8-K: Full House Resorts Reports Q3 2024 Results: Revenue Growth Driven by American Place and Chamonix

Full House Resorts saw a significant revenue increase in the third quarter of 2024, driven by the growth of American Place and the opening of Chamonix, despite a net loss due to development costs and other factors.

Summary

• Full House Resorts announced its financial results for the third quarter of 2024, with revenues reaching $75.7 million, compared to $71.5 million in the same period last year.
• The prior year's revenue included $5.8 million from accelerated recognition of deferred revenue from sports wagering agreements.
• The company reported a net loss of $8.5 million, or $(0.24) per diluted share, which includes preopening and development costs, a gain on the sale of Stockmans Casino, and depreciation and amortization charges.
• Adjusted EBITDA for the quarter was $11.7 million, compared to $20.6 million in the prior year, which benefited from the accelerated recognition of deferred revenue.
• American Place saw a 17.7% increase in revenue and a 13.6% increase in Adjusted Property EBITDA.
• Gaming revenues at the Colorado operations increased by 115% compared to the prior year, with hotel occupancy reaching 88.5% in September 2024.
• Total revenues from Colorado operations rose 178% from the third quarter of 2023.
• The company agreed to sell Stockmans Casino for $9.2 million, recognizing a $2.0 million gain from the sale of the real property.
• The company had $33.6 million in cash and cash equivalents as of September 30, 2024, with $450.0 million in outstanding senior secured notes due 2028 and $27.0 million outstanding under its revolving credit facility.

Sentiment

Score: 5

Explanation: The sentiment is mixed. While there is strong revenue growth in some areas, the net loss and decrease in Adjusted EBITDA temper the positive aspects. The delay in the permanent American Place facility is also a concern.

Positives

• American Place continues to show strong growth, with a 17.7% increase in revenue and a 13.6% increase in Adjusted Property EBITDA.
• The Colorado operations experienced significant growth, with a 115% increase in gaming revenues and a 178% increase in total revenues compared to the prior year.
• Hotel occupancy in Colorado reached 88.5% in September 2024, indicating strong customer interest.
• The sale of Stockmans Casino resulted in a $2.0 million gain.
• The Grand Lodge Casino lease extension provides long-term stability for that property.
• The company has commenced a marketing campaign for Chamonix after its grand opening.

Negatives

• The company reported a net loss of $8.5 million for the third quarter of 2024.
• Adjusted EBITDA decreased to $11.7 million from $20.6 million in the prior year, primarily due to the absence of accelerated revenue recognition from sports wagering agreements and elevated costs at Chamonix.
• The Midwest & South segment saw a 12.8% decrease in Adjusted Segment EBITDA, impacted by storms in the Mississippi Gulf Coast area.
• The West segment's Adjusted Segment EBITDA decreased to $1.2 million from $2.3 million in the prior year, due to high operating expenses at the new Chamonix casino.

Risks

• The company faces risks related to its substantial indebtedness.
• There are risks associated with financing the construction of the permanent American Place facility.
• Inflation could impact labor costs and the price of food, construction, and other materials.
• Potential disruptions in supply chains could affect operations.
• Legal or regulatory challenges could delay construction projects, including American Place and the potential relocation of Rising Star.
• Construction risks, disputes, and cost overruns could impact project timelines and budgets.
• The company is dependent on existing management.
• Competition in the gaming industry could affect performance.
• Cyber events could impact operations.
• The company is subject to regulatory and business conditions in the gaming industry.

Future Outlook

The company expects further growth at American Place in 2025 and beyond, and remains confident in Chamonix's earnings potential. They also anticipate the resolution of litigation related to the permanent American Place facility in the next few quarters and believe the permanent facility will perform much better than the temporary one. The company is also exploring the potential relocation of the Rising Star Casino Resort.

Management Comments

• Daniel R. Lee, President and Chief Executive Officer, stated that American Place continued its meaningful growth during the third quarter of 2024.
• Mr. Lee also noted that gaming revenues in Colorado continued to set new monthly records, resulting in a 115% increase during the current quarter when compared to the prior-year period.
• Management believes Chamonix is an unparallelled casino for the region and remains confident in its earnings potential over the coming quarters and in the longer-term.
• Management is excited for the future permanent American Place facility and believes it will perform much better than the temporary casino.

Industry Context

The results reflect the ongoing trend of casino operators expanding their footprint and investing in new properties. The growth at American Place and the opening of Chamonix are examples of this trend. The comparison to the Rockford casino's transition from a temporary to a permanent facility highlights the potential for significant revenue growth when transitioning to a permanent facility.

Comparison to Industry Standards

• The 17.7% revenue growth at American Place is a strong performance compared to other regional casinos, though specific benchmarks are not provided in the document.
• The 115% increase in gaming revenue in Colorado is exceptional, likely driven by the new Chamonix facility, and significantly exceeds typical industry growth rates.
• The comparison to the Rockford casino's 139% revenue increase after transitioning to a permanent facility suggests a similar potential for American Place, though this is a single data point and not a broad industry benchmark.
• The document does not provide specific comparisons to competitors like Penn National Gaming, Boyd Gaming, or Caesars Entertainment, making it difficult to assess relative performance against industry leaders.

Legal Proceedings

• Construction of the permanent American Place casino is on hold pending litigation.

Stakeholder Impact

• Shareholders may be concerned about the net loss and decrease in Adjusted EBITDA.
• Employees at American Place and Chamonix may benefit from the growth and expansion of those properties.
• Customers in Colorado are experiencing improved hotel and gaming options.
• Suppliers may see increased business due to the expansion of operations.
• Creditors may be monitoring the company's debt levels and financial performance.

Next Steps

• The company will commence a post-opening awareness campaign for Chamonix.
• The company will continue to operate the temporary American Place casino until August 2027.
• The company expects to resolve litigation related to the permanent American Place facility in the next few quarters.
• The company is exploring the potential relocation of the Rising Star Casino Resort.
• The company will host a conference call to discuss the results.

Key Dates

Keywords

casino, gaming, resorts, EBITDA, revenue, American Place, Chamonix, Colorado, hotel, sports wagering