Monarch Casino & Resort, Inc. (Nasdaq: MCRI) (“Monarch” or “the
Company”) today reported operating results for the fourth quarter
and full year ended December 31, 2022, as summarized below:
($ in thousands, except per share data and
percentages)
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2022 |
|
|
2021 |
|
Increase |
|
|
2022 |
|
|
2021 |
|
Increase |
Net revenue |
$ |
120,536 |
|
$ |
111,068 |
|
8.5 |
% |
|
$ |
477,870 |
|
$ |
395,377 |
|
20.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income(1) |
$ |
22,433 |
|
$ |
19,871 |
|
12.9 |
% |
|
$ |
87,479 |
|
$ |
68,488 |
|
27.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(3) |
$ |
41,588 |
|
$ |
39,015 |
|
6.6 |
% |
|
$ |
167,085 |
|
$ |
137,294 |
|
21.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share |
$ |
1.17 |
|
$ |
1.06 |
|
10.4 |
% |
|
$ |
4.60 |
|
$ |
3.68 |
|
25.0 |
% |
Diluted
earnings per share(2) |
$ |
1.14 |
|
$ |
1.02 |
|
11.8 |
% |
|
$ |
4.47 |
|
$ |
3.53 |
|
26.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
- 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 fourth quarter of 2022 and 2021 was $0.8 million and
$2.1 million, respectively, and the impact during the twelve months
of 2022 and 2021 was $7.3 million and $5.1 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 fourth quarter of 2022 and 2021 was $0.03 and $0.09 per
share, respectively, and the impact during the twelve months of
2022 and 2021 was $0.30 and $0.21 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:
“Monarch ended a strong 2022 with record fourth quarter and fiscal
year financial results. We continue to benefit from the ongoing
ramp up of our expanded and enhanced Black Hawk property. Net
revenue and Adjusted EBITDA growth of over 20% in 2022 drove free
cash flow to a record high, positioning Monarch to return capital
to stockholders in the form of the one-time cash dividend and the
recurring annual cash dividend to be paid quarterly, which we
announced last week. As of now, we have approximately $30 million
cash in the bank. We expect to pay the one-time dividend with the
available cash, including additional cash generated from
operations, with the remaining balance to be drawn from the new
credit facility. Our strong balance sheet and free cash flow allows
us to continue to invest in our existing operations, while we
pursue potential M&A opportunities.
"Fourth quarter net revenue and Adjusted EBITDA
grew to $120.5 million and $41.6 million, respectively, resulting
in an Adjusted EBITDA margin of 34.5%. We believe that these
results demonstrate a healthy underlying trend in both our markets.
Atlantis’ fourth quarter financial results were negatively impacted
by severe rains in California and heavy snow in the Sierra Nevada
mountains, which reduced visitation from our key feeder
markets.
“In Black Hawk, we are gaining market share,
especially in the upper end of the market.
“We continue our investment in the Atlantis, a
very competitive market, to further distinguish it as Reno’s
preferred destination for resort and gaming entertainment. We are
currently working on the redesign and upgrade of the hotel rooms in
the second tower, which, as of now, is on schedule for completion
before Memorial Day 2023. In addition, we are in the midst of
replacing the casino carpet, bringing a fresh new look to the
property, which we expect will further enhance the guest
experience.
“We are actively evaluating potential
acquisitions and we are prepared to move aggressively for the right
opportunity.”
Summary of 2022 Fourth Quarter Operating
Results In the 2022 fourth quarter, the Company generated
net revenue of $120.5 million, an increase of 8.5% from the $111.1
million in the prior-year quarter. Casino, food and beverage
(“F&B”), and hotel revenues increased 3.5%, 17.0% and 17.0%,
respectively, year over year. The increase in revenues was driven
primarily by the ongoing growth in business at Monarch Black
Hawk.
Selling, general and administrative (“SG&A”)
expenses for the fourth quarter of 2022 were $24.7 million compared
to $22.2 million in the prior-year period, driven primarily by
increases in labor and utility costs. As a percentage of net
revenue, SG&A expense was 20.5% compared to 20.0% in the
prior-year period. Casino operating expense as a percentage of
casino revenue increased to 35.6% during the fourth quarter of 2022
from 34.0% in the prior-year period primarily due to an increase in
labor expense. F&B operating expense as a percentage of F&B
revenue decreased to 73.8% during the fourth quarter of 2022 from
78.2% in the prior-year period primarily due to an increase in
average check and improved cost management. Hotel operating expense
as a percentage of hotel revenue decreased to 37.4% in the fourth
quarter of 2022 compared to 40.1% in the same period a year ago,
primarily due to operating leverage on the higher revenues
generated by our hotel operations in Black Hawk.
Net income for the fourth quarter of 2022
increased 12.9% and diluted EPS increased 11.8% compared to the
same period last year. The Company generated consolidated Adjusted
EBITDA of $41.6 million for the fourth quarter of 2022, an increase
of $2.6 million, or 6.6%, over the same period a year ago.
Credit Facility, Liquidity and Capital
Returns
Capital expenditures of $7.7 million in the
fourth quarter of 2022 were funded from operating cash flows and
included various projects and ongoing maintenance capital spending
at both properties. The Company expensed $0.2 million of interest
in the fourth quarter of 2022 compared to $0.7 million in the
prior-year period.
During the fourth quarter of 2022, the Company
made $20 million in principal payments on its Term Loan Facility.
As of December 31, 2022, the Company had a net cash position,
including cash and cash equivalents, of $38.8 million and an
outstanding principal balance of $7.0 million under its Term Loan
Facility, with no borrowings outstanding under its Revolving Credit
Facility.
On February 1, 2023, the Company entered into a
Fifth Amended and Restated Credit Agreement with Wells Fargo Bank,
N.A., where the Company increased the aggregate principal amount of
its revolving line of credit from $70.0 million to $100.0 million,
with an option to increase it by an additional $100.0 million
within the first six months. The maturity date for the Fifth
Amended and Restated Credit Agreement has been extended to January
1, 2025.
On February 7, 2023, the Company’s Board of
Directors authorized a one-time cash dividend of $5.00 per share of
its outstanding common stock, payable on March 15, 2023, to
stockholders of record as of March 1, 2023. The Board also approved
a recurring annual cash dividend of $1.20 per outstanding share of
Common Stock beginning in the second quarter of 2023, which
dividend will be payable in quarterly amounts on the 15th day of
the third month of each applicable calendar quarter, to be reviewed
quarterly by the Board. For the calendar year 2023, the Company
expects to pay total cash dividends of $5.90 per share.
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) the continuing strength of our
balance sheet and our expected free cash flow; (ii) our
expectations regarding continuing our dividend payments in the
future; (iii) our expectations regarding the cash flow we expect
generate to fund our one-time cash dividend to stockholders; (iv)
our beliefs regarding the strengths of the local markets we serve
in Reno and Black Hawk; and (v) our expectations regarding the
completion of room renovations at the Atlantis. 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, whether caused by
COVID-19, its variants or other causes;
- our ability to maintain compliance with the terms and
conditions of our credit facilities and other material contracts in
the event of any unexpected or unplanned events, such as temporary
or extended shutdowns;
- 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 any 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;
- potential of increased regulatory and other burdens;
- 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, other
parts of the world 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.
Atlantis features approximately 61,000 square
feet of casino space; 817 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; retail
outlet 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 1,300 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 42 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 INCOME |
(In
thousands, except per share data) |
|
Three months ended December 31, |
|
Twelve months ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
unaudited |
|
unaudited |
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Casino |
$ |
67,151 |
|
|
$ |
64,898 |
|
|
$ |
270,756 |
|
|
$ |
233,413 |
|
Food and beverage |
|
31,338 |
|
|
|
26,787 |
|
|
|
117,156 |
|
|
|
91,080 |
|
Hotel |
|
16,905 |
|
|
|
14,450 |
|
|
|
71,179 |
|
|
|
54,374 |
|
Other |
|
5,142 |
|
|
|
4,933 |
|
|
|
18,779 |
|
|
|
16,510 |
|
Net revenues |
$ |
120,536 |
|
|
$ |
111,068 |
|
|
$ |
477,870 |
|
|
$ |
395,377 |
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
Casino |
$ |
23,920 |
|
|
$ |
22,039 |
|
|
$ |
95,076 |
|
|
$ |
75,258 |
|
Food and beverage |
|
23,143 |
|
|
|
20,936 |
|
|
|
88,440 |
|
|
|
72,684 |
|
Hotel |
|
6,325 |
|
|
|
5,798 |
|
|
|
25,508 |
|
|
|
22,106 |
|
Other |
|
2,542 |
|
|
|
2,036 |
|
|
|
9,254 |
|
|
|
7,668 |
|
Selling, general and administrative |
|
24,671 |
|
|
|
22,205 |
|
|
|
97,602 |
|
|
|
84,427 |
|
Depreciation and amortization |
|
11,188 |
|
|
|
10,120 |
|
|
|
43,433 |
|
|
|
38,428 |
|
Other operating items, net |
|
671 |
|
|
|
2,130 |
|
|
|
7,115 |
|
|
|
4,929 |
|
Total operating expenses |
|
92,460 |
|
|
|
85,264 |
|
|
|
366,428 |
|
|
|
305,500 |
|
Income from operations |
$ |
28,076 |
|
|
$ |
25,804 |
|
|
$ |
111,442 |
|
|
$ |
89,877 |
|
|
|
|
|
|
|
|
|
Interest expense |
|
(200 |
) |
|
|
(720 |
) |
|
|
(2,420 |
) |
|
|
(4,506 |
) |
Income before income taxes |
|
27,876 |
|
|
|
25,084 |
|
|
|
109,022 |
|
|
|
85,371 |
|
Provision
for income taxes |
|
(5,443 |
) |
|
|
(5,213 |
) |
|
|
(21,543 |
) |
|
|
(16,883 |
) |
Net income |
$ |
22,433 |
|
|
$ |
19,871 |
|
|
$ |
87,479 |
|
|
$ |
68,488 |
|
|
|
|
|
|
|
|
|
Earnings per
share of common stock |
|
|
|
|
|
|
|
Basic |
$ |
1.17 |
|
|
$ |
1.06 |
|
|
$ |
4.60 |
|
|
$ |
3.68 |
|
Diluted |
$ |
1.14 |
|
|
$ |
1.02 |
|
|
$ |
4.47 |
|
|
$ |
3.53 |
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares and potential common shares
outstanding |
|
|
|
|
|
|
|
Basic |
|
19,127 |
|
|
|
18,750 |
|
|
|
18,996 |
|
|
|
18,617 |
|
Diluted |
|
19,628 |
|
|
|
19,509 |
|
|
|
19,578 |
|
|
|
19,427 |
|
MONARCH CASINO & RESORT, INC. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEET |
(In
thousands, except per share data) |
|
|
December 31, 2022 |
|
December 31, 2021 |
ASSETS |
|
|
|
|
Current
assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
38,779 |
|
|
$ |
33,526 |
|
Receivables, net |
|
|
9,566 |
|
|
|
8,881 |
|
Income taxes receivable |
|
|
24,989 |
|
|
|
26,946 |
|
Inventories |
|
|
7,558 |
|
|
|
7,159 |
|
Prepaid expenses |
|
|
8,537 |
|
|
|
7,552 |
|
Total current assets |
|
|
89,429 |
|
|
|
84,064 |
|
Property and
equipment, net |
|
|
578,050 |
|
|
|
580,807 |
|
Goodwill |
|
|
25,111 |
|
|
|
25,111 |
|
Intangible
assets, net |
|
|
352 |
|
|
|
477 |
|
Total assets |
|
$ |
692,942 |
|
|
$ |
690,459 |
|
LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current
liabilities |
|
|
|
|
Current maturities of long-term debt |
|
$ |
6,693 |
|
|
$ |
20,000 |
|
Accounts payable |
|
|
14,418 |
|
|
|
18,575 |
|
Construction accounts payable |
|
|
49,957 |
|
|
|
58,891 |
|
Accrued expenses |
|
|
46,037 |
|
|
|
42,967 |
|
Short-term lease liability |
|
|
639 |
|
|
|
745 |
|
Total current liabilities |
|
|
117,744 |
|
|
|
141,178 |
|
Deferred
income taxes |
|
|
23,016 |
|
|
|
19,617 |
|
Long-term
lease liability |
|
|
13,228 |
|
|
|
13,498 |
|
Long-term
debt, net |
|
|
- |
|
|
|
68,152 |
|
Total liabilities |
|
|
153,988 |
|
|
|
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; 19,093,676 outstanding at December 31,
2022; |
|
|
|
|
18,764,540 outstanding at December 31, 2021 |
|
|
|
|
Additional paid-in capital |
|
|
40,716 |
|
|
|
41,426 |
|
Treasury stock, 2,624 shares at December 31, 2022; 331,760 shares
at |
|
|
(170 |
) |
|
|
(4,341 |
) |
December 31, 2021 |
|
|
|
|
Retained
earnings |
|
|
498,217 |
|
|
|
410,738 |
|
Total stockholders' equity |
|
|
538,954 |
|
|
|
448,014 |
|
Total liabilities and stockholders' equity |
|
$ |
692,942 |
|
|
$ |
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 December 31, |
|
Twelve Months Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income |
$ |
22,433 |
|
|
$ |
19,871 |
|
|
$ |
87,479 |
|
|
$ |
68,488 |
|
Expenses: |
|
|
|
|
|
|
|
Stock based compensation |
|
1,653 |
|
|
|
961 |
|
|
|
5,095 |
|
|
|
4,060 |
|
Depreciation and amortization |
|
11,188 |
|
|
|
10,120 |
|
|
|
43,433 |
|
|
|
38,428 |
|
Provision for income taxes |
|
5,443 |
|
|
|
5,213 |
|
|
|
21,543 |
|
|
|
16,883 |
|
Interest expense |
|
200 |
|
|
|
720 |
|
|
|
2,420 |
|
|
|
4,506 |
|
Pre-opening expenses (2) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2 |
|
Construction litigation expenses (2) |
|
783 |
|
|
|
2,132 |
|
|
|
7,261 |
|
|
|
5,117 |
|
COVID-19 expenses (2) (3) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
108 |
|
Litigation proceeds, net (2) |
|
- |
|
|
|
- |
|
|
|
(42 |
) |
|
|
(334 |
) |
Insurance claims proceeds (2) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(100 |
) |
(Gain) loss on disposition of assets (2) |
|
(112 |
) |
|
|
(2 |
) |
|
|
(104 |
) |
|
|
136 |
|
Adjusted EBITDA (1) |
$ |
41,588 |
|
|
$ |
39,015 |
|
|
$ |
167,085 |
|
|
$ |
137,294 |
|
- 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