Net Revenue, Net Income, and Adjusted EBITDA Increased from the Prior-Year Period
New Rising Star Ferry Service is Now Operational
"Christmas Casino & Inn by Bronco Billy’s" Concept Opened on November 1 in Cripple Creek, Colorado
Company Submitted a Proposal to Build a New Racetrack and Casino in Clovis, New Mexico
LAS VEGAS, Nov. 07, 2018 (GLOBE NEWSWIRE) -- Full House Resorts, Inc. (Nasdaq: FLL) today announced results for the third quarter ending September 30, 2018.
On a consolidated basis, net revenues in the third quarter of 2018 increased to $44.0 million from $43.7 million in the prior-year period. Net income for the third quarter of 2018 improved to $1.6 million, or $0.04 per diluted common share, from $0.8 million, or $0.03 per diluted common share, in the third quarter of 2017. Adjusted EBITDA(a) in the 2018 third quarter rose to $6.5 million. For the prior-year period, Adjusted EBITDA was $6.4 million, which included a $675,000 benefit related to the settlement of parking garage litigation at Silver Slipper.
"The past few months have been eventful ones for our growing company," said Daniel R. Lee, President and Chief Executive Officer of Full House Resorts. "We continue to benefit from property investments made over the past two years, as seen in this quarter’s solid results. We also recently completed several more investments.
"At Rising Star, we are proud to have officially begun ferry boat service between our resort casino and populous Boone County, Kentucky. After navigating numerous state and federal agencies for several years, we finally welcomed our first cars on September 29. High winds and a mechanical issue caused us to not operate for a few days during the month. Those issues have been resolved and the ferry is now operating reliably with approximately four round-trips per hour starting at 8:00 a.m. and running until 10:00 p.m. from Sunday through Thursday and until midnight on Fridays and Saturdays. The early response has been extremely positive, with more than 10,300 passengers utilizing the service over its 22 days of operations in October. We are still in a ramp-up period and should be further helped by a targeted awareness campaign that we recently commenced.
"At the Silver Slipper," continued Mr. Lee, "we opened our newest amenity in August 2018, an on-site sports betting area. New amenities like this one, as well as the Oyster Bar and Beach Club that we completed last year, have contributed to increases in guest traffic and casino win. Our net win rose 8.7% in the quarter despite a significant expansion at a competing casino. Those traffic increases are represented in Silver Slipper's strong gains in the third quarter, particularly after adjusting for the $675,000 legal settlement that was included in Adjusted EBITDA for the third quarter of 2017.
"Perhaps most exciting is what we just unveiled on November 1 in Cripple Creek: the new Christmas Casino & Inn, located in a freestanding building up the block from the existing Bronco Billy’s complex. Over the past several months, our design team secretly overhauled the space, inserting creative and festive elements throughout to create a new Christmas Casino & Inn. We kept this quiet so that the publicity would be appropriately timed for the holiday season. From a 17-foot Christmas "pyramid" custom-built in Germany to an entire wall adorned with 30 cuckoo clocks, the new Christmas Casino & Inn with approximately 150 slot machines is a wondrous year-round extension of the Christmas Casino concept that originated several years ago at our Rising Star Casino Resort. Though early, the initial response to the Christmas Casino & Inn has been strong. It is the first new and differentiated casino in Cripple Creek in more than a decade, and the response bodes well for our broader plans to expand Bronco Billy’s.
"Related to that Bronco Billy’s expansion, the court recently granted our motion to dismiss a competitor's lawsuit seeking design changes to our project. We are pleased with the court’s decision and expect to begin construction this quarter on Phase One, the parking garage that will connect into Bronco Billy’s. We anticipate that construction of Phase Two, including a new four-star hotel, spa, and convention and entertainment space, will begin once we complete Phase One's parking garage, as much of today's surface parking lots will be utilized in the expanded Bronco Billy's facility. We continue to expect completion of the entire project in 2020.
"We are always searching for ways to extend our development pipeline and prudently grow our company," concluded Mr. Lee. "Most recently, we participated in the New Mexico Racing Commission’s competitive process for the state’s sixth racetrack casino license. Our proposal, La Posada del Llano, represents the largest investment by far of all the proposals, and it generates the most in jobs and tax revenue. It also has the potential to improve race purses and radically transform the horse racing industry by introducing new fans to the sport, including through our unique 'Moving Grandstand' concept. While there is never certainty in such competitive processes, we firmly believe that our proposal is the strongest of the five proposals in terms of the benefits for the racing industry, the City of Clovis, and the State of New Mexico. The racing commission is expected to make a decision within the next few months."
Third Quarter 2018 Highlights and Subsequent Events
Liquidity and Capital Resources
As of September 30, 2018, the Company had $20.8 million in cash and $99.3 million in outstanding senior secured notes.
Conference Call Information
The Company will host a conference call for investors today, November 7, 2018, at 4:30 p.m. ET (1:30 p.m. PT) to discuss its 2018 third 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 (800) 289-0571 or, for international callers, (323) 794-2597.
A replay of the conference call will be available shortly after the conclusion of the call through November 21, 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 5672479.
(a) Reconciliation of Non-GAAP Financial Measure
We define “Adjusted EBITDA” as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, impairment charges, asset write-offs, recoveries, gain (loss) from asset disposals, preopening expenses, project development and acquisition costs, and non-cash share-based compensation expense. Although Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles (“GAAP”), we believe this non-GAAP financial measure provides meaningful supplemental information regarding our performance and liquidity. We utilize Adjusted EBITDA internally to focus management on year-over-year changes in our core operating performance, which we consider our ordinary, ongoing and customary operations and which we believe is useful information to investors. Accordingly, management excludes certain items when analyzing core operating performance, such as the items mentioned above, that management believes are not reflective of ordinary, ongoing and customary operations. A version of Adjusted EBITDA (known as Consolidated EBITDA, as defined in the indenture governing our senior secured notes) is also used to determine compliance with certain covenants.
In addition, because Adjusted EBITDA is not calculated in accordance with GAAP, it may not necessarily be comparable to similarly titled measures employed by other companies. A reconciliation of Adjusted EBITDA is presented below. However, you should not consider this measure in isolation or as a substitute for operating income, cash flows from operating activities, or any other measure for determining our operating performance or liquidity that is calculated in accordance with GAAP. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that, in the future, we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
Accounting Standards Codification No. 606, Revenue from Contracts with Customers ("ASC 606")
In accordance with GAAP, on January 1, 2018, the Company adopted the new revenue recognition accounting standard under the "modified retrospective" approach, which impacts the comparability of certain items between the 2018 and 2017 periods. The accounting changes have little effect on net revenues, Adjusted EBITDA, operating income, or net income. However, those changes substantially affect the characterization of revenue items leading to net revenues, as well as the treatment of certain departmental expenses. In accordance with the "modified retrospective" approach, figures for the 2018 periods are presented under the new standard, while figures for the 2017 periods are presented without adjustment. As a result, comparisons of departmental items in our financial statements between periods in 2018 and 2017, such as "casino revenues" and "casino expenses," are not meaningful, as much of the change is caused by the new accounting standard. To facilitate comparisons with the 2017 periods, we have provided a supplemental table showing affected items without the adoption of the new revenue recognition standard.
FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues | |||||||||||||||
Casino (1) | $ | 30,767 | $ | 39,009 | $ | 86,369 | $ | 110,702 | |||||||
Food and beverage (1) | 9,371 | 8,760 | 26,093 | 24,759 | |||||||||||
Hotel (1) | 2,583 | 2,408 | 7,448 | 6,724 | |||||||||||
Other operations | 1,307 | 1,234 | 3,276 | 3,250 | |||||||||||
Gross revenues | 44,028 | 51,411 | 123,186 | 145,435 | |||||||||||
Less promotional allowances (1) | — | (7,685 | ) | — | (21,968 | ) | |||||||||
Net revenues | 44,028 | 43,726 | 123,186 | 123,467 | |||||||||||
Operating costs and expenses | |||||||||||||||
Casino (1) | 11,934 | 20,102 | 34,300 | 57,556 | |||||||||||
Food and beverage (1) | 10,301 | 3,466 | 29,184 | 9,598 | |||||||||||
Hotel (1) | 2,708 | 348 | 7,847 | 826 | |||||||||||
Other operations (1) | 958 | 483 | 2,306 | 1,333 | |||||||||||
Selling, general and administrative (1) | 11,769 | 13,076 | 36,193 | 39,902 | |||||||||||
Preopening costs | 140 | — | 140 | — | |||||||||||
Project development and acquisition costs | 390 | 53 | 557 | 238 | |||||||||||
Depreciation and amortization | 2,094 | 2,193 | 6,300 | 6,428 | |||||||||||
Loss (gain) on disposal of assets, net | — | 12 | 79 | (2 | ) | ||||||||||
40,294 | 39,733 | 116,906 | 115,879 | ||||||||||||
Operating income | 3,734 | 3,993 | 6,280 | 7,588 | |||||||||||
Other (expense) income, net | |||||||||||||||
Interest expense, net of capitalized interest | (2,513 | ) | (2,718 | ) | (7,519 | ) | (8,102 | ) | |||||||
Loss on extinguishment of debt | — | — | (2,673 | ) | — | ||||||||||
Adjustment to fair value of warrants | 463 | (302 | ) | 886 | (272 | ) | |||||||||
(2,050 | ) | (3,020 | ) | (9,306 | ) | (8,374 | ) | ||||||||
Income (loss) before income taxes | 1,684 | 973 | (3,026 | ) | (786 | ) | |||||||||
Provision for income taxes | 119 | 184 | 356 | 552 | |||||||||||
Net income (loss) | $ | 1,565 | $ | 789 | $ | (3,382 | ) | $ | (1,338 | ) | |||||
Basic earnings (loss) per share | $ | 0.06 | $ | 0.03 | $ | (0.13 | ) | $ | (0.06 | ) | |||||
Diluted earnings (loss) per share | $ | 0.04 | $ | 0.03 | $ | (0.16 | ) | $ | (0.06 | ) | |||||
Basic weighted average number of common shares outstanding | 26,932 | 22,891 | 25,702 | 22,877 | |||||||||||
Diluted weighted average number of common shares outstanding | 28,490 | 23,663 | 26,188 | 22,877 |
Full House Resorts, Inc.
Supplemental Information
Third Quarter 2018 Impact of Adoption of New Revenue Recognition Standard
(In Thousands, Unaudited)
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 As Reported | ||||||||||||||
As Reported | Balances without Adoption of ASC 606 | Effect of Change Higher/(Lower) | |||||||||||||
Statement of Operations | |||||||||||||||
Revenues | |||||||||||||||
Casino (1)(2) | $ | 30,767 | $ | 39,837 | $ | (9,070 | ) | $ | 39,009 | ||||||
Food and beverage (1)(2) | 9,371 | 9,293 | 78 | 8,760 | |||||||||||
Hotel (1)(2) | 2,583 | 2,369 | 214 | 2,408 | |||||||||||
Promotional allowances (1)(2) | — | (8,315 | ) | 8,315 | (7,685 | ) | |||||||||
Costs and expenses | |||||||||||||||
Casino (1)(3) | 11,934 | 20,239 | (8,305 | ) | 20,102 | ||||||||||
Food and beverage (3) | 10,301 | 3,337 | 6,964 | 3,466 | |||||||||||
Hotel (3) | 2,708 | 363 | 2,345 | 348 | |||||||||||
Other operations (3) | 958 | 460 | 498 | 483 | |||||||||||
Selling, general and administrative (3) | 11,769 | 13,736 | (1,967 | ) | 13,076 | ||||||||||
Operating income | 3,734 | 3,732 | 2 | 3,993 | |||||||||||
Income before income taxes | 1,684 | 1,682 | 2 | 973 | |||||||||||
Net income | 1,565 | 1,563 | 2 | 789 |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 As Reported | ||||||||||||||
As Reported | Balances without Adoption of ASC 606 | Effect of Change Higher/(Lower) | |||||||||||||
Statement of Operations | |||||||||||||||
Revenues | |||||||||||||||
Casino (1)(2) | $ | 86,369 | $ | 111,063 | $ | (24,694 | ) | $ | 110,702 | ||||||
Food and beverage (1)(2) | 26,093 | 25,877 | 216 | 24,759 | |||||||||||
Hotel (1)(2) | 7,448 | 6,828 | 620 | 6,724 | |||||||||||
Promotional allowances (1)(2) | — | (22,968 | ) | 22,968 | (21,968 | ) | |||||||||
Costs and expenses | |||||||||||||||
Casino (1)(3) | 34,300 | 57,184 | (22,884 | ) | 57,556 | ||||||||||
Food and beverage (3) | 29,184 | 9,527 | 19,657 | 9,598 | |||||||||||
Hotel (3) | 7,847 | 981 | 6,866 | 826 | |||||||||||
Other operations (3) | 2,306 | 1,287 | 1,019 | 1,333 | |||||||||||
Selling, general and administrative (3) | 36,193 | 41,718 | (5,525 | ) | 39,902 | ||||||||||
Operating income | 6,280 | 6,303 | (23 | ) | 7,588 | ||||||||||
Loss before income taxes | (3,026 | ) | (3,003 | ) | (23 | ) | (786 | ) | |||||||
Net loss | (3,382 | ) | (3,359 | ) | (23 | ) | (1,338 | ) |
Full House Resorts, Inc.
Supplemental Information
Segment Revenues and Adjusted Property EBITDA and
Reconciliation of Adjusted EBITDA to Operating Income (Loss) and Net Income (Loss)
(In Thousands, Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||
Net Revenues | |||||||||||||||||||||||||||||||
Silver Slipper Casino and Hotel | $ | 17,887 | $ | 16,425 | $ | 51,888 | $ | 49,520 | |||||||||||||||||||||||
Rising Star Casino Resort | 12,228 | 12,698 | 35,983 | 37,498 | |||||||||||||||||||||||||||
Bronco Billy's Casino and Hotel | 7,520 | 7,505 | 20,557 | 20,140 | |||||||||||||||||||||||||||
Northern Nevada Casinos | 6,393 | 7,098 | 14,758 | 16,309 | |||||||||||||||||||||||||||
$ | 44,028 | $ | 43,726 | $ | 123,186 | $ | 123,467 | ||||||||||||||||||||||||
Adjusted Property EBITDA(1) and Adjusted EBITDA | |||||||||||||||||||||||||||||||
Silver Slipper Casino and Hotel | $ | 3,072 | $ | 3,054 | $ | 9,138 | $ | 9,013 | |||||||||||||||||||||||
Rising Star Casino Resort | 831 | 728 | 2,100 | 2,671 | |||||||||||||||||||||||||||
Bronco Billy's Casino and Hotel | 1,463 | 1,769 | 3,424 | 4,092 | |||||||||||||||||||||||||||
Northern Nevada Casinos | 2,066 | 1,892 | 2,526 | 2,391 | |||||||||||||||||||||||||||
Adjusted Property EBITDA | 7,432 | 7,443 | 17,188 | 18,167 | |||||||||||||||||||||||||||
Corporate | (960 | ) | (1,064 | ) | (3,311 | ) | (3,518 | ) | |||||||||||||||||||||||
Adjusted EBITDA | $ | 6,472 | $ | 6,379 | $ | 13,877 | $ | 14,649 | |||||||||||||||||||||||
Depreciation and amortization | (2,094 | ) | (2,193 | ) | (6,300 | ) | (6,428 | ) | |||||||||||||||||||||||
Preopening costs | (140 | ) | — | (140 | ) | — | |||||||||||||||||||||||||
Project development and acquisition costs | (390 | ) | (53 | ) | (557 | ) | (238 | ) | |||||||||||||||||||||||
Gain (loss) on asset disposals, net | — | (12 | ) | (79 | ) | 2 | |||||||||||||||||||||||||
Share-based compensation | (114 | ) | (128 | ) | (521 | ) | (397 | ) | |||||||||||||||||||||||
Operating income | 3,734 | 3,993 | 6,280 | 7,588 | |||||||||||||||||||||||||||
Other (expense) income | |||||||||||||||||||||||||||||||
Interest expense | (2,513 | ) | (2,718 | ) | (7,519 | ) | (8,102 | ) | |||||||||||||||||||||||
Loss on extinguishment of debt | — | — | (2,673 | ) | — | ||||||||||||||||||||||||||
Adjustment to fair value of warrants | 463 | (302 | ) | 886 | (272 | ) | |||||||||||||||||||||||||
(2,050 | ) | (3,020 | ) | (9,306 | ) | (8,374 | ) | ||||||||||||||||||||||||
Income (loss) before income taxes | 1,684 | 973 | (3,026 | ) | (786 | ) | |||||||||||||||||||||||||
Provision for income taxes | (119 | ) | (184 | ) | (356 | ) | (552 | ) | |||||||||||||||||||||||
Net income (loss) | $ | 1,565 | $ | 789 | $ | (3,382 | ) | $ | (1,338 | ) |
Forward-looking Statements
This press release contains statements by Full House and its officers that are "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Some forward-looking statements in this press release include those regarding our operating trends and expected results of operations; our future growth prospects; our beliefs regarding the impact of our recent renovations and improvements on our results of operations; our expectations regarding our new ferry boat service; our ability to make significant progress on our longer-term growth plans; our expectations regarding our Bronco Billy's expansion project, including timing for completion of the entire project and for commencement and completion of the project phases; our expectations for the Christmas Casino; our intent to compete for a racetrack casino license in New Mexico and our expectations regarding our related proposal, including timing for a decision by the New Mexico Racing Commission. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the control of Full House. Such risks include, without limitation, changes in the Company’s business strategies, interest rate risks, the failure to obtain and/or maintain regulatory approvals (including in Colorado, Indiana, Nevada and Mississippi), the Company’s success in obtaining the state of New Mexico's sixth racing license; the ability to obtain financing upon reasonable terms (including for projects such as the Bronco Billy’s expansion), the potential increase in Full House's indebtedness due to the expansion of Bronco Billy’s, construction risks, dependence on existing management, competition, uncertainties over the development and success of our acquisition and expansion projects, the financial performance of our finished projects and renovations, effectiveness of expense and operating efficiencies, general macroeconomic conditions, and regulatory and business conditions in the gaming industry (including the future allowance of live table games at Indiana’s racinos, or the possible authorization or expansion of gaming in nearby states). Additional information concerning potential factors that could affect Full House’s financial condition and results of operations is included in the reports Full House files with the Securities and Exchange Commission, including, but not limited to, its Form 10-K for the most recently ended fiscal year and the Company’s other periodic reports filed with the Securities and Exchange Commission. The Company is under no obligation to (and expressly disclaims any such obligation to) update or revise its forward-looking statements as a result of new information, future events or otherwise, except as otherwise required by law. Actual results may differ materially from those indicated in the forward-looking statements.
About Full House Resorts, Inc.
Full House Resorts owns, leases, develops and operates gaming facilities throughout the country. The Company’s properties include Silver Slipper Casino and Hotel in Hancock County, Mississippi; Bronco Billy's Casino and Hotel in Cripple Creek, Colorado; the Christmas Casino & Inn in Cripple Creek, Colorado; Rising Star Casino Resort in Rising Sun, Indiana; and Stockman’s Casino in Fallon, Nevada. The Company also operates the Grand Lodge Casino at the Hyatt Regency Lake Tahoe Resort, Spa and Casino in Incline Village, Nevada under a lease agreement with the Hyatt organization. Further information about Full House Resorts can be viewed on its website at www.fullhouseresorts.com. The information contained on, or that may be accessed through, our website and Facebook page are not incorporated by reference into, and is not a part of, this document.