FLL Full House Resorts Inc

Full House Resorts (NASDAQ:FLL) today announced results for the three-month and nine-month periods ended September 30, 2013. Net loss attributable to the Company for the three months ended September 30, 2013 was $2.2 million or $0.11 per common share, compared to net income of $2.1 million, or $0.11 per common share, in the prior-year period. Excluding a $4.0 million goodwill impairment loss, net of tax effect, related to Stockman’s Casino, the Company would have reported net income attributable to the Company per common share of $0.02 for the three months ended September 30, 2013.

Third Quarter 2013 Highlights and Subsequent Events

• Adjusted EBITDA, as defined below, for the third quarter of 2013 was $5.3 million versus $4.7 million in the prior-year period.
• At its Silver Slipper Casino in Hancock County, Mississippi for the third quarter 2013, the Company recorded revenue of $13.0 million and adjusted EBITDA of $2.5 million. The Silver Slipper Casino was acquired on October 1, 2012.
• At its Rising Star Casino Resort for the third quarter 2013, the Company recorded revenue of $17.0 million compared to revenue of $22.3 million in the prior-year quarter due to increased competition from recently opened Ohio casinos. Rising Star adjusted EBITDA for the third quarter 2013 was $1.1 million versus $2.7 million in the prior-year quarter.
• Northern Nevada casino revenue for the third quarter of 2013 was $7.2 million compared to revenue of $7.4 million in the prior-year period. Adjusted EBITDA for the third quarter 2013 was $2.3 million, a decrease from $2.6 million in the prior-year period due primarily to continuing revenue weakness at Stockman’s Casino.
• As of September 30, 2013, Full House Resorts had $25.4 million in cash and $66.3 million in outstanding debt on its balance sheet.
• On August 26, 2013, the Company closed on an amendment to its First Lien Credit Agreement to provide for a $10.0 million loan from its first lien facility lenders to fund a portion of the $17.7 million construction of the 142-room hotel at the Silver Slipper Casino. The Company has commenced construction on the hotel and expects the opening to occur during the fourth quarter of 2014.
• On November 1, 2013, the Company voluntarily prepaid its next two amortization payments due under the First Lien Credit Agreement on January 1, 2014 and April 1, 2014 in the total amount of $2.5 million.

“While we encountered a challenging third quarter due to increased competition and the continuing slow economy, there were still some positive developments which keep us optimistic for Full House’s long-term future,” said Andre Hilliou, Chairman and Chief Executive Officer of Full House. “In Indiana, construction of the new hotel adjacent to Rising Star is nearing completion, and we expect it to provide a boost to Rising Star upon its opening next week. We also expect to begin realizing additional gaming tax savings at our Rising Star property beginning next year as the result of legislation passed earlier this year. In addition, we closed on the necessary financing for a much-needed hotel at our Silver Slipper property and have begun construction on the facility. We remain focused on building Full House into a locals-oriented regional casino company and continue to evaluate opportunities to achieve this end in a measured and conservative manner.”

Third Quarter 2013 Results

For the quarter ended September 30, 2013, the Company reported total revenue of $37.4 million, up from $30.1 million in the prior-year period, due to the addition of the Silver Slipper Casino on October 1, 2012 and partially offset by a $5.3 million decline in revenue from the Rising Star Casino Resort due to increased competition.

Operating expenses for the third quarter 2013 were $34.7 million compared to $27.1 million in the prior-year period. The increase was primarily due to the addition of the Silver Slipper Casino and partially offset by $3.6 million of cost reductions at Rising Star. The Company recorded $36,000 of stock compensation expense in the third quarter of 2013, compared to $0.3 million in the third quarter of 2012.

Adjusted EBITDA, as defined below, was $5.3 million for the third quarter of 2013 versus $4.7 million in the prior-year period.

Net loss for the third quarter 2013 was $2.2 million or $0.11 per common share, compared to net income of $2.1 million, or $0.11 per common share, in the prior-year period. Current year results include $1.8 million of interest costs related to the credit facilities used to acquire the Silver Slipper Casino. During the third quarter of 2012, the Company had no significant debt and had $0.1 million of interest expense. Excluding a $4.0 million goodwill impairment loss related to Stockman’s Casino, net of tax effect, the Company would have reported net income attributable to the Company per common share of $0.02 for the three months ended September 30, 2013.

On August 26, 2013, the Company closed on an amendment to its First Lien Credit Agreement to provide for a $10.0 million loan from its first lien facility lenders. The terms and conditions of the amendment to the First Lien Credit Agreement include that (1) the term loan portion of the First Lien Credit Agreement was increased by $10.0 million; (2) the interest rate was lowered by 1.0%; (3) the maturity date was extended to June 29, 2016; and (4) certain financial ratio covenants were revised to accommodate the additional extension of credit. The proceeds will be used to fund a portion of the $17.7 million construction of a 142-room hotel at the Company’s Silver Slipper property.

Nine Month 2013 Results

For the nine months ended September 30, 2013, Full House reported total revenue of $113.3 million, compared to total revenue of $91.3 million in the prior-year period, primarily as a result of the addition of $40.0 million in revenue from the Silver Slipper Casino purchased on October 1, 2012, offset by a $12.7 million decrease in the Company’s Midwest segment revenues due to increased competition and a $5.4 million decrease in management revenues due to the sale of the Company’s interest in GEM in 2012.

Operating expenses for the nine months ended September 30, 2013 were $105.4 million compared to $81.7 million in the prior-year period, primarily due to the addition of $36.3 million in operating expenses from the Silver Slipper Casino purchased in October 2012, partially offset by a decrease of $10.9 million in operating expenses in the Company’s Midwest segment due to cost containment measures and decreased business volume as a result of competition. The Company recorded $0.6 million of stock compensation expense in the nine-month period ended September 30, 2013, compared to $0.9 million of stock compensation expense in the prior-year period.

Operating income for the nine months ended September 30, 2013 was $3.9 million, compared to operating income of $50.8 million in the prior-year period, due to a $41.2 million gain on the sale in March 2012 of the Company’s interest in GEM and the FireKeepers management agreement. Excluding a $4.0 million goodwill impairment loss related to Stockman’s Casino in the current year and the gain on sale in the prior-year period, operating income for the nine months ended September 30, 2013 would have been $7.9 million versus $9.6 million in the prior-year period.

Adjusted EBITDA, as defined below, for the nine months ended September 30, 2013 was $15.4 million compared to adjusted EBITDA in the prior-year period of $12.8 million, which is net of non-controlling interest and excluding the gain on the sale of GEM.

In addition, current year results include $5.6 million of interest costs related to the credit facilities used to acquire the Silver Slipper Casino. During the first nine months of 2012 the Company extinguished all of its debt at the end of the first quarter and therefore had interest expense of $0.8 million.

The Company reported net loss attributable to the Company per common share of $0.09 for the nine months ended September 30, 2013 compared to net income per common share of $1.53 for the prior-year period. Excluding the $4.0 million goodwill impairment, net of tax effect, for the nine months ended September 30, 2013 and excluding, net of tax effect, (1) the $41.2 million gain on sale of joint venture, (2) a $1.7 million pre-tax loss on debt extinguishment and (3) $0.4 million of transaction costs for the nine months ended September 30, 2012, net income attributable to the Company per common share would have been $0.05 for the nine months ended September 30, 2013 compared to $0.17 for the prior-year period.

Liquidity and Capital Resources

As of September 30, 2013, Full House had $25.4 million in cash and $66.3 million in outstanding debt on its balance sheet. On November 1, 2013, the Company voluntarily prepaid its next two amortization payments due under the First Lien Credit Agreement on January 1, 2014 and April 1, 2014 in the total amount of $2.5 million.

Conference Call Information

The Company will host a conference call and webcast today at 11:00 AM EST.

The conference call can be accessed live over the phone by dialing 888-504-7963 or for international callers by dialing 1-719-457-2661. A replay will be available two hours after the call and can be accessed by dialing 877-870-5176 or for international callers by dialing 1-858-384-5517; the passcode is 1730197. The replay will be available until Thursday, November 14, 2013. The conference call can also be accessed live by webcast from the Company’s website at www.fullhouseresorts.com under the investor relations section.

         

Selected unaudited Statements of Operations data for the three months ended September 30 (in thousands),

  Casino Operations 2013     Nevada   Midwest   Gulf Coast  

Development/Management

  Corporate   Consolidated Revenues $ 7,164   $

17,001

 

 

$

12,964

 

$ 313 $ - $ 37,442 Selling, general & administrative expense 1,477 4,316 4,434 - 1,006 11,233 Depreciation & amortization 172 749 1,573 - 4 2,498 Impairment loss (4,000 ) - - - - (4,000 ) Operating income (loss) (1,834 ) 359 971 291 (1,011 ) (1,224 ) Net (loss) income attributable to the Company (1,211 ) 745 639 (451 ) (1,873 ) (2,151 )     Casino Operations 2012     Nevada   Midwest   Gulf Coast  

Development/Management

  Corporate   Consolidated Revenues $ 7,443 $ 22,252 $ - $ 439 $ - $ 30,134 Selling, general & administrative expense 1,525 5,084 - - 1,282 7,891 Depreciation & amortization 218 1,128 - - 2 1,348 Operating income (loss) 2,382 1,593 - 426 (1,376 ) 3,025 Net income (loss) attributable to the Company 1,573 1,501 - (34 ) (955 ) 2,085        

Selected unaudited Statements of Operations data for the nine months ended September 30 (in thousands),

  Casino Operations 2013     Nevada   Midwest   Gulf Coast  

Development/Management

  Corporate   Consolidated Revenues $ 17,692   $

54,413

 

  $

40,044

 

$ 1,123 $ - $ 113,272 Selling, general & administrative expense 4,474 13,090 13,729 - 4,280 35,573 Depreciation & amortization 529 2,222 4,146 - 9 6,906 Impairment loss (4,000 ) - - - - (4,000 ) Operating income (loss) 74 3,358 3,708 1,062 (4,289 ) 3,913 Net income (loss) attributable to the Company 49 2,382 2,429 46 (6,523 ) (1,617 )     Casino Operations 2012     Nevada   Midwest   Gulf Coast  

Development/Management

  Corporate   Consolidated Revenues $ 17,508 $ 67,144 $ - $ 6,648 $ - $ 91,300 Selling, general & administrative expense 4,662 14,747 - 136 4,619 24,164 Depreciation & amortization 707 3,430 - 593 6 4,736 Operating gains - - - 41,200 - 41,200 Operating income (loss) 3,463 5,191 - 46,986 (4,869 ) 50,771 Net income (loss) attributable to the Company 2,282 1,913 - 29,925 (5,454 ) 28,666              

Reconciliation of adjusted EBITDA for the three months ended September 30 (in thousands),

  Casino Operations 2013   Nevada   Midwest   Gulf Coast  

Development/Management

  Corporate   Consolidated   Operating income (loss) $ (1,834 ) $

359

 

$

971

 

$

291

 

$ (1,011 ) $ (1,224 )   Add Back: Impairment loss 4,000 - - - - 4,000 Stock Compensation - - - - 36 36 Kentucky Project costs expensed - - - 11 - 11 Depreciation and amortization   172       749       1,573       -       4       2,498     Adjusted EBITDA $ 2,338     $ 1,108     $ 2,544     $ 302     $ (971 )   $ 5,321       Casino Operations 2012   Nevada   Midwest   Gulf Coast  

Development/Management

  Corporate   Consolidated   Operating income (loss) $ 2,382 $ 1,593 $ - $ 426 $ (1,376 ) $ 3,025   Add Back: Stock Compensation - - - - 310 310 Silver Slipper acquisition costs expensed - - - 13 - 13 Depreciation and amortization   218       1,128       -       -       2       1,348   Adjusted EBITDA $ 2,600     $ 2,721     $ -     $ 439     $ (1,064 )   $ 4,696    

Certain minor reclassifications in prior year balances have been made to conform to the current presentation, which had no effect on previously reported net income.

                   

Reconciliation of adjusted EBITDA for the nine months ended September 30 (in thousands),

  Casino Operations 2013   Nevada   Midwest   Gulf Coast  

Development/Management

  Corporate   Consolidated   Operating income (loss) $ 74 $ 3,358 $ 3,708 $ 1,062 $ (4,289) $ 3,913   Add Back: Impairment loss 4,000 - - - - 4,000 Stock Compensation - - - - 586 586 Silver Slipper acquisition costs expensed - - - (9) - (9) Kentucky Project costs expensed - - - 44 - 44 Depreciation and amortization 529   2,222   4,146   -   9   6,906 Adjusted EBITDA $ 4,603   $ 5,580   $ 7,854   $ 1,097   $ (3,694)   $ 15,440       Casino Operations

Net of Non-Controlling Interest

2012   Nevada   Midwest   Gulf Coast  

Development/Management

  Corporate   Consolidated   GEM   50%  

Development/Management

  Consolidated   Operating income (loss) $ 3,463 $ 5,191 $ - $ 46,986 $ (4,869) $ 50,771 $ 4,773 2,387 $ 44,599 $ 48,384   Add Back: Stock Compensation - - - - 931 931 - - - 931 Silver Slipper acquistion costs expensed - - - 133 - 133 - - 133 133 Depreciation and amortization 707 3,430 - 593 6 4,736 431 216 377 4,520   Deduct: Gain (Loss) on sale of joint venture -   -   -   (41,200)   -   (41,200)   -   -   (41,200)   (41,200) Adjusted EBITDA $ 4,170   $ 8,621   $ -   $ 6,512   $ (3,932)   $ 15,371   $ 5,204   $ 2,603   $ 3,909   $ 12,768   Certain minor reclassifications in prior year balances have been made to conform to the current presentation, which had no effect on previously reported net income.      

FULL HOUSE RESORTS, INC. AND SUBSIDIARIESUNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)

 

Three monthsended September 30,

Nine monthsended September 30,

  2013       2012     2013       2012   Revenues Casino $ 34,135 $ 27,676 $ 103,205 $ 78,744 Food and beverage 2,046 1,332 6,293 4,074 Management fees 313 339 1,123 6,548 Other operations   948     787     2,651     1,934     37,442     30,134     113,272     91,300  

Operating costs and expenses

Casino

17,481 15,106 52,416 44,428 Food and beverage 1,981 1,223 6,041 3,807 Other operations 1,451 1,436 4,362 4,218 Project development and acquisition costs 22 105 61 376 Selling, general and administrative 11,233 7,891 35,573 24,164 Depreciation and amortization   2,498     1,348     6,906     4,736     34,666     27,109     105,359     81,729   Operating gains (losses) Gain on sale of joint venture -- -- -- 41,200 Impairment Loss   (4,000 )   --     (4,000 )   --     (4,000 )   --     (4,000 )   41,200     Operating (loss) income   (1,224 )   3,025     3,913     50,771     Other (expense) income Interest expense (1,847 ) (72 ) (5,615 ) (805 ) Gain on derivative instrument -- -- -- 8 Other income (expense), net 15 3 (6 ) 9 Loss on extinguishment of debt   --     --     --     (1,719 ) Other expense, net   (1,832 )   (69 )   (5,621 )   (2,507 ) (Loss) Income before income taxes (3,056 ) 2,956 (1,708 ) 48,264 Income tax (benefit) expense   (905 )   871     (91 )   17,417   Net (loss) income (2,151 ) 2,085 (1,617 ) 30,847 Income attributable to non-controlling interest in consolidated joint venture   --     --     --     (2,181 ) Net (loss) income attributable to the Company $ (2,151 ) $ 2,085   $ (1,617 ) $ 28,666     Net (loss) income attributable to the Company per common share $ (0.11 ) $ 0.11   $ (0.09 ) $ 1.53     Weighted-average number of common shares outstanding   18,750,681     18,679,681     18,736,604     18,676,824  

About Full House Resorts, Inc.

Full House owns, develops and manages gaming facilities. The Company owns the Rising Star Casino Resort in Rising Sun, Indiana. The Rising Star Casino has 40,000 square feet of gaming space with approximately 1,200 slot and video poker machines and 33 table games. The property includes a 190-room hotel, a pavilion with five food and beverage outlets, an 18-hole Scottish links golf course and a large, multi-purpose Grand Theater for concerts and performance events as well as meetings and conventions. The Company acquired the Silver Slipper Casino in Hancock County, Mississippi on October 1, 2012, which has 37,000 square feet of gaming space with almost 1,000 slot and video poker machines, 25 table games, a poker room and the only live Keno game on the Gulf Coast. The Silver Slipper property includes a fine dining restaurant, buffet, quick service restaurant and two casino bars. Full House also owns Stockman’s Casino in Fallon, Nevada and operates the Grand Lodge Casino at Hyatt Regency Lake Tahoe Resort, Spa and Casino in Incline Village, Nevada on the north shore of Lake Tahoe under a lease agreement (expiring on August 31, 2018) with an affiliate of Hyatt Hotels Corporation. In addition, the Company has a management agreement with the Pueblo of Pojoaque for the operations of the Buffalo Thunder Casino and Resort in Santa Fe, New Mexico along with the Pueblo’s Cities of Gold casino facilities.

Further information about Full House Resorts can be viewed on its website at www.fullhouseresorts.com.

Forward-looking Statements

Some of the statements made in this release are forward-looking statements. These forward-looking statements are based upon Full House’s current expectations and projections about future events and generally relate to Full House’s plans, objectives and expectations for Full House’s business. Although Full House’s management believes that the plans and objectives expressed in these forward-looking statements are reasonable, the outcome of such plans, objectives and expectations involve risks and uncertainties including without limitation, regulatory approvals, including the ability to maintain a gaming license in Indiana, Nevada and Mississippi, financing sources and terms, integration of acquisitions, competition and business conditions in the gaming industry, including competition from Ohio casinos and any possible authorization of gaming in Kentucky. Additional information concerning potential factors that could affect Full House’s financial condition and results of operations is included in the reports Full House files with the Securities and Exchange Commission, including, but not limited to, its Form 10-K for the most recently ended fiscal year.

Full House Resorts, Inc.Mark Miller, 702-221-7800Chief Operating Officerwww.fullhouseresorts.comOrICRWilliam R. Schmitt, 203-682-8200investors@fullhouseresorts.com