Monarch Posts Record-Setting Q3 Results Driven By Market Share Growth In Colorado; Solid Nevada Performance

Monarch Posts Record-Setting Q3 Results Driven By Market Share Growth In Colorado; Solid Nevada Performance

Monarch Casino & Resort has reported all-time record financial results for the third quarter of the year. The company, which operates the Atlantis Casino Resort in Reno, Nevada, and the Monarch Casino Resort in Black Hawk, Colorado, posted net revenue of $133.7 million for the period, an increase of 19.8% from the $111.6 million in the prior-year quarter.

Casino, food & beverage, 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, the company noted.

Net income for the third quarter increased by 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 2021’s third quarter.

“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,” said John Farahi, Co-Chairman and Chief Executive Officer of Monarch.

“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,” the chief executive further commented. “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.”

However, net income during the period was negatively impacted by legal and consulting costs related to the ongoing litigation with PCL Construction Services, Monarch Black Hawk’s general contractor. The impact during Q3 of 2022 and 2021 was $2.8 million and $1.5 million, respectively, while also impacting the first nine months of 2022 at $6.5 million.

Still, despite this setback, the operator managed to post all-time quarterly records for net revenue and Adjusted EBITDA. “We are not at full employment at either property and continue to face a challenging labor market,” noted Farahi. “Even so, our team strives to deliver the full array of amenities and industry-leading services that our guests have come to expect.”

In Black Hawk, the company continues to gain a greater share of the market’s “most valuable customers” through the property’s upscale design and amenities. Additionally, the operator credits success in the market to the venue’s “state-of-the-art” sports betting offering, which Monarch claims has attracted new customers that are “staying and playing with us.”

As for Reno’s Atlantis, the property continues to deliver “strong results,” with the company’s focus on the market being the ongoing enhancement of the resort. “Guests’ response to the recently upgraded and redesigned rooms in the first hotel tower has been very positive,” noted Farahi. In addition, the firm has recently completed and opened new upscale retail space; and a renovation of the second Atlantis hotel tower is set for early 2023.

Using cash flow from operations, Monarch has now paid down a “substantial” portion of its debt. Given continued cash flow growth and low leverage, the company is evaluating “a full range of capital allocation options,” including potential share repurchases under its existing 2.9 million share repurchase authorization and potential dividend.