Monarch Casino & Resort, Inc. (Nasdaq: MCRI) (“Monarch” or “the
Company”) today reported record operating results for the third
quarter ended September 30, 2022, as summarized below:
($ in thousands, except per share data and
percentages)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
2021 |
|
Increase |
|
|
2022 |
|
|
2021 |
|
Increase |
Net revenue |
$ |
133,727 |
|
$ |
111,630 |
|
19.8% |
|
$ |
357,334 |
|
$ |
284,309 |
|
25.7% |
|
|
|
|
|
|
|
|
|
|
|
|
Net income(1) |
$ |
27,493 |
|
$ |
22,314 |
|
23.2% |
|
$ |
65,046 |
|
$ |
48,617 |
|
33.8% |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(3) |
$ |
51,694 |
|
$ |
40,279 |
|
28.3% |
|
$ |
125,497 |
|
$ |
98,279 |
|
27.7% |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
1.45 |
|
$ |
1.20 |
|
20.8% |
|
$ |
3.43 |
|
$ |
2.62 |
|
30.9% |
Diluted earnings per share(2) |
$ |
1.41 |
|
$ |
1.15 |
|
22.6% |
|
$ |
3.33 |
|
$ |
2.51 |
|
32.7% |
|
|
|
|
|
|
|
|
|
|
|
|
- Net Income was negatively impacted by legal and consulting
costs, related to the ongoing litigation with the Monarch Black
Hawk general contractor, PCL Construction Services, Inc. The impact
during the third quarter of 2022 and 2021 was $2.8 million and $1.5
million, respectively, and the impact during the first nine months
of 2022 and 2021 was $6.5 million and $3.0 million,
respectively.
- Diluted EPS was negatively impacted by legal and consulting
costs, related to the ongoing litigation with the Monarch Black
Hawk general contractor, PCL Construction Services, Inc. The impact
during the third quarter of 2022 and 2021 was $0.14 and $0.08 per
share, respectively, and the impact during the first nine months of
2022 and 2021 was $0.33 and $0.15 per share,
respectively.
- 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: “Our
strong operating momentum continued in the 2022 third quarter as we
generated all-time quarterly record financial results, including a
28% increase in Adjusted EBITDA over the previous record, set in
the same quarter a year ago. The ramp-up of our expanded and
enhanced Black Hawk property continues at a robust pace, resulting
in market share gains that were complemented by solid performance
at our Atlantis in Reno. Over the last year, with the completion of
Monarch Black Hawk expansion, we have continued to fine-tune all
aspects of our business and are operating more efficiently and
effectively than ever before.
"Net revenue and Adjusted EBITDA of $133.7
million and $51.7 million, respectively, were all-time quarterly
records. We also delivered a record Adjusted EBITDA margin of
38.7%. We are not at full employment at either property and
continue to face a challenging labor market. Even so, our team
strives to deliver the full array of amenities and industry-leading
services that our guests have come to expect from Monarch.
“In Black Hawk, we continue to gain a greater
share of the market’s most valuable customers. Given the property’s
upscale design and amenities, we believe we have a long runway
ahead to fully unlock its potential. Another driver of our success
in Black Hawk is our state-of-the-art sports betting offering,
which has attracted new customers who are staying and playing with
us. We will continue to aggressively court this new cohort to
further capture their entertainment spend going forward.
“Atlantis continues to deliver strong results.
Our primary focus remains the ongoing enhancement of the property.
Guests’ response to the recently upgraded and redesigned rooms in
the first hotel tower has been very positive. In addition, we just
completed and opened new upscale retail space. We are planning a
renovation of the second Atlantis hotel tower early in 2023, as
well as several other capital projects, which will ensure that the
Atlantis remains Reno’s preferred destination for casino resort
gaming entertainment.
“Using cash flow from operations, we’ve now paid
down a substantial portion of our debt. Given our continued cash
flow growth and low leverage, we are evaluating a full range of
capital allocation options, including potential share repurchases
under our existing 2.9 million share repurchase authorization and
potential dividend. We continue to look for opportunities to bring
our success in Reno and Black Hawk to a new market and will move
aggressively when the right opportunity presents itself. We
continue to work on enhancing the value of our business and
rewarding our loyal stockholders.”
Summary of 2022 Third Quarter Operating
Results In the 2022 third quarter, the Company generated
net revenue of $133.7 million, an increase of 19.8% from $111.6
million in the prior-year quarter. Casino, food and beverage
(“F&B”), and hotel revenues increased 20.3%, 20.6% and 19.9%
year over year, respectively. The increase in revenues was driven
by the ongoing growth in business at Monarch Black Hawk, as well as
continued strength at Atlantis.
Selling, general and administrative (“SG&A”)
expenses for the third quarter of 2022 were $25.7 million compared
to $21.7 million in the prior-year period, driven primarily by
increases in labor expense, utility expense and advertising expense
at Monarch Black Hawk. As a percentage of net revenue, SG&A
expense decreased to 19.2% compared to 19.4% in the prior-year
period. Casino operating expense as a percentage of casino revenue
decreased to 33.1% during the third quarter of 2022 from 33.3% in
the prior-year period. F&B operating expense as a percentage of
F&B revenue decreased to 72.4% during the third quarter of 2022
from 77.6% in the prior-year period due to ongoing efforts to align
menu prices with increased commodity prices and labor costs. Hotel
operating expense as a percentage of hotel revenue decreased to
34.2% in the third quarter of 2022 compared to 38.5% in the same
period a year ago, primarily due to the continued ramp-up of the
hotel operations in Black Hawk.
Net income for the third quarter of 2022
increased 23.2% and diluted EPS increased 22.6% compared to the
same period last year. The Company generated consolidated Adjusted
EBITDA of $51.7 million, an increase of $11.4 million, or 28.3%,
over the same period a year ago.
Credit Facility and Liquidity
Capital expenditures of $5.3 million in the third quarter of 2022,
funded from operating cash flows, included the redesign and upgrade
of the new retail space at Atlantis as well as ongoing maintenance
capital spending at both properties. The Company expensed $0.9
million of interest in both the third quarter of 2022 and 2021.
During the third quarter of 2022, the Company
made $38 million in principal payments on its Term Loan Facility.
As of September 30, 2022, the Company had a net cash position,
including cash and cash equivalents of $33.1 million and an
outstanding principal balance of $27.0 million under its Term Loan,
with no borrowings outstanding under its $70.0 million Revolving
Credit Facility.
Forward Looking Statements This
press release contains forward-looking statements within the
meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as "plan," "believe,"
"expect," "seem," "look," "look forward," "positioning," "future,"
"will," "confident" and similar references to future periods.
Example of forward-looking statements include, among others,
statements we make regarding: (i) our expected operating results;
(ii) our belief that we are operating more efficiently and
effectively than ever before; (iii) our belief that we have a long
runway ahead to fully unlock Monarch Blackhawk’s potential ; (iv)
our consideration of a full range of capital allocation options,
including potential share repurchases and a potential dividend
distribution ; (v) regarding the quality of our products and guest
services in Reno and Black Hawk, including as premier destination
gaming resorts in their respective markets; (vi) our expectations
regarding our guests' acceptance of the expanded casino, new hotel
and enhanced amenities at Monarch Black Hawk; and (vii) our
expectations regarding our future position in, and share of, the
gaming 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.
Therefore, you should not rely on any of these 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:
- continuing adverse impacts of COVID-19, including new variants,
on our business, financial condition and operating results;
- continuing actions by government officials at the federal,
state and/or local level with respect to steps to be taken,
including, without limitation, temporary or extended shutdowns,
travel restrictions, social distancing and shelter-in-place orders,
in connection with COVID-19 and its variants;
- our ability to manage guest safety concerns caused by COVID-19
and its variants;
- our ability to effectively manage and control expenses during
any temporary or extended shutdown periods;
- our ability to maintain compliance with the terms and
conditions of our credit facilities and other material contracts in
the event of any temporary or extended shutdowns;
- our ability to negotiate relief options and necessary
amendments to our Term Loan Facility;
- access to available and reasonable financing on a timely
basis;
- our ability to maintain strong working relationships with our
regulators, employees, lenders, suppliers, insurance carriers,
customers, and other stakeholders;
- impacts of any uninsured losses;
- changes in guest visitation or spending patterns due to
economic conditions, health or other concerns;
- construction factors, including delays, disruptions,
availability of labor and materials, increased costs of labor and
materials, contractor disagreements, zoning issues, environmental
restrictions, soil and water conditions, weather and other hazards,
site access matters, building permit issues and other regulatory
approvals or issues;
- ongoing disagreements over costs of and responsibility for
delays and other construction related matters with our general
contractor at Monarch Casino Resort Spa Black Hawk, PCL
Construction Services, Inc., including, as previously reported, the
litigation against us by such contractor;
- claims for construction defects, breach of contract, breach of
warranty, fraud, fraudulent inducement, negligence or other
construction related claims that we may have in connection with
construction and completion of Monarch Casino Resort Spa Black Hawk
and any adverse impacts on operations required to correct the
same;
- our litigation against the general contractor of Monarch Casino
Resort Spa Black Hawk, PCL Construction Services, Inc., in the
above-mentioned litigation in which litigation the parties are
preparing for trial in 2023;
- our potential need to post bonds or other forms of surety to
support our legal remedies;
- risks related to development and construction activities
(including disputes with and defaults by contractors and
subcontractors; construction, equipment or staffing problems and
delays; shortages of materials or skilled labor; environmental,
health and safety issues; weather and other hazards, site access
matters, and unanticipated cost increases);
- our ability to generate sufficient operating cash flow to help
finance our expansion plans and subsequent debt reduction;
- changes in laws mandating increases in minimum wages and
employee benefits;
- 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, including predictions for
a potential recession;
- the effects of labor shortages on our market position, growth
and financial results;
- the potential of increases in state and federal taxation to
address budgetary and other impacts relating to COVID-19;
- the potential of increased regulatory and other burdens to
address the direct and indirect impacts of COVID-19;
- guest acceptance of our expanded facilities once completed and
the resulting impact on our market position, growth and financial
results;
- competition in our target market areas;
- broad-based inflation, including wage inflation; and
- the impact of the events occurring in Eastern Europe and the
conflict taking place in Ukraine.
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 reports 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
Resort Spa Black Hawk in Black Hawk, Colorado, approximately 40
miles west of Denver. For additional information on Monarch, visit
the Company's website at www.monarchcasino.com.
The Atlantis features approximately 61,000
square feet of casino space; 818 guest rooms and suites; eight food
outlets; two gourmet coffee 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 1,400 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 Monarch Black Hawk features approximately
60,000 square feet of casino space; more than 1,100 slot machines;
approximately 40 table games; a live poker room; a keno; and a
sports book. The resort also includes 10 bars and lounges, as well
as four dining options: a twenty-four-hour full-service restaurant,
a buffet-style restaurant, the Monarch Chophouse (a fine-dining
steakhouse), and Bistro Mariposa (elevated Southwest cuisine). The
resort offers 516 guest rooms and suites, banquet and meeting room
space, a retail store, a concierge lounge and an upscale spa and
pool facility located on the top floor of the tower. The resort is
connected to a nine-story parking structure with approximately
1,350 parking spaces, and additional valet parking, with total
property capacity of approximately 1,500 spaces.
Contacts: John Farahi Chief
Executive Officer 775/824-4401 or JFarahi@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 |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In
thousands, except per share data; unaudited) |
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
Casino |
|
$ |
76,909 |
|
|
$ |
63,931 |
|
|
$ |
203,605 |
|
|
$ |
168,515 |
|
Food and beverage |
|
|
31,312 |
|
|
|
25,971 |
|
|
|
85,818 |
|
|
|
64,293 |
|
Hotel |
|
|
20,785 |
|
|
|
17,336 |
|
|
|
54,274 |
|
|
|
39,924 |
|
Other |
|
|
4,721 |
|
|
|
4,392 |
|
|
|
13,637 |
|
|
|
11,577 |
|
Net revenues |
|
|
133,727 |
|
|
|
111,630 |
|
|
|
357,334 |
|
|
|
284,309 |
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
Casino |
|
|
25,474 |
|
|
|
21,297 |
|
|
|
71,156 |
|
|
|
53,219 |
|
Food and beverage |
|
|
22,665 |
|
|
|
20,148 |
|
|
|
65,297 |
|
|
|
51,748 |
|
Hotel |
|
|
7,117 |
|
|
|
6,668 |
|
|
|
19,183 |
|
|
|
16,308 |
|
Other |
|
|
2,383 |
|
|
|
2,120 |
|
|
|
6,712 |
|
|
|
5,632 |
|
Selling, general and administrative |
|
|
25,651 |
|
|
|
21,690 |
|
|
|
72,931 |
|
|
|
62,222 |
|
Depreciation and amortization |
|
|
11,183 |
|
|
|
9,434 |
|
|
|
32,245 |
|
|
|
28,308 |
|
Other operating items, net |
|
|
2,898 |
|
|
|
1,233 |
|
|
|
6,444 |
|
|
|
2,799 |
|
Total operating expenses |
|
|
97,371 |
|
|
|
82,590 |
|
|
|
273,968 |
|
|
|
220,236 |
|
Income from operations |
|
|
36,356 |
|
|
|
29,040 |
|
|
|
83,366 |
|
|
|
64,073 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(870 |
) |
|
|
(891 |
) |
|
|
(2,220 |
) |
|
|
(3,786 |
) |
Income before income taxes |
|
|
35,486 |
|
|
|
28,149 |
|
|
|
81,146 |
|
|
|
60,287 |
|
Provision for income taxes |
|
|
(7,993 |
) |
|
|
(5,835 |
) |
|
|
(16,100 |
) |
|
|
(11,670 |
) |
Net income |
|
$ |
27,493 |
|
|
$ |
22,314 |
|
|
$ |
65,046 |
|
|
$ |
48,617 |
|
|
|
|
|
|
|
|
|
|
Earnings per
share of common stock |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.45 |
|
|
$ |
1.20 |
|
|
$ |
3.43 |
|
|
$ |
2.62 |
|
Diluted |
|
$ |
1.41 |
|
|
$ |
1.15 |
|
|
$ |
3.33 |
|
|
$ |
2.51 |
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares and potential common shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
18,999 |
|
|
|
18,640 |
|
|
|
18,952 |
|
|
|
18,573 |
|
Diluted |
|
|
19,503 |
|
|
|
19,423 |
|
|
|
19,559 |
|
|
|
19,395 |
|
MONARCH CASINO & RESORT, INC. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEET |
(In
thousands, except per share data) |
|
|
September 30, 2022 |
|
December 31, 2021 |
ASSETS |
|
(unaudited) |
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
33,139 |
|
|
$ |
33,526 |
|
Receivables, net |
|
|
9,920 |
|
|
|
8,881 |
|
Income taxes receivable |
|
|
24,646 |
|
|
|
26,946 |
|
Inventories |
|
|
6,534 |
|
|
|
7,159 |
|
Prepaid expenses |
|
|
7,749 |
|
|
|
7,552 |
|
Total current assets |
|
|
81,988 |
|
|
|
84,064 |
|
Property and
equipment, net |
|
|
581,183 |
|
|
|
580,807 |
|
Goodwill |
|
|
25,111 |
|
|
|
25,111 |
|
Intangible
assets, net |
|
|
383 |
|
|
|
477 |
|
Total assets |
|
$ |
688,665 |
|
|
$ |
690,459 |
|
LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current
liabilities |
|
|
|
|
Current maturities of long-term debt |
|
$ |
26,237 |
|
|
$ |
20,000 |
|
Accounts payable |
|
|
16,510 |
|
|
|
18,575 |
|
Construction accounts payable |
|
|
49,648 |
|
|
|
58,891 |
|
Accrued expenses |
|
|
47,622 |
|
|
|
42,967 |
|
Short-term lease liability |
|
|
538 |
|
|
|
745 |
|
Total current liabilities |
|
|
140,555 |
|
|
|
141,178 |
|
Deferred
income taxes |
|
|
19,617 |
|
|
|
19,617 |
|
Long-term
lease liability |
|
|
13,123 |
|
|
|
13,498 |
|
Long-term
debt, net |
|
|
- |
|
|
|
68,152 |
|
Total liabilities |
|
|
173,295 |
|
|
|
242,445 |
|
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; 18,894,736 outstanding at September 30,
2022; |
|
|
|
|
18,764,540 outstanding at December 31, 2021 |
|
|
|
|
Additional paid-in capital |
|
|
47,254 |
|
|
|
41,426 |
|
Treasury stock, 201,564 shares at September 30, 2022; 331,760
shares at December 31, 2021 |
|
|
(7,859 |
) |
|
|
(4,341 |
) |
Retained earnings |
|
|
475,784 |
|
|
|
410,738 |
|
Total stockholders' equity |
|
|
515,370 |
|
|
|
448,014 |
|
Total liabilities and stockholders' equity |
|
$ |
688,665 |
|
|
$ |
690,459 |
|
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, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Adjusted EBITDA (1) |
$ |
51,694 |
|
|
$ |
40,279 |
|
|
$ |
125,497 |
|
|
$ |
98,279 |
|
Expenses: |
|
|
|
|
|
|
|
Stock based compensation |
|
(1,257 |
) |
|
|
(572 |
) |
|
|
(3,442 |
) |
|
|
(3,099 |
) |
Depreciation and amortization |
|
(11,183 |
) |
|
|
(9,434 |
) |
|
|
(32,245 |
) |
|
|
(28,308 |
) |
(Provision) for income taxes |
|
(7,993 |
) |
|
|
(5,835 |
) |
|
|
(16,100 |
) |
|
|
(11,670 |
) |
Interest expense |
|
(870 |
) |
|
|
(891 |
) |
|
|
(2,220 |
) |
|
|
(3,786 |
) |
Pre-opening expenses (2) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2 |
) |
Construction litigation expenses (2) |
|
(2,751 |
) |
|
|
(1,516 |
) |
|
|
(6,478 |
) |
|
|
(2,985 |
) |
COVID-19 expenses (2) (3) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(108 |
) |
Litigation proceeds, net (2) |
|
- |
|
|
|
334 |
|
|
|
42 |
|
|
|
334 |
|
Insurance claims proceeds (2) |
|
- |
|
|
|
100 |
|
|
|
- |
|
|
|
100 |
|
Gain (loss) on disposition of assets (2) |
|
(147 |
) |
|
|
(151 |
) |
|
|
(8 |
) |
|
|
(138 |
) |
Net income |
$ |
27,493 |
|
|
$ |
22,314 |
|
|
$ |
65,046 |
|
|
$ |
48,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 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,
pre-opening expenses, construction litigation expenses, acquisition
expenses, 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.
- Amount included in the "Other operating items, net" in the
Consolidated Statement of Income.
- Includes equipment and supplies directly attributable to the
pandemic for reopening of properties; such expenses are incremental
to normal operations.
Monarch Casino and Resort (NASDAQ:MCRI)
Gráfica de Acción Histórica
De Jun 2024 a Jul 2024
Monarch Casino and Resort (NASDAQ:MCRI)
Gráfica de Acción Histórica
De Jul 2023 a Jul 2024