Monarch Casino Resort reported its second quarter financial results Wednesday, posting a $4.3 million net loss for the period ending June 30. The casino operator beat market expectations as the reported loss represents 24 cents per diluted share, but the consensus was it would go above the 62 cent mark.
The Reno-based casino operator that had $9.3 million net income in Q2 2019, saw its revenue fall to $15.2 million for the quarter, from $62.8 million for the same three months in 2019, but topping the forecasted by market analysts $14.8 million.
The financial report that was issued after the market close on Wednesday posted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) down to $490, 000, compared to $16.45 million for Q2 2019.
Employee Furloughs, Covenant Waiver and Credit Facility Amendments
Monarch’s two casino properties, the Atlantis in Reno, Nevada, and the Monarch Casino Black Hawk in Black Hawk, Colorado, had to close doors mid-March, much alike all land-based gaming properties in the US, expected to comply with federal and state orders to curb the spread of the virus infection. Shutting down operations forced Monarch to cut expenses and seek covenant waiver and credit facility amendments with banks, Monarch Casino Chairman and CEO John Farahi outlined.
“Following the state-mandated closure of our properties in mid-March, we took immediate steps to ensure that our Company preserved its financial flexibility to manage through the nearly three-month shutdown.”
John Farahi, Chairman and CEO, Monarch Casino
Both casino properties of the company resumed operations, June 4 and June 17 for the Atlantis and the Monarch Casino Black Hawk, respectively, but table games remained closed at the gaming facility in Colorado.
“Our focus from day one has been the health and safety of our team members and guests. Consequently, we have been extremely diligent in our approach to minimizing risks as we reintroduce our guests to the gaming, entertainment and hospitality experiences they have come to expect from Monarch.”
John Farahi, Chairman and CEO, Monarch Casino
Second quarter revenues for Monarch fell across all divisions, food and beverage falling the most, 83.9%, closely followed by hotel revenue, down 83.3%, and casino revenue which posted a nearly 70% drop, all compared with the revenues generated during the second quarter in 2019. Despite being at the bottom of the list of cash burn rate, Monarch Casino managed to cut nearly $9 million from its operating costs, posting a 46% drop, mainly due to the furloughing of approximately 90% of its staff.
Since the reopening of its properties, visitation has not fully recovered to pre-closure levels and the casinos continue to operate with limited capacity in line with state-mandated re-opening guidelines, numbers related to spend per visit look encouraging, Monarch Chairman and CEO outlined, pointing out to the positive customer feedback regarding the comprehensive safety measures the operator received.
Despite the overall optimism, Monarch also listed a number of factors that could potentially affect future performance, including extended shutdowns of properties and construction delays.