Full House Resorts(US:FLL)2022-11-07 16:00Company Operations - Full House Resorts operates five casinos and is constructing two additional properties: Chamonix Casino Hotel in Colorado and The Temporary in Illinois[120]. - The company has seven permitted sports wagering "skins," with five contracted and four currently operational as of September 30, 2022[120]. - An agreement with Circa Sports was established to develop and manage on-site sportsbooks at The Temporary and American Place, with a non-refundable market access fee of $5 million received[133]. Financial Performance - Consolidated total revenues decreased by $5.8 million (12.4%) for the three months ended September 30, 2022, and by $9.7 million (7.1%) for the nine months ended September 30, 2022, primarily due to the absence of government stimulus programs and competitive pressures from online sports wagering[144]. - Operating expenses increased by $2.9 million (8.0%) for the three months and by $6.4 million (6.1%) for the nine months ended September 30, 2022, mainly due to preopening costs for new projects and higher insurance and food costs[145]. - Net loss for the three months ended September 30, 2022, was $(3,577) thousand compared to a net income of $4,619 thousand in the prior year, representing a decrease of 177.4%[144]. - Adjusted EBITDA for the three months ended September 30, 2022, was $7.8 million, compared to $13.6 million in the prior-year period[182]. - The company experienced a net loss of $3.6 million for the three months ended September 30, 2022, compared to a net income of $4.6 million in the prior-year period[182]. Revenue Breakdown - The company’s revenues are primarily derived from slot machines, table games, keno, sports betting, hotels, and food and beverage outlets[124]. - Casino revenues from slots decreased by $2,839 thousand (9.9%) for the three months and by $9,092 thousand (10.5%) for the nine months ended September 30, 2022[144]. - Non-casino revenues, net of food and beverage, decreased by $1,281 thousand (4.0%) for the three months and remained relatively stable with a decrease of $378 thousand (1.8%) for the nine months[144]. - Total revenues for the Mississippi segment decreased by 7.2% to $19,981,000 for the three months ended September 30, 2022, and by 8.4% to $62,432,000 for the nine months ended September 30, 2022, primarily due to declines in casino revenue[158]. - Total revenues for the Indiana segment decreased by 23.4% to $9,639,000 for the three months ended September 30, 2022, and by 5.3% to $30,069,000 for the nine months ended September 30, 2022[161]. - Total revenues for the Colorado segment decreased by 30.8% to $4,385,000 for the three months ended September 30, 2022, and by 31.6% to $12,732,000 for the nine months ended September 30, 2022, due to construction disruptions[166]. - Total revenues for the Nevada segment increased by 22.6% to $6,290,000 for the three months ended September 30, 2022, and by 11.6% to $15,868,000 for the nine months ended September 30, 2022[158]. Segment Performance - Adjusted Segment EBITDA for the Mississippi segment decreased by 34.7% to $4,235,000 for the three months ended September 30, 2022, and by 33.1% to $15,442,000 for the nine months ended September 30, 2022[160]. - Adjusted Segment EBITDA for the Indiana segment decreased by 64.8% to $1,343,000 for the three months ended September 30, 2022, and by 16.3% to $6,374,000 for the nine months ended September 30, 2022[165]. - Adjusted Segment EBITDA for the Colorado segment decreased by 97.7% to $36,000 for the three months ended September 30, 2022, and by 101.0% to $(49,000) for the nine months ended September 30, 2022[169]. - Adjusted Segment EBITDA for the Nevada segment increased by 48.3% to $2,280,000 for the three months ended September 30, 2022, and by 9.2% to $4,557,000 for the nine months ended September 30, 2022[160]. Costs and Expenses - Interest expense increased to $8,682 thousand for the three months ended September 30, 2022, compared to $6,557 thousand in the prior year, reflecting higher costs associated with new debt issuance[149]. - The effective income tax rate for the three months ended September 30, 2022, was (0.8%), compared to 2.0% in the prior year, primarily due to tax amortization effects and valuation allowances[152]. - Corporate expenses declined by 14.6% (or $0.2 million) and 14.0% (or $0.7 million) for the three and nine months ended September 30, 2022, primarily due to a decrease in accrued bonus compensation[179]. Future Outlook - The Temporary project is expected to open within the next three months, while the Chamonix project is anticipated to open in mid-2023, contributing to future revenue growth[145]. - The Illinois sports operations are anticipated to begin in Spring 2023, with a minimum expected revenue contribution of $5 million annually from a third-party agreement[178]. - The company plans to invest approximately $100 million in Chamonix for 2022 and $125 million in 2023, with an expected opening in mid-2023[197]. - The company plans to invest approximately $40 million in 2022 and $60 million in 2023 for The Temporary, including significant upfront gaming license payments[198]. Cash Flow and Debt - As of September 30, 2022, the company had $241.8 million in cash and equivalents, including $156.1 million in restricted cash for Chamonix's construction[188]. - Cash provided by operations during the nine months ended September 30, 2022, was $40,000, a decrease from $19.3 million in the prior-year period, primarily due to reduced revenues and income[189]. - Cash used in investing activities during the nine months ended September 30, 2022, was $117.2 million, mainly for capital expenditures related to Chamonix and The Temporary/American Place[190]. - Cash provided by financing activities during the nine months ended September 30, 2022, was $93.7 million, compared to $235.5 million in the prior-year period[191]. - Long-term debt as of September 30, 2022, was $410.0 million, with no drawn amounts under the Credit Facility[193]. - The company has significant outstanding debt and contractual obligations, with principal debt maturing in February 2028[192]. - The company expects current cash balances and available borrowing capacity to meet liquidity needs for the next 12 months[188]. Operational Challenges - The company faces significant fluctuations in quarterly operating results due to seasonality and variations in gaming hold percentages[125]. - Economic uncertainty from the COVID-19 pandemic has led to increased costs, labor shortages, and supply chain disruptions impacting operations and construction projects[128]. - The construction budget for Chamonix was revised from $180 million to approximately $250 million due to supply chain issues and inflation[197]. Internal Controls and Legal Matters - The company completed an evaluation of its disclosure controls and procedures as of September 30, 2022, concluding they are effective at a reasonable assurance level[210]. - There have been no changes in internal control over financial reporting that materially affected the company during the last fiscal quarter[212]. - The company is subject to various legal and administrative proceedings but does not expect these to have a material adverse effect on its consolidated financial position or results of operations[213].