Full House Resorts(US:FLL)2021-08-11 01:04Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 2021 was $14.9 million, marking the fourth consecutive quarter of strong results, with the first half of 2021 totaling over $25 million [4] - Annualized adjusted EBITDA for the last four quarters is just shy of $48 million [4] - The Nevada segment showed slower recovery from COVID-19, but signs of improvement were noted in Q2 2021 [4] Business Line Data and Key Metrics Changes - In Mississippi, adjusted EBITDA reached almost $9 million, the best second quarter in the property's history, compared to $3.6 million in Q2 2019 [6] - Indiana reported $2.7 million in adjusted EBITDA, significantly up from $600,000 in Q2 2019 [7] - Colorado achieved $1.8 million in adjusted EBITDA, up from $876,000 in 2019, indicating a strong performance [7] - Northern Nevada saw adjusted EBITDA of $1.4 million, compared to $400,000 in 2019 [7] - Contracted sports wagering income was $1.5 million, a new revenue stream not present in 2019 [7] Market Data and Key Metrics Changes - The company has launched five out of six planned sports skins, generating $6 million in annualized contractual revenue, with an additional $1 million expected from the final launch [5] - The cash position remains strong, with approximately $283 million in cash and restricted cash, of which $176 million is reserved for the Chamonix construction project [5] Company Strategy and Development Direction - The company is focused on enhancing its cost structure through investments in new slot marketing systems and technology, which are expected to yield sustainable long-term benefits [4] - Chamonix is under construction with a budget of $180 million, although costs may rise to around $200 million due to higher-than-expected bids [10][38] - The company is considering adding another 70 rooms to the Chamonix project, pending city approvals [12] - The company is also exploring opportunities for expansion in Terre Haute and Waukegan, with proposals being developed for potential new casinos [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing recovery and performance of the business, noting that the third quarter comparisons will not show as significant increases due to full operations last year [25][26] - The company is optimistic about the potential for Chamonix to generate significant EBITDA, potentially reaching $50 million to $60 million annually [40] - Management is cautious about acquisitions, focusing on executing current projects effectively before pursuing additional growth opportunities [32][33] Other Important Information - The company is evaluating the potential for cashless technology in its casinos, with ongoing developments in the industry [28][30] - The tax rate changes at Rising Star are expected to positively impact margins, although the full effect will be seen in future quarters [46][47] Q&A Session Summary Question: Trends into July regarding revenue and margins - Management indicated continued satisfaction with business performance, although comparisons to last year will be less dramatic due to full operations [25] Question: Opportunities for rolling out the slot system across properties - The slot system has been successfully implemented in Mississippi, Indiana, and Colorado, with plans to introduce it in Northern Nevada [26][27] Question: Thoughts on cashless technology - Management acknowledged the potential for cashless systems but noted that consumer adaptation takes time [28][29] Question: Returns on Chamonix and CapEx cadence - Expected spending for Chamonix is around $50 million this year, with an additional $100 million to $130 million in 2022, potentially increasing to $225 million if additional rooms are added [37][38][39] Question: Record performance at Rising Star and tax changes - Management confirmed that the lower tax rate began on July 1, but its impact on margins will be reflected in future accounting periods [46][47]