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Item 2. Management’s Discussion and Analysis

2026-04-30 compared with 2025-10-28 · 33 added, 57 removed, 94 unchanged (49% of the section changed)

76 unchanged sentences

RESULTS OF OPERATIONS

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

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.

Casino revenue increased 5.0% in the third quarter of 2025 compared to the third quarter of 2024.

Comparison of Operating Results for the Three-Month Periods Ended March 31, 2026 and 2025

For the three months ended March 31, 2026, our net income totaled $27.6 million, or $1.52 per diluted share, compared to net income of $19.9 million, or $1.05 per diluted share, for the same period in 2025, reflecting a 38.9% and 44.8% increase in net income and diluted earnings per share, respectively.

Net revenues in the three months ended March 31, 2026, totaled $136.6 million, an increase of $11.2 million, or 8.9%, compared to the three months ended March 31, 2025.

Income from operations for the three months ended March 31, 2026, totaled $34.9 million compared to income from operations of $25.3 million for the same period in 2025.

Casino revenue increased 9.4% in the first quarter of 2026 compared to the first quarter of 2025.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

Other revenue increased 1.3% in the first nine months of 2025 compared to the same prior year period.

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.

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.

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.

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.

Casino operating expense as a percentage of casino revenue decreased to 36.0% for the three months ended March 31, 2026, compared to 37.7% for the three months ended March 31, 2025, primarily due to better labor management and operational efficiency.

Food and beverage revenue for the first quarter of 2026 increased 5.6% compared to the first quarter of 2025 due to 4.5% increase in food and beverage revenue per cover, combined with an increase in food and beverage covers of 1.1%.

Food and beverage operating expense as a percentage of food and beverage revenue in the first quarter of 2026 decreased to 72.7% compared to 74.3% in the first quarter of 2025 due primarily to an increase in revenue per cover.

Hotel revenue increased 13.5% in the first quarter of 2026 compared to the same quarter of 2025 primarily as a result of an increase in available rooms.

ADR decreased by $7.49 ($184.83 in the first quarter of 2026 and $192.32 in the first quarter of 2025).

Hotel occupancy percentage decreased to 79.6% during the first quarter of 2026 compared to 80.9% during the first quarter of 2025.

Hotel RevPAR was $158.01 and $167.67 for the three months ended March 31, 2026 and 2025, respectively.

Hotel operating expense as a percentage of hotel revenue decreased to 36.0% in the first quarter of 2026 compared to 37.7% for the comparable prior year period primarily due to lower expenses per occupied room.

Other revenue increased 6.6% in the first quarter of 2026 compared to the same prior year period primarily due to an increases in spa and commission revenues.

SG&A expense increased to $27.8 million in the first quarter of 2026 from $27.2 million in the first quarter of 2025.

As a percentage of net revenue, SG&A expense decreased to 20.3% in the first quarter of 2026 compared to 21.7% in the same period in 2025.

Depreciation and amortization expense decreased to $10.5 million for the three months ended March 31, 2026, compared to $13.2 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.

We recognized $0.3 million and $0.4 million for the three months ended March 31, 2026 and 2025, respectively, in professional service fees relating to our construction litigation.

In the first quarter of 2026, we accrued $1.1 million in interest on the PCL judgment that we are disputing.

In the first quarter of 2026 and 2025, we recognized $0.6 million and $0.3 million, respectively, of interest income, net of interest expense.

CAPITAL SPENDING AND DEVELOPMENT

We seek to continually upgrade and maintain our facilities in order to present a fresh, high quality product to our guests.

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.

Cash paid for capital expenditures for the three-month periods ended March 31, 2026 and 2025 totaled $7.5 million and $16.0 million, respectively.

During each of the three-month periods ended March 31, 2026 and 2025, our capital expenditures related primarily to the acquisition of gaming, and other equipment to upgrade and replace existing equipment at Atlantis and Monarch Black Hawk and property upgrades capital projects.

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity have been cash provided by operations and, for capital expansion projects, borrowings available under our Amended Credit Facility.

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.

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.

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.

For the three months ended March 31, 2026, net cash provided by operating activities totaled $48.5 million, compared to net cash provided by operating activities of $36.5 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 due to normal business fluctuations in Account receivable, Income tax receivable and Accrued expenses.

Net cash used in investing activities totaled $7.5 million and $16.0 million during each of the three months ended March 31, 2026 and 2025, respectively and consisted primarily of cash used for the acquisition of gaming and other equipment and ongoing maintenance capital expenditures at both properties.

Net cash used in financing activities in the first three months of 2026 totaled $17.4 million and consisted of $17.7 million cash used for the repurchase of Company stock under the Repurchase Plan and $5.4 million used for payment of dividends, partially offset by $5.7 million of net proceeds from stock options exercise.

Net cash used in financing activities in the first three months of 2025 totaled $4.1 million and consisted of $5.5 million used for payment of dividends, partially offset by $1.4 million of net proceeds from stock options exercise.

Sixth Amended Credit Facility

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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, 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.

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.

As of March 31, 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 remained available for borrowing.

In addition to other customary covenants for a facility of this nature, as of March 31, 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 March 31, 2026, our Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.0:1.0 and 144.9:1.0, respectively.

The interest rate under the Amended Credit Facility is either SOFR (the Secured Overnight Financing Rate) plus a margin of 1.25%, or a base rate (as defined in the Amended Credit Facility) plus a margin ranging of 0.25% per annum.

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We believe that we are in full compliance.

We believe that our anticipated operating cash flows will be sufficient to sustain operations for the twelve months from the filing of this Form 10-Q for the quarter ended September 30, 2025 and fulfill our capital expenditure plans and authorized dividend distributions.

We believe that our anticipated operating cash flows will be sufficient to sustain operations for the twelve months from the filing of this Form 10-Q for the quarter ended March 31, 2026 and fulfill our capital expenditure plans and authorized dividend distributions.

However financial, economic, competitive, regulatory, and other factors, many of which are beyond our control, could negatively impact our operations.

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CRITICAL ACCOUNTING POLICIES

A description of our critical accounting policies and estimates can be found in Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2024 Form 10-K.

For a more extensive discussion of our accounting policies, see Note 1, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in our 2024 Form 10-K filed with the SEC on March 3, 2025.

A description of our critical accounting policies and estimates can be found in Part II Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis