Monarch Casino & Resort Reports 2018 Third Quarter Net Revenue

MONARCH CASINO & RESORT REPORTS ALL-TIME RECORD QUARTERLY NET REVENUE OF $64.4 MILLION, NET INCOME OF $10.9 MILLION AND ADJUSTED EBITDA OF $18.4 MILLION

 

 

RENO, NV, October 24, 2018 – Monarch Casino & Resort, Inc. (Nasdaq: MCRI) (“Monarch” or “the Company”) today reported operating results for the quarter ended September 30, 2018, as summarized below:

($ in thousands, except per share data and percentages)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2018

 

2017

 

Increase

 

2018

 

2017

 

Increase

     Net revenue(1)

 $64,359

 

 $63,027

 

2.1%

 

 $180,536

 

 $174,670

 

3.4%

                       

     Adjusted EBITDA(2)

   18,427

 

   17,541

 

5.1%

 

   47,151

 

   45,457

 

3.7%

                       

     Net income

 $  10,859

 

 $  9,030

 

20.3%

 

 $  26,839

 

 $  21,141

 

27.0%

                       

     Basic EPS

 $    0.61

 

 $    0.51

 

19.6%

 

 $    1.51

 

 $    1.20

 

25.8%

     Diluted EPS

 $    0.58

 

 $    0.49

 

18.4%

 

 $    1.44

 

 $    1.16

 

24.1%

 

  • As described in the section below entitled “New Revenue Recognition Standard,” the Company has changed its revenue recognition policy effective January 1, 2018. This change resulted in a $35 thousand and $351 thousand increase in Net revenue for the three and nine months ended September 30, 2018, respectively. Please see the reconciliation provided at the end of this release for more information related to the changes in revenues and expenses.
  • 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: “Monarch’s long-term growth opportunity is taking shape as our operating results continue to benefit from the initiatives to leverage our market-leading amenities and customer service in two of the country’s most attractive gaming markets. With our significant development of Monarch Casino Black Hawk proceeding, we expect to benefit from the property’s optimal location and position as the market’s newest casino resort when our expanded resort amenities open in the summer of 2019.

“Reflecting solid third quarter performance at both Atlantis Casino Resort and Monarch Casino Black Hawk, we generated record breaking top and bottom line financial results, including 2.1% year over year revenue growth and 5.1% Adjusted EBITDA growth. Both Atlantis and Monarch Casino Black Hawk benefited from good visitation and strong slot play trends while non-gaming revenue performance remained healthy as our guests value the market-leading entertainment and amenities our properties provide. Our performance in Black Hawk, which remains under heavy construction, demonstrates both our ability to drive further growth and the long-term potential of the Black Hawk market.

“Our solid third quarter results were achieved despite the impact of continued wage pressure, ongoing construction disruption in Black Hawk and increased expenses related to some management-level hiring in Black Hawk as we begin to prepare for the expanded operation. Furthermore, our casino results at Atlantis Casino Resort were again impacted by abnormally low table games hold.

“Construction on our master planned expansion at Monarch Casino Black Hawk continues at full speed as the team concludes its work on the structure of the 23-story hotel tower and turns its attention to the exterior of the building and the build-out of interior spaces. Our contractor has informed us that our new expanded casino, restaurants, retail areas and approximately six floors of our new hotel tower will be completed in the second quarter of 2019 and that the remaining hotel tower floors and related amenities will be completed in the third quarter of 2019.

“The continued revitalization of Reno and significant investments being made throughout the Northern Nevada market, along with the health of our Denver feeder market and soon to be completed Monarch Casino Black Hawk expansion, favorably positions Monarch to generate significant free cash flow over time. In addition, we expect to retain our attractive leverage profile through the end of construction at Monarch Casino Black Hawk as we continue to fund a portion of the project with cash from operations. With our strong financial position and attractive growth opportunities, we believe the best days for Monarch are ahead.”

New Revenue Recognition Standard

On January 1, 2018, the Company adopted accounting standard update No. 2014-09 (“ASC 606”) and all the related amendments (“new revenue standard”) to all contracts which provides consistency in the reported financial information within the gaming industry. The Company applied the modified retrospective method and recognized the cumulative effect of the initial application of the new revenue standard as an adjustment to the opening balance of retained earnings. The opening retained earnings adjustment primarily related to the change in the accounting for the slot club liability from the immediate revenue/cost method to the deferred revenue method.

The new revenue standard also resulted in reclassifications to and from revenues, promotional allowances and operating expenses. Pursuant to the new revenue standard, food and beverage, hotel and other complimentaries are now valued at their retail price and included as revenues within their respective categories, with a corresponding decrease in gaming revenues, as the offsetting amount historically included in promotional allowances has been eliminated. In addition, the cost of providing these complimentary goods and services are now included as expenses within their respective categories, resulting in a corresponding decrease in casino expenses. While those changes have resulted in a $35 thousand and $351 thousand increase in net revenue for the three and nine months ending September 30, 2018, respectively, they had no impact on adjusted EBITDA, net income and EPS (basic and diluted).

Financial results for the three months and nine months ending September 30, 2017 have not been restated and are reported under the accounting standards in effect during those periods. The Company has provided a reconciliation between the new revenue standard and the old revenue standard for the three and nine months ending September 30, 2018 at the end of this release.

 

Summary of 2018 Third Quarter Operating Results

For the 2018 third quarter, consolidated net revenues of $64.4 million increased 2.1% from $63.0 million in the prior year. Primarily due to the previously announced change in revenue recognition accounting, casino revenues declined 31.0% year over year while hotel revenues increased 25.3% and food and beverage revenues increased 13.0%. Please see “Monarch Casino & Resort, Inc. and Subsidiaries Reconciliation of Post to Pre ASC 606 Adoption” below for more information. Casino revenues were also negatively impacted by low table games hold at Atlantis Casino Resort.

Selling, general and administrative (“SG&A”) expenses for the third quarter of 2018 were $16.8 million compared to $16.4 million in the prior year period, driven primarily by increased labor and utility expenses. As a percentage of net revenue, SG&A expenses were 26.1% compared to 26.0% a year ago. Casino operating expense as a percentage of casino revenue decreased to 34.2% in the third quarter of 2018 compared to 39.3% in the third quarter of 2017 due to the adoption of the new revenue standard, partially offset by lower table games revenue at Atlantis. Food and beverage operating expense as a percentage of food and beverage revenue increased to 74.2% during the third quarter of 2018 from 41.0% a year ago as a result of the adoption of the new revenue standard, partially offset by improvements in product cost. Hotel operating expense as a percentage of hotel revenue decreased to 36.2% in the third quarter of 2018 compared to 37.4% in the same period in the prior year, primarily as a result of operational cost efficiencies, partially offset by the effect of the adoption of the new revenue standard.

The Company generated consolidated adjusted EBITDA of $18.4 million in the third quarter of 2018, an increase of $0.9 million, or 5.1%, over the same period a year ago. Net income and diluted EPS for the third quarter of 2018 rose 20.3% and 18.4%, respectively, partially benefiting from a lower tax rate as a result of the Tax Cuts and Jobs Act enacted late last year.

Monarch Black Hawk Expansion

Summarized below is an update on the Company’s ongoing upgrade and expansion of Monarch Casino Black Hawk, including the budgeted costs and completion dates for the project as well as the amounts spent through September 30, 2018: 

$ in millions

Budget Cost

 

Total Spent Through September 30, 2018

 

Left to Spend

 

Estimated
Completion Date

 

I. Existing Facility

             

 

  Monarch Casino Black Hawk (1)

$76

 

$76

 

-

 

Completed

 

  Existing Facility Upgrade (2)(3)

$34 - $36

 

$24

 

$10- $12

 

Interior completed; Exterior 1Q19

 

          Total Existing Facility

$110 - $112

 

$100

 

$10 - $12

   

 

               

 

II. Expansion

             

 

  Acquired Land Parcels

$10

 

$10

 

-

 

Completed

 

  Parking Structure

$38 - $41

 

$41

 

-

 

Completed

 

  Hotel Tower & Casino (3)

 $264 - $269

 

$105

 

$159 - $164

 

3Q19

 

  Other

  $8 - $10

 

$10

 

-

   

 

          Total Expansion

$320 - $330

 

$166

 

$159- $164

   

 

          Total Cost

$430 - $442

 

$266

 

$169 - $176

   

 

               

 

(1) The Company paid $76.0 million cash or $69.2 million net of acquired working capital and NOLs when it acquired Monarch Casino Black Hawk (formerly Riviera Black Hawk Casino) in 2012.

 

(2) Includes upgrades to the interior, which were completed in August 2015, demolition of the original garage, and upgrades to the exterior of the existing facility to match the design of the master planned expansion.

(3) The Company anticipates funding the hotel tower and casino expansion, as well as the existing facility exterior upgrades, from a combination of operating cash flow and the amended and restated credit facility (the “Amended Credit Facility”).

 

                         

As stated above, our contractor has informed us that expanded casino, restaurants, retail areas and approximately six floors of our new hotel tower will be completed in the second quarter of 2019 and that the remaining hotel tower floors and related amenities will be completed in the third quarter of 2019.

Credit Facility and Liquidity

Capital expenditures of $41.2 million in the third quarter of 2018 include construction costs related to the Monarch Casino Black Hawk expansion and ongoing capital maintenance spending. Capital expenditures were funded from the Company’s operating cash flows as well as $32.3 million of borrowings against Monarch’s Amended Credit Facility during the quarter. The amount outstanding on Monarch’s Amended Credit Facility as of September 30, 2018 was approximately $69.3 million.

Interest expense, net of amount capitalized, for the third quarter of 2018 was $55 thousand, compared to $161 thousand in the third quarter of 2017.

Monarch continues to believe that its operating cash flow and the approximately $180.1 million available under its Amended Credit Facility will be sufficient to fund all remaining costs related to the completion of the Monarch Casino Black Hawk expansion.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, statements relating to (i) our plans, objectives, near- and long-term outlook, opportunities, expectations, growth prospects and future operations with respect to Atlantis Casino Resort Spa and Monarch Casino Black Hawk and the markets in their respective regions; (ii) our plans, costs, financing, and additional expenses and revenue opportunities as a result of project and budget modifications, construction, completion and opening timelines of upgraded, redesigned and/or expanded facilities at Monarch Casino Black Hawk; and (iii) our expectations regarding our future position in the market and the quality of service we provide to our guests. Actual results and future events and conditions may differ materially from those described in any forward-looking statements. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation:

  • construction factors, including delays, disruptions, increased costs of labor and materials, contractor disagreements, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters, building permit issues and other regulatory approvals or issues;
  • we have not yet entered into a guaranteed maximum price (“GMP”) construction contract with our Monarch Casino Black Hawk general contractor and negotiation of the GMP may involve disagreements between the parties;
  • components of our Monarch Casino Black Hawk construction project will be outside the scope of any GMP contract;
  • access to available and reasonable financing on a timely basis;
  • our ability to generate sufficient operating cash flow to help finance our expansion plans;
  • our ability to effectively manage expenses to optimize its margins and operating results;
  • changes in laws and regulations permitting expanded and other forms of gaming in our key markets;
  • the effects of local and national economic, credit and capital market conditions on the economy in general and on the gaming industry and our business in particular;
  • guest acceptance of our expanded facilities once completed and the resulting impact on our market position, growth and future financial results; and
  • competition in our target market areas

Additional information concerning potential factors that could adversely affect all forward-looking statements, including the Company's financial results, is included in our Securities and Exchange Commission filings, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q, which are available on our website at www.monarchcasino.com.

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 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 Monarch Casino Black Hawk features approximately 30,000 square feet of casino space; approximately 740 slot machines; 14 table games; a 250-seat buffet-style restaurant; a snack bar and a new nine-story parking structure with approximately 1,350 spaces, plus additional existing valet parking bringing total parking capacity to 1,500 spaces. Once completed, the Monarch Casino 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, and associated support facilities.

Contacts:

David Farahi

Chief Operating Officer

775/825-4700 or dfarahi@monarchcasino.com

Joseph Jaffoni, Richard Land, James Leahy

JCIR

212/835-8500 or mcri@jcir.com

 

 

- financial tables follow -

 

 

 

MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

 

Three months ended
September 30,

 

Nine months ended September 30,

 

 

2018

 

2017

 

2018

 

2017

Revenues

 

 

 

 

 

 

 

 

   Casino

 

$     33,504

 

$     48,574

 

$     94,591

 

$   135,207

   Food and beverage

 

     18,472

 

     16,342

 

       52,951

 

       47,394

   Hotel

 

       9,167

 

       7,316

 

       23,627

 

       19,204

   Other

 

       3,216

 

       3,191

 

         9,367

 

         9,039

     Gross revenues

 

     64,359

 

     75,423

 

     180,536

 

     210,844

   Less promotional allowances

 

    -

 

    (12,396)

 

    -

 

    (36,174)

     Net revenues

 

     64,359

 

     63,027

 

     180,536

 

     174,670

 

               

Operating expenses

               

   Casino

 

       11,455

 

       19,097

 

       33,007

 

       54,837

   Food and beverage

 

       13,700

 

        6,699

 

       39,990

 

       19,461

   Hotel

 

         3,315

 

         2,735

 

         9,870

 

         7,192

   Other

 

      1,571

 

      1,126

 

        4,681

 

        3,133

   Selling, general and administrative

 

      16,793

 

      16,398

 

       48,130

 

       46,117

   Depreciation and amortization

 

         3,651

 

         3,722

 

       11,081

 

       11,397

   Loss on disposition of assets

 

           8

 

           -

 

           12

 

           4

     Total operating expenses

 

       50,493

 

       49,777

 

     146,771

 

     142,141

   

 Income from operations

 

       13,866

 

       13,250

 

       33,765

 

       32,529

 

               

Other expenses

               

   Interest expense, net of amounts capitalized

 

   (55)

 

   (161)

 

        (177)

 

        (639)

     Total other expense

 

       (55)

 

       (161)

 

         (177)

 

         (639)

   

 

 

 

 

 

 

 

     Income before income taxes

 

       13,811

 

       13,089

 

       33,588

 

       31,890

Provision for income taxes

 

      (2,952)

 

      (4,059)

 

      (6,749)

 

    (10,749)

     Net income

 

$     10,859

 

$       9,030

 

$     26,839

 

$     21,141

                 

Earnings per share of common stock

               

   Net income

               

     Basic

 

$         0.61

 

$         0.51

 

$         1.51

 

$         1.20

     Diluted

 

$         0.58

 

$         0.49

 

$         1.44

 

$         1.16

 

               

Weighted average number of common shares and potential common shares outstanding

               

    Basic

 

       17,886

 

       17,616

 

       17,826

 

       17,541

    Diluted

 

18,631

 

18,398

 

18,582

 

18,212

 

 

 

 

 

 

 

MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

   

September 30,

 

December 31,

   

2018

 

2017

ASSETS

 

(unaudited)

   

Current assets

       

    Cash and cash equivalents

 

 $             34,694

 

 $             29,151

    Receivables, net

 

                    6,933

 

                    6,925

    Income taxes receivable

 

-

 

2,008

    Inventories

 

                  3,324

 

                    3,335

    Prepaid expenses

 

                   4,611

 

                   4,612

        Total current assets

 

                  49,562

 

                  46,031

Property and equipment

       

    Land

 

                30,034

 

                 30,034

    Land improvements

 

                    7,281

 

                    7,249

    Buildings

 

                193,286

 

                193,286

    Buildings improvements

 

                 25,460

 

                  24,745

    Furniture and equipment

 

                143,726

 

                140,404

    Construction in progress

 

                  136,089

 

                  48,834

    Leasehold improvements

 

3,782

 

                    3,800

 

 

539,658

 

               448,352

    Less accumulated depreciation and amortization

 

             (207,692)

 

             (197,638)

        Net property and equipment

 

               331,966

 

               250,714

Other assets

       

    Goodwill

 

25,111

 

                  25,111

    Intangible assets, net

 

2,995

 

                    3,869

    Deferred income taxes

 

3,543

 

                     3,544

    Other assets, net

 

2,415

 

                     2,818

        Total other assets

 

                  34,064

 

                  35,342

          Total  assets

 

 $            415,592

 

 $            332,087

 

LIABILITIES AND STOCKHOLDERS' EQUITY

       

Current liabilities

       

    Accounts payable

 

$               8,875

 

$                8,184

    Construction accounts payable

 

                    14,775

 

                    5,823

    Accrued expenses

 

29,929

 

25,406

    Income taxes payable

 

91

 

-

        Total current liabilities

 

53,670

 

39,413

Long - term debt

 

            69,270

 

            26,200

          Total liabilities

 

                 122,940

 

                  65,613

 

Stockholders' equity

       

    Preferred stock, $.01 par value, 10,000,000  shares authorized; none issued

 

-

 

-

    Common stock, $.01 par value, 30,000,000 shares authorized;

 

                     191

 

                      191

       19,096,300 shares issued; 17,894,057 outstanding at September 30, 2018;

       

       17,759,446 outstanding at December 31, 2017

       

    Additional paid-in capital

 

                  29,188

 

                  26,890

    Treasury stock, 1,202,243 shares at September 30, 2018; 1,336,854 shares

 

               (16,224)

 

               (18,123)

       at December 31, 2017

       

    Retained earnings

 

                279,497

 

                257,516

          Total stockholders' equity

 

                292,652

 

                266,474

          Total liabilities and stockholders' equity

 

 $            415,592

 

 $            332,087

 

 

 

MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES

RECONCILIATION OF POST TO PRE ASC 606 ADOPTION

 (In thousands, unaudited)

 

 

Three Months Ended September 30, 2018

 

Post ASC 606 Adoption

 

ASC 606 Changes

 

 

Pre ASC 606 Adoption

Revenues

 

 

 

 

 

 

Casino

$33,504

 

$15,755

(a)(b)(c)(d)

 

$49,259

Food and beverage

18,472

 

(1,412)

(a)(d)(e)

 

17,060

Hotel

9,167

 

(1,477)

(a)(f)

 

7,690

Other

3,216

 

37

(a)(d)

 

3,253

Gross revenues

64,359

 

12,903

 

 

77,262

Less promotional allowances

-

 

(12,938)

(a)(d)

 

(12,938)

Net revenues

64,359

 

(35)

(b)(c)(e)(f)

 

64,324

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

Casino

11,455

 

8,521

(b)(c)(g)

 

19,976

Food and beverage

13,700

 

(7,271)

(e)(g)

 

6,429

Hotel

3,315

 

(748)

(f)(g)

 

2,567

Other

1,571

 

(537)

(g)

 

1,034

Selling, general and administrative

16,793

 

-

 

 

16,793

Depreciation and amortization

3,651

 

-

 

 

3,651

Loss on disposal of assets

8

 

-

 

 

8

Total operating expenses

50,493

 

(35)

 

 

50,458

Income from operations

 13,866

 

 -

 

 

 13,866

Adjusted EBITDA (1)

$18,427

 

-

 

 

$18,427

       

 

 

 

                 
  • Definitions, disclosures and reconciliations of non-GAAP financial information are included later in the release.

 

  • Change as a result of reclassification of current period complimentaries at estimated retail price from promotional allowances to casino, food and beverage, hotel, spa and retail revenues.
  • Change as a result of reclassification of the earned and unused points during the period from casino expense to casino revenue.
  • Change as a result of reclassification of the wide area progressive system expense from casino revenue to casino expense.
  • Change as a result of the change of the casino floor bars menu prices and some retail outlets prices from discounted to retail price.
  • Change as a result of reclassification of the banquets service fees from food and beverage expense to food and beverage revenue.
  • Change as a result of reclassification of the group rebates and commissions from hotel expense to hotel revenue.
  • Change as a result of the elimination of the reclassification journal entry that reclassified the costs of complimentaries from hotel, food and beverage and other expense categories to casino expense. Under ASC 606, the costs of complimentaries stay in the complimentaries revenue producing department.

 

MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES

RECONCILIATION OF POST TO PRE ASC 606 ADOPTION

 (In thousands, unaudited)

 

 

Nine Months Ended September 30, 2018

 

Post ASC 606 Adoption

 

ASC 606 Changes

 

 

Pre ASC 606 Adoption

Revenues

 

 

 

 

 

 

Casino

$94,591

 

$44,341

(a)(b)(c)(d)

 

$138,932

Food and beverage

52,951

 

(4,228)

(a)(d)(e)

 

48,723

Hotel

23,627

 

(3,414)

(a)(f)

 

20,213

Other

9,367

 

81

(a)(d)

 

9,448

Gross revenues

180,536

 

36,780

 

 

217,316

Less promotional allowances

-

 

(37,131)

(a)(d)

 

(37,131)

Net revenues

180,536

 

(351)

(b)(c)(e)(f)

 

180,185

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

Casino

33,007

 

24,852

(b)(c)(g)

 

57,859

Food and beverage

39,990

 

(21,138)

(e)(g)

 

18,852

Hotel

9,870

 

(2,481)

(f)(g)

 

7,389

Other

4,681

 

(1,584)

(g)

 

3,097

Selling, general and administrative

48,130

 

-

 

 

48,130

Depreciation and amortization

11,081

 

-

 

 

11,081

Loss on disposal of assets

12

 

-

 

 

12

Total operating expenses

146,771

 

(351)

 

 

146,420

Income from operations

 33,765

 

 -

 

 

 33,765

Adjusted EBITDA (1)

$47,151

 

-

 

 

$47,151

       

 

 

 

                 
  • Definitions, disclosures and reconciliations of non-GAAP financial information are included later in the release.
  • Change as a result of reclassification of current period complimentaries at estimated retail price from promotional allowances to casino, food and beverage, hotel, spa and retail revenues.
  • Change as a result of reclassification of the earned and unused points during the period from casino expense to casino revenue.
  • Change as a result of reclassification of the wide area progressive system expense from casino revenue to casino expense.
  • Change as a result of the change of the casino floor bars menu prices and some retail outlets prices from discounted to retail price.
  • Change as a result of reclassification of the banquets service fees from food and beverage expense to food and beverage revenue.
  • Change as a result of reclassification of the groups rebate and commissions from hotel expense to hotel revenue.
  • Change as a result of the elimination of the reclassification journal entry that reclassified the costs of complimentaries from hotel, food and beverage and other expense categories to casino expense. Under ASC 606, the costs of complimentaries stay in the complimentaries revenue producing department.

 

MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES

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 September 30,

 

Nine Months Ended September 30,

 

2018

 

2017

 

2018

 

2017

          Adjusted EBITDA (1)

 $18,427

 

 $17,541

 

$47,151

 

$45,457

Expenses:

             

     Stock based compensation

(902)

 

(569)

 

(2,293)

 

(1,527)

     Depreciation and amortization

(3,651)

 

(3,722)

 

(11,081)

 

(11,397)

     Interest expense, net of amount capitalized

(55)

 

(161)

 

(177)

 

(639)

     Loss on disposition of assets

(8)

 

-

 

(12)

 

(4)

     Provision for income taxes

(2,952)

 

(4,059)

 

(6,749)

 

(10,749)

          Net income

 $10,859

 

 $9,030

 

$26,839

 

$21,141

           

  • 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 US 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 US GAAP) or as a measure of liquidity. This measure enables comparison of the Company's performance over multiple periods, as well as against the performance of other companies in our industry 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.

 

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