Monarch evaluating potential acquisitions after posting revenue up 7% in Q2

Monarch Casino & Resort has announced net revenue of $123.7 million for the second quarter of the year, up 7% annually. The company has also posted $22.4 million in net profit, 15% above the figure posted in the same period last year. In light of the positive developments, the casino operator has declared a cash dividend of $0.30 per share and said it is eyeing acquisitions.

John Farahi, Co-Chairman and Chief Executive Officer of Monarch, said the results reflected the operator’s “strong market position” in Black Hawk, Colorado, and a year-over-year improvement in the operating performance of the Atlantis Casino Resort Spa in Reno, Nevada.

In Black Hawk, Farahi said the company’s Monarch Casino Resort Spa continued to expand its 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,” the CEO pointed out.

As for Atlantis, the property generated strong casino and food and beverage revenue, as guest visits and spend per visit increased year-over-year. However, hotel revenue was impacted by renovation work during the quarter on the redesign and upgrade of hotel rooms in the second tower.

Atlantis Casino Resort Spa in Reno, Nevada

Hotel performance in Reno improved once again in June, as Atlantis’ full inventory of rooms became available to guests once again. “The Reno market remains extremely competitive, we continue to prudently invest in Atlantis to maintain, what we believe is, a market-leading position,” added Farahi.

A record Q2 for Monarch

The operational improvements resulted in net revenue and Adjusted EBITDA growing to all-time second-quarter records of $123.7 million and $42.1 million, respectively, resulting in an Adjusted EBITDA margin of 34.1%.

Breaking down figures per segment, casino and food and beverage 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 revenue was driven by ongoing growth at Monarch Black Hawk, while the decrease in hotel revenue was due to a decrease in the average daily rate.

Selling, general and administrative expenses for the second quarter increased to $25 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 of June 30, the company had cash and cash equivalents of $35.1 million and an outstanding principal balance of $41 million under its credit facility. During the second quarter, Monarch made $10 million in principal payments on its credit facility.

Capital expenditures of $10.3 million 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.

Monarch CEO John Farahi

Monarch eyeing acquisitions, dividend announced

In a statement, Monarch’s CEO said the company continues to evaluate potential acquisition opportunities where the operator can employ its “developmental and operational expertise in a financially prudent manner.”

As a result of the positive performance, the company has also announced a cash dividend of $0.30 per share of its outstanding common stock. The dividend is payable on September 15 to stockholders of record on September 1, and is part of a previously announced annual cash dividend of $1.20 per share, distributed in quarterly payments.

“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,” added Farahi.