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 inflationary pressures, combined with continued aggressive marketing programs by our competitors, may disrupt Atlantis’ revenue growth, operating costs management and profit margins improvement.

Current wording

Atlantis: We continuously upgrade our property. With quality gaming, hotel and dining products, we believe 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 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. Monarch Black Hawk is positioned to leverage the best in the market property amenities, 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 increase revenue and accelerate market share.

Previous wording

Food and Beverage revenue KPI: The main KPIs in managing our food and beverage (“F&B”) operations are covers and average revenue per cover. A cover represents the number of guests served and is an indicator of volume. Average revenue per cover represents the average amount spent per food and beverage outlets’ served guests. Changes in the average revenue per cover might be an indicator for changes in menu offerings, changes in menu prices or may indicate changes in our guests’ preferences and purchasing habits.

Current wording

Food and Beverage revenue KPI: The main KPIs in managing our food and beverage (“F&B”) operations are covers and average revenue per cover. A cover represents the number of guests served and is an indicator of volume. Average revenue per cover represents the average amount spent per food and beverage outlets served guests. Changes in the average revenue per cover might be an indicator of changes in menu offerings, changes in menu prices or may indicate changes in our guests’ preferences and purchasing habits.

Previous wording

Operating margins: Our management is consistently focused on controlling expenses and finding cost savings, without affecting the quality of the product we offer and our guests’ services and experience. We measure our performance using expense margin, which is a percentage of direct expenses, including labor, cost of product and any other operating expenses related to the gaming, food and beverage, or hotel operation to the net gaming, food and beverage, or hotel revenues. Selling, general and administrative (“SG&A”) margin represents SG&A expenses for a period as a percentage of total net revenue for a period. In managing the food and beverage operation, we use Cost Of Goods Sold (“COGS”) percentage, which represents a percentage of product cost to the food and beverage revenue and is a measurement of commodity prices and menu sales prices.

Current wording

Operating margins: Our management is consistently focused on controlling expenses and finding cost savings, without affecting the quality of the product we offer and our guests’ services and experience. We measure our performance using expense margin, which is a percentage of direct expenses, including labor, cost of product and any other operating expenses related to the gaming, food and beverage, or hotel operation to the net gaming, food and beverage, or hotel revenues. Selling, general and administrative (“SG&A”) margin represents SG&A expenses for a period as a percentage of total net revenue for a period. In managing the food and beverage operation, we use an operating margin percentage based on the product cost to the food and beverage, which represents a percentage of product cost to the food and beverage revenue and is a measurement of commodity prices and menu sales prices.

Previous wording

For the three months ended June 30, 2026, our net income totaled $32.5 million, or $1.78 per diluted share, compared to net income of $27.0 million, or $1.44 per diluted share, for the same period in 2025, reflecting a 20.4% and 23.6% increase in net income and diluted earnings per share, respectively. Net revenues in the three months ended June 30, 2026, totaled $142.6 million, an increase of $5.7 million, or 4.2%, compared to the three months ended June 30, 2025. Income from operations for the three months ended June 30, 2026, totaled $38.6 million compared to income from operations of $34.9 million for the same period in 2025.

Current wording

For the three months ended September 30, 2026, our net income totaled $32.0 million, or $1.76 per diluted share, compared to net income of $31.6 million, or $1.69 per diluted share, for the same period in 2025, reflecting a 1.4% and 4.1% increase in net income and diluted earnings per share, respectively. Net revenues in the three months ended September 30, 2026, totaled $146.3 million, an increase of $3.5 million, or 2.4%, compared to the three months ended September 30, 2025. Income from operations for the three months ended September 30, 2026, totaled $41.3 million compared to income from operations of $38.2 million for the same period in 2025.

Previous wording

Casino revenue increased 2.5% in the second quarter of 2026 compared to the second quarter of 2025. The increase in casino revenue was driven primarily by the continued increase in visitation and gaming volume. Casino operating expense as a percentage of casino revenue slightly decreased to 35.5% for the three months ended June 30, 2026, compared to 35.7% for the three months ended June 30, 2025, primarily due to improved labor management and operational efficiency.

Current wording

Casino revenue increased 3.4% in the third quarter of 2026 compared to the third quarter of 2025. The increase in casino revenue was driven primarily by the continued increase in visitation and gaming volume. Casino operating expense as a percentage of casino revenue for each of the three months ended September 30, 2026, and 2025 is 35.8%.

Previous wording

Food and beverage revenue for the second quarter of 2026 increased 3.1% compared to the second quarter of 2025 due to 2.0% increase in food and beverage revenue per cover, combined with a 1.1% increase in food and beverage covers. Food and beverage operating expense as a percentage of food and beverage revenue in the second quarter of 2026 increased to 72.9% compared to 70.3% in the second quarter of 2025 due primarily to increase in labor and product cost per cover.

Current wording

Food and beverage revenue for the third quarter of 2026 increased 1.3% compared to the third quarter of 2025 due to 3.0% increase in food and beverage revenue per cover, partially offset by a 1.7% decrease in food and beverage covers. Food and beverage operating expense as a percentage of food and beverage revenue in the third quarter of 2026 decreased to 69.6% compared to 69.9% in the third quarter of 2025 due primarily to increase in revenue per cover.

Previous wording

Hotel revenue increased 13.0% in the second quarter of 2026 compared to the same quarter of 2025 as a result of increase in occupancy percentage to 83.7% during the second quarter of 2026 compared to 79.6% during the second quarter of 2025 resulting from improved convention group business in the current year and increase in ADR by $7.01 ($196.43 in the second quarter of 2026 and $189.42 in the second quarter of 2025). Hotel RevPAR was $177.94 and $162.57 for the three months ended June 30, 2026 and 2025, respectively. Hotel operating expense as a percentage of hotel revenue decreased to 32.1% in the second quarter of 2026 compared to 34.3% for the comparable prior year period primarily due to increase in the ADR and decrease in expenses per occupied room.

Current wording

Hotel revenue increased 0.9% in the third quarter of 2026 compared to the same quarter of 2025 as a result of increase in occupancy percentage to 89.8% during the third quarter of 2026 compared to 89.0% during the third quarter of 2025 and increase in ADR by $0.99 ($193.08 in the third quarter of 2026 compared to $192.09 in the third quarter of 2025). Hotel RevPAR was $184.22 and $183.42 for the three months ended September 30, 2026, and 2025, respectively. Hotel operating expense as a percentage of hotel revenue decreased to 31.3% in the third quarter of 2026 compared to 31.4% for the comparable prior year period primarily due to increase in the ADR and decrease in operating expenses per occupied room.

Previous wording

Other revenue increased 4.5% in the second quarter of 2026 compared to the same prior year period primarily due to increases in commission revenues at both properties and spa revenue at Monarch Black Hawk.

Current wording

Other revenue increased 2.0% in the third quarter of 2026 compared to the same prior year period primarily due to increases in commission revenues and spa revenue.

Previous wording

SG&A expense increased to $28.6 million in the second quarter of 2026 from $26.8 million in the second quarter of 2025. As a percentage of net revenue, SG&A expense increased to 20.0% in the second quarter of 2026 compared to 19.6% in the same period in 2025. The increase in SG&A expenses is primarily result of increase in payroll tax as a result of stock option exercises, legal expenses, property taxes and repair and maintenance expenses.

Current wording

SG&A expense increased to $29.0 million in the third quarter of 2026 from $27.5 million in the third quarter of 2025. As a percentage of net revenue, SG&A expense increased to 19.8% in the third quarter of 2026 compared to 19.3% in the same period in 2025. The increase in SG&A expenses is primarily result of increase in legal and employee related expenses.

Previous wording

Depreciation and amortization expense decreased to $10.7 million for the three months ended June 30, 2026, compared to $13.6 million for the same prior year period, due to assets placed into service in the fourth quarter of 2020, with the opening of the hotel tower at Monarch Black Hawk, becoming fully depreciated by the fourth quarter of 2025.

Current wording

Depreciation and amortization expense decreased to $10.8 million for the three months ended September 30, 2026, compared to $14.1 million for the same prior year period, due to assets placed into service in the fourth quarter of 2020, with the opening of the hotel tower at Monarch Black Hawk, becoming fully depreciated by the fourth quarter of 2025.

Previous wording

We recognized $0.4 million and $0.9 million for the three months ended June 30, 2026, and 2025, respectively, in professional service fees relating to our construction litigation. In the second quarter of 2026, we accrued $1.1 million in interest on the PCL judgment that we are disputing.

Current wording

We recognized $0.2 million and $0.5 million for the three months ended September 30, 2026, and 2025, respectively, in professional service fees relating to our construction litigation. In the third quarter of 2026, we accrued $1.1 million in interest on the PCL judgment that we are disputing.

Previous wording

In the second quarter of 2026 and 2025, we recognized $07 million and $0.4 million, respectively, of interest income, net of interest expense.

Current wording

In the third quarters of 2026 and 2025, we recognized $0.8 million and $0.6 million, respectively, of interest income, net of interest expense.

Previous wording

Comparison of Operating Results for the Six-Month Periods Ended June 30, 2026 and 2025

Current wording

Comparison of Operating Results for the Nine-Month Periods Ended September 30, 2026, and 2025

Previous wording

For the six months ended June 30, 2026, we had a net income of $60.1 million, or $3.30 per diluted share, compared to net income of $46.9 million, or $2.50 per diluted share for the same period in 2025, reflecting a 28.3% and 32.0% increase in net income and diluted earnings per share, respectively. Net revenues in the six months ended June 30, 2026, totaled $279.1 million, an increase of 6.4%, compared to the six months ended June 30, 2025. Income from operations for the six months ended June 30, 2026 totaled $73.6 million compared to $60.2 million income from operations for the same period in 2025.

Current wording

For the nine months ended September 30, 2026, we had a net income of $92.1 million, or $5.06 per diluted share, compared to net income of $78.4 million, or $4.18 per diluted share for the same period in 2025, reflecting a 17.4% and 21.1% increase in net income and diluted earnings per share, respectively. Net revenues in the nine months ended September 30, 2026, totaled $425.4 million, an increase of 5.0%, compared to the nine months ended September 30, 2025. Income from operations for the nine months ended September 30, 2026, totaled $114.8 million compared to $98.4 million income from operations for the same period in 2025.

Previous wording

Casino revenue increased 5.8% in the first six months of 2026 compared to the first six months of 2025 and was driven by an increase in visitation and gaming volume. Casino operating expense as a percentage of casino revenue decreased to 35.7% for the six months ended June 30, 2026 compared to 36.7% for the six months ended June 30, 2025 primarily as a result of operational improvements and efficiencies.

Current wording

Casino revenue increased 4.9% in the first nine months of 2026 compared to the first nine months of 2025 and was driven by an increase in visitation and gaming volume. Casino operating expense as a percentage of casino revenue decreased to 35.8% for the nine months ended September 30, 2026, compared to 36.4% for the nine months ended September 30, 2025, primarily as a result of operational improvements and efficiencies.

Previous wording

Food and beverage revenue for the first six months of 2026 increased 4.3% compared to the 2025 same period due to a 3.2% increase in food and beverage revenue per cover, combined with an increase of food and beverage covers by 1.1%. Food and beverage operating expense as a percentage of food and beverage revenue increased in the first six months of 2026 to 72.8% from 72.2% for the same period in 2025 primarily to increase in labor and product cost per cover.

Current wording

Food and beverage revenue for the first nine months of 2026 increased 3.2% compared to the same 2025 period due to a 3.2% increase in food and beverage revenue per cover. Food and beverage covers were the same in the two comparable periods. Food and beverage operating expense as a percentage of food and beverage revenue increased in the first nine months of 2026 to 71.7% from 71.4% for the same period in 2025 primarily due to an increase in labor and product cost per cover.

Previous wording

Hotel revenue increased 13.2% in the first six months of 2026 compared to the first six months of 2025 primarily due to an increase in occupancy from 80.2% during the first six months of 2025 to 81.7% during the same period of 2026. ADR slightly increased by $0.04, from $190.76 in the first six months of 2025 to $190.80 in the first six months of 2026. RevPAR was $168.03 for the first six months of 2026 and $164.91 for the first six months of 2025. Hotel operating expense as a percentage of hotel revenue decreased to 33.9% in the first six months of 2026 compared to 35.9% for the comparable prior year period primarily as a result of decrease in labor and other operating expenses per occupied room.

Current wording

Hotel revenue increased 8.4% in the first nine months of 2026 compared to the first nine months of 2025 primarily due to an increase in occupancy from 83.4% during the first nine months of 2025 to 84.4% during the same period of 2026. ADR increased by $0.35, from $191.27 in the first nine months of 2025 to $191.62 in the first nine months of 2026. RevPAR was $173.50 for the first nine months of 2026 and $171.59 for the first nine months of 2025. Hotel operating expense as a percentage of hotel revenue decreased to 33.0% in the first nine months of 2026 compared to 34.2% for the comparable prior year period primarily as a result of decrease in labor and other operating expenses per occupied room.

Previous wording

SG&A expense increased to $56.3 million in the first six months of 2026 from $54.0 million in the first six months of 2025 primarily. The increase in SG&A expenses is primarily result of increase in payroll tax as a result of stock option exercises, legal expenses, repair and maintenance and property taxes expenses. As a percentage of net revenue, SG&A expense decreased to 20.2% in the first six months of 2026 compared to 20.6% in the same period in 2025.

Current wording

SG&A expense increased to $85.3 million in the first nine months of 2026 from $81.5 million in the first nine months of 2025. The increase in SG&A expenses is primarily result of increase in legal, labor and other employee related expenses. As a percentage of net revenue, SG&A expense of 20.1% are the same in the first nine months of 2026 and 2025.

Previous wording

Depreciation and amortization expense increased to $21.1 million for the six months ended June 30, 2026 compared to $26.8 million for the same prior year period, due to assets placed into service in the fourth quarter of 2020, with the opening of the hotel tower at Monarch Black Hawk, becoming fully depreciated by the fourth quarter of 2025.

Current wording

Depreciation and amortization expense decreased to $31.9 million for the nine months ended September 30, 2026, compared to $40.8 million for the same prior year period, due to assets placed into service in the fourth quarter of 2020, with the opening of the hotel tower at Monarch Black Hawk, becoming fully depreciated by the fourth quarter of 2025.

Previous wording

During the first six months of 2026 we recognized $0.8 million in professional services fees relating to our construction litigation. 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 2026, we accrued $2.2 million in interest on the PCL judgment that we are disputing.

Current wording

During the first nine months of 2026 and 2025 we recognized $0.9 million and $1.9 million, respectively, in professional services fees relating to our construction litigation. During the first nine months of 2026, we accrued $3.3 million in interest on the PCL judgment that we are disputing.

Previous wording

During the first six months of 2026, we recognized $1.3 million of interest income, net of interest expense. During the first six months of 2025, we recognized $0.7 million of interest income, net of interest expense.

Current wording

During the first nine months of 2026, we recognized $2.2 million of interest income, net of interest expense. During the first nine months of 2025, we recognized $1.3 million of interest income, net of interest expense.

Previous wording

Cash paid for capital expenditures for the six-month periods ended June 30, 2026 and 2025 totaled $12.6 million and $28.4 million, respectively. During the six-month periods ended June 30, 2025 capital expenditures related primarily to the redesign and upgrade of hotel rooms in the third tower at Atlantis. During each of the six-month periods ended June 30, 2026 and 2025, capital expenditures also included acquisition of gaming, and other equipment to upgrade and replace existing equipment at Atlantis and Monarch Black Hawk and for properties enhancements.

Current wording

Cash paid for capital expenditures for the nine-month periods ended September 30, 2026, and 2025 totaled $22.3 million and $33.9 million, respectively. During each of the nine-month periods ended September 30, 2026, and 2025, capital expenditures related to acquisition of gaming, and other equipment to upgrade and replace existing equipment, to properties enhancements at Atlantis and Monarch Black Hawk and purchase of piece of land with a building on it, adjacent to Atlantis.

Previous wording

For the six months ended June 30, 2026, net cash provided by operating activities totaled $79.2 million, compared to net cash provided by operating activities of $70.6 million in the same prior year period. This increase was primarily a result of an increase in net income.

Current wording

For the nine months ended September 30, 2026, net cash provided by operating activities totaled $130.0 million, compared to net cash provided by operating activities of $126.6 million in the same prior year period. This increase was primarily a result of an increase in net income.

Previous wording

Net cash used in investing activities totaled $12.4 million and $28.4 million during each of the six months ended June 30, 2026 and 2025, respectively. Net cash used in investing activities during the first six months of 2025 consisted primarily of cash used for the redesign and upgrade of hotel rooms in the third tower at Atlantis. Net cash used in investing activities during each of the first six months of 2026 and 2025 also included cash used for acquisition of gaming, and other equipment to upgrade and replace existing equipment at Atlantis and Monarch Black Hawk and for properties enhancements.

Current wording

Net cash used in investing activities totaled $22.1 million and $33.8 million during each of the nine months ended September 30, 2026, and 2025, respectively. Net cash used in investing activities during each of the first nine months of 2026 and 2025 included cash used for acquisition of gaming, and other equipment to upgrade and replace existing equipment at Atlantis and Monarch Black Hawk, cash used for properties enhancements and cash to purchase a piece of land with a building on it, adjacent to Atlantis.

Previous wording

Net cash used in financing activities in the first six months of 2026 totaled $25.1 million and consisted of $17.5 million cash used for purchase of Company stock under the Repurchase Plan and $10.7 million used for payment of dividends, partially offset by $3.1 million of net proceeds from stock options exercise. 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.

Current wording

Net cash used in financing activities in the first nine months of 2026 totaled $67.0 million and consisted of $54.9 million cash used for purchase of Company stock under the Repurchase Plan and $16.0 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 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.

Previous wording

The Amended Credit Facility extends the maturity date to January 1, 2028 and removes the lien on real property under the Prior Facility. As of June 30, 2025, the Company had no outstanding principal balance under the Amended Credit Facility, a $0.6 million standby letter of credit and $99.4 million remained available for borrowing.

Current wording

The Amended Credit Facility extends the maturity date to January 1, 2028, and removes the lien on real property under the Prior Facility. As of September 30, 2026, the Company had no outstanding principal balance under the Amended Credit Facility, a $0.6 million standby letter of credit and $99.4 million remaining available for borrowing.

Previous wording

In addition to other customary covenants for a facility of this nature, as of June 30, 2026, 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, 2026, our Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.0:1.0 and 257.5:1.0, respectively.

Current wording

In addition to other customary covenants for a facility of this nature, as of September 30, 2026, 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, 2026, our Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.0:1.0 and 114.5:1.0, respectively.

Previous wording

For a discussion regarding our material commitments for capital expenditures, see the CAPITAL SPENDING AND DEVELOPMENT section above.

Current wording

For a discussion regarding our material commitments for capital expenditure, see the CAPITAL SPENDING AND DEVELOPMENT section above.