Like many businesses across the country, Full House Resorts was forced to shutter its casinos due to state-mandated orders in March. But CEO Dan Lee found a silver lining during the nearly two months the company wasn’t doing business.
“I hate to put a good spin on a pandemic, but it kind of happened at a good time for us,” Lee said Thursday during a conference call with analysts to discuss Las Vegas-based Full House Resorts’ third quarter earnings. “We had started to focus on operations pretty intensely this year after not having a great second half last year.”
The result was third quarter revenues of $42 million, down from $44.3 million during the same quarter in 2019. But net income for the third quarter of 2020 increased to $7.7 million, or 28 cents per share, from $900,00, or 3 cents a share a year ago.
Investors were pleased by the results, sending Full House shares up 13.45% on Friday. The stock price closed at $3.29 on the Nasdaq after gaining 39 cents.
Lee said the installation of the Konami Gaming System in late 2019 helped Full House reassess its priorities.
“We were focused on reinventing the way we operate,” Lee said, noting that the company closed its Christmas Casino, a satellite venue in Cripple Creek, Colorado, and cut back on other amenities, including a 49 cent breakfast at Bronco Billy’s in Cripple Creek and not offering some table games at 5 a.m.
“At Rising Star (in Rising Sun, Indiana) in particular, we found we had a lot of customers that, when we added up everything, we were doing for them – free buffets and everything else – we were upside down,” Lee said. “We were not making money. We scaled back what we were doing for them and focused on more on customers that really matter and did more and better stuff for them.”
Revenues increased at Full House Resorts’ Silver Slipper in Mississippi by 10.5% from the third quarter of 2019, rising to $20 million from $18.1 million. But COVID-19 restrictions affected other properties, notably Rising Star, where revenues declined from $11.7 million in 2019’s third quarter to $9.6 million. Bronco Billy’s also suffered a 2.5% decline in the third quarter, from $8.1 million in 2019 to $7.6 million in 2020.
The company’s properties in Northern Nevada also brought in less revenue from a year earlier. Grand Lodge Casino in Lake Tahoe and Stockman in Fallon together had total revenues of $4.1 million for the third quarter, a decline of 35% from $6.3 million in the third quarter of 2019. Lee said the Grand Lodge declined because of decreased tourism in the Lake Tahoe area, and that Stockman was subject to restrictions placed on military personnel at the Naval Air Station, also known as Top Gun, in Fallon.
Full House remains in contention to build a new casino in Waukegan, Illinois, between Chicago and Milwaukee. The company is one of three finalists for the Waukegan site, and recently signed a commitment letter with an unnamed multi-billion-dollar investment management firm that has experience with casino construction projects.
Lee said Full House would be able to meet the required investment of $25 million in the Waukegan project as equity and would own no less than 60% of the site.
As of September 30, Full House Resorts had $34 million in cash and equivalents, $107.1 in outstanding senior secured notes, and $5.6 million in outstanding unsecured loans obtained under the CARES Act.
Shares of Full House, traded on the NASDAQ, closed at $2.90 Thursday, up 20 cents or 7.4%.
Disclosure: CDC Gaming Resorts Senior analyst Ken Adams is a member of the Full House board
