MONARCH CASINO & RESORT INC

Previous wording

Atlantis: We continuously upgrade our property. With quality gaming, hotel and dining products, we believe the Atlantis is well positioned to benefit from future macro and local economic growth. Reno remains a healthy local-oriented market, but at the same time a very competitive market. The market’s employment growth is broad based and we expect this positive indicator will support the continued strength of our business at Atlantis. At the same time, the tight employment environment has created labor challenges, including wage inflation, which we continue to actively manage. In addition, we are facing increased competition from the continued growth of California tribal gaming and an extremely competitive promotional environment in Northern Nevada. The increase in the labor costs and the other inflationary pressures, combined with continued aggressive marketing programs by our competitors, has applied pressure on Atlantis’ revenue growth, operating costs and profit margins.

Current wording

Atlantis: We continuously upgrade our property. With quality gaming, hotel and dining products, we believe the Atlantis is well positioned to benefit from future macro and local economic growth. Reno remains a healthy local-oriented market, but at the same time a very competitive market. The market’s employment growth is broad based, and we expect this positive indicator will support the continued strength of our business at Atlantis. At the same time, the tight employment environment has created labor challenges, including wage inflation, which we continue to actively manage. In addition, we are facing increased competition from the continued growth of California tribal gaming and an extremely competitive promotional environment in Northern Nevada. The inflationary pressures, combined with continued aggressive marketing programs by our competitors, may disrupt Atlantis’ revenue growth, operating costs management and profit margins improvement.

Previous wording

Monarch Black Hawk: Monarch Black Hawk is the first property encountered by visitors arriving from Denver and other major population centers via Colorado State Highway 119. The Denver metro economy remains strong with higher than the national average per capita personal income. At the beginning of 2022, we completed the master planned renovation and expansion, transforming the property into a world-class resort. Monarch Black Hawk is positioned to leverage the expanded operation, the elimination of betting limits and new game types in Black Hawk, Colorado, as well as to benefit from the growing state-wide online and retail sports betting. Monarch Black Hawk also is experiencing labor challenges, resulting from the distance to the staffing filter markets of Golden, Colorado and the Denver Metro area. We continue to attract high-value players from Denver and Boulder metro areas, who had previously traveled to other markets, such as Las Vegas, for a high-end casino entertainment experience. We believe that the quality of our expanded product and exceptional guest service will meet the demand of the high-end segment of the market and will grow revenue and accelerate market share.

Current wording

Monarch Black Hawk: Monarch Black Hawk is the first property encountered by visitors arriving from Denver and other major population centers via Colorado State Highway 119. The Denver metro economy remains strong with higher than the national average per capita personal income. At the beginning of 2022, we completed the master planned renovation and expansion, transforming the property into a world-class resort. Monarch Black Hawk is positioned to leverage the expanded operation, the elimination of betting limits and new game types in Black Hawk, Colorado, as well as to benefit from the growing state-wide online and retail sports betting. Monarch Black Hawk also is experiencing labor challenges, resulting from the distance to the staffing filter markets of Golden, Colorado and the Denver Metro area. We continue to attract high-value players from Denver and Boulder metro areas, who had previously traveled to other markets, such as Las Vegas, for a high-end casino entertainment experience. We believe that the quality of our product and exceptional guest service will meet the demand of the high-end segment of the market and will grow revenue and accelerate market share.

Previous wording

Our management evaluates the KPI as compared to prior periods, the peer group, or market, as well as for any trends.

Current wording

Our management evaluates the KPI as compared to prior periods, our peer group, or market, as well as for any trends.

Previous wording

For the three months ended June 30, 2025, our net income totaled $27.0 million, or $1.44 per diluted share, compared to net income of $22.7 million, or $1.19 per diluted share, for the same period in 2024, reflecting a 19.1% and 21.0% increase in net income and diluted earnings per share, respectively. Net revenues in the three months ended June 30, 2025, totaled $136.9 million, an increase of $8.8 million, or 6.8%, compared to the three months ended June 30, 2024. Income from operations for the three months ended June 30, 2025, totaled $34.9 million compared to income from operations of $29.5 million for the same period in 2024.

Current wording

For the three months ended September 30, 2025, our net income totaled $31.6 million, or $1.69 per diluted share, compared to net income of $27.6 million, or $1.47 per diluted share, for the same period in 2024, reflecting a 14.4% and 15.0% increase in net income and diluted earnings per share, respectively. Net revenues in the three months ended September 30, 2025, totaled $142.8 million, an increase of $4.9 million, or 3.6%, compared to the three months ended September 30, 2024. Income from operations for the three months ended September 30, 2025, totaled $38.2 million compared to income from operations of $35.3 million for the same period in 2024.

Previous wording

Casino revenue increased 12.1% in the second quarter of 2025 compared to the second quarter of 2024. The increase in casino revenue was driven primarily by the continued increase in market share at our properties. Casino operating expense as a percentage of casino revenue decreased to 35.7% for the three months ended June 30, 2025, compared to 37.7% for the three months ended June 30, 2024, primarily due to better labor management and operational efficiency.

Current wording

Casino revenue increased 5.0% in the third quarter of 2025 compared to the third quarter of 2024. The increase in casino revenue was driven primarily by the continued increase in market share at our properties. Casino operating expense as a percentage of casino revenue decreased to 35.8% for the three months ended September 30, 2025, compared to 36.3% for the three months ended September 30, 2024, primarily due to better labor management and operational efficiency.

Previous wording

Food and beverage revenue for the second quarter of 2025 increased 1.1% compared to the second quarter of 2024 due to 4.0% increasein food and beverage revenue per cover, partially offset by a decrease in food and beverage covers by 2.8%. Food and beverage operating expense as a percentage of food and beverage revenue in the second quarter of 2025 decreased to 70.3% compared to 73.8% in the second quarter of 2024 due primarily to decrease in labor expense and increase in revenue per cover.

Current wording

Food and beverage revenue for the third quarter of 2025 increased 2.9% compared to the third quarter of 2024 due to 4.3% increase in food and beverage revenue per cover, partially offset by a decrease in food and beverage covers of 2.8%. Food and beverage operating expense as a percentage of food and beverage revenue in the third quarter of 2025 decreased to 69.9% compared to 72.8% in the third quarter of 2024 due primarily to a decrease in labor expense and an increase in revenue per cover.

Previous wording

Hotel revenue decreased 3.1% in the second quarter of 2025 compared to the same quarter of 2024 primarily as a result of decrease in occupancy percentage to 79.6% during the second quarter of 2025 compared to 85.5% during the second quarter of 2024 resulting from lower convention group business in the current year than in the prior year. ADR increased by $4.08 ($189.42 in the second quarter of 2025 and $185.34 in the second quarter of 2024). Hotel RevPAR was $162.57 and $172.06 for the three months ended June 30, 2025 and 2024, respectively. Hotel operating expense as a percentage of hotel revenue increased to 34.3% in the second quarter of 2025 compared to 33.5% for the comparable prior year period primarily due to lower revenue.

Current wording

Hotel revenue increased 3.9% in the third quarter of 2025 compared to the same quarter of 2024 primarily as a result of an increase in ADR of $11.39 ($192.09 in the third quarter of 2025 and $180.70 in the third quarter of 2024). Hotel occupancy percentage slightly decreased to 89.0% during the third quarter of 2025 compared to 89.7% during the third quarter of 2024. Hotel RevPAR was $183.42 and $176.47 for the three months ended September 30, 2025 and 2024, respectively. Hotel operating expense as a percentage of hotel revenue decreased to 31.4% in the third quarter of 2025 compared to 33.8% for the comparable prior year period primarily due to higher ADR.

Previous wording

Other revenue increased 7.7% in the second quarter of 2025 compared to the same prior year period primarily due to increases in spa and commission revenues at both properties.

Current wording

Other revenue decreased 9.8% in the third quarter of 2025 compared to the same prior year period primarily due to proceeds from finalization of Employee Retention Credit review by IRS in 2024, partially offset by increases in spa and retail revenues.

Previous wording

SG&A expense increased to $26.8 million in the second quarter of 2025 from $26.2 million in the second quarter of 2024. As a percentage of net revenue, SG&A expense decreased to 19.6% in the second quarter of 2025 compared to 20.4% in the same period in 2024.

Current wording

SG&A expense increased to $27.5 million in the third quarter of 2025 from $27.2 million in the third quarter of 2024. As a percentage of net revenue, SG&A expense decreased to 19.3% in the third quarter of 2025 compared to 19.7% in the same period in 2024.

Previous wording

Depreciation and amortization expense increased to $13.6 million for the three months ended June 30, 2025, compared to $12.4 million for the same prior year period, due to new assets placed into service with the ongoing renovation at Atlantis.

Current wording

Depreciation and amortization expense increased to $14.1 million for the three months ended September 30, 2025, compared to $13.1 million for the same prior year period, due to new assets placed into service with the ongoing renovation at Atlantis.

Previous wording

We recognized $0.9 million and $0.1 million for the three months ended June 30, 2025 and 2024, respectively, in professional service fees relating to our construction litigation.

Current wording

We recognized $0.5 million and $0.02 million for the three months ended September 30, 2025 and 2024, respectively, in professional service fees relating to our construction litigation.

Previous wording

In the second quarter of 2025, we recognized $0.4 million of interest income, net of interest expense. In the second quarter of 2024, we recognized $0.2 million of interest expense, net of interest income. See further discussion of our Amended Credit Facility in the LIQUIDITY AND CAPITAL RESOURCES section below.

Current wording

In the third quarter of 2025, we recognized $0.6 million of interest income, net of interest expense. In the third quarter of 2024, we recognized $0.2 million of interest expense, net of interest income. See further discussion of our Amended Credit Facility in the LIQUIDITY AND CAPITAL RESOURCES section below.

Previous wording

Comparison of Operating Results for the Six-Month Periods Ended June 30, 2025 and 2024

Current wording

Comparison of Operating Results for the Nine-Month Periods Ended September 30, 2025 and 2024

Previous wording

For the six months ended June 30, 2025, we had a net income of $46.9 million, or $2.50 per diluted share, compared to net income of $41.0 million, or $2.12 per diluted share for the same period in 2024, reflecting a 14.4% and 17.9% increase in net income and diluted earnings per share, respectively. Net revenues in the six months ended June 30, 2025, totaled $262.3 million, an increase of 5.0%, compared to the six months ended June 30, 2024. Income from operations for the six months ended June 30, 2025 totaled $60.2 million compared to $53.3 million income from operations for the same period in 2024.

Current wording

For the nine months ended September 30, 2025, we had a net income of $78.4 million, or $4.18 per diluted share, compared to net income of $68.6 million, or $3.60 per diluted share for the same period in 2024, reflecting a 14.4% and 16.1% increase in net income and diluted earnings per share, respectively. Net revenues in the nine months ended September 30, 2025, totaled $405.1 million, an increase of 4.5%, compared to the nine months ended September 30, 2024. Income from operations for the nine months ended September 30, 2025 totaled $98.4 million compared to $88.6 million income from operations for the same period in 2024.

Previous wording

Casino revenue increased 8.6% in the first six months of 2025 compared to the first six months of 2024 and was driven by an increase in market share at both properties. Casino operating expense as a percentage of casino revenue decreased to 36.7% for the six months ended June 30, 2025 compared to 37.8% for the six months ended June 30, 2024 primarily as a result of decrease in labor expense as a percentage of revenue and decrease in promotional allowances.

Current wording

Casino revenue increased 7.3% in the first nine months of 2025 compared to the first nine months of 2024 and was driven by an increase in market share at both properties. Casino operating expense as a percentage of casino revenue decreased to 36.4% for the nine months ended September 30, 2025 compared to 37.3% for the nine months ended September 30, 2024 primarily as a result of decrease in labor and other operating expenses as a percentage of revenue.

Previous wording

Food and beverage revenue for the first six months of 2025 increased 0.3% compared to the 2024 same period due to a 2.1% increase in food and beverage revenue per cover, partially offset by a decrease of food and beverage covers by 1.8%. Food and beverage operating expense as a percentage of food and beverage revenue decreased in the first six months of 2025 to 72.2% from 74.3% for the same period in 2024 primarily as a result of operational improvenents and eficiancies.

Current wording

Food and beverage revenue for the first nine months of 2025 increased 1.2% compared to the 2024 same period due to a 2.9% increase in food and beverage revenue per cover, partially offset by a decrease of food and beverage covers by 1.6%. Food and beverage operating expense as a percentage of food and beverage revenue decreased in the first nine months of 2025 to 71.4% from 73.8% for the same period in 2024 primarily as a result of operational improvements and efficiencies.

Previous wording

Hotel revenue decreased 1.9% in the first six months of 2025 compared to the first six months of 2024 primarily due to a decrease in occupancy from 82.2% during the first six months of 2024 to 80.2% during the same period of 2025 partially offset by an increase in ADR by $7.22, from $183.54 in the first six months of 2024 to $190.76 in the first six months of 2025. RevPAR was $164.91 for the first six months of 2025 and $162.96 for the first six months of 2024. Hotel operating expense as a percentage of hotel revenue increased to 35.9% in the first six months of 2025 compared to 34.5% for the comparable prior year period primarily as a result of lower revenue.

Current wording

Hotel revenue increased 0.3% in the first nine months of 2025 compared to the first nine months of 2024 primarily due to an increase in ADR by $8.79, from $182.48 in the first nine months of 2024 to $191.27 in the first nine months of 2025. Hotel occupancy decreased from 84.8% during the first nine months of 2024 to 83.4% during the same period of 2025. RevPAR was $171.59 for the first nine months of 2025 and $167.74 for the first nine months of 2024. Hotel operating expense as a percentage of hotel was flat at 34.2% in each of the first nine months of 2025 and 2024.

Previous wording

SG&A expense increased to $54.0 million in the first six months of 2025 from $53.3 million in the first six months of 2024 primarily due to: $1.1 million increase in labor expense, partially offset by $0.4 million decrease in advertising and marketing expense. As a percentage of net revenue, SG&A expense decreased to 20.6% in the first six months of 2025 compared to 21.3% in the same period in 2024.

Current wording

SG&A expense increased to $81.5 million in the first nine months of 2025 from $80.4 million in the first nine months of 2024 primarily due to: $0.8 million increase in repair and maintenance expense; $0.6 million increase in taxes and $0.6 million increase in stock options expense, partially offset by $0.6 million decrease in advertising and marketing expense and $0.3 million decrease in utility expense. As a percentage of net revenue, SG&A expense decreased to 20.1% in the first nine months of 2025 compared to 20.8% in the same period in 2024.

Previous wording

Depreciation and amortization expense increased to $26.8 million for the six months ended June 30, 2025 compared to $24.9 million for the same prior year period, due to new assets placed into service with the ongoing renovation at Atlantis.

Current wording

Depreciation and amortization expense increased to $40.8 million for the nine months ended September 30, 2025 compared to $38.0 million for the same prior year period, due to new assets placed into service with the ongoing renovation at Atlantis.

Previous wording

During the first six months of 2025 we recognized $1.4 million in professional services fees relating to our construction litigation. During the first six months of 2024, we recognized $0.6 million in professional services fees relating to our construction litigation and $0.1 million in loss on disposal of assets..

Current wording

During the first nine months of 2025 we recognized $1.9 million in professional services fees relating to our construction litigation. During the first nine months of 2024, we recognized $0.6 million in professional services fees relating to our construction litigation and $0.3 million in loss on disposal of assets.

Previous wording

During the first six months of 2025, we recognized $0.7 million of interest income, net of interest expense. During the first six months of 2024, we expensed $0.2 million of interest, net of interest income. See further discussion of our Amended Credit Facility in the LIQUIDITY AND CAPITAL RESOURCES section below.

Current wording

During the first nine months of 2025, we recognized $1.3 million of interest income, net of interest expense. During the first nine months of 2024, we recognized $0.3 million of interest expense, net of interest income. See further discussion of our Amended Credit Facility in the LIQUIDITY AND CAPITAL RESOURCES section below.

Previous wording

Cash paid for capital expenditures for the six-month periods ended June 30, 2025 and 2024 totaled $28.4 million and $30.7 million, respectively. During each of the six-month periods ended June 30, 2025 and 2024, our capital expenditures related primarily to the redesign and upgrade of hotel rooms in the third tower at Atlantis, and the acquisition of gaming, and other equipment to upgrade and replace existing equipment at Atlantis and Monarch Black Hawk.

Current wording

Cash paid for capital expenditures for the nine-month periods ended September 30, 2025 and 2024 totaled $33.8 million and $34.4 million, respectively. During each of the nine-month periods ended September 30, 2025 and 2024, our capital expenditures related primarily to the redesign and upgrade of hotel rooms in the third tower at Atlantis, and the acquisition of gaming, and other equipment to upgrade and replace existing equipment at Atlantis and Monarch Black Hawk.

Previous wording

For the six months ended June 30, 2025, net cash provided by operating activities totaled $70.6 million, compared to net cash provided by operating activities of $62.6 million in the same prior year period. This increase was primarily a result of an increase in net income and an increase in depreciation expense.

Current wording

For the nine months ended September 30, 2025, net cash provided by operating activities totaled $126.6 million, compared to net cash provided by operating activities of $102.9 million in the same prior year period. This increase was primarily a result of an increase in net income, as well as change in working capital.

Previous wording

Net cash used in investing activities totaled $28.4 million and $30.7 million during each of the six months ended June 30, 2025 and 2024, respectively. Net cash used in investing activities during each of the first six months of 2025 and 2024 consisted primarily of cash used for the redesign and upgrade of hotel rooms in the third tower at Atlantis and the acquisition of gaming and other equipment at both properties.

Current wording

Net cash used in investing activities totaled $33.8 million and $34.4 million during each of the nine months ended September 30, 2025 and 2024, respectively. Net cash used in investing activities during each of the first nine months of 2025 and 2024 consisted primarily of cash used for the redesign and upgrade of hotel rooms in the third tower at Atlantis and the acquisition of gaming and other equipment at both properties.

Previous wording

Net cash used in financing activities in the first six months of 2025 totaled $29.4 million and consisted of $20.0 million cash used for purchase of Company stock under the Repurchase Plan and $11.0 million used for payment of dividends, partially offset by $1.6 million of net proceeds from stock options exercise. Net cash used in financing activities in the first six months of 2024 totaled $41.8 million and consisted of $50.4 million cash used for purchase of Company stock under the Repurchase Plan and $11.2 million used for payment of dividends, partially offset by $17.5 million of borrowings under the Amended Credit Facility, net of the payments to the lender under the Amended Credit Facility, and $2.3 million of net proceeds from stock options exercise.

Current wording

Net cash used in financing activities in the first nine months of 2025 totaled $43.9 million and consisted of $31.3 million cash used for purchase of Company stock under the Repurchase Plan and $16.5 million used for payment of dividends, partially offset by $3.9 million of net proceeds from stock options exercise. Net cash used in financing activities in the first nine months of 2024 totaled $72.5 million and consisted of $60.0 million cash used for purchase of Company stock under the Repurchase Plan and $16.7 million used for payment of dividends, partially offset by $1.5 million of borrowings under the Amended Credit Facility, net of the payments to the lender under the Amended Credit Facility, and $2.7 million of net proceeds from stock options exercise.

Previous wording

In addition to other customary covenants for a facility of this nature, as of June 30, 2025, we were required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 1.5:1 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.1:1.0. As of June 30, 2025, our Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.0:1.0 and 77.0:1.0, respectively.

Current wording

In addition to other customary covenants for a facility of this nature, as of September 30, 2025, we were required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 1.5:1 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.1:1.0. As of September 30, 2025, our Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.0:1.0 and 112.3:1.0, respectively.

Previous wording

On February 24, 2025, Wells Fargo Bank agreed to waive its right to declaring an event of default under the Amended Credit Facility arising out of the February 14, 2025 judgment on the litigation between Monarch and PCL, so long as we strictly comply with each and every other provision of the Amended Credit Facility. We believe that we are in full compliance.

Current wording

On February 24, 2025, Wells Fargo Bank agreed to waive its right to declaring an event of default under the Amended Credit Facility arising out of the February 14, 2025 judgment on the litigation between Monarch and PCL, as described above in Part I, Item 1, NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), Note 9 “Legal Matters” of this Form 10-Q, so long as we strictly comply with each and every other provision of the Amended Credit Facility. We believe that we are in full compliance.