Full House Resorts, Inc. (NASDAQ:FLL) Q3 2023 Earnings Call Transcript
Full House Resorts, Inc. (NASDAQ:FLL) Q3 2023 Earnings Call Transcript November 8, 2023
Operator: Greetings, and welcome to the Full House Resorts Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lewis Fanger, Chief Financial Officer of Full House Resorts. Please go ahead.
Lewis Fanger: Thank you, and good afternoon, everyone. Welcome to our third quarter earnings call. As always before we begin, we remind you that today’s conference call may contain forward-looking statements that we're making under the Safe Harbor provision of federal securities laws. I would also like to remind you that the Company's actual results could differ materially from the anticipated results in these forward-looking statements. Please see today's press release under the caption Forward-Looking Statements for the discussion of risks that may affect our results. Also, we may make reference to non-GAAP measures such as adjusted EBITDA. For a reconciliation of those measures, please see our website as well as the various press releases that we issue.
We're also broadcasting this conference call at fullhouseresorts.com, where you can find today's earnings release as well as all of our SEC filings. And then lastly we do have some slides that we uploaded as well for you. If you go to investors.fullhouseresorts.com in the middle of the page you’ll see a banner with links. Click on company inflow and in presentations and you’ll see a link to the third quarter slides that we’ll reference here. So with all that said, we’ll get to your questions relatively quickly today, because I know MGM is on deck in about 30 minutes. But with all that said, we had a very strong third quarter. Revenues increased 73% to $71.5 million. That rise was helped out by The Temporary, which opened back in February of this year, and it continues to ramp up.
Compared to the second quarter of this year, The Temporary showed pretty meaningful sequential improvement. Revenues at The Temporary improved about 18% from $20 million in the second quarter of 2023 to almost $24 million in this third quarter. Adjusted property EBITDA rose 64% from $4.1 million to $6.8 million. Circa did open their on-site sportsbook at The Temporary in the third quarter, but really the meaningful addition that we're waiting for is the high-end restaurant, which is on-site and going through its final paces. The hiring process has already begun, and we expect to have that open at the end of this year. Elsewhere at the company, we had $5.8 million of accelerated revenues from the termination of two of our sports skin agreements.
Even adjusting for that, though, we had a good quarter that exceeded consensus. Flipping forward in the slides to slide five, you can see our usual renderings of Chamonix. We're very excited for this opening. If you know the history of gaming, then you know that the business model that has worked time and again has defined an underpenetrated gaming market without any differentiated product, and we think we found that in Cripple Creek. In our case, we have roughly 1 million people in the broader Colorado Springs area, and the gaming spend per capita is about $170 per person per year. For casinos that are within an hour of their feed-in markets, you tend to see a per capita number that is double or even higher than that versus what you see currently in Cripple Creek's casinos.
The national average, which includes many states where casinos aren't convenient, like Hawaii and Alaska and Utah, is two-thirds higher than what we already see out of Cripple Creek as well. And so that stat alone is what gets us very excited for our upcoming opening. But on top of all that, we've built a destination that really is unlike any other casino in the state, let alone in Cripple Creek. It is just beautiful on the inside. We think it will offer a compelling reason for Colorado residents to experience, and in many cases, Cripple Creek too, for the very first time, and then to continue to visit again and again. On slide six, just a quick reminder of what we're building. It's a quarter of a billion dollar project. It's a beautiful new casino.
There's a hotel with the first four-star product in the market. We're going to have a great steakhouse called 980 Prime, which is being run by the people behind Barry's Downtown, Prime at Circa, and 9 Steakhouse in Las Vegas. There will be a rooftop pool, a spa, an integrated parking garage. It will be pretty grand. Our opening date remains December 26th, which is just seven weeks away. We did create a fun ad campaign. It meant to generate excitement in the area while also getting a quick sneak peek into the building. And at the very bottom of that slide, you'll see a YouTube link, which you can click on to get to the 60-second ad. On TV in Colorado, we'll break it up into shorter 15-second spots, but we'll also air the full thing digitally.
Slide seven, you can see the Valet arrival experience. In the middle is the Valet drop-off with the hotel rooms just above. On the left of that page is a jewelry store, and then in the front of the building and also to the right will be casino space. Slide eight is a sneak peek at our table games pit. By the way, these photos were taken about a week and a half ago, but they're already pretty stale. But nonetheless, in this photo, you can see the chandeliers being installed. Slide nine is just me and us trying to show off the casino a little bit without ruining the surprise for you, but you can see some of the ceiling detail here. It really is very different than what you'll see anywhere else in the market today. Slide 10 is a view from our ballroom.
The chandeliers are now installed. The carpet's done, though we've got them covered for protection up until opening day. This is where we've been storing and testing all of our slot machines, all of which, by the way, have arrived on site. Slot bases are a few days away from being installed, and we'll follow that very shortly by the slot machines themselves in their actual locations throughout the casino. Slides 11 and 12 are photos that we showed you last time, just giving you a sneak peek at some of the room product. Those are being shut off one by one as our furniture gets installed. And then slide 13 shows some of the beautiful nature views that you get from many of our guest rooms. Outside of that, a quick look at liquidity. Our liquidity remains in a good spot.
At the end of the quarter, we had $84 million of cash, including $58 million of cash that, by design, is reserved to complete Chamonix. Normal cage cash tends to hover around $10 million or a little bit more. Something that most people don't think about is our sports skins and how those are prepaid. And so in this fourth quarter, we're due to receive about $10 million in cash related to our skins. That includes $3.6 million already received in October from the terminated sports agreements, and then there's another $5 million due from Circa in December, which is prepayment for their mobile operations in Illinois for all of 2024. We also have $13 million available under our credit facility, all of which is available for us to draw. And that provides us even more cushion as we prepare for what's going to be a pretty big and momentous opening for this company at the end of December.
So with all that said, Dan, did I miss anything? Or do you want to do some Q&A?
Dan Lee: No, we'll take some questions. And we'll stay here as long as possible, but we are trying to make it easy for people to go to the MGM call because we know many of you will want to do that. But it was a great quarter. I'd be happy to talk about it for two hours. So we're happy to take questions.
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