Revenue dips for Monarch; company hopes to Black Hawk expansion in Q4

October 30, 2020 12:17 AM
  • Matthew Crowley, CDC Gaming Reports
October 30, 2020 12:17 AM
  • Matthew Crowley, CDC Gaming Reports

The coronavirus cast its shadow on Monarch Casino Resort’s third-quarter earnings, sending revenue down as health protocols limited casino capacity in Black Hawk, Colorado. But that revenue and per-share earnings smashed Wall Street forecasts and Reno-based Monarch posted record adjusted cash flow.

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In a statement Thursday, Monarch said its net income was $10.7 million, or 57 cents per share, for the three months ended Sept. 30, up from net income of $9.3 million, or 50 cents per share, a year earlier. Analysts polled by Yahoo Finance had, on average, forecast earnings of 29 cents per share.

Adjusted earnings before interest, taxes, depreciation, and amortization, a cash flow measure that excludes one-time expenses, rose 19% to a record $20.7 million from $17.4 million.

Revenue fell 8.7% to $59.9 million from $65.6 million and topped the $48.8 million average revenue estimate of Yahoo Finance-polled analysts.

Putting his best positive spin on the coronavirus fallout, Monarch CEO John Farahi said although the restricted capacity hurt revenue, the company streamlined its cost structure and achieved operational efficiencies. Monarch also said it amended and increased its credit line’s principal amount to better position the company for possible acquisitions.

Gaming revenue rose 9% helped by increased per-visit spending at the company’s Atlantis hotel-casino in Reno. Overall food and beverage revenue fell 30.0%; hotel revenue dipped 33.1%.

Prolonging a theme from previous quarters, the company again delayed the expected opening of a new 23-story, 500-room hotel tower at Black Hawk, part of an expansion, now pegged to cost $430 million to $442 million.

The company said it now expects the opening in the fourth quarter.

In fourth-quarter earnings documents, Monarch had said it expected a “soft opening” of these features and a grand opening date for the new tower in the 2020 second quarter. An opening for the full expansion had been promised for 2019.

Monarch said it’s in court battling its general contractor for the Black Hawk project, PCL Construction Services Inc., which has sued for construction delay-related damages. Monarch said it has countersued.

So far, Monarch said it has spent $320 million of a budgeted $320 million to $330 million on the full expansion. Costs have reached $430 million.

“We are confident that the expanded casino, new hotel, and enhanced amenities will be received very favorably by our guests,” Farahi said.

Farahi added that third-quarter gaming visitation at Black Hawk has been strong since a state-mandated closure was lifted Sept. 11. He said the company is watching for the ballot result of Amendment 77 in Colorado, which would amend the state constitution to let the city of Black Hawk increase its $100 bet limit and approve new casino games such as baccarat and pai-gow.

Given Colorado voters’ OK on Tuesday, Amendment 77’s changes could take effect as early as May 1, buoying the casino’s revenue, the company said.

Monarch Casino shares rose 10 cents, or 0.24% Thursday to close at $41.41 on the Nasdaq. The share price has fallen by 16.3% in 2020.

Follow Matthew Crowley on Twitter @copyjockey