In a break with tradition, Full House Resorts executives plunged straight into first-quarter commentary at the start of Wednesday afternoon’s earnings call. CFO Lewis Fanger dispensed with pro forma SEC verbiage and any sort of formal statement, beginning with the off-the-cuff remarks.
Fanger said that business at The Temporary at American Place, in Waukegan, Illinois, was growing “and we’re not done yet.” He also reported that Full House would save $900,000, thanks to an insurance adjustment at its Silver Slipper casino on Mississippi’s Gulf Coast.
But the main Fanger focus was on Chamonix in Cripple Creek, Colorado. He said the hotel had come fully on line and that the property was already moving into a profitable second quarter. “Unfortunately, the winter snow kept falling on weekends,” he remarked, “but it did allow us to work through some of the opening kinks.”
CEO Dan Lee elaborated that Chamonix was seeing “pretty decent occupancy on weekends” and the company was experimenting with new marketing initiatives. “That will take some time. We should be quite profitable during the summer.”
He took satisfaction in the early performance of the Chamonix steakhouse. “The presidents of several high-end hotels told us they thought we had the best high-end restaurant in the state. Now we just need to fill it with people.”
Turning to The Temporary, Lee said, “We’re also running margins above 30 percent.” Bally’s Casino in downtown Chicago, he continued, was having no effect “and our gaming-tax rate is about 10 points lower than theirs. We always knew we were the closest casino to a million people and eventually they would find their way into our tent.” Added Lee, “We’re at the point where we’re already producing positive cash flow and that will continue.”
He still stressed the need to take the long view. “A lot of the investors think the moment you open the doors of a casino, it’s an instant slam dunk.” He conceded of The Temporary, “It’s not a fetching building. We’ve been getting past that. When we build the permanent, it will be fetching.” With one exception, Lee noted, the older competitors were “stacked and crowded and not very livable.”
Fanger added that The Temporary was already the number-two casino in Illinois, albeit well behind Rivers Casino Des Plaines. “It keeps my eyes wide open as to what the potential will be when we have a beautiful building.”
The design of that building is in flux, as Full House has been influenced lately by Durango Resort’s food hall in Las Vegas. Each eatery has a dedicated loading dock, something Lee hopes to incorporate in Waukegan, “forcing Sysco to make multiple stops, at their expense.”
Lee projected an August 2025 construction start on the permanent American Place. The early stages, he said, wouldn’t be cost-intensive and would be paid for out of free cash flow.
The CEO scoffed at a lawsuit filed by Wisconsin’s Potawatomi Band. “If you just saw their presentation,” he remarked, “you would say, ‘That’s the ugliest piece of s**t I’ve ever seen.’” He added that the litigation-induced delay had been beneficial; it gave Full House time until the high-yield bond market came back and for Chamonix to be completed.
Asked about his appetite for mergers or acquisitions, Lee quipped, “If the Caesars guys are willing to sell Caesars Palace for four times cash flow, we’ll think about it.” He continued that he didn’t have to think about such things, as he was focused on getting new products ramped up.
“Our stock will be three or four or five times what it’s worth today,” Lee predicted, “We just have to get this stuff to mature and stay focused on it. We’re very careful not to make mistakes.” He said he admired Monarch Casinos & Resorts for its willingness to focus on two casinos only.
On other Full House fronts, Lee reported that the Silver Slipper and Indiana’s Rising Star were “off a little bit” in the first quarter. Also, in northern Nevada, he expected to receive a lease extension from Hyatt for the Grand Lodge casino.
