Monarch Casino & Resort, Inc. · NASDAQ:MCRI
Monarch Casino & Resort — Investor Presentation (September 2021)
39 slides from Monarch Casino & Resort's investor presentation, September 2021
Slide 1: Investor Presentation
Investor Presentation September 2021
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: Investment Summary
Investment Summary Prime locations and assets Results-oriented management with strong operating track record • Record LTM GGR at both properties Strong underlying economic fundamentals in both markets • Reno’s population growth of 15.3% from 2010 to 2020 (national average: 7.4%) is attributable to e
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 • Approximately 80% of Atlantis revenues come from drive-in guests • Nearly all of Monarch Black Hawk’s revenues come from drive-in guests • Drive-to visitation could be
Slide 5: 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 1993 • 283 rooms • 3
Slide 6: Monarch Casino Resort Spa Black Hawk
Monarch Casino Resort Spa Black Hawk
Slide 7: Monarch Casino Resort Spa Black Hawk - Overview
Monarch Casino Resort Spa Black Hawk - Overview Acquired gaming license 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 included (pictured): • 32,000 square foot casino with ~743 slots and 14 ta
Slide 8: Resort / Casino Expansion
Resort / Casino Expansion Monarch Casino Resort Spa began phased opening in 4Q20 Amenities at completed resort to include: • All new 23-story luxurious tower with 516 hotel rooms (20% suites) • ~60,000 square foot casino • ~1,200 slot machines and ~40 table games • Sports betting lounge; poker room;
Slide 9: Black Hawk Gaming Market
Black Hawk Gaming Market Pre-COVID closure, market1 consisted of: • 21 casinos • Only five casinos offered more than 500 slot machines • 8,742 slot machines • 162 table games • 1,133 hotel rooms spread across six gaming facilities • Largest is Ameristar at 536 hotel rooms Monarch Casino Resort Spa i
Slide 10: Black Hawk Market Share
Black Hawk Market Share1 17.8% 19% 150% Indexed gaming revenue (2012 Q1=0%) 17% Monarch Casino Resort Spa has consistently grown market share 125% over the past seven years MCRI market share (TTM) 100% 15% • TTM market share was 17.8% as of June 30, 2021 75% • Represents an increase of 980 basis poi
Slide 11: 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 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 $85,6411 is 30% above the national average • Sixth largest source of air traffic to Las Vegas in 2019 (originating passengers only) Black Hawk underserve
Slide 13: 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 14: Colorado Bet Limit Changes
Colorado Bet Limit Changes Amendment 77 changes live effective May 1, 2021 • Company has posted bet limits of up to $3,000 and considers requests for greater limits on a case by case basis (had been capped by state at $100) • Baccarat now available • Keno counter went live May 27, 2021 Colorado's Am
Slide 15: Resort Ad Campaign Launch
Resort Ad Campaign Launch Monarch delayed its launch of the resort opening advertising campaign due to COVID-19 occupancy restrictions • Campaign launched 5/17/21 • Revenue and market share growth through April 2021 driven by marketing to the company's database and the property's superior location •
Slide 16: Slide 16
Slide 17: Atlantis Casino Resort Spa Reno
Atlantis Casino Resort Spa Reno
Slide 18: 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 19: Continuous Market Share Gains
350% 17% 16.0% Continuous Market Share Gains 300% 15% Indexed gaming revenue (1996=0%) 250% 13% Atlantis Casino Resort Spa has consistently outperformed the MCRI market share 200% greater Reno-Sparks market for the last 24 years 11% • Primary focus has always been providing best-in-class and best-in
Slide 20: Atlantis Hotel Occupancy and Cash ADR
Atlantis Hotel Occupancy and Cash ADR Total Occupancy Cash ADR(1) 100% $140 $138 90% 87% $135 80% 76% 71% 70% 67% $130 58% $126 60% 53% $124 $125 $123 $122 50% $120 $118 40% 30% $115 20% $110 10% 0% $105 2019 2020 2Q21 LTM 2019 2020 2Q21 LTM Reno-Sparks Atlantis Reno-Sparks Atlantis Given hotel mark
Slide 21: Fast-Growing Reno Market
Fast-Growing Reno Market Population approaching 500,000 • Reno metro’s population has grown 15.3% in the past decade (national average: 7.4%) Reno diversifying to broader base of industries • Expanded list of industries include manufacturing, distribution and technology Reno undertaking significant
Slide 22: Positive Market Characteristics
Positive Market Characteristics “PayCertify is moving its headquarters to Reno partly because taxes in California are so high, CEO Chase Hammer said. It specializes in various financial technology services, including credit-card issuing and payment processing.” • “2 California tech companies bringin
Slide 23: Atlantis' Prime Reno Location
Silver Legacy Circus Circus Rail City Western Village Ramada Reno Atlantis’ 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
Slide 24: Atlantis Enhancements
Atlantis Enhancements Enhancements completed in 4Q20 include: • Atrium Cocktail Lounge • Red Bloom, serving authentic Asian cuisine 2021 enhancements in process include: • Standard room and bathroom redesign and upgrades • All-new top-tier suites • Conveyance system improvements
Slide 25: Reno Development Opportunity
Reno Development Opportunity ~40 acre Atlantis site includes opportunity for additional expansion • Existing casino retains capacity based on current resort footprint Atlantis is the only property with a direct connection to the Reno-Sparks Convention Center • Convention Center features ~600,000 squ
Slide 26: California Ad Campaign
California Ad Campaign Atlantis launched a California-focused, fully-integrated advertising campaign in May 2021 • Informed by two years of extensive market research • Campaign comes with more robust digital buying strategy • Atlantis has historically taken greater than its fair share of the locals
Slide 27: Slide 27
Slide 28: Growth Initiatives
Growth Initiatives
Slide 29: Sports Betting
Sports Betting Monarch owns & operates its sportsbook—a unique approach • App content and trading done by internal 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 sport
Slide 30: 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 licensed in 2012 • Trips to Atlantis from the Denver MSA grew significantly upon acquisition of the Colorado property The new Mona
Slide 31: Balance Sheet Management
Balance Sheet Management $132.4 million of debt1 and $28.3 million of cash as of June 30, 2021 Company and lenders entered into a restated credit agreement in September 2020 • Aggregate principal amount of facility is $270 million ($200 million term loan and $70 million revolving credit facility) •
Slide 32: Strong Growth Profile
Strong Growth Profile Near term organic growth: • Strong economic tailwinds in Reno • Ramp of Black Hawk resort • Implementation of Amendment 77 changes Substantial free cash flow with completion of Black Hawk development Monarch’s priorities for use of future cash flow include: • Debt pay-down • Op
Slide 33: Financial Results
Financial Results
Slide 34: Historical Financial Performance
Historical Financial Performance $350.0 35.0% Black Hawk acquired $300.0 4/26/12 30.0% $250.0 25.0% $ in millions $200.0 20.0% $150.0 15.0% $100.0 10.0% $50.0 5.0% $0.0 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2Q21 LTM Net Revenue $136.4 $134.5 $163.3 $188.7 $187.8 $202.2 $217.0 $
Slide 35: 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 1.1x 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 2020 2Q21 Source: Monarch Casino & Resort analysis 1. EBITDA
Slide 36: Income Statement Overview
Income Statement Overview Three Months Ended June 30, Six Months Ended June 30, $ in 000s, except EPS 2021 2020 Increase 2021 2020 Increase Net revenue $97,719 $15,156 544.8% $172,679 $66,167 161.0% Adjusted EBITDA(1) 35,169 490 7,077.3% 58,000 8,599 574.5% Net income $18,149 ($4,347) 517.5% $26,303
Slide 37: Balance Sheet Overview
Balance Sheet Overview $ in 000s June 30, 2021 December 31, 2020 Cash and cash equivalents $28,296 $28,310 Net property and equipment 565,877 572,507 Other assets 72,675 71,060 Total assets $666,848 $671,877 Long-term debt1 (including current maturities) $132,400 $179,662 Other liabilities 133,361 1
Slide 38: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Adjusted EBITDA $35,169 $490 $58,000 $8,599 Expenses: Stock based compensation (1,247) (981) (2,527) (1,854) Depreciation and amortization (9,360) (3,833) (18,874) (7,653) (Provision) benefit for
Slide 39: Investment Summary
Investment Summary Prime locations and assets Results-oriented management with strong operating track record • Record LTM GGR at both properties Strong underlying economic fundamentals in both markets • Reno’s population growth of 15.3% from 2010 to 2020 (national average: 7.4%) is attributable to e
Monarch Casino & Resort — Investor Presentation (September 2021) on 6ix