FULL HOUSE RESORTS INC Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Colorado Performance: Quarter was disappointing with expenses outpacing revenue growth. Discussed mailing list successes (15,000 list with 3% response) and failures (176,000 list with 0.8% response). Advertising resumption, grand opening with Jay Leno for VIP players.
• Segment Details: Grand Lodge Casino affected by hotel construction delays; Silver Slipper got new GM; American Place showed strong EBIT and revenue growth, building mailing list and margins.
• Relocation Plan: Proposal to relocate Rising Star to Fort Wayne, with potential bond refinancing and financing for new casino in Fort Wayne.
• Marketing and Hiring: Hired new VP of Advertising, more casino hosts and sales/marketing people. Focus on targeting advertising correctly and building business through strategic promotions.

Segment Performance

• Colorado Segment: In Q3 2024, Colorado segment had EBITDA loss of $0.7 million vs profit of $0.1 million in Q3 2023. Grand Lodge Casino at Lake Tahoe had EBITDA $1.8 million vs $2.2 million in Q3 2023 due to hotel construction disruptions.
• Silver Slipper, Rising Star, and American Place: Silver Slipper EBITDA was $2.6 million vs $3.6 million in Q3 2023 due to hurricane impact. American Place was the bright spot with $7.7 million EBIT, a 13.3% increase y-o-y and 17.6% revenue increase. Rising Star is a growth opportunity with proposal to relocate to Fort Wayne.
• Other: Fallon was sold, resulting in a couple million dollar gain.

Guidance

• American Place: Expected EBITDA growth in 2025, aiming for mid to upper 30s EBITDA.
• Chamonix: Hoping to demonstrate success to finance permanent American Place refinancing in mid-2025.
• Rising Star Relocation: Uncertainty on legislative approval, but potential for new casino in Fort Wayne with better financing terms as business improves.

Risks

• Mailing List Risks: Ineffective large mailing lists leading to high customer acquisition costs and low profitability.
• Hotel Construction Impact: Grand Lodge Casino's construction delays affecting occupancy and EBITDA.
• Legislative Uncertainty: Relocation of Rising Star depends on unpredictable legislative approval.
• Litigation Impact: Potawatomi Tribe lawsuit affecting permanent American Place construction timeline.

Question and Answer

Q: Thoughts on margin progression for Chamonix?

A: Discussed market growth potential, competition, and marketing strategies to drive margins, noting Colorado market has room to grow and marketing efforts to target customers.

Q: Sales transaction and stock options?

A: Exercised stock options due to tax implications, but remains confident in the company's prospects.

Q: Impact of Silver Slipper and competitor changes?

A: Mentioned Treasure Chest's transition and local competition impacts, noting Hollywood Casino's new GM as a bigger impact.

Q: Free cash flow and permanent American Place CapEx?

A: Uncertainty on timing of CapEx for permanent American Place based on market and financing conditions, with flexibility in when spending begins.