– Net Revenues Decrease 1.0% in the Fourth Quarter Due to Weather Issues; For the Full Year, Net Revenues Increase 10.5% Due to a Full Year of Bronco Billy’s and Increases in Every Operating Segment
– Company Completes $100 Million Refinancing of Its First- and Second-Lien Debt, Reducing Interest Expense and Debt Service by $2.3 Million Per Year Based on Current Interest Rates
– Company Anticipates Commencement of Ferry Service at Rising Star for the Summer Season
– Company Will Seek Cripple Creek City Council Approval in April for Its Bronco Billy’s Hotel Project and, Pending Such Approval, Plans to Begin Construction in Second Quarter of 2018
LAS VEGAS, March 01, 2018 (GLOBE NEWSWIRE) — Full House Resorts, Inc. (Nasdaq:FLL) today announced results for the fourth quarter and year ending December 31, 2017.
On a consolidated basis, net revenues in the fourth quarter of 2017 decreased 1.0% to $37.8 million from $38.2 million in the prior-year period. Net loss for the fourth quarter of 2017 was a loss of $3.7 million, or a loss of $0.16 per diluted common share, compared to a net loss of $2.5 million, or a loss of $0.12 per diluted common share, in the prior-year period. Adjusted EBITDA(a) in the 2017 fourth quarter was $1.8 million versus $3.6 million in the fourth quarter of 2016. The decrease was largely attributable to adverse weather throughout much of the quarter, including on several key weekends, as well as increased health and benefit costs.
For the full year, net revenues rose 10.5% to $161.3 million. This increase was the result of revenue increases in every operating segment, as well as a full year of ownership of Bronco Billy’s, which was acquired in May 2016. Net loss for 2017 was a loss of $5.0 million, or a loss of $0.22 per diluted share, versus a loss of $5.1 million in 2016, or a loss of $0.26 per diluted share. Adjusted EBITDA increased to $16.5 million from $16.2 million in 2016. Due in part to its significant depreciation and amortization expense, the Company generally has positive cash flow from operations despite net losses for the full-year periods. Strong results in the first three quarters of 2017 were offset largely due to the weather impacts mentioned above during the fourth quarter, as well as increased health and benefit costs.
“Snowstorms and prolonged icy weather conditions significantly impacted visitation in both the Midwest and the South, including on New Year’s Eve,” said Daniel R. Lee, President and Chief Executive Officer of Full House Resorts. “Additionally, Hurricane Nate resulted in the temporary shutdown of casinos along the Gulf Coast, including Silver Slipper, on a key weekend. Ironically, Grand Lodge Casino in Lake Tahoe suffered from a lack of snow at local ski areas for the winter. During periods with normal weather, business levels remained solid.”
“We’ve made significant progress on our long-term growth plans,” continued Mr. Lee. “We expect to receive the final permit from the Army Corps of Engineers in mid-March and will begin construction immediately on the roads and ramps along the Ohio River permitting ferry service between Rising Star and the populous and prosperous region of northern Kentucky, directly across the river. The ferry boat itself is comprised of a new push tug and barge. The tug is in a shipyard in Cincinnati and the barge is en route from a shipyard in Florida, where it was constructed. We hope to commence the ferry boat service prior to the peak summer season. We have also purchased and staged the materials to extensively refurbish the Rising Star pavilion during the upcoming second quarter, so visitors arriving on the new ferry will have a significantly enhanced arrival experience.”
“In Colorado,” added Mr. Lee, “we submitted our official application for the vacation of certain streets and other approvals that will enable us to build a four-star hotel connected to our Bronco Billy’s Casino in Cripple Creek, approximately one hour from Colorado Springs and two hours from Denver. We expect that the city council will review our application in April 2018 and, pending its approval, we intend to start construction in the second quarter. The first phase of this project is construction of a parking garage directly behind Bronco Billy’s. We intend to complete construction of the garage by year-end, enabling us to build the hotel, spa, and meeting rooms on the surface parking lots currently utilized by the casino. If all goes well, the new hotel should open in 2020.”
Lee also noted that the Company completed two important amenities in August 2017 — the RV Park at Rising Star and the Beach Club at Silver Slipper. “The RV Park and Beach Club are closed, of course, during the coldest months of the winter,” Mr. Lee said. “Both, however, are scheduled to reopen later this month and will be important property improvements during the upcoming summer period.”
Commented Lewis Fanger, Chief Financial Officer of Full House Resorts, “We are excited to begin 2018 with our new senior secured notes in place. These new notes, which refinanced our first- and second-lien credit facilities, should benefit cash flow in two ways: significant cash interest expense savings based upon current interest rates, and debt amortization that is 56% lower than the amounts required under our prior credit facilities. The new notes also extend our debt maturities well into the future, going from 2019 under our prior credit facilities to 2024, and provide significantly more flexibility.”
Mr. Lee concluded, “Full House Resorts has reached a transitional moment. Over the past three years, we have focused on improving operations, laid the ground work for thoughtful future growth, and crafted a balance sheet that’s more flexible and less costly than it has been in the past. With that groundwork in place, we look forward to the excitement and growth that we expect the next few years will bring.”
Fourth Quarter 2017 Highlights and Subsequent Events
- Net revenues at Silver Slipper Casino and Hotel declined 1.6% in the fourth quarter of 2017 to $14.5 million from $14.8 million in the prior-year quarter. Adjusted Property EBITDA of $1.7 million in the fourth quarter of 2017 compares to $2.7 million in the prior-year period. In October 2017, Silver Slipper (along with all other casinos on the Gulf Coast) was required to temporarily close during the passage of Hurricane Nate. While physical damage from the hurricane was minimal, the shutdown occurred on a key event weekend. Additionally, extreme and unusually cold weather for southern Mississippi, including icy road conditions and snow, adversely impacted visitation during the fourth quarter of 2017. For the year, Silver Slipper continued to improve, with net revenues increasing 8.4% to $64.0 million and Adjusted Property EBITDA rising 7.4% to $10.7 million. Net revenues grew by 12%, 13% and 9.6% in the first, second and third quarters, respectively, with Adjusted Property EBITDA similarly growing by 15%, 23% and 33% in these same quarters.
- At Rising Star Casino Resort, net revenues declined 2.9% for the fourth quarter of 2017 to $12.3 million from $12.6 million. Adjusted Property EBITDA of $7,000 in the fourth quarter of 2017 compares to $448,000 in the prior-year period. Similar to Silver Slipper, Rising Star had adverse weather conditions, including significant snowfall on the key New Year’s holiday and throughout the quarter. For the year, net revenues increased 0.6% to $49.8 million and Adjusted Property EBITDA was $2.7 million. The Company is looking forward to a full season of its new RV Park in 2018, as well as other improvements that it is currently planning to the casino and its entry pavilion. Additionally, the Company anticipates commencing its ferry boat operation prior to the peak summer season. There is a video of the recent launching of the ferry boat at www.facebook.com/FHResorts.
- At Bronco Billy’s Casino and Hotel, net revenues for the fourth quarter of 2017 improved 5.0% to $6.1 million from $5.8 million. Adjusted Property EBITDA was $0.7 million for both the 2017 and 2016 fourth quarters. For the full year, net revenues were $26.2 million and $16.2 million in 2017 and 2016, respectively, and Adjusted Property EBITDA was $4.8 million and $3.4 million, respectively. Financial results for 2016 include results since May 13, 2016, when the Company acquired Bronco Billy’s. As previously disclosed, the Company continues to develop its plans for a significant expansion at Bronco Billy’s, including a new luxury hotel tower, spa, parking garage, convention and entertainment center, and high-end restaurant. This expansion will integrate seamlessly with the existing casino. For renderings of the proposed expansion, as well as a presentation discussing the Company’s analysis of the Cripple Creek market, please visit the investor section of www.fullhouseresorts.com and click on “News and Events/Presentations.”
- The Northern Nevada segment consists of the Grand Lodge and Stockman’s casinos. Combined, Northern Nevada net revenues were $4.9 million and $5.0 million for the fourth quarter of 2017 and 2016, respectively. Adjusted Property EBITDA for the Northern Nevada segment was $0.4 million and $0.7 million for the same periods, respectively. Results for the fourth quarter of 2017 reflect a lack of snowfall at Grand Lodge, which relies on visitation to the area’s ski resorts over the winter months. At Stockman’s Casino, the property benefited from an increase in activity at the nearby Naval Air Station, known for its “Top Gun” school. For the full year, Northern Nevada revenues were $21.2 million in both 2017 and 2016. Adjusted EBITDA was $2.8 million in 2017 and $3.9 million in 2016. In the first half of 2017, Grand Lodge was under significant construction as part of an extensive refurbishment. The Company also recently completed construction of a new porte cochere and landscaping improvements at Stockman’s Casino.
- On February 2, 2018, the Company refinanced all of its existing first and second lien credit facilities with $100.0 million of new senior secured notes due 2024 (the “New Notes”). Net of a 2% original issue discount, the Company received $98.0 million of proceeds, which were used to pay off all of its outstanding first and second lien credit facilities and to pay for related refinancing costs. The New Notes are secured by liens on substantially all of the Company’s assets and guaranteed by all of our subsidiaries. The interest rate on the New Notes is at LIBOR plus 700 basis points (increasing to 750 basis points under certain conditions, as defined) and quarterly principal payments of $250,000. The Company is also required to redeem the New Notes for any excess cash flow, as calculated annually and defined in the indenture governing the New Notes, beginning with its annual results for the 2018 fiscal year. The New Notes replaced first lien debt with an interest rate of LIBOR plus 425 basis points and second lien debt that incurred interest at 13.5%.
- The Company maintains a Facebook page to provide work-in-progress photos to investors of our various growth projects and other activities. To access that Facebook page, please visit www.facebook.com/FHResorts.
Liquidity and Capital Resources
As of December 31, 2017, the Company had $19.9 million in cash and $96.1 million in outstanding first- and second-lien debt. As noted above, in February 2018, the Company issued $100.0 million of new senior secured notes due 2024. Proceeds from the notes were used to, among other items, refinance all of the Company’s outstanding first- and second-lien debt and pay for expenses related to the refinancing.
Conference Call Information
The Company will host a conference call for investors today, March 1, 2018, at 4:30 p.m. ET (1:30 p.m. PT) to discuss its 2017 fourth quarter results. Investors can access the live audio webcast from the Company’s website at www.fullhouseresorts.com under the investor relations section. The conference call can also be accessed by dialing (888) 394-8218 or, for international callers, (323) 701-0225.
A replay of the conference call will be available shortly after the conclusion of the call through March 15, 2018. To access the replay, please visit www.fullhouseresorts.com. Investors can also access the replay by dialing (844) 512-2921 or, for international callers, (412) 317-6671 and using the passcode 7659738.