Monarch Casino & Resort has reported record operating results for the second quarter ended June 30, 2023.
CEO Comment
John Farahi, Co-Chairman and CEO of Monarch, said: “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.
