Reset, renew … rejoice. Full House Resorts said operational strategy and marketing changes helped the company post fourth-quarter earnings that reversed a year-earlier loss, although revenue fell.
The earnings-per-share figure missed Wall Street forecast; revenue topped them.
In a statement, the Las Vegas-based casino operator said net income was $3.5 million, or 12 cents per diluted common share, for the three months ended Dec. 31, up from a net loss of $4.1 million, or 15 cents per diluted common share, a year earlier.
Analysts polled by Seeking Alpha had, on average, expected 14 cents in earnings per share for the fourth quarter. Full House said accounting for the fair market value of outstanding warrants affected both 2020 and 2019 earnings; the company said it bought back the warrants last month for $4 million.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that excludes one-time costs, rose more than fourfold to $9.8 million from $2.3 million. Fourth-quarter revenue fell 1.8% to $38.3 million from $39.0 million to top the $38.4 million average forecast of Wall Street analysts.
“We had a phenomenal fourth quarter,” Full House President and Chief Executive Officer said Dan Lee said. “The fourth quarter tends to be seasonally weaker than the third quarter, but our properties continued to perform extremely well adjusted for the seasonality. Adjusted EBITDA for the second half of 2020 was more than the total for all of 2019.
“We now have approximately eight months of successful ‘reset operations’ behind us,” Lee added. “We continue to believe that the results of the past several months are sustainable.”
In its statement, Full House said construction on improvements at Bronco Billy’s in Cripple Creek, Colorado, which the pandemic had stopped, has resumed, aided by $180 million of proceeds from issuing new debt. Although the upgrades, which include a new 300-room hotel and a parking garage, had been planned in phases, Full House said the debt proceeds mean the project can be built all at once.
Fourth-quarter revenue at Full House’s Silver Slipper in Hancock County, Mississippi, rose 8.1% to $18.3 million from $17 million a year earlier. Fourth-quarter revenue at the company’s Northern Nevada cohort, which includes the Grand Lodge and Stockman’s casinos (down 26% to $3.4 million from $4.6 million), the Rising Star Casino Resort in Rising Sun, Indiana (down 5.3% to $10.8 million from $11.4 million), and Bronco Billy’s (down 6.6% to $5.7 million from $6.1 million) all declined.
Last month, Zacks Investment Research analyst Brian Bolan said he was optimistic about Full House, rating it “buy.” Craig-Hallum, which also rates the stock “buy,” raised its 2021 price target for Full House to $8 from $6, encouraged by the Bronco Billy’s project.
If reached, the $8 target would be about a 2.7% increase from Full House stock’s $7.79 after-house close Monday. The stock surged 10.69 in regular trading on the Nasdaq (up 74 cents to $7.66).
“While this adds leverage and risk,” analyst Ryan Sigdahl wrote, “we think the return potential is high (we estimate $30M+ incremental annual EBITDA) and transforms the market from a day trip to overnight destination.”
For the 12 months ended Dec. 31, Full House reported net income of $100,000, or 1 cent per diluted common share, reversing a net loss of $5.8 million, or 22 cents per diluted share, a year earlier. Although COVID-19 caused about three months of pandemic-related closures, 12-month adjusted EBITDA in 2020 rose 23.3% to $19.7 million from $15.9 million.
Full-year, revenue fell 24.1% to $125.6 million from $165.4 million.
