Monarch Casino & Resort Q1 Earnings Strengthen, Analysts Anticipate Positive Drivers

Despite inclement weather in Reno, Monarch Casino & Resort (NASDAQ: MCRI) delivered robust financial results for the first quarter, prompting at least one analyst to highlight positive aspects of the regional casino operator’s story.

Monarch’s Atlantis Reno saw strong first-quarter performance, with adjusted EBITDA amounting to $36.5 million on net revenue of $116.6 million. Both of these figures were records for the company, but the EBITDA number slightly missed analyst projections. Furthermore, the company is continuing to add market share in Black Hawk, Colorado, with all revenue categories – including casino, food and beverage, and hotel – displaying growth.

Commenting on the results, Monarch CEO John Farahi stated: “In Black Hawk, we continued to expand market share. We believe Monarch Black Hawk has yet to realize its full potential.” Additionally, the Atlantis Reno property is undergoing renovations to keep up with competition and the upgrades to the second hotel are expected to be completed by the end of May.

Monarch Casino Proven to be a Safe Investment

Amidst macroeconomic headwinds, Monarch is proving to be a safe investment, with ownership of its real estate and a strong balance sheet. Analysts at Stifel noted the potential for further return of capital via special dividends and can be seen as a benefactor “amidst decelerating regional GGR trends, given a pristine balance sheet, real estate ownership, a higher average income customer base, and structural economic tailwinds underpinning market growth.”

In February, Monarch announced a $5 per share special dividend, as well as a new 30-cent per share quarterly payout. With $34 million in cash on hand as of March 31 and strong cash flow-generating prospects, the operator could potentially continue to reward shareholders.

Snowy Weather Blamed for Missed EBITDA

Snowy weather in Reno during the first quarter is thought to have caused a $3 million EBITDA “headwind”. Heavy snowfall affected inbound routes from the important Northern California market, resulting in closures for five weekends and several weekday stretches.

However, Stifel analysts have reported that, overall, demand trends for Monarch remain steady. They noted that, “our industry checks suggest stable underlying trends thus far.” As such, they view the snow as a key focus as earnings progress, especially as Monarch could be the last regional operator to notice any consumer softness due to its comparatively higher income customer base.