• Monarch Casino & Resort Reports Record 2022 Fourth Quarter Financial Results

    المصدر: Nasdaq GlobeNewswire / 14 فبراير 2023 15:03:00   America/Chicago

    RENO, Nev., Feb. 14, 2023 (GLOBE NEWSWIRE) -- 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%
                
    1. 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.
       
    2. 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.
       
    3. 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 
    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 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.
    2. Amount included in the "Other operating items, net" in the Consolidated Statement of Income.
    3. Includes equipment and supplies directly attributable to the pandemic for reopening of properties; such expenses are incremental to normal operations.


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