Monarch Casino & Resort, Inc. · NASDAQ:MCRI
Monarch Casino & Resort — Investor Presentation (December 2020)
36 slides from Monarch Casino & Resort's investor presentation, December 2020
Slide 1: Investor Presentation December 2020
Investor Presentation December 2020
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: Initial Impact of COVID-19
Initial Impact of COVID-19 Pre-COVID, January and February 2020 revenue was up 14% and Adjusted EBITDA1 was up 26% Y/Y Atlantis and Black Hawk closed for 78 and 92 days, respectively Construction and maintenance continued at both properties • Black Hawk expansion project continued for most of shutdo
Slide 4: Business Recovery Ongoing
Business Recovery Ongoing Majority of Company’s revenues come from guests who live within an hour drive of Atlantis and Black Hawk • Effectively all of Monarch Black Hawk’s revenues come from drive-in guests • Approximately 80% of Atlantis revenues come from drive-in guests • Drive-to visitation cou
Slide 5: Investment Summary
Investment Summary Prime locations and assets Results-oriented management with strong operating track record • Record gaming market share at both properties Strong underlying economic fundamentals in both markets • Reno’s unemployment rate of 6.7% (national average: 7.7%) is attributable to economic
Slide 6: Company History
Company History 2008 1994 1999 Phase IV – Atlantis 1991 Phase II - Atlantis Phase III - Atlantis • Property features: Phase I – Atlantis • Second high-rise tower • Third high-rise tower • 969 rooms, since • First high-rise tower opens, adding: opens, adding: reduced to 818 opens • 283 rooms • 388 ro
Slide 7: Monarch Casino Resort Spa Black Hawk
Monarch Casino Resort Spa Black Hawk
Slide 8: Monarch Casino Resort Spa Black Hawk - Overview
Monarch Casino Resort Spa Black Hawk - Overview Acquired in 2012 • Transaction price of $76.0 million • Acquisition multiple of 6.7x reduced to 4.9x after first year of Monarch ownership Amenities pre-expansion include: • 32,000 square foot casino with ~743 slots and 14 tables • Buffet restaurant an
Slide 9: Prime Property Location
Slot count Z Casino > 600 300 to 600 Sasquatch Bull Durham < 300 Prime Property Location Saratoga Gilpin Wild Card Saloon Red Dolly Ameristar Easy access from Front Range population centers and heavily- The Lodge trafficked I-70 ski corridor Mardi Gras Monarch Casino Resort Spa Golden Gates • ~35 mi
Slide 10: Black Hawk Gaming Market
Pro-Forma Market Overview3 Property Slots1 Tables1 Rooms2 Black Hawk Gaming Market Monarch Casino Resort Spa 1,250 40 516 Ameristar (PENN) 1,240 40 536 As of 2/29/2020 (final pre-COVID reporting): The Lodge (JACENT) 963 26 50 • 6,837 slot machines Isle of Capri (CZR) 909 29 238 • Only four casinos o
Slide 11: Black Hawk Market Share
Black Hawk Market Share 90% Black Hawk 14.3% 15.0% Indexed gaming revenue (2012 Q1=0%) construction 70% from 1Q14 to 14.0% Monarch Casino Resort Spa has grown market share for 24 3Q15 MCRI market share (TTM) straight quarters 50% 13.0% • TTM market share was 14.3% as of September 30, 2020 30% 12.0%
Slide 12: Rationale for Black Hawk Investment
Rationale for Black Hawk Investment Denver metro area an attractive target market • Population of more than 3 million • Median household income of $85,641 is 30% above the national average • Sixth largest source of air traffic to Las Vegas in 2019 (originating passengers only) Black Hawk underserved
Slide 13: Black Hawk Market Underserved by Hotel Rooms
Black Hawk Market Underserved by Hotel Rooms 2019 Gross Gaming Revenue per Hotel Room $1,000 $931 $900 $800 $700 $621 $600 $500 $400 $300 $230 $200 $89 $86 $100 $59 $49 $44 $0 Macau Black Hawk Atlantic City Lake Charles MS Gulf Coast Shreveport / Bossier Reno / Sparks Las Vegas Strip BlackMacau Hawk
Slide 14: Denver Metro Area Provides Significant Air Traffic to Las Vegas
Denver Metro Area Provides Significant Air Traffic to Las Vegas Top Las Vegas Feeder Markets (2019 Originating Passengers in Thousands) 1,800 1,600 1,565 1,521 1,400 1,200 1,000 815 800 690 671 636 600 510 502 477 444 400 200 0 Los Angeles San Francisco Chicago Seattle Dallas Denver New York Washing
Slide 15: Hotel Tower / Casino Expansion
Hotel Tower / Casino Expansion Monarch Casino Resort Spa began opening in 4Q20 Financed through combination of cash flow from operations and Company’s existing credit facility Amenities at completed resort to include: • All new 23-story tower with 516 hotel rooms (20% suites) • ~60,000 square foot c
Slide 16: Slide 16
Slide 17: Colorado Bet Limit Changes
Colorado Bet Limit Changes Amendment 77 passed statewide on November 3 • Industry led initiative • Concurrent local ballot passed authority to City Counsel of Black Hawk to approve changes • On December 1, 2020, City Council of Black Hawk approved changes that will go into effect on May 1, 2021 • Re
Slide 18: Atlantis Casino Resort Spa Reno
Atlantis Casino Resort Spa Reno
Slide 19: Atlantis Overview
Atlantis Overview Award-winning facility • TripAdvisor - Rated #1 Reno resort last 7 years, consistently boasting the majority of city’s top 5 restaurants • USA Today Travel - #1 casino outside Las Vegas • AAA - “Four Diamond” rating • Forbes - Four-Star Award for Spa Atlantis (only four-star venue
Slide 20: Prime Reno Location
Silver Legacy Circus Circus Rail City Western Village Ramada Reno Prime Reno Location Eldorado Harrah’s Nugget Club Cal Neva Baldini’s Ideally located in the heart of south Reno’s restaurant, shopping Grand Sierra and convention district Boomtown Reno, Gold Dust West & • ~3 miles south of downtown i
Slide 21: Fast-Growing Reno Market
Fast-Growing Reno Market Population approaching 500,000 • Reno metro’s population has grown 8.1% in the past five years (national average: 3.1%) Reno diversifying to broader base of industries • Expanded list of industries include manufacturing, distribution and technology Reno undertaking significa
Slide 22: Positive Market Characteristics
Positive Market Characteristics “Natural assets and growing infrastructure make ‘little city’ Reno a big-time destination for visitors and talent.” • “America’s Best Small Cities” Bestcities.org, June 23, 2020 “Where they go when they leave typically includes places with a lower cost of living and r
Slide 23: Continuous Market Share Gains
300% 17% 16.0% Continuous Market Share Gains 250% 15% Indexed gaming revenue (1996=0%) 200% 13% Atlantis Casino Resort Spa has consistently outperformed the MCRI market share greater Reno-Sparks market for the last 23 years 150% 11% • Primary focus has always been providing best-in-class and best-in
Slide 24: Atlantis Enhancements
Atlantis Enhancements All-new enhancements for 4Q20 • Atrium Cocktail Lounge (opened on November 25) • Red Bloom serving authentic Asian cuisine Scheduled 2021 enhancements • Standard room and bathroom redesign and upgrades • All-new top-tier suites • Conveyance system improvements
Slide 25: Atlantis Hotel Occupancy and Cash ADR
Atlantis Hotel Occupancy and Cash ADR Total Occupancy Cash ADR(1) 100% $140 $138 89% 87% 90% $135 78% 80% 70% $130 70% 67% $127 $126 $125 $124 60% 57% 50% $120 $118 40% $115 $115 30% $110 20% 10% $105 0% $100 2018 2019 3Q20 LTM 2018 2019 3Q20 LTM Reno-Sparks Atlantis Reno-Sparks Atlantis Atlantis oc
Slide 26: Sports Betting
Sports Betting Monarch owns & operates its sportsbook—a unique approach • App content and lines managed internally by Reno-based bookmaking team • Atlantis Race and Sports mobile app launched in Nevada in 2015 • BetMonarch mobile app launched in Colorado in May 2020 as one of state’s first mobile sp
Slide 27: Leverage Loyalty Program
Leverage Loyalty Program Rebranded as Monarch Rewards in June 2019 Atlantis Casino Resort Spa Reno has benefited from cross property play since the Black Hawk casino was purchased in 2012 The new Monarch Casino Resort Spa Black Hawk will now benefit from the loyal Atlantis database The ‘One Card’ pl
Slide 28: Balance Sheet Management
Balance Sheet Management $181.9 million of debt1 as of September 30, 2020 Company and lenders entered into a restated credit agreement in September 2020, including: • Extended the maturity date of the Company’s Amended Credit Facility to September 2023 • Increased the aggregate principal amount of t
Slide 29: Long-term Growth Through M&A
Long-term Growth Through M&A Monarch’s priorities for use of future cash flow include: • Debt pay-down • Opportunities for growth via M&A Company continually evaluates potential M&A with a focus on: • Driving EBITDA growth by deploying Monarch’s superior service levels, industry product/marketing be
Slide 30: Financial Results
Financial Results
Slide 31: Historical Financial Performance
Historical Financial Performance $300.0 27.0% Black Hawk acquired 4/26/12 26.0% $250.0 25.0% $200.0 24.0% $ in millions $150.0 23.0% 22.0% $100.0 21.0% $50.0 20.0% $0.0 19.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 3Q20 LTM Net Revenue $136.4 $134.5 $163.3 $188.7 $187.8 $202.2 $217.0 $230.
Slide 32: Historical Net Leverage Ratio
Historical Net Leverage Ratio 4.0x 3.5x 3.5x Total Net Debt / LTM Adjusted EBITDA1 3.0x 2.5x 2.2x 2.0x 1.7x 1.5x 1.3x 1.1x 1.0x 0.7x 0.6x 0.5x 0.5x 0.4x 0.4x 0.0x 0.0x -0.1x -0.5x 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 3Q20 LTM Source: Monarch Casino & Resort analysis 1. EBITDA is ad
Slide 33: Income Statement Overview
Income Statement Overview Three Months Ended September 30, Nine Months Ended September 30, Increase / 2020 2019 (Decrease) 2020 2019 (Decrease) Net revenue $59,869 $65,585 (8.7%) $126,036 $187,086 (32.6%) Adjusted EBITDA(1) 20,664 17,351 19.1% 29,263 47,545 (38.5%) Net income $10,745 $9,326 15.2% $8
Slide 34: Balance Sheet Overview
Balance Sheet Overview September 30, 2020 December 31, 2019 Cash and cash equivalents $30,526 $60,539 Net property and equipment 520,423 501,483 Other assets 48,197 48,856 Total assets $599,146 $610,878 Long-term debt1 (including current maturities) $181,864 $195,415 Other liabilities 63,752 74,262
Slide 35: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Adjusted EBITDA $20,664 $17,351 $29,263 $47,545 Expenses: Stock based compensation (897) (1,027) (2,751) (2,945) Depreciation and amortization (3,891) (3,686) (11,544) (10,984) Provisi
Slide 36: Investment Summary
Investment Summary Prime locations and assets Results-oriented management with strong operating track record • Record gaming market share at both properties Strong underlying economic fundamentals in both markets • Reno’s unemployment rate of 6.7% (national average: 7.7%) is attributable to economic
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