The November 2020 opening of Monarch Casino Resort Spa took its city by storm, quickly becoming one of the largest and most successful Black Hawk casinos. Despite maintaining its reputation at the top for nearly three years, the parent company of the casino announced drops in its Q3 bottom line.
Monarch Casino & Resort Inc., which also owns Atlantis Casino in Reno, NV, recently reported its Q3 2023 net revenue was $132.96 million, down 0.6% year-over-year from $133.73 million.
Net income was significantly lower at $24.16 million, representing a 12.1% YoY decrease from $27.49 million. Adjusted EBITDA ($49.22 million; -4.8% YoY from $51.69 million) and basic earnings per share ($1.26; -13.1% YoY from $1.45) also dropped.
How did Monarch Casino revenues perform in Q3?
Two of Monarch Casino & Resort Inc’s (MCRI) four metrics showed improvements in Q3. Unfortunately, the casino was not one of them. It was also the only one below Wall Street’s projections.
- Casino: $73.82 million (-4% YoY) – $78.57 million average estimate
- Food & Beverage: $32.97 million (+5.3% YoY) – $32.03 million average estimate
- Hotel: $20.61 million (-0.9% YoY) – $19.83 million average estimate
- Other: $5.57 million (+18% YoY) – $4.9 million average estimate.
Enough with the bad news, though. MCRI’s Q3 represented the second-highest revenue totals of any period since the property opened.
Its overall upward trend is visible, too.
The company has noticed this trend and believes it will continue. During its Q3 earnings, it declared a cash dividend of $0.30 per share, which stockholders will receive on Dec. 15.
Lawsuit in CO cuts into bottom line
In its financial results, MCRI declared that legal and consulting costs affected its quarterly net income by $2.9 million. These costs involve an ongoing lawsuit between Monarch Black Hawk and its construction contractor, PCL Construction Services Inc.
Monarch filed a suit against PCL earlier this year, claiming it performed substandard work for its $250 million contract to build the casino’s 23-story hotel. The two parties also have other outstanding legal battles dating back to 2019 and 2021.
MCRI has spent $4.1 million on legal fees in 2023 through September. It spent another $6.5 million more in the first nine months of 2022.
Monarch Black Hawk not to blame
MCRI’s earnings statements account for two properties. In addition to Monarch Black Hawk, the company owns Atlantis Casino Resort Spa in Reno, NV, which saw unforeseen heat from other local casinos in the promotions department.
John Farahi, co-chairmain and CEO of Monarch, said,
“At Atlantis, third quarter results were impacted by, what we believe to be, an irrational promotional environment driven by our competitors.”
As for steps to remedy the circumstance, Farahi added,
“Our primary focus remains the ongoing enhancement of the property and we expect to begin a redesign and upgrade of the third Atlantis hotel tower in early 2024.”
Monarch Black Hawk’s honeymoon phase isn’t over, either. The casino grew market share in Q2 2023 and remains the top earner.
Farahi said that expanding the market share among mid-to-upper tier players was a top priority to accompany its already-best amenities in the state.
Beyond that, MCRI plans to continue developing both of its properties, pay cash dividends and explore any acquisition opportunities that arise.