Monarch Casino & Resort, Inc. (Nasdaq: MCRI) (“Monarch,” “we,”
“our,” or “the Company”) today reported record operating results
for the second quarter ended June 30, 2023, as summarized below:
($ in thousands, except per share data and
percentages)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
|
Increase |
|
2023 |
|
2022 |
|
Increase |
Net revenue |
$123,683 |
|
$115,289 |
|
7.3% |
|
$240,327 |
|
$223,607 |
|
7.5% |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
22,413 |
|
19,435 |
|
15.3% |
|
40,083 |
|
37,553 |
|
6.7% |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
$42,128 |
|
$39,461 |
|
6.8% |
|
$78,608 |
|
$73,803 |
|
6.5% |
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS |
$1.16 |
|
$1.02 |
|
13.7% |
|
$2.08 |
|
$1.98 |
|
5.1% |
Diluted EPS |
$1.14 |
|
$0.99 |
|
15.2% |
|
$2.04 |
|
$1.92 |
|
6.3% |
(1) 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
financial results for the 2023 second quarter reflect our strong
market position in Black Hawk and a year over year improvement in
the operating performance at Atlantis. Net revenue and Adjusted
EBITDA grew to all-time second quarter records of $123.7 million
and $42.1 million, respectively, resulting in an Adjusted EBITDA
margin of 34.1%.
“In Black Hawk, we continued to expand market
share throughout the quarter, especially in the upper end of the
market. We believe there are further growth opportunities as we
continue to penetrate the Denver regional market.
“At Atlantis, we generated strong casino and
food and beverage revenue, as guest visits and spend per visit
increased year-over-year. Hotel revenue was impacted by renovation
work during the quarter on the redesign and upgrade of hotel rooms
in the second tower. Hotel performance improved in June as our full
inventory of rooms became available to guests. The Reno market
remains extremely competitive, we continue to prudently invest in
Atlantis to maintain, what we believe is, a market-leading
position.
“We remain committed to returning capital to our
stockholders. Our strong balance sheet and free cash flow position
us to invest in our existing properties, pay quarterly cash
dividends and consider potential share repurchases under our
existing share repurchase authorization. We continue to evaluate
potential acquisition opportunities where we can employ our
developmental and operational expertise in a financially prudent
manner.”
Summary of 2023 Second Quarter Operating
Results In the 2023 second quarter, net revenue increased
7.3% year over year to $123.7 million, compared to $115.3 million
in the prior-year quarter. Casino and food and beverage (“F&B”)
revenues increased 7.8% and 10.8% year over year, respectively,
while hotel revenues decreased 1.1% year over year. The increase in
casino and F&B revenues was driven primarily by ongoing growth
at Monarch Black Hawk. The decrease in hotel revenues was driven
primarily by a decrease in the average daily rate.
Selling, general and administrative (“SG&A”)
expenses for the second quarter of 2023 were $25.0 million compared
to $23.1 million in the prior-year period, driven primarily by an
increase in utility, insurance and marketing and advertising
expenses. As a percentage of net revenue, SG&A expense
increased to 20.2% compared to 20.0% in the prior-year period.
Casino operating expense as a percentage of casino revenue
increased to 37.4% during the second quarter of 2023 from 36.5% in
the prior-year period, primarily due to increased labor expense.
F&B operating expense as a percentage of F&B revenue
decreased to 72.3% during the second quarter of 2023 from 77.0% in
the prior-year period due to an increase in average check and
improved cost management. Hotel operating expense as a percentage
of hotel revenue increased to 36.2% in the second quarter of 2023
compared to 34.4% in the same period a year ago, primarily due to a
decrease in the average daily rate and an increase in labor
expense.
Net income increased 15.3% and diluted EPS
increased 15.2% compared to the same period a year ago. The Company
generated second quarter 2023 consolidated Adjusted EBITDA of $42.1
million, an increase of $2.7 million, or 6.8%, over the same period
a year ago.
Credit Facility and Liquidity
As of June 30, 2023, the Company had cash and cash equivalents of
$35.1 million and an outstanding principal balance of $41.0 million
under its credit facility. During the 2023 second quarter, the
Company made $10 million in principal payments on its credit
facility. The Company expensed $0.8 million of interest in the
second quarter of 2023 compared to $0.7 million in the prior-year
period.
Capital expenditures of $10.3 million in the
second quarter of 2023 were funded from operating cash flows and
included the redesign and upgrade of hotel rooms in the second
tower at Atlantis and maintenance capital spending at both
properties.
On June 15, 2023, the Company paid a cash
dividend of $0.30 per share to its stockholders of record on June
1, 2023. The cash dividend was funded from cash on hand.
Quarterly Dividend Declaration
The Company is announcing a cash dividend of $0.30 per share of its
outstanding common stock. The dividend is payable on September 15,
2023, to stockholders of record on September 1, 2023. This cash
dividend is part of the previously announced annual cash dividend
of $1.20 per share payable in quarterly payments and subject to
quarterly review and evaluation by the Company’s Board of
Directors.
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 beliefs regarding the strengths of the local
markets we serve in Reno and Black Hawk; and (iv) our beliefs
regarding the potential for capturing additional market share in
the Denver regional market. 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:
- our ability to manage guest safety
concerns, whether caused by any contagious diseases 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;
- our 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 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
Black Hawk and any adverse impacts on operations required to
correct the same;
- our litigation against the general
contractor of Monarch Black Hawk, PCL Construction Services, Inc.,
in which the parties are preparing for trial scheduled to begin in
the second half of 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 renovation projects 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 Monarch Casino Resort Spa Black
Hawk ("Monarch Black Hawk") in Black Hawk, Colorado, approximately
40 miles west of Denver and the Atlantis Casino Resort Spa
("Atlantis"), a hotel/casino facility in Reno, Nevada. For
additional information on Monarch, visit the Company's website at
www.monarchcasino.com.
The Monarch Black Hawk features approximately
60,000 square feet of casino space; more than 1,000 slot machines;
43 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.
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; 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 1,200 slot and video poker
machines; approximately 33 table games, including blackjack, craps,
roulette, and others; a race and sports book; a 24-hour live keno
lounge; and a poker room.
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
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
INCOME(In thousands, except per share data; Unaudited)
|
|
Three months endedJune 30, |
|
Six months endedJune 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
Casino |
|
$68,855 |
|
$63,865 |
|
$135,760 |
|
$126,696 |
Food and beverage |
|
31,525 |
|
28,459 |
|
60,842 |
|
54,506 |
Hotel |
|
18,094 |
|
18,297 |
|
33,565 |
|
33,489 |
Other |
|
5,209 |
|
4,668 |
|
10,160 |
|
8,916 |
Net revenues |
|
123,683 |
|
115,289 |
|
240,327 |
|
223,607 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Casino |
|
25,746 |
|
23,315 |
|
50,998 |
|
45,682 |
Food and beverage |
|
22,803 |
|
21,901 |
|
44,740 |
|
42,632 |
Hotel |
|
6,541 |
|
6,293 |
|
12,931 |
|
12,066 |
Other |
|
2,786 |
|
2,247 |
|
5,729 |
|
4,329 |
Selling, general and administrative |
|
24,955 |
|
23,097 |
|
50,071 |
|
47,280 |
Depreciation and amortization |
|
11,618 |
|
10,546 |
|
22,955 |
|
21,062 |
Other operating items, net |
|
(474) |
|
2,229 |
|
36 |
|
3,546 |
Total operating expenses |
|
93,975 |
|
89,628 |
|
187,460 |
|
176,597 |
Income from operations |
|
29,708 |
|
25,661 |
|
52,867 |
|
47,010 |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
(780) |
|
(700) |
|
(1,367) |
|
(1,350) |
Income before income taxes |
|
28,928 |
|
24,961 |
|
51,500 |
|
45,660 |
Provision for income taxes |
|
(6,515) |
|
(5,526) |
|
(11,417) |
|
(8,107) |
Net income |
|
$22,413 |
|
$19,435 |
|
$40,083 |
|
$37,553 |
|
|
|
|
|
|
|
|
|
Earnings per share of common stock |
|
|
|
|
|
|
|
|
Basic |
|
$1.16 |
|
$1.02 |
|
$2.08 |
|
$1.98 |
Diluted |
|
$1.14 |
|
$0.99 |
|
$2.04 |
|
$1.92 |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares and potential common
shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
19,243 |
|
18,987 |
|
19,229 |
|
18,928 |
Diluted |
|
19,618 |
|
19,582 |
|
19,636 |
|
19,586 |
MONARCH CASINO & RESORT, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEET(In
thousands, except per share data)
|
|
June 30, 2023 |
|
December 31, 2022 |
ASSETS |
|
(unaudited) |
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$35,100 |
|
$38,779 |
Receivables, net |
|
8,060 |
|
9,566 |
Income taxes receivable |
|
4,599 |
|
24,989 |
Inventories |
|
7,166 |
|
7,558 |
Prepaid expenses |
|
7,008 |
|
8,537 |
Total current assets |
|
61,933 |
|
89,429 |
Property and equipment, net |
|
577,795 |
|
578,050 |
Goodwill |
|
25,111 |
|
25,111 |
Intangible assets, net |
|
382 |
|
352 |
Total assets |
|
$665,221 |
|
$692,942 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current liabilities |
|
|
|
|
Current maturities of long-term debt |
|
$- |
|
$6,693 |
Accounts payable |
|
15,034 |
|
14,418 |
Construction accounts payable |
|
47,449 |
|
49,957 |
Accrued expenses |
|
43,356 |
|
46,037 |
Short-term lease liability |
|
660 |
|
639 |
Total current liabilities |
|
106,499 |
|
117,744 |
Deferred income taxes |
|
23,016 |
|
23,016 |
Long-term lease liability |
|
12,894 |
|
13,228 |
Long-term debt, net |
|
41,000 |
|
- |
Total liabilities |
|
183,409 |
|
153,988 |
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 |
19,143,344 shares issued and outstanding at June 30, 2023; |
|
|
|
|
19,096,300 shares issued and 19,093,676 outstanding at December 31,
2022 |
|
|
|
|
Additional paid-in capital |
|
44,670 |
|
40,716 |
Treasury stock, 2,624 shares at December 31, 2022 |
|
- |
|
(170) |
Retained earnings |
|
436,951 |
|
498,217 |
Total stockholders' equity |
|
481,812 |
|
538,954 |
Total liabilities and stockholders' equity |
|
$665,221 |
|
$692,942 |
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 EndedJune 30, |
|
Six Months EndedJune 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net income |
$22,413 |
|
$19,435 |
|
$40,083 |
|
$37,553 |
Expenses: |
|
|
|
|
|
|
|
Stock based compensation |
1,276 |
|
1,025 |
|
2,750 |
|
2,185 |
Depreciation and amortization |
11,618 |
|
10,546 |
|
22,955 |
|
21,062 |
Provision for income taxes |
6,515 |
|
5,526 |
|
11,417 |
|
8,107 |
Interest expense |
780 |
|
700 |
|
1,367 |
|
1,350 |
Construction litigation expenses (2) |
663 |
|
2,385 |
|
1,173 |
|
3,727 |
Litigation proceeds, net (2) |
- |
|
(42) |
|
- |
|
(42) |
Insurance claims proceeds (2) |
(1,195) |
|
- |
|
(1,195) |
|
- |
Loss (gain) on disposition of assets (2) |
58 |
|
(114) |
|
58 |
|
(139) |
Adjusted EBITDA (1) |
$42,128 |
|
$39,461 |
|
$78,608 |
|
$73,803 |
(1) 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 Monarch'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 Monarch'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. Monarch defines Adjusted
EBITDA margin as Adjusted EBITDA divided by Net revenue.(2) Amount
included in the “Other operating items, net” on the Consolidated
Statement of Income.
Monarch Casino and Resort (NASDAQ:MCRI)
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Monarch Casino and Resort (NASDAQ:MCRI)
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