Full House Resorts grew revenues and EBITDA in the first quarter while continuing to lay a foundation for growth and expansion in the regional gaming market through capital expenditures and property improvements in core regions.
The company’s northern Nevada segment dodged a bullet and wasn’t as adversely impacted by record snowfall in the Reno area as its competitors, and the other segments performed well enough to even things out.
“I hate to blame weather, but it did snow heck of lot. And weather doesn’t usually affect quarter that much. I will tell you it decimated January, but then we had a great March. And so at the end of the day, we came out just fine,” said David Lee, chief executive officer.
Net revenues for the quarter grew 24 percent to $40 million year-over-year. Net loss was $0.6 million, slightly up from the loss incurred in the first quarter of 2016. Adjusted EBITDA grew 29 percent from $3.6 million to $4.6 million.
Full House’s largest property – the Silver Slipper Casino and Hotel in St. Louis, MIssissippi – saw revenues increase by 12 percent to $16.7 million and EBITDA grow 15 percent to $3.1 million. Substantial property improvements on tap for the remainder of 2017 include a pool, beach club and oyster bar
“Silver Slipper saw more than 12 percent revenue growth as the property continues to evade cannibalization in the Mississippi gulf region. The company’s ongoing investments in non-gaming amenities should support further market share gains,” wrote Chad Beynon, an analyst at Macquarie.
The Rising Star Casino Resort in Indiana saw revenues largely flat, but has some momentum building there with the rollout of a new 56 stall recreational vehicle park after Memorial Day.
“None of the casinos in Indiana or Ohio or West Virginia or even Pennsylvania have RV parks. So we’re going to be the first to have one,” said Lee..”Basically, from our perspective it costs a lot less to build an RV park per space, and the customers bring in their own hotel room. 9 percent of households now own RVs and the average cost of an RV is over $40,000, and so this is an upper economic strata.”
Beynon wrote that the company is on solid grounding and could pull off $20 million in EBITDA next year if the current capital improvement projects go according to plan.
“We believe if EBITDA can continue growing along disruptions and cash burn remains limited, then leverage over this capex period should be left in check. As such, first quarter performance implies Full House could exit this growth phase with a solid leverage profile in 2018 when free cash flow should begin to ramp,” he said.
“With legacy assets brought in line with competition, we expect management to continue targeting value adding growth initiatives, such as more mergers and acquisitions or further property improvement plans,” Beynon added.
At the end of the first quarter, Full House had $25 million in cash on its balance sheet against $98 million in total debt. Net cash flow from operating activities was roughly $1.5 million, while capital expenditures were estimated at $2.5 million.
