What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-07 · 75 added, 46 removed, 315 unchanged (28% of the section changed)

5 unchanged sentences

Three months ended

Six months ended

Food and beverage

7 unchanged sentences

Other income (expense)

Interest income (expense), net

Interest expense, net

Income before income taxes

7 unchanged sentences

(In thousands, except shares)

March 31, 2024

June 30, 2024

December 31, 2023

9 unchanged sentences

Current liabilities

Current maturities of long-term debt, net

Current maturities of long-term debt

Accounts payable

1 unchanged sentence

Accrued expenses

Income taxes payable

Short-term lease liability

8 unchanged sentences

Common stock, $ .01 par value, 30,000,000 shares authorized;

19,174,278 shares issued and 18,830,036 outstanding at March 31, 2024;

19,206,377 shares issued and 18,409,671 outstanding at June 30, 2024;

19,154,031 shares issued and 19,091,497 outstanding at December 31, 2023

Additional paid-in capital

Treasury stock, 344,242 shares at March 31, 2024;

Treasury stock, 796,706 shares at June 30, 2024;

62,534 shares at December 31, 2023

13 unchanged sentences

Balance, March 31, 2024

Exercise of stock options, net

Stock-based compensation expense

Purchase of company common stock

Dividend payment

Balance, June 30, 2024

Balance, January 1, 2023

3 unchanged sentences

Balance, March 31, 2023

Exercise of stock options, net

Stock-based compensation expense

Dividend payment

Balance, June 30, 2023

The Notes to the Consolidated Financial Statements are an integral part of these statements.

3 unchanged sentences

(In thousands, Unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

4 unchanged sentences

Provision for bad debts

(Gain) loss on disposition of assets

Loss on disposition of assets

Non-cash operating lease expense

24 unchanged sentences

Cash paid for interest

Cash paid for income taxes

The Notes to the Consolidated Financial Statements are an integral part of these statements.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

QUARTERLY PERIOD ENDED MARCH 31, 2024

QUARTERLY PERIOD ENDED JUNE 30, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

17 unchanged sentences

In the opinion of the management of the Company, all adjustments considered necessary for a fair presentation, consisting of normal recurring accruals, are reflected in the interim financial statements.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The balance sheet at December 31, 2023, has been derived from the audited consolidated financial statements of the Company at that date, but does not include all of the information and footnotes required by U.S.

21 unchanged sentences

Historically, the Company has not incurred any significant credit-related losses.

As of March 31, 2024, the Company has recorded a reserve of $ 0.1 million for gaming and non-gaming receivables.

As of June 30, 2024, the Company has recorded a reserve of $ 0.2 million for gaming and non-gaming receivables.

The Company believes it is not exposed to any significant credit risk on cash and accounts receivable.

4 unchanged sentences

Property and equipment, net consists of the following (in thousands):

March 31, 2024

June 30, 2024

December 31, 2023

19 unchanged sentences

If the undiscounted cash flows do not exceed the carrying value, the impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model or market comparable, when available.

For the three-month periods ended March 31, 2024 and 2023, respectively, there were no impairment charges.

For the six-month periods ended June 30, 2024 and 2023, respectively, there were no impairment charges.

The Company accounts for goodwill in accordance with ASC Topic 350, Intangibles-Goodwill and Other (“ASC Topic 350”).

2 unchanged sentences

Impairment testing for goodwill is performed at the reporting unit level, and each of the Company’s casino properties is considered to be a reporting unit.

As of March 31, 2024, we had goodwill totaling $ 25.1 million related to the purchase of Monarch Black Hawk, Inc.

As of June 30, 2024, we had goodwill totaling $ 25.1 million related to the purchase of Monarch Black Hawk, Inc.

ASC Topic 350 requires that goodwill be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

18 unchanged sentences

The points estimated SSP is computed as the cash redemption value of the points expected to be redeemed, which is determined through an analysis of all redemption activity over the preceding twelve-month period.

As of March 31, 2024, the Company had estimated the obligations related to the players’ club program at $ 8.8 million, which is included in Accrued Expenses in the Liabilities and Stockholders’ Equity section in the Consolidated Balance Sheet.

As of June 30, 2024, the Company had estimated the obligations related to the players’ club program at $ 8.8 million, which is included in Accrued Expenses in the Liabilities and Stockholders’ Equity section in the Consolidated Balance Sheet.

Food and Beverage, Hotel and Other (retail) Revenues:

11 unchanged sentences

Other operating items, net, in general consist of miscellaneous operating charges or proceeds.

For each of the three months ended March 31, 2024 and 2023, Other operating items, net, was $ 0.5 million and primarily represented professional service fees relating to our construction litigation.

For the three months ended June 30, 2024, Other operating items, net, was $ 0.2 million and consisted of $ 0.1 million professional service fees relating to our construction litigation and $ 0.1 million loss on disposal of assets.

For the three months ended June 30, 2023, Other operating items, net, was $ 0.5 million and primarily consisted of $ 1.2 million net proceeds from a sale of a COVID closure related insurance claim, offset by $ 0.6 million of professional service fees relating to our construction litigation and $ 0.1 million loss on disposal of assets.

For the six months ended June 30, 2024, Other operating items, net, was $ 0.7 million and consisted of $ 0.6 million professional service fees relating to our construction litigation and $ 0.1 million loss on disposal of assets.

For the six months ended June 30, 2023, Other operating items, net, was $ 0.1 million and primarily consisted of $ 1.2 million of professional service fees relating to our construction litigation and $ 0.1 million loss on disposal of assets, offset by $ 1.2 million net proceeds from a sale of a COVID closure related insurance claim.

Impact of Recently Adopted Accounting Standards:

The Company has evaluated the recently issued or proposed by the FASB or other standards-setting bodies accounting standards and does not believe the future adoption of any such pronouncements will have a material effect on the Company’s Consolidated Financial Statements.

Segment Reporting - Improvements to Reportable Segment Disclosures:

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.2023-07, Segment Reporting Topic 280.

Under ASC 280 a public entity is required to disclose a measure of segment’s profit or loss, used by the chief operating decision maker to asses segment performance and make decisions about allocation of resources.

In addition to segment’s revenue and measure for profit or loss, the standard requires enhanced disclosures of significant segment expenses.

The amendments provide new segment disclosure requirements for entities with a single reportable segment.

This guidance is effective for annual reporting periods beginning after December 15, 2023, and interim reporting periods after December 15, 2024.

Early adoption is permitted and retrospective application is required for all periods presented.

The Company is currently evaluating the impact of adopting this guidance on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

Income Tax—Improvements to Income Tax Disclosures:

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes Topic 740, which requires enhanced disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations.

This guidance is effective for annual reporting periods beginning after December 15, 2024.

Early adoption is permitted and should be applied on a prospective basis, however retrospective application is permitted.

The Company is currently evaluating the impact of adopting this guidance on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

A variety of proposed or otherwise potential accounting standards are currently under review and study by standard-setting organizations and certain regulatory agencies.

Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, the implementation of any such proposed or revised standards would have on the Company’s Consolidated Financial Statements.

ACCOUNTING FOR LEASES

2 unchanged sentences

As permitted by ASC 842, the Company elected not to separate non-lease components from their related lease components.

As of March 31, 2024, the Company’s right of use assets consisted of the Parking Lot Lease, the Driveway Lease (each as defined and discussed in NOTE 5.

As of June 30, 2024, the Company’s right of use assets consisted of the Parking Lot Lease, the Driveway Lease (each as defined and discussed in NOTE 5.

RELATED PARTY TRANSACTIONS) , as well as certain billboard leases.

The weighted-average incremental borrowing rate of the leases presented in the lease liability as of March 31, 2024, was 4.33 %.

There were no new leases entered into in the first quarter of 2024.

The weighted-average remaining lease term of the leases presented in the lease liability as of March 31, 2024, was 17.02 years.

Cash paid related to the operating leases presented in the lease liability for the three months ended March 31, 2024 and 2023, was $ 0.4 million and $ 0.3 million, respectively.

The weighted-average incremental borrowing rate of the leases presented in the lease liability as of June 30, 2024, was 4.33 %.

There were no new leases entered into in the second quarter of 2024.

The weighted-average remaining lease term of the leases presented in the lease liability as of June 30, 2024, was 16.86 years.

Cash paid related to the operating leases presented in the lease liability for the six months ended June 30, 2024 and 2023, was $ 0.8 million and $ 0.6 million, respectively.

STOCK-BASED COMPENSATION

3 unchanged sentences

Three months ended

Six months ended

Food and beverage

6 unchanged sentences

The following is a reconciliation of the number of shares (denominator) used in the basic and diluted earnings per share computations (shares in thousands):

Three months ended March 31,

Three months ended June 30,

Effect of dilutive stock options

Six months ended June 30,

Effect of dilutive stock options

Excluded from the computation of diluted earnings per share are options where the exercise prices are greater than the weighted assumed proceeds per share as their effects would be anti-dilutive in the computation of diluted earnings per share.

For the three months ended March 31, 2024 and 2023, options for approximately 867 thousand and 576 thousand shares, respectively, were excluded from the computation.

For the three months ended June 30, 2024 and 2023, options for approximately 955 thousand and 647 thousand shares, respectively, were excluded from the computation.

For the six months ended June 30, 2024 and 2023, options for approximately 912 thousand and 578 thousand shares, respectively, were excluded from the computation.

RELATED PARTY TRANSACTIONS

12 unchanged sentences

If the Company elects not to exercise its renewal option, the Company will be obligated to pay BLI $ 1.6 million.

For each of the three-month periods ended March 31, 2024 and 2023, the Company paid $ 187 thousand in rent, plus $ 8 thousand in operating expenses relating to this lease.

The right of use asset and lease liability balances as of March 31, 2024, recognized in the Consolidated Balance Sheet, was $ 9.7 million.

For each of the three-month periods ended June 30, 2024 and 2023, the Company paid $ 187 thousand in rent, plus $ 1 thousand in operating expenses relating to this lease.

For each of the six-month periods ended June 30, 2024 and 2023, the Company paid $ 374 thousand in rent, plus $ 9 thousand in operating expenses relating to this lease The right of use asset and lease liability balances as of June 30, 2024, recognized in the Consolidated Balance Sheet, was $ 9.6 million.

In addition, the Atlantis shares a driveway with the Shopping Center and leases approximately 37,400 square feet from BLI (the “Driveway Lease”) for an initial lease term of 15 years , which commenced on September 30, 2004, at an original annual rent of $ 300 thousand plus common area expenses.

5 unchanged sentences

At the end of the renewal terms, the Company has the option to purchase the leased driveway section of the Shopping Center.

For each of the three-month periods ended March 31, 2024 and 2023, the Company paid $ 101 thousand in rent plus $ 13 thousand and $ 12 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of March 31, 2024, recognized in the Consolidated Balance Sheet , was $ 3.2 million.

The Company occasionally leases billboard advertising, storage space and parking lot space from affiliates controlled by the Farahi Family Stockholders, and paid $ 132 thousand for each of the three-month periods ended March 31, 2024 and 2023, for such leases.

For each of the three-month periods ended June 30, 2024 and 2023, the Company paid $ 101 thousand in rent plus $ 11 thousand and $ 9 thousand, respectively, in operating expenses relating to this lease.

For each of the six-month periods ended June 30, 2024 and 2023, the Company paid $ 202 thousand in rent plus $ 24 thousand and $ 21 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of June 30, 2024, recognized in the Consolidated Balance Sheet , was $ 3.1 million.

The Company occasionally leases billboard advertising, storage space and parking lot space from affiliates controlled by the Farahi Family Stockholders, and paid $ 125 thousand and $ 137 thousand, respectively, for the three-month periods ended June 30, 2024 and 2023, and $ 257 thousand and $ 269 thousands, respectively, for the six-month periods ended June 30, 2024 and 2023, for such leases.

LONG-TERM DEBT

1 unchanged sentence

The Amended Credit Facility provides for a $ 100 million line of credit which matures on January 1, 2025.

As of March 31, 2024, the Company had an outstanding principal balance of $ 5.5 million under the Amended Credit Facility.

In addition to other customary covenants for a facility of this nature, as of March 31, 2024, the Company is required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 2.5 :1 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.1 :1.

As of March 31, 2024, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.04 :1 and 55.46 :1, respectively.

As of June 30, 2024, the Company had an outstanding principal balance of $ 23.0 million under the Amended Credit Facility.

In addition to other customary covenants for a facility of this nature, as of June 30, 2024, the Company is required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 2.5 :1 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.1 :1.

As of June 30, 2024, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.13:1 and 88.27:1, respectively.

The interest rate under the Amended Credit Facility is SOFR (the Secured Overnight Financing Rate) plus a margin ranging from 1.00 % to 1.50 %, or a base rate (as defined in the Amended Credit Facility) plus a margin ranging from 0.00 % to 0.50 %.

1 unchanged sentence

In addition, SOFR-based loans will incur a 0.10 % credit adjustment spread due to the conversion from LIBOR to SOFR as the new benchmark rate.

As of March 31, 2024, the interest rate was 8.5 %, or SOFR plus a 1.00 % margin.

As of June 30, 2024, the interest rate was approximately 5.4 %, or SOFR plus a 1.00 % margin.

The Company’s obligations under the Amended Credit Facility are secured by substantially all of the Company’s assets.

For the three months ended March 31, 2024 and 2023, the Company’s effective tax rate was 23.3 % and 21.7 %, respectively.

For the six months ended June 30, 2024 and 2023, the Company’s effective tax rate was 22.9 % and 22.2 %, respectively.

Deferred tax assets were evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies.

No uncertain tax positions were recorded as of March 31, 2024 and 2023.

No uncertain tax positions were recorded as of June 30, 2024 and 2023.

No change in uncertain tax positions is anticipated over the next twelve months.

4 unchanged sentences

The actual timing, number and value of shares repurchased under the repurchase program will be determined by management at its discretion and will depend on a number of factors, including the market price of the Company’s stock, general market economic conditions and applicable legal requirements.

In the first quarter of 2024, the Company purchased 281,708 shares of its common stock on the open market for an aggregate amount of $ 19.5 million under its existing Repurchase Plan.

As of March 31, 2024, we have an authorization to purchase up to 2,533,789 shares under the Repurchase Plan.

In the second quarter of 2024, the Company purchased 452,464 shares of its common stock on the open market for an aggregate amount of $ 30.5 million under its existing Repurchase Plan.

As of June 30, 2024, we have an authorization to purchase up to 2,081,325 shares under the Repurchase Plan.

LEGAL MATTERS

24 unchanged sentences

We are currently unable to determine the probability of the outcome or reasonably estimate the loss or gain, if any.

On February 9, 2023, Monarch Growth, Inc., Monarch Casino & Resort, Inc.

and Monarch Black Hawk, Inc.

On February 9, 2023, Monarch Growth, Inc., Monarch Casino & Resort, Inc., and Monarch Black Hawk, Inc.

filed a complaint in District Court, City and County of Denver, Colorado, against PCL, in connection with the Project.

4 unchanged sentences

Monarch alleges that the claims asserted in the Second Denver Lawsuit were neither known nor reasonably discoverable in time to be included in the First Denver Lawsuit.

Following the filing of a motion to dismiss the Second Denver Action by PCL, Monarch amended its complaint in the Second Denver Lawsuit.

On September 13, 2023, PCL filed a motion to dismiss Monarch’s amended complaint.

On February 13, 2024, the Court denied PCL’s motion to dismiss the amended complaint.

On March 26, 2024, the Court set the Second Denver Lawsuit for a seven-day bench trial to commence on April 7, 2025.

The parties have recently begun discovery, and we are currently unable to determine the probability of the outcome or reasonably estimate the loss or gain, if any.

The Company recognized $ 0.5 million in construction litigation expense relating to these lawsuits for each of the three months ended March 31, 2024 and 2023, which is included in Other operating items, net on the Consolidated Statements of Income.

The parties are conducting discovery, and we are currently unable to determine the probability of the outcome or reasonably estimate the loss or gain, if any.

The Company recognized $ 0.6 million and $ 1.2 million in construction litigation expense relating to these lawsuits for the six months ended June 30, 2024 and 2023, respectively, which is included in Other operating items, net on the Consolidated Statements of Income.

From time to time, we may be subject to other legal proceedings and claims in the ordinary course of business.

4 unchanged sentences

These dividends will be paid quarterly on the 15th day of the third month of the applicable calendar quarter (or, if such date is not a trading day, then the first trading day immediately thereafter such date) to those stockholders of record on the 1st day of the third month of the applicable calendar quarter (or, if such date is not a trading day, then the first trading day immediately thereafter such date).

On March 15, 2024, the Company paid a cash dividend of $ 0.30 per share of its outstanding common stock, to stockholders of record on March 1, 2024.

On June 15, 2024 , the Company paid a cash dividend of $ 0.30 per share of its outstanding common stock, to stockholders of record on June 1, 2024 .

This cash dividend was part of the previously announced annual cash dividend of $ 1.20 per share payable in quarterly payments.

On April 17, 2024, the Company announced a cash dividend of $ 0.30 per share of its outstanding common stock, payable on June 15, 2024, to stockholders of record on June 1, 2024.

On July 24, 2024 , the Company announced a cash dividend of $ 0.30 per share of its outstanding common stock, payable on September 15, 2024 , to stockholders of record on September 1, 2024 .

This cash dividend is part of the previously announced annual cash dividend of $ 1.20 per share payable in quarterly payments.

2 unchanged sentences

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 1. Financial Statements