UNITED STATES
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CURRENT REPORT
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On April 20, 2022, Monarch Casino & Resort, Inc. (the Company) issued a press release announcing its financial results for the first quarter ended March 31, 2022. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Exhibit 99.1 Press release dated April 20, 2022
Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Monarch Casino & Resort, Inc. | ||
| Date: April 20, 2022 | By: | /s/ Edwin S. Koenig |
| Edwin S. Koenig | ||
| Chief Accounting Officer (Principal Financial and Accounting Officer and Duly Authorized Officer) | ||
EXHIBIT 99.1
Monarch Casino & Resort Reports Record First Quarter Financial Results
RENO, Nev., April 20, 2022 (GLOBE NEWSWIRE) -- Monarch Casino & Resort, Inc. (Nasdaq: MCRI) (“Monarch,” “we,” “our,” or “the Company”) today reported record operating results for the first quarter ended March 31, 2022, as summarized below:
($ in thousands, except per share data and percentages)
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | Increase | ||||||
| Net revenue | $ | 108,318 | $ | 74,960 | 44.5 | % | ||
| Net income | 18,118 | 8,154 | 122.2 | % | ||||
| Adjusted EBITDA(1) | $ | 34,342 | $ | 22,831 | 50.4 | % | ||
| Basic EPS | $ | 0.96 | $ | 0.44 | 118.2 | % | ||
| Diluted EPS | $ | 0.92 | $ | 0.42 | 119.0 | % | ||
(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: “Fiscal year 2022 is off to a strong start as we benefited from the full scope of operations at our newly expanded Monarch Black Hawk and the continued growth of market share at both properties. Our first quarter results also benefited from continued healthy overall macroeconomic trends. The labor market pressure and rising inflation could impact further near-term margins. Our teams continue to manage expenses effectively as we re-invest in our properties and grow our business.
“Net revenue and Adjusted EBITDA of $108.3 million and $34.3 million, respectively, were both first quarter records, as was our Adjusted EBITDA margin of 31.7%. We believe that our financial results demonstrate our operational excellence and confirm that our investment in Monarch Black Hawk is delivering exceptional returns.
“Our master plan expansion at Monarch Black Hawk was completed in the first quarter of 2022 with the opening of Bistro Mariposa, a dining venue offering elevated Southwest cuisine. Our market-leading resort continues to gain significant market share, particularly from the upper segment of the market. Following the elimination of betting limits in May 2021 and the additional table games variety, the property’s table games revenue continues to increase significantly. Our efforts to grow revenue and adjusted EBITDA at Monarch Black Hawk have only just begun and we are excited for the long-term growth opportunity of this property.
“In Reno, underlying market trends remain competitive, and we continue to invest in the property to ensure that our Atlantis resort remains at the pinnacle of Reno casino resort offerings. Atlantis’ first quarter financial results were impacted by construction work on the redesign and upgrade of approximately 20% of the room inventory at Atlantis. The project remains on schedule and is currently expected to be completed by the end of the second quarter of 2022.
“As we look to the balance of 2022, we intend to build on our strong operating performance in the first quarter, which traditionally is the slowest quarter of the year for us and for our markets. We continue to evaluate potential acquisitions where we can fully leverage our development and operating expertise to drive long-term value for our stockholders. Our future remains bright and we look forward to what promises to be an exciting 2022.”
Summary of 2022 First Quarter Operating Results
In the 2022 first quarter, the Company generated net revenue of $108.3 million, an increase of 44.5% from $75.0 million in the prior-year quarter. Casino, food and beverage (“F&B”), and hotel revenues increased 33.9%, 60.7% and 75.9% year over year, respectively. The increase in revenues was driven primarily by the ongoing ramp up of operations at the Company’s hotel and expanded casino at Monarch Black Hawk. In the first quarter of 2021, both Atlantis and Black Hawk revenues were adversely impacted by pandemic-related capacity and other regulatory limitations which remained in effect following the properties respective reopening.
Selling, general and administrative (“SG&A”) expenses for the first quarter of 2022 were $24.2 million compared to $19.9 million in the prior-year period, driven primarily by additional SG&A expenses to support the expanded Monarch Black Hawk and increases in advertising and promotional expenses related to the grand opening events at Monarch Black Hawk. As a percentage of net revenue, SG&A expense decreased to 22.3% compared to 26.6% in the prior-year period. Casino operating expense as a percentage of casino revenue increased to 35.6% during the first quarter of 2022 from 29.0% in the prior-year period, primarily due to increases in gaming tax expense and labor expense. F&B operating expense as a percentage of F&B revenue decreased to 79.6% during the first quarter of 2022 from 87.0% in the prior-year period due to a change in the restaurant mix and improved management of labor expense. Hotel operating expense as a percentage of hotel revenue decreased to 38.0% in the first quarter of 2022 compared to 49.2% in the same period a year ago, primarily due to an increase in Average Daily Rate.
Income from operations for the first quarter of 2022 increased 89.2% compared to the same period last year. Net income increased 122.2% and diluted EPS increased 119.0%. The Company generated first quarter 2022 consolidated Adjusted EBITDA of $34.3 million, an increase of $11.5 million, or 50.4%, over the same period a year ago. The increase in the Adjusted EBITDA represents an approximate 32% flow-through of net revenue.
Credit Facility and Liquidity
Capital expenditures of $23.7 million in the first quarter of 2022 primarily included the redesign and upgrade of the hotel rooms in the first tower at Atlantis as well as ongoing maintenance capital spending at both properties. All capital expenditures were funded from operating cash flows. The Company expensed $0.7 million of interest in the first quarter of 2022 compared to $1.6 million in the first quarter of 2021.
During the first quarter of 2022, the Company made $10 million in principal payments on its Term Loan Facility. As of March 31, 2022, the Company had an outstanding principal balance of $80 million under the Term Loan and had no outstanding balance under its $70 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 have sufficient liquidity to fund all remaining construction and litigation costs and ongoing capital expenditures; (iii) our belief that our business is well-positioned to benefit from any post-pandemic recovery and healthy macroeconomic trends; (iv) our expectation regarding the availability of future acquisition opportunities; (v) our beliefs regarding the quality of our products and guest services in Reno and Black Hawk, including as a 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:
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 (“Atlantis”), a hotel/casino facility in Reno, Nevada, and the Monarch Casino Resort Spa Black Hawk (“Monarch 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 1,000 slot machines; approximately 40 table games; a live poker room; a keno counter; and a sports book. The resort also includes 10 bars and lounges, as well as five dining options: a twenty-four-hour full-service restaurant, Java etc. (a coffee and sandwich outlet), 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 March 31, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenues | ||||||||
| Casino | $ | 62,831 | $ | 46,911 | ||||
| Food and beverage | 26,047 | 16,206 | ||||||
| Hotel | 15,192 | 8,635 | ||||||
| Other | 4,248 | 3,208 | ||||||
| Net revenues | 108,318 | 74,960 | ||||||
| Operating expenses | ||||||||
| Casino | 22,367 | 13,618 | ||||||
| Food and beverage | 20,731 | 14,095 | ||||||
| Hotel | 5,773 | 4,251 | ||||||
| Other | 2,082 | 1,520 | ||||||
| Selling, general and administrative | 24,183 | 19,925 | ||||||
| Depreciation and amortization | 10,516 | 9,514 | ||||||
| Other operating items, net | 1,317 | 754 | ||||||
| Total operating expenses | 86,969 | 63,677 | ||||||
| Income from operations | 21,349 | 11,283 | ||||||
| Interest expense | (650 | ) | (1,619 | ) | ||||
| Income before income taxes | 20,699 | 9,664 | ||||||
| Provision for income taxes | (2,581 | ) | (1,510 | ) | ||||
| Net income | $ | 18,118 | $ | 8,154 | ||||
| Earnings per share of common stock | ||||||||
| Net income | ||||||||
| Basic | $ | 0.96 | $ | 0.44 | ||||
| Diluted | $ | 0.92 | $ | 0.42 | ||||
| Weighted average number of common shares and potential common shares outstanding | ||||||||
| Basic | 18,868 | 18,481 | ||||||
| Diluted | 19,592 | 19,283 | ||||||
| MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEET |
| (In thousands, except per share data) |
| March 31, 2022 | December 31, 2021 | |||||||
| ASSETS | (unaudited) | |||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 33,149 | $ | 33,526 | ||||
| Receivables, net | 7,487 | 8,881 | ||||||
| Income taxes receivable | 24,365 | 26,946 | ||||||
| Inventories | 6,972 | 7,159 | ||||||
| Prepaid expenses | 7,031 | 7,552 | ||||||
| Total current assets | 79,004 | 84,064 | ||||||
| Property and equipment, net | 586,543 | 580,807 | ||||||
| Goodwill | 25,111 | 25,111 | ||||||
| Intangible assets, net | 446 | 477 | ||||||
| Total assets | $ | 691,104 | $ | 690,459 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Current maturities of long-term debt | $ | 20,000 | $ | 20,000 | ||||
| Accounts payable | 19,410 | 18,575 | ||||||
| Construction accounts payable | 51,625 | 58,891 | ||||||
| Accrued expenses | 42,710 | 42,967 | ||||||
| Short-term lease liability | 669 | 745 | ||||||
| Total current liabilities | 134,414 | 141,178 | ||||||
| Deferred income taxes | 19,617 | 19,617 | ||||||
| Long-term lease liability | 13,373 | 13,498 | ||||||
| Long-term debt, net | 58,511 | 68,152 | ||||||
| Total liabilities | 225,915 | 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; 18,875,124 outstanding at March 31, 2022; | ||||||||
| 18,764,540 outstanding at December 31, 2021 | ||||||||
| Additional paid-in capital | 44,263 | 41,426 | ||||||
| Treasury stock, 221,176 shares at March 31, 2022; 331,760 shares at | (8,121 | ) | (4,341 | ) | ||||
| December 31, 2021 | ||||||||
| Retained earnings | 428,856 | 410,738 | ||||||
| Total stockholders' equity | 465,189 | 448,014 | ||||||
| Total liabilities and stockholders' equity | $ | 691,104 | $ | 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 March 31, | |||||||
| 2022 | 2021 | ||||||
| Adjusted EBITDA (1) | $ | 34,342 | $ | 22,831 | |||
| Expenses: | |||||||
| Stock based compensation | (1,160 | ) | (1,280 | ) | |||
| Depreciation and amortization | (10,516 | ) | (9,514 | ) | |||
| Provision for income taxes | (2,581 | ) | (1,510 | ) | |||
| Interest expense | (650 | ) | (1,619 | ) | |||
| Pre-opening expenses (2) | - | (1 | ) | ||||
| Construction litigation expenses (2) | (1,342 | ) | (645 | ) | |||
| COVID-19 expense | - | (108 | ) | ||||
| Gain on disposition of assets (2) | 25 | - | |||||
| Net income | $ | 18,118 | $ | 8,154 | |||
(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.
Cover |
Apr. 20, 2022 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Apr. 20, 2022 |
| Entity File Number | 0-22088 |
| Entity Registrant Name | Monarch Casino & Resort, Inc. |
| Entity Central Index Key | 0000907242 |
| Entity Tax Identification Number | 88-0300760 |
| Entity Incorporation, State or Country Code | NV |
| Entity Address, Address Line One | 3800 South Virginia Street |
| Entity Address, City or Town | Reno |
| Entity Address, State or Province | NV |
| Entity Address, Postal Zip Code | 89502 |
| City Area Code | 775 |
| Local Phone Number | 335-4600 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock, $0.01 per value per share |
| Trading Symbol | MCRI |
| Security Exchange Name | NASDAQ |
| Entity Emerging Growth Company | false |
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