Monarch Casino ‘prepared to move aggressively’ on potential acquisitions

Monarch Casino Black Hawk

Monarch Casino and Resort is “actively evaluating potential acquisitions” and has asserted that the group is “prepared to move aggressively for the right opportunity”.

These comments come as the group delivered a 2022 fourth quarter and full-year financial report, which saw John Farahi, Co-Chair and Chief Executive Officer, declare that “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”.

Adding: “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.”

The group, which owns and operates the Atlantis Casino Resort Spa in Reno, Nevada, and Colorado’s Monarch Casino Resort Spa Black Hawk, saw Q4 revenue increase 8.5 per cent year-on-year to $120.5m (2021: $111.1m).

This, said Monarch, was primarily driven by the ongoing growth of the business in the latter of those aforementioned gaming venues.

Casino, food and beverage and hotel revenues increased 3.5 per cent, 17 per cent and 17 per cent to $67.15m (2021: $64.89m), $31.33m (2021: $26.78m) and $16.9m (2021: $14.45m), respectively.

Net income for the fourth quarter of 2022 increased 12.9 per cent to $22.43m (2021: $19.87m), although the company did note that this “was negatively impacted by legal and consulting costs, related to the ongoing litigation with the Monarch Black Hawk general contractor, PCL Construction Services”.

Adjusted EBITDA of $41.6m represents an increase of 6.6 per cent YoY, while selling, general and administrative expenses for the fourth quarter was $24.7m compared to $22.2m in the prior-year period, driven primarily by increases in labour and utility costs.

For the full-year, revenue increased 20.9 per cent to $477.87m (2021: $395.37m), with net income rising 27.7 per cent to $87.47m (2021: $68.48) and AEBITDA closing 2022 at $167m, up 21.7 per cent from $137.29m.

“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,” commented Farahi. 

“Net revenue and Adjusted EBITDA growth of over 20 per cent 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 $30m 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.”