Monarch Casino & Resort Incorporated, owners and operators of a number of casino establishments in the US, such as Monarch Casino Black Hawk and Atlantis Casino Resort Spa, has revealed details and provided a business update in regards to the first quarter of 2020 amid the ongoing Coronavirus pandemic.
- For the 2020 first quarter, consolidated net revenue of $51.0 million decreased 13.2% from $58.7 million in the prior year.
- Casino, food and beverage, and hotel revenues decreased 6.6%, 16.6%, and 24.6% year-over-year, respectively.
- The decrease in revenues in all three categories began early in March and was driven by the COVID-19 outbreak, which culminated in temporary shutdown of the Company’s casinos and other operations in Reno and Black Hawk.
- For the two-month period ended February 29, 2020, consolidated revenue, net income and Adjusted EBITDA grew 14.2%, 37.6% and 26.1%, respectively, compared to the same period in 2019.
- Net income for the first quarter of 2020 decreased 71.2% and diluted EPS declined 71.1%.
- The decline in net income and diluted EPS in the quarter is primarily a result of the shutdown of the Company’s operations in Reno and Black Hawk late in the first quarter due to the COVID-19 pandemic.
Co-Chairman and Chief Executive Officer of Monarch John Farahi said:
“The first quarter of 2020 was a study in contrasts, with Monarch delivering strong financial performance in the first two months of the quarter followed by a March which demonstrated the impact of the significant operational challenges created by the global spread of the COVID-19 pandemic.
In an effort to contain the virus, on March 16th the state of Colorado mandated a temporary shutdown of all casinos including Monarch Casino Black Hawk and on March 17th the state of Nevada mandated the temporary closure of all casinos including Atlantis Casino Resort Spa in Reno.
The states of Colorado and Nevada have not yet provided clear dates or guidelines for the reopening of casinos in such states.
Ahead of the mandated suspension of our operations, both of our properties were performing well.
Consolidated net revenue and net income for the first two months of the year were up year-over-year by 14% and 38%, respectively, and Adjusted EBITDA grew 26%.
This strong early performance was driven by an increase in spending per visit, as well as a continued increase in market share at both locations.
With the temporary closure of our properties in mid-March, consolidated revenue, net income and Adjusted EBITDA dramatically declined for the full month of March 2020.
As a result of the strong performance in the early part of the quarter, combined with the decline in March performance, we recognized 2020 first quarter net revenue, net income and Adjusted EBITDA declines of 13%, 71% and 41%, respectively.
Since closing our properties, our main concern has been the safety and health of our team members.
We are also working diligently to preserve our liquidity and to best position the Company and our properties for renewed long-term success once the COVID-19 threat passes to the point where reopening will be allowed and ultimately when more ‘normal’ operations are permitted and are prudent.
Our entire team received two weeks of regular pay after our operations were suspended and subsequently all team members not working were placed on unpaid furlough, while keeping their employee benefits.
I have foregone my salary as of March 30, our board members forwent cash directors’ fees as of April 1 and our working executive management team took a salary reduction of 50%.
Thanks to our long-term, transparent relationship with our bank group and history of consistent performance, we were granted limited covenant waivers under our amended credit facility, including a waiver of the mandatory principal payment of $5.0 million, due on March 31, 2020.
Further, we are in continuing discussions with our lenders regarding additional steps under our amended credit facility that we may request in light of the ever-changing circumstances.
While our principal efforts are aimed at reducing monthly cash burn, we are also using this time to invest in preventative maintenance at both of our properties. We believe these actions, the Company’s solid cash position, and our modest leverage give us the financial flexibility to manage through the COVID-19 impact and prepare our properties for re-opening and a return to normalized operations.
In Colorado, construction on the new Monarch Casino Resort Spa Black Hawk continues and we are working with the general contractor and the City of Black Hawk to secure a temporary certificate of occupancy for floors one through five in the building’s podium as well as some floors in the hotel tower.
The COVID-19 outbreak has slowed some of our efforts, and we do not yet have a definitive timeline for the property opening. We continue to plan for a phased opening of the expanded casino resort, depending in substantial part, on the length and conditions of the state mandated closure.
On behalf of the Board, I’d like to thank our team members, our guests and our stockholders for their patience during these difficult times as we manage through uncertainty and properly position our business for when the country’s economy begins to re-open.
Most importantly, once the temporary shutdowns end, the entire Monarch team looks forward to welcoming our valued guests back to Atlantis and the new and exciting Monarch Casino Resort Spa Black Hawk.
While the pandemic has presented serious challenges and setbacks for the entire gaming and hospitality industry, we believe the actions we’ve taken and the quality of our properties in the markets we serve will be key factors in Monarch’s long-term success.”