US – Monarch provides Black Hawk update alongside significant Q2 revenue fallBy Lewis - 24 July 2020
Announcing its operating results for the second quarter, Monarch Casino & Resort praised the tireless efforts of its staff and provided an update on the construction of its Monarch Casino Black Hawk property.
For the second quarter of 2020, consolidated net revenue of $15.2m decreased 75.9 per cent from $62.8m in the prior year. Casino, food and beverage (“F&B”), and hotel revenues decreased 69.8 per cent, 83.9 per cent, and 83.3 per cent year-over-year, respectively.
Revenue for each category decreased as a result of the COVID-19 outbreak and the temporary shutdown of the company’s operations in Reno and Black Hawk which began late in the first quarter of 2020 and ended on June 4 and June 17, respectively.
Selling, general and administrative (“SG&A”) expenses for the second quarter of 2020 were $8.9m compared to $16.5m in the prior-year period, driven primarily by the mandated shutdown of the Company’s operations and temporary furloughs of approximately 90 per cent of the company’s employees as a result of the pandemic. As a percentage of net revenue, SG&A expense increased to 58.5 per cent compared to 26.3 per cent in the prior year period.
Casino operating expense as a percentage of casino revenue decreased to 26.8 per cent during the second quarter of 2020 from 34.5 per cent in the prior-year period primarily as a result of cost cutting measures undertaken by the company as well as strong initial casino performance as both properties re-opened late in the quarter.
F&B operating expense as a percentage of F&B revenue increased to 96.6 per cent during the second quarter of 2020 from 79.6 per cent in the prior year period primarily as a result of higher labour costs as a percentage of revenue. Hotel operating expense as a percentage of hotel revenue increased to 61.8 per cent in the second quarter of 2020 compared to 39.1 per cent in the same period a year ago, primarily as a result of higher labor costs as a percentage of revenue.
Monarch generated consolidated adjusted EBITDA of $0.5m in the second quarter of 2020 compared to $16.5m in the same period a year ago. Net income for the second quarter of 2020 decreased 146.8 per cent and diluted EPS declined 148 per cent compared to same period a year ago. The decline in adjusted EBITDA, net income and diluted EPS in the quarter is primarily a result of the COVID-19 outbreak and the temporary shutdown of the company’s operations in Reno and Black Hawk which began late in the 2020 first quarter and lasted for more than two thirds of the second quarter.
John Farahi, Co-Chairman and Chief Executive Officer of Monarch, commented: “Following the state-mandated closure of our properties in mid-March, we took immediate steps to ensure that our Company preserved its financial flexibility to manage through the nearly three-month shutdown. We reduced expenses throughout the Company and worked with our bankers to secure the necessary amendments to our credit facility. Thanks to the commitment and sacrifices of our dedicated team, along with the support of our bankers, Monarch was well prepared to carry on during the state-mandated shutdowns of our operations and emerge from them in a financially stable position.
“Since the June 4 re-opening of Atlantis Casino Resort Spa and the June 17 re-opening of Monarch Casino Black Hawk, we have adjusted our staffing and services, in-line with the changing public health guidelines put forth by the governors of Nevada and Colorado, as well as by the CDC. Our focus from day one has been the health and safety of our team members and guests. Consequently, we have been extremely diligent in our approach to minimizing risks as we reintroduce our guests to the gaming, entertainment and hospitality experiences they have come to expect from Monarch.
“As a result of our cost mitigation measures and the strong initial reopening performance at both Atlantis and Black Hawk, Monarch generated 2020 second quarter revenue of $15.2m and delivered positive Adjusted EBITDA of $0.5m. Though visitation has not yet fully recovered to pre-COVID levels, and we continue to limit capacity in-line with the state-mandated re-opening guidelines, spend per visit has been very encouraging and our guests have offered positive feedback on the comprehensive safety measures we’ve implemented.
“The Company recorded June net revenue of $15.0m and Adjusted EBITDA of $6.9m. For the portion of June in which Atlantis Casino Resort Spa was open, gaming revenue increased 12 per cent compared to the same period a year-ago. Gaming revenue at Monarch Casino Black Hawk for the portion of June in which the property was open declined, as table games have not yet been allowed to re-open.”
Monarch also provided an update on its ongoing construction at its Monarch Casino Black Hawk property, revealing that the expanded casino, restaurants, hotel administration, lounges, and some hotel floors will open in the third quarter of 2020.
“In Colorado, we continued to make progress on the construction of the new Monarch Casino Resort Spa Black Hawk throughout the shutdown. We anticipate that the podium and some hotel floors will open in the third quarter of 2020 and the balance of the hotel tower will open in the fourth quarter of 2020. Importantly, guest excitement continues to build with the recent removal of the construction wall separating the existing casino from the new expanded casino.
“On behalf of our Board of Directors, I’d like to thank our team members for their sacrifice during the unprecedented property shutdowns and for their tireless efforts as we worked quickly to implement new health and safety measures ahead of the re-openings.
“To our guests, everyone at Monarch thanks you for your patience during the closures and for your loyalty since our re-opening. It’s marvelous to see your smiling faces again. You’ve told us time and again that you value the friendly service and warm experience Monarch employees provide, and we believe you have clearly demonstrated your appreciation over the past few weeks.
“Finally, to our stockholders, we thank you for continuing to invest and trust in our entire team, which has given us the confidence to manage through the ongoing COVID-19 pandemic and to position Monarch for long-term success,” added Mr. Farahi.