Owner of Reno’s Atlantis looking to grow the company’s presence

Owner of Reno’s Atlantis looking to grow the company’s presence

Article brief provided by Nevada Independent
  • Howard Stutz, Nevada Independent
July 28, 2022 5:00 PM
  • Howard Stutz, Nevada Independent

Monarch Casino and Resorts CEO John Farahi wants to expand the company’s holdings beyond its legacy property in Reno and its Black Hawk, Colorado hotel-casino that is now the market leader.

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The underlying question is where the company will look.

“Monarch continues to evaluate strategic mergers and acquisition opportunities,” Truist Securities gaming analyst Barry Jonas told investors last week after Reno-based Monarch reported the company’s second-quarter results.

“We don’t think anything is imminent, although management is hopeful some good opportunities may arise,” Jonas said.

Jefferies gaming analyst David Katz has a similar opinion.

“The search remains active for the next property to acquire, although our impression is that nothing is imminent,” Katz said.

Monarch told investors its revenue for the three months that ended on June 30 grew 18 percent from a year ago to $115.3 million. Net income increased 7.1 percent to $19.4 million. The company’s cash flow grew 12.2 percent to $39.5 million.

Monarch doesn’t break out results by individual hotel-casinos, but analysts suggested Monarch Black Hawk was well ahead of Reno’s Atlantis Casino Resort because the Northern Nevada property is in the midst of room remodel at its original hotel tower that disrupted 20 percent of its room inventory.

In a statement, Atlantis said the project was completed and many of the rooms were available before the Memorial Day weekend.

Northern Nevada’s casino market has seen recent changes with the conversion of Harrah’s Reno into the non-gaming Reno City Center and the pending sale of the Nugget in Sparks to Colorado-based Century Casinos.

“While Reno remains a very competitive market, we believe our focus on operational execution and capital investments in Atlantis will help … competitiveness,” Farahi said in a statement.

Jonas said Monarch saw a pickup in its Reno business during June after several quarters that were considered “flattish” given construction disruptions and a competitive market.

“Management is confident that continued investment in the property will enhance Atlantis’s positioning,” Jonas told investors. “Importantly, Monarch does not anticipate any (additional) construction disruptions.”

Monarch does not conduct a traditional quarterly earnings conference call but Farahi and other executives speak individually with analysts. Farahi credited Monarch’s low debt of $43.8 million at the end of the quarter and available cash of $30.5 million as vehicles to explore casino purchases. He didn’t mention any potential targets or locations.

“Our favorable balance sheet positions Monarch to continue to evaluate potential acquisitions to drive long-term value for our stockholders,” Farahi said.

This excerpt originally appeared in Indy Gaming on July 27, 2022.