What changed in this filing

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Item 1. Financial Statements

2024-11-08 compared with 2024-08-08 · 67 added, 52 removed, 338 unchanged (26% of the section changed)

5 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

Food and beverage

17 unchanged sentences

(In thousands, except shares)

June 30, 2024

September 30, 2024

December 31, 2023

1 unchanged sentence

Cash and cash equivalents

Receivables, net

Receivables, net of provision for credit losses

Income taxes receivable

19 unchanged sentences

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

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

19,296,464 shares issued and 18,368,473 outstanding at September 30, 2024;

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

Additional paid-in capital

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

Treasury stock, 927,991 shares at September 30, 2024;

62,534 shares at December 31, 2023

18 unchanged sentences

Balance, June 30, 2024

Exercise of stock options, net

Stock-based compensation expense

Purchase of company common stock

Dividend payment

Balance, September 30, 2024

Balance, January 1, 2023

7 unchanged sentences

Balance, June 30, 2023

Exercise of stock options, net

Stock-based compensation expense

Dividend payment

Balance, September 30, 2023

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

3 unchanged sentences

(In thousands, Unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

35 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

QUARTERLY PERIOD ENDED JUNE 30, 2024

QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2 unchanged sentences

was incorporated in 1993.

Unless otherwise indicated, “Monarch,” “us,” “we,” and the “Company” refer to Monarch Casino & Resort, Inc.

Unless otherwise indicated, “Monarch,” “us,” “we,” and the “Company” refers to Monarch Casino & Resort, Inc.

and its subsidiaries.

12 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 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.

Operating results for the three and nine months ended September 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.

3 unchanged sentences

The accounting guidance for disclosures about segments of an enterprise and related information requires separate financial information to be disclosed for all operating segments of a business.

The Company determined that the Company’s two operating segments, Atlantis and Monarch Black Hawk, meet the aggregation criteria stipulated by ASC 280-10-50-11.

The Company determined that the Company’s two operating segments, Atlantis and Monarch Black Hawk, meet the aggregation criteria stipulated by Accounting Standards Codification (“ASC”) 280-10-50-11.

The Company views each property as an operating segment and the two operating segments have been aggregated into one reporting segment.

1 unchanged sentence

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of bank deposits and trade receivables.

The Company accounts for credit losses in accordance with ASU 2016-13 using a forward-looking expected loss model.

The Company accounts for credit losses in accordance with Accounting Standards Update (“ASU”) 2016-13 using a forward-looking expected loss model.

The Company maintains its surplus cash in bank accounts which, at times, may exceed federally insured limits.

3 unchanged sentences

In addition, the Company also has receivables due from hotel guests and convention groups and events, which are primarily secured with a credit card.

An allowance for doubtful accounts is determined to reduce the Company’s receivables to their carrying value, which approximates fair value.

An allowance for current expected credit losses is determined to reduce the Company’s receivables to their carrying value, which approximates fair value.

The allowance is estimated based on historical collection experience, specific review of individual customer accounts, current economic and business conditions and management’s expectations of future economic and business conditions.

5 unchanged sentences

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

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

As of September 30, 2024, the Company has recorded a reserve of $ 0.3 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):

June 30, 2024

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

For the nine-month periods ended September 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 June 30, 2024, we had goodwill totaling $ 25.1 million related to the purchase of Monarch Black Hawk, Inc.

As of September 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.

3 unchanged sentences

The majority of the Company’s revenue is recognized when products are delivered or services are performed.

For certain revenue transactions (when a patron uses a club loyalty card), in accordance with Accounting Standard Update No.

For certain revenue transactions (when a patron uses a club loyalty card), in accordance with ASU No.

2014-09 (“ASC 606”), a portion of the revenue is deferred until the points earned by the patron are redeemed or expire.

12 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 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.

As of September 30, 2024, the Company had estimated the obligations related to the players’ club program at $ 8.5 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 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.

For the three months ended September 30, 2024, Other operating items, net, was $ 0.2 million and primarily represents loss on disposal of assets.

For the three months ended September 30, 2023, Other operating items, net, was $ 3.0 million and primarily represents professional service fees relating to our construction litigation.

For the nine months ended September 30, 2024, Other operating items, net, was $ 0.9 million and consisted of $ 0.6 million professional service fees relating to our construction litigation and $ 0.3 million loss on disposal of assets.

For the nine months ended September 30, 2023, Other operating items, net, was $ 3.0 million and consisted of $ 4.1 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:

1 unchanged sentence

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.

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 assess 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.

15 unchanged sentences

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

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.

As of September 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 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.

The weighted-average incremental borrowing rate of the leases presented in the lease liability as of September 30, 2024, was 4.34 %.

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

The weighted-average remaining lease term of the leases presented in the lease liability as of September 30, 2024, was 16.65 years.

Cash paid related to the operating leases presented in the lease liability for each of the nine months ended September 30, 2024 and 2023, was $ 1.1 million.

STOCK-BASED COMPENSATION

3 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

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 June 30,

Three months ended September 30,

Effect of dilutive stock options

Six months ended June 30,

Nine months ended September 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 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.

For the three months ended September 30, 2024 and 2023, options for approximately 905 thousand and 749 thousand shares, respectively, were excluded from the computation.

For the nine months ended September 30, 2024 and 2023, options for approximately 910 thousand and 617 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 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.

For each of the three-month periods ended September 30, 2024 and 2023, the Company paid $ 187 thousand in rent, plus $ 17 thousand and $8 thousands, respectively, in operating expenses relating to this lease.

For each of the nine-month periods ended September 30, 2024 and 2023, the Company paid $ 561 thousand in rent, plus $ 26 thousand and $17 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of September 30, 2024, recognized in the Consolidated Balance Sheet, was $ 9.5 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 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.

For each of the three-month periods ended September 30, 2024 and 2023, the Company paid $ 101 thousand in rent plus $ 16 thousand and $ 14 thousand, respectively, in operating expenses relating to this lease.

For each of the nine-month periods ended September 30, 2024 and 2023, the Company paid $ 303 thousand in rent plus $ 40 thousand and $ 35 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of September 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 $ 118 thousand and $ 104 thousand, respectively, for the three-month periods ended September 30, 2024 and 2023, and $ 375 thousand and $ 373 thousand, respectively, for the nine-month periods ended September 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 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.

As of September 30, 2024, the Company had an outstanding principal balance of $ 7.0 million under the Amended Credit Facility.

In addition to other customary covenants for a facility of this nature, as of September 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 September 30, 2024, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.04:1 and 109.52:1, 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 %.

The applicable margins will vary depending on the Company’s leverage ratio.

The applicable margins vary depending on the Company’s leverage ratio.

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

As of September 30, 2024, the interest rate was approximately 6.2 %, 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 six months ended June 30, 2024 and 2023, the Company’s effective tax rate was 22.9 % and 22.2 %, respectively.

For the nine months ended September 30, 2024 and 2023, the Company’s effective tax rate was 22.3 % and 22.6 %, 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 June 30, 2024 and 2023.

No uncertain tax positions were recorded as of September 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 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.

In the third quarter of 2024, the Company purchased 131,285 shares of its common stock on the open market for an aggregate amount of $ 9.6 million under its existing Repurchase Plan.

As of September 30, 2024, we have an authorization to purchase up to 1,950,040 shares under the Repurchase Plan.

LEGAL MATTERS

33 unchanged sentences

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.

The Company recognized $ 0.6 million and $ 4.1 million in construction litigation expense relating to these lawsuits for the nine months ended September 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 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 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 .

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

For the nine months ended September 30, 2024, the Company paid total of $ 0.90 per share cash dividend.

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

On October 23, 2024 , the Company announced a cash dividend of $ 0.30 per share of its outstanding common stock, payable on December 15, 2024 , to stockholders of record on December 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