Full House Resorts drew another step closer to profitability in the second quarter, generating solid revenue and EBITDA gains
amid capital improvements across its portfolio of properties in Nevada, Indiana, Colorado and the Mississippi Gulf Coast.
“It was a good quarter, but still very much a transitional quarter,” said Daniel R. Lee, chief executive officer.
“We’ve got stuff going on at every property. Those improvements are really just starting to be completed and will come online over
the next 12 to 18 months.”
Net revenues for the quarter grew +16.00 percent to $40.1 million… While adjusted EBITDA grew +9.00 percent to $3.7 million.
Both figures were bolstered by a partial prior year contribution from Bronco Billy’s Casino and Hotel in Cripple Creek, Colorado,
which was acquired on May 13, 2016.
The company incurred a net loss of $1.5 million, which was down from the net loss of $2.4 million in the prior year quarter.
But because of its significant depreciation and amortization expenses, the company noted… it maintains overall
positive cash flow from operations.
Net revenues at Silver Slipper Casino and Hotel, the company’s flagship property in St. Louis, Mississippi, were up +13.00 percent for the quarter to
$16.4 million while adjusted property EBITDA grew to +23.00% percent to $2.9 million. Very solid numbers considering that this performance came
amid construction disruptions both inside and outside the property.
“We had another solid quarter, with Silver Slipper again leading our growth,” said Lee. “We are especially proud of our strong performance in the face of
significant construction work during the quarter at our properties.”
Lee also reported that the renovation at the Grand Lodge Casino at Lake Tahoe had been completed after significant construction disruptions that
caused as much as 70.00% percent of the casino floor to be closed off.
“We completed that extensive construction at Grand Lodge on June 30 and the fresh new casino design has been well-received by our guests,” Lee said.
“Since the refresh in Lake Tahoe.. Slot win has increased by +13.00 percent and Table game volumes increased +7.00 percent in July 2017 versus July 2016 ”
Chad Beynon, an analyst with Macquarie, noted that Full House’s operational and property improvements should continue to drive EBITDA growth and
deleveraging, which could open the door for acquisition activity.
In a report issued to Macquarie clients this morning analyst Beynon said of Full House:
“We expect a refinancing in the 6.00% -to- 7.00% percent range… This could lead to a +$4.0 million -to- +$5.0 million of incremental interest cost savings
and increase the company’s annual cash flow from operations”
“In addition.. We believe a successful refinancing of the company’s high interest debt… Increases Full House’s appetite for larger M&A transactions,”
Beynon further wrote in the client note:
“As we see M&A picking up in the Regional Gaming space.. Full House is the likely beneficiary and consolidator of “smaller gaming assets”
“While the larger players are avoiding/shedding properties of less than $15 million in annual EBITDA …
These smaller gaming assets could become very accretive opportunities for the likes of FLL”
As of June 30… Full House had $22 million in cash and $75.8 million in net debt
Full House closed the quarter with a ==> 5.1x times Debt to EBITDA ratio.