Optimism infused Monarch Casino and Resort’s second-quarter earnings report as a key cash flow measure and revenue rose to top Wall Street forecasts. Company officials predicted increases in free cash flow from its under-renovation hotel-casino in Black Hawk, Colorado, although the project’s completion would come later than previously predicted.
In a statement issued after stock markets closed Wednesday, the Reno-based company said its net income was $9.27 million, or 50 cents per diluted share, up from $9.24 million, or 50 cents per diluted share, a year earlier. The latest result topped the 46 cents-per-share forecast of analysts surveyed by Yahoo Finance.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that filters out nonrecurring costs, rose 3.8 percent to $16.5 million from $15.9 million.
Quarterly revenue rose 4.8 percent to $62.8 million from $59.9 million. The latest result topped the $61.3 million forecast by Yahoo-polled analysts.
In a statement accompanying the results, Monarch Casino co-Chairman and CEO John Farahi said the company’s properties, the Black Hawk hotel-casino and the Atlantis, overcame obstacles to post higher year-over-year revenue. Atlantis said health care and payroll expenses increased; Black Hawk had $188,000 in preopening expenses.
Monarch Casino said it expects work on the first five floors of the Black Hawk casino tower, which includes the expanded casino, restaurants and public areas, to finish late in the third quarter or early in the fourth quarter. Completion of the rest of the tower and a structure to bridge the new tower and the previously existing casino would come in the fourth quarter, the company added.
Preopening costs will likely grow, the company said.
“As the transformation of Monarch Casino Black Hawk wraps up, we believe our positioning for long-term growth has never been stronger,” Farahi said. “We have been able to fund over half of the spending to date on the more than $400 million Black Hawk Casino project from operating cash flow. We expect to drive strong free cash flow growth as business at the new resort and expanded casino ramps up beginning in 2020.”
In June, Union Gaming Group cut its price target on Monarch Casino to $47 from $49 after the casino company said the Black Hawk tower project wouldn’t finish during the third quarter as had been promised.
Nevertheless, analyst John DeCree continued to expect long-term benefits from the renovation.
“However, (the price target cut) does coincide with our recent downgrade to ‘hold’ in anticipation of some near-term headwinds typical of new casino openings/expansions,” DeCree wrote in a note to investors, “including elevated preopening expenses and modest timing delays.”
Monarch said it has spent $365 million of a budgeted $430 million to $442 million on the expansion.
Monarch Casino shares fell 9 cents, or 0.2 percent, Wednesday, to close at $45.01 on the Nasdaq. The share price has risen 16.7 percent in 2019 trading.
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