Northern Nevada performance was sunny, but Colorado construction snags threw shade on Monarch Casino and Resort’s fourth-quarter financial results.
Revenue at the company’s Atlantis hotel-casino in Reno reached record heights, officials said, but construction hurdles delayed progress on a Black Hawk, Colorado, casino upgrade. The company’s quarterly earnings missed Wall Street forecasts.
In a statement issued after stock markets closed Wednesday, Las Vegas-based Monarch said its net income was $7.3 million, or 39 cents per diluted share, for the three months ended Dec. 31, up from net income of $4.4 million, or 23 cents per diluted share, a year earlier. The latest number missed the 42-cents-per-share forecast of analysts polled by Yahoo Finance.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that excludes nonrecurring items, rose 6.3 percent to $13.4 million from $12.6 million.
Revenue was $59.8 million, topping the $57.1 million forecast of Yahoo Finance-polled analysts. The latest number is up 6.6 percent from $59.8 million a year earlier.
In a statement accompanying the results, Monarch said the Atlantis achieved record and cash flow in the quarter. But Monarch Co-Chairman and CEO John Farahi said labor expenses, including a search for an executive to lead the expanded company business, and construction costs at the Black Hawk property, dampened earnings.
Monarch had $43.2 million in capital spending in the quarter.
Also, Farahi suggested, a gambling system conversion complication pushed selling, general and administrative expenses up 6.6 percent to $17.7 million from $16.6 million.
Fourth-quarter food-and-beverage revenue rose 14 percent and hotel revenue increased 23.1 percent, offsetting a 28 percent casino revenue decline.
Farahi said the expansion of the casino, hotel tower, restaurants, shops and interiors of six hotel tower floors for the Black Hawk casino, which had been expected to finish by the second quarter, will now be finished in the third. The remaining hotel tower floors, which the company has said would be done in the third quarter, will now be done in the fourth, he added.
The total cost for the Black Hawk upgrade had been estimated at $442 million. Monarch acquired the hotel-casino, 40 miles west of Denver, from Riviera Holding Corp. for $76 million in 2012.
Repeating a warning from the third quarter, Monarch said it hadn’t yet agreed to a guaranteed maximum price construction contract with Black Hawk’s project’s contractor. Delays and disruptions could arise.
Despite the mixed results, Seeking Alpha writer Vince Martin has called Monarch one of regional gambling’s more promising stories. In December, he wrote that both Black Hawk and Reno are growing, in-demand markets and that the new Black Hawk hotel will likely boost profits by year’s end.
“The combination makes MCRI an attractive takeover target in a space that has consolidated over the past few years,” Martin wrote. “Modest balance sheet leverage, even pro forma for remaining construction spend, gives Monarch options if it chooses to be a buyer rather than a seller. Management seems solid, as both properties consistently have grown market share over the years.”
Net income for the 12 months ended Dec. 31 was $34.1 million, or $1.83 per diluted share, up from net income of $25.5 million, or $1.45 per diluted share, a year earlier.
Twelve-month net revenue rose 4.2 percent to $240.3 million from $230.7 million.
Monarch Casino & Resorts shares rose $1.37, or 3.15 percent, Wednesday to close at $44.83 on the Nasdaq.
Follow Matthew Crowley on Twitter @copyjockey
