $12,662,696
Earnings per share
of common stock:
Basic $0.38 $0.30 $0.86 $0.68
Diluted $0.37 $0.30 $0.85 $0.67
Weighted average
number of common
shares and
potential common
shares
outstanding:
Basic 18,867,748 18,777,844 18,840,034 18,737,648
Diluted 19,103,711 18,817,744 19,082,667 18,794,422
Monarch Casino & Resort, Inc.
Condensed Consolidated Balance Sheets
September 30, December 31,
2005 2004
ASSETS (UNAUDITED)
Current assets
Cash $10,933,455 $11,814,778
Receivables, net 2,985,691 2,959,894
Federal income tax refund receivable -- 493,797
Inventories 1,277,645 1,452,696
Prepaid expenses 2,515,396 2,346,242
Deferred income taxes 1,115,719 1,115,719
Total current assets 18,827,906 20,183,126
Property and equipment
Land 10,339,530 10,339,530
Land improvements 3,166,106 3,226,913
Buildings 78,955,538 78,955,538
Building improvements 10,269,844 7,524,680
Furniture and equipment 66,686,391 65,146,594
Leasehold improvement 1,346,965 1,346,965
170,764,374 166,540,220
Less accumulated depreciation
and amortization (74,114,213) (68,791,045)
Net property and equipment 96,650,161 97,749,175
Other assets, net 269,524 406,620
Total assets $115,747,591 $118,338,921
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $-- $--
Accounts payable 7,351,459 5,747,775
Accrued expenses 6,782,698 7,918,299
Federal income taxes payable 1,207,203 --
Total current liabilities 15,341,360 13,666,074
Long-term debt, less current maturities 11,900,000 32,400,000
Deferred income taxes 6,035,507 6,509,505
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value,
10,000,000 shares authorized;
none issued -- --
Common stock, $.005 par value,
30,000,000 shares authorized;
19,072,550 shares issued;
18,868,146 outstanding at
9/30/05, 18,812,448 outstanding
at 12/31/04 95,363 95,363
Additional paid-in capital 17,831,307 17,463,272
Treasury stock, 204,404 shares
at 9/30/05, 260,102 shares
at 12/31/04, at cost (749,831) (954,152)
Retained earnings 65,293,885 49,158,859
Total stockholders' equity 82,470,724 65,763,342
Total liabilities and
stockholders' equity $115,747,591 $118,338,921
Monarch Casino & Resort, Inc.
Reconciliation of Net Income to EBITDA (1)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
(unaudited) (unaudited) (unaudited) (unaudited)
Net income $7,087,214 $5,552,438 $16,135,026 $12,662,696
Adjustments
Provision for
income taxes 3,762,000 2,924,520 8,550,000 6,523,520
Stockholder
guarantee fee
expense -- -- -- 136,164
Interest expense 301,629 333,483 890,966 1,125,121
Depreciation &
amortization 2,113,060 2,047,706 6,251,172 7,687,196
EBITDA (1) $13,263,903 $10,858,147 $31,827,164 $28,134,697
