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Monarch Casino & Resort Inc. Reports Operating Results (10-Q)

May 10, 2010 | About:

Monarch Casino & Resort Inc. (NASDAQ:MCRI) filed Quarterly Report for the period ended 2010-03-31.

Monarch Casino & Resort Inc. has a market cap of $173.02 million; its shares were traded at around $10.73 with a P/E ratio of 22.35 and P/S ratio of 1.29. Monarch Casino & Resort Inc. had an annual average earning growth of 4.4% over the past 10 years.MCRI is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

For the three months ended March 31, 2010, our net income was $2.4 million, or $0.15 per diluted share, on net revenues of $34.4 million, an increase from net income of $922 thousand, or $0.06 per diluted share, on net revenues of $32.6 million for the three months ended March 31, 2009. Income from operations for the three months ended March 31, 2010 totaled $4.2 million, a 121.1% increase when compared to $1.9 million for the same period in 2009. Net revenues and net income increased 5.5% and 166.7%, respectively, when compared to last years first quarter.

Hotel revenues were $5.2 million for the first quarter of 2010, an increase of 8.3% from the $4.8 million reported in the 2009 first quarter. This increase was the result of higher hotel occupancy, an increase in the average daily room rate (ADR) and a $10 per day resort fee, paid by our hotel guests, which we implemented on June 1, 2009. Hotel revenues in the first quarter of 2009 included a $3 per occupied room energy surcharge. During the first quarter of 2010, the Atlantis experienced a 78.4% occupancy rate, as compared to 76.9% during the same period in 2009. The Atlantis ADR was $69.08 in the first quarter of 2010 compared to $66.89 in the first quarter of 2009. Hotel operating expenses as a percent of hotel revenues decreased to 27.7% for the first quarter of 2010 from 32.6% for the first quarter of 2009 due to the increased hotel revenue combined with a decrease in hotel operating expense of $140 thousand due to various miscellaneous expense reductions.

Selling, general and administrative (SG&A) expenses were $11.1 million in the first quarter of 2010, a 4.3% decrease from $11.6 million in the first quarter of 2009. The decrease was primarily due to reductions in bad debt expense of $400 thousand, legal expense of $200 thousand, electricity expense of $195 thousand partially offset by increased marketing expense of $185 thousand and miscellaneous expense of $60 thousand. As a percentage of net revenue, SG&A expenses decreased to 32.2% in the

A driveway was completed and opened on September 30, 2004 that is being shared between the Atlantis and a shopping center (the Shopping Center) directly adjacent to the Atlantis. The Shopping Center is controlled by an entity whose owners include our controlling stockholders. As part of this project, in January 2004, we leased a 37,368 square-foot corner section of the Shopping Center for a minimum lease term of 15 years at an annual rent of $300,000, subject to increase every 60 months based on the Consumer Price Index. We also use part of the common area of the Shopping Center and pay our proportional share of the common area expense of the Shopping Center. We have the option to renew the lease for three five-year terms, and at the end of the extension periods, we have the option to purchase the leased section of the Shopping Center at a price to be determined based on an MAI Appraisal. The leased space is being used by us for pedestrian and vehicle access to the Atlantis, and we may use a portion of the parking spaces at the Shopping Center. The total cost of the project was $2.0 million; we were responsible for two thirds of the total cost, or $1.35 million. The cost of the new driveway is being depreciated over the initial 15-year lease term. Some components of the new driveway are being depreciated over a shorter period of time. We paid $85,200 in lease payments for the leased driveway space at the Shopping Center during the three months ended March 31, 2010.

(3) Purchase obligations represent approximately $830 thousand of commitments related to capital projects and approximately $1.9 million of materials and supplies used in the normal operation of our business. Of the total purchase order and construction commitments, approximately $1.9 million are cancelable by us upon providing a 30-day notice.

The maximum principal available under the New Credit Facility is reduced by $2.5 million per quarter beginning on December 31, 2009. At March 31, 2010, the maximum principal available was $55 million. We may permanently reduce the maximum principal available at any time so long as the amount of such reduction is at least $500,000 and a multiple of $50,000.

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