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 percent to $40.1 million while adjusted EBITDA grew 9 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 percent for the quarter to $16.4 million while adjusted property EBITDA grew to 23 percent to $2.9 million. This performance came amid construction disruption 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 to Grand Lodge Casino at Lake Tahoe had been completed after a significant disruption that caused as much as 70 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. “Table game volumes in July 2017, for example, increased 7 percent versus July 2016 and slot win increased by 13 percent.”
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.
“A refinancing in the 6-7 percent range could lead to (a $4 to $5 million incremental increase in annual cash flow from operations) and increase Full House’s appetite for larger transactions,” he wrote in a client note. “In addition, while M&A is picking up in the Regional Gaming industry, Full House benefits from being able to look at smaller assets (less than $15 million of annual EBITDA), while everyone else is avoiding/shedding.”
As of June 30, Full House had $22 million in cash on hand against $75.8 million in net debt with a 5.1 times debt to EBITDA ratio.
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Aaron Stanley
https://www.clippings.me/aaronstanley
