Monarch Casino & Resort, Inc. · NASDAQ:MCRI
Monarch Casino & Resort — JPMorgan Conference 2014
44 slides from Monarch Casino & Resort's conference presentation, Mar 13, 2014
Slide 1: Investor Meeting Presentation – March 13, 2014
Investor Meeting Presentation – March 13, 2014 Atlantis Casino Resort Spa in Reno, Nevada Monarch Casino in Black Hawk, Colorado 1
Slide 2: Forward-looking information
Forward-looking information This presentation contains certain forward-looking information that generally can be identified by the context of the statement or the use of forward-looking terminology, such as “believes,” “estimates,” “anticipates,” “intends,” “expects,” “plans,” “is confident that,” “
Slide 3: Table of contents
Table of contents 1) Company overview 2) Atlantis Casino Resort Spa 3) Monarch Casino Black Hawk 4) Monarch consolidated results 5) Conclusion 6) Questions and answers 7) Appendix 3
Slide 4: Diversification of net revenue and EBITDA sources
Company overview Diversification of net revenue and EBITDA sources 2013 net revenue by property 2013 EBITDA by property1 $188.7mm $52.9mm $47.5mm, 25% $16.5mm, 31% $36.4mm, $141.3mm, 69% 75% Reno Black Hawk Reno Black Hawk 25% of MCRI net revenue and 31% of property EBITDA are now sourced outside of
Slide 5: Company overview summary
Company overview Summary Reno Difficult market conditions expected to continue in Northern Nevada due to: Recessionary macroeconomic factors Continued heavy promotional environment in local market We have upgraded and expanded the Atlantis facility by investing over $95 million over the last few yea
Slide 6: Historic milestones
Company overview Historic milestones 1970s 1980s 1990s 2000s 2010s 1972: Golden Door Motel 1993: Initial stock offering raises Phase IV - Atlantis Acquisition of Riviera Black Hawk purchased by the Farahi family: $17mm of expansion capital 2008 Q2: When the most recent 2012 Q2: Acquisition of Rivier
Slide 7: Table of contents
Table of contents 1) Company overview 2) Atlantis Casino Resort Spa 3) Monarch Casino Black Hawk 4) Monarch consolidated results 5) Conclusion 6) Questions and answers 7) Appendix 7
Slide 8: Position near more affluent south Reno communities
Atlantis Casino Resort Spa Position near more affluent south Reno communities Source: Wells Fargo 8
Slide 9: Tribal competitors
Atlantis Casino Resort Spa Tribal competitors Red Fox Existing Sherwood Valley Colusa Coyote Valley Robinson Proposed Pinoleville (on reservation) Konocti Vista Enterprise Sho-Ka-Wah Twin Pine Thunder Valley Proposed (off reservation) River Rock Cache Creek Red Hawk Under Construction Rohnert Park J
Slide 10: Atlantis expansion and upgrade
Atlantis Casino Resort Spa Atlantis expansion and upgrade Facility is very fresh and was recently expanded and upgraded $95 million of capital improvements completed in 2009 Awarded AAA’s “Four Diamond Rating” in August 2012 (less than 5% of AAA rated properties achieve “Four Diamond”) The new ameni
Slide 11: New amenity highlights
Atlantis Casino Resort Spa New amenity highlights Established as one of the finest restaurants in northern Nevada Atlantis Steakhouse Recipient of AAA Four Diamond Award Established as a locals favorite Manhattan Deli & Popular with local business and community leaders Restaurant 2013 sports write w
Slide 12: RevPAR drivers
Atlantis Casino Resort Spa RevPAR drivers Occupancy1 100% 85.4% 89.1% 87.2% 89.5% 62.0% 65.2% 63.7% 66.6% 50% 0% 2010 2011 2012 2013 MCRI Reno-Sparks ADR1,2 $85 $83.62 $79.13 $80.54 $80 $76.09 $75.00 $74.16 $74.83 $75 $72.30 $70 $65 2010 2011 2012 2013 MCRI Reno-Sparks Occupancy and ADR have remaine
Slide 13: Income statement
Atlantis Casino Resort Spa Income statement Property Net Revenue Property Adjusted EBITDA1,2 $150 $40 $36.4 27% 26% Annual $ in millions $145 $33.5 $33.3 Annual $ in millions $141.3 $35 $30.1 25% $140 $136.4 $134.5 $133.6 24% $135 $30 23% $130 22% $25 $125 21% $120 $20 20% 2010 2011 2012 2013 2010 2
Slide 14: Atlantis casino market share
Atlantis Casino Resort Spa Atlantis casino market share MCRI and Reno-Sparks indexed gaming revenue growth Over the last 18 years, 300% Atlantis construction disruption 17% Atlantis has continued from 2007 Q3 to 2008 Q2 to outperform the 250% 15% Indexed gaming revenue (1996=0%) Reno-Sparks market b
Slide 15: Table of contents
Table of contents 1) Company overview 2) Atlantis Casino Resort Spa 3) Monarch Casino Black Hawk 4) Monarch consolidated results 5) Conclusion 6) Questions and answers 7) Appendix 15
Slide 16: Local metropolitan area population
Monarch Casino Black Hawk Local metropolitan area population Black Hawk / Central City Black Hawk is located 35 miles west of the Denver metro area (3.0 million people1), 35 miles southwest of Boulder, 20 miles west of Golden, and 77 miles east of Vail2 Source: 1) Denver area projected 2014 populati
Slide 17: Black Hawk gaming market
Monarch Casino Black Hawk Black Hawk gaming market Slot count > 700 Bullwhackers 500 to 700 Wild Card Saloon < 500 Bull Durham Black Hawk Station Ameristar Entrance To Black Hawk Central City Market Saratoga Mardi Gras Monarch Canyon Grand Plateau Gilpin Red Dolly The Lodge Golden Lady Luck Gates Go
Slide 18: Black Hawk-Central City gaming market
Monarch Casino Black Hawk Black Hawk-Central City gaming market Commentary Property level detail 1 1 2 Property Location Slots Tables Rooms Comprised of 26 casinos Ameristar (PNK) Black Hawk 1,476 56 536 Isle of Capri (ISLE) Black Hawk 1,080 33 238 10,405 slot machines and 240 table The Lodge (JACEN
Slide 19: Black Hawk-Central City market performance
Monarch Casino Black Hawk Black Hawk-Central City market performance Black Hawk-Central City total gaming revenue1 $700 $661 $650 $27 $633 $629 $625 $619 $621 $604 $25 Annual revenue ($ in millions) $594 $600 $69 $577 $577 $25 $576 $66 $67 $71 $21 $556 $23 $48 $27 $550 $538 $21 $20 $634 $500 $605 $5
Slide 20: Acquisition transaction summary
Monarch Casino Black Hawk Acquisition transaction summary Transaction closed April 26, 2012 Purchase price of $76.0mm cash ($69.2mm net after $2.1mm of cash and $4.7mm of NOLs) Funded by new $100mm revolving credit facility TTM Adjusted EBITDA at time of transaction announcement was $10.3mm which re
Slide 21: Income statement
Monarch Casino Black Hawk Income statement Property net revenue1 Property Adjusted EBITDA1,2 $47.5 $18 $16.5 40% $50 $16 $10.0 35% Annual $ in millions $42.3 $8.9 $12.9 $14 30% Annual $ in millions $45 $40 $39.8 $39.3 $12 25% $10 20% $35 $8 15% $30 $6 10% $25 $4 5% $2 0% $20 2010 2011 2012 2013 $15
Slide 22: Significant market share gains since acquisition
Monarch Casino Black Hawk Significant market share gains since acquisition Trailing twelve month 9.0% 9.0% Riviera Monarch Monarch Casino Black ownership ownership Hawk market share has 8.8% 8.8% steadily increased since the acquisition 8.6% 8.6% Market share has 8.4% 8.4% increased 96 bps, or 12%,
Slide 23: Sound basis for further investment in Black Hawk
Monarch Casino Black Hawk Sound basis for further investment in Black Hawk Size of Denver market as indicated by 2014 population of 3.0 million Top quintile personal income growth for Denver area among all tracked MSAs in nation Household incomes in area of $58,732 17% above national average of $50,
Slide 24: Redesign and master development expansion plan
Monarch Casino Black Hawk Redesign and master development expansion plan Completed property enhancements All new 250 seat buffet All casino floor restrooms Redesign and upgrade of second floor including bathrooms Addition of temporary casino floor next to buffet The master development plan: Complete
Slide 25: Current facility
Monarch Casino Black Hawk Current facility 25
Slide 26: Redesigned rendering
Monarch Casino Black Hawk Redesigned rendering 26
Slide 27: Current facility
Monarch Casino Black Hawk Current facility 27
Slide 28: Redesigned rendering
Monarch Casino Black Hawk Redesigned rendering 28
Slide 29: Redesigned rendering
Monarch Casino Black Hawk Redesigned rendering 29
Slide 30: Redesigned rendering
Monarch Casino Black Hawk Redesigned rendering 30
Slide 31: Significant Adj. EBITDA gains at Ameristar Black Hawk
Monarch Casino Black Hawk Significant Adj. EBITDA gains at Ameristar Black Hawk Annual Adjusted EBITDA and capital spend for Ameristar Black Hawk1 $70 Casino Hotel Smoking Amendment remodel construction ban 50 begins commences & $58.8 $60 $56.0 Hotel opens $53.0 Adj EBITDA ($ in millions) $50 $40 $3
Slide 32: Table of contents
Table of contents 1) Company overview 2) Atlantis Casino Resort Spa review 3) Monarch Casino Black Hawk review 4) Monarch consolidated results 5) Conclusion 6) Questions and answers 7) Appendix 32
Slide 33: Consolidated results: Income statement
Monarch consolidated results Income statement Net revenue Adjusted EBITDA1,2 Black Hawk acquired 04/26/12 $188.7 $60 26% $200 $48.5 Annual $ in millions $163.3 $50 25% $36.2 24% Annual $ in millions $150 $136.4 $134.5 $40 $29.5 $29.3 23% $30 22% $100 $20 21% $10 20% $50 $0 19% 2010 2011 2012 2013 $0
Slide 34: Strong balance sheet position
Monarch consolidated results Strong balance sheet position Total debt LTM leverage ratio $100 2.5x $90 $81.1 2.0x $80 2.0x 1.9x $70 Total debt / adjusted EBITDA $60 $ in millions $53.8 1.5x $48.5 $50 1.1x $40 1.0x 1.0x $28.6 0.8x $30 $24.7 $20 0.5x $10 $0 2009 2010 2011 2012 2013 0.0x 2009 2010 2011
Slide 35: Table of contents
Table of contents 1) Company overview 2) Atlantis Casino Resort Spa review 3) Monarch Casino Black Hawk review 4) Monarch consolidated results 5) Conclusion 6) Questions and answers 7) Appendix 35
Slide 36: Conclusion
Conclusion Summary Reno Difficult market conditions expected to continue in Northern Nevada due to: Recessionary macroeconomic factors Continued heavy promotional environment in local market We have upgraded and expanded the Atlantis facility by investing over $95 million over the last few years (mi
Slide 37: Table of contents
Table of contents 1) Company overview 2) Atlantis Casino Resort Spa review 3) Monarch Casino Black Hawk review 4) Monarch consolidated results 5) Conclusion 6) Questions and answers 7) Appendix 37
Slide 38: Table of contents
Table of contents 1) Company overview 2) Atlantis Casino Resort Spa review 3) Monarch Casino Black Hawk review 4) Monarch consolidated results 5) Conclusion 6) Questions and answers 7) Appendix 38
Slide 39: Organizational chart
Appendix Organizational chart1 Monarch Casino & Resort, Inc. Golden Road Motor Inn, Inc. Monarch Growth Inc. Atlantis Casino Resort Spa Monarch Black Hawk, Inc. HoldCo Monarch Casino Black Hawk Sub Owned property 1) Does not show non-operating subsidiaries. 39
Slide 40: The competitors: recent developments
Appendix The competitors: recent developments Heavy promotional environment in Reno-Sparks Downtown properties losing share to Atlantis, Peppermill and GSR Increased competition from central California casinos Red Hawk casino opened in December 2008 2,000 slots, 75 tables, no hotel rooms near Sacram
Slide 41: MCRI has dramatically increased Adj. EBITDA
Monarch Casino Black Hawk MCRI has dramatically increased Monarch Casino Black Hawk Adj. EBITDA TTM Adj. EBITDA growth since acquisition from Riviera $20 LTM EBITDA ($ in millions) 39% higher than 55% higher than $15.9 $14.3 $15 pre-acquisition pre-acquisition $10.3 $10 $5 $0 Pre-acquisition 11 mont
Slide 42: Market overview
Appendix Market overview Consideration Commentary 35 miles to Denver metro area (3.0 million people1) No tribal casino competition Only tribal casinos are in far southwest CO 350 to 400 miles drive time from Denver Desirable regional market 2012 Denver metro area median household income of $61K; 20%
Slide 43: Market overview
Appendix Market overview Consideration Commentary Gaming floor seamlessly connected to six-floor parking garage Among leading facilities in Fifth largest casino in Black Hawk-Central City by number of slots Black Hawk Shortest “handle to handle” casino as defined by distance from car door handle to
Slide 44: Kerzner litigation settled
Appendix Kerzner litigation settled Kerzner filed suit in May 2006 to prohibit: MCRI’s use of “Atlantis” name for casino services outside of Reno Specific prohibition of use by MCRI of “Atlantis” in Las Vegas We won the lawsuit in July 2013 at a total cost of $5.3 million The settlement: MCRI holds