Full House Resorts Announces Three And Nine Months Results For The Period Ended September 30, 2012

Please replace the release with the following corrected version due to revisions: The Company’s press release issued earlier today reporting the financial results for the three and nine months ended September 30, 2012 contained an inadvertent classification error with respect to management revenues included in the incorrect column in the Adjusted EBITDA tables. The complete corrected financial information is included with this release.

The corrected release reads:

FULL HOUSE RESORTS ANNOUNCES THREE AND NINE MONTHS RESULTS FOR THE PERIOD ENDED SEPTEMBER 30, 2012

Full House Resorts (NYSE MKT: FLL) today announced results for the three- and nine-month periods ended September 30, 2012. Net income attributable to the Company for the three months ended September 30, 2012 was $2.1 million, or $0.11 per common share, compared to a net loss of $1.1 million, or $0.06 per common share, in the prior-year period. Excluding non-cash impairment charges of $4.9 million and rebranding and acquisition costs of $0.2 million for the prior-year quarter, net income attributable to the Company per common share in the third quarter of 2011 would also have been $0.11.

Third Quarter 2012 Highlights and Subsequent Events
  • Adjusted EBITDA, as defined below, for the third quarter of 2012 was $4.7 million versus $6.2 million in the prior-year period. Prior-year period adjusted EBITDA results include $2.9 million from Gaming Entertainment (Michigan), LLC (“GEM”), which was sold at the end of March 2012, and $1.1 million in equity in net income from the Company’s Delaware management agreement, which expired in August 2011; excluding those agreements, adjusted EBITDA in the third quarter of 2011 would have been $2.2 million.
  • At its Rising Star Casino Resort for the third quarter 2012, the Company recorded revenue of $22.3 million compared to revenue of $24.1 million in the prior-year quarter. Rising Star adjusted EBITDA for the third quarter 2012 was $2.7 million versus $2.6 million in the prior-year quarter primarily due to lower benefits expense and marine operating costs in the third quarter of 2012.
  • Northern Nevada casino revenue for the third quarter of 2012 was $7.4 million compared to $3.3 million in the prior-year period. Adjusted EBITDA for the third quarter 2012 was $2.6 million, an increase from $0.6 million in the prior-year period. The improvement in revenue and adjusted EBITDA is primarily due to the addition of the Grand Lodge Casino lease in September 2011.
  • As of September 30, 2012, Full House Resorts had $21.5 million in cash and no outstanding debt on its balance sheet.
  • On October 1, 2012, the Company announced it had completed the $70 million acquisition of Silver Slipper Casino Venture LLC, doing business as the Silver Slipper Casino in Hancock County, Mississippi. The acquisition was funded with $70 million of debt and approximately $6.7 million of cash on hand for working capital and fees.

“We were pleased with our third quarter performance, as we saw steady performance at our Rising Star Casino Resort despite the increased competition in Ohio, as well as strong performance at our Northern Nevada properties,” said Andre Hilliou, Chairman and Chief Executive Officer of Full House. “Further, we were excited at the beginning of October to complete our acquisition of the Silver Slipper Casino and welcoming their staff to the Full House family. The Silver Slipper is a well-designed and efficient property located in a stable market with a strong management team in place, and we believe we can leverage our corporate resources and experience to further improve the Silver Slipper’s profitability and create additional long-term shareholder value.”

Third Quarter 2012 Results

For the quarter ended September 30, 2012, the Company reported casino, food and beverage, hotel and other revenue (other than management fees) of $30.1 million, up from $27.4 million in the prior-year period, primarily due to the addition of the Grand Lodge Casino on September 1, 2011 and partially offset by a $1.8 million decline in revenue from the Rising Star Casino Resort.

Operating expenses for the third quarter 2012 were $27.1 million compared to $28.1 million in the prior-year period, primarily due to lower operating costs and gaming taxes at Rising Star Casino Resort, as well as lower amortization expense due to the sale of GEM in March 2012. The Company also recorded $0.3 million of stock compensation expense during the third quarter of 2012 and the prior-year period.

Last year’s third quarter included approximately $6.0 million in management fees from GEM, which the Company sold in March 2012, and $1.1 million of income related to the Company’s Delaware management agreement which expired in August 2011, resulting in no contribution to revenue or income from GEM and Delaware operations in the third quarter of 2012.

Operating income for the third quarter 2012 was $3.0 million, compared to operating income of $6.5 million in the prior-year period (excluding $4.9 million in non-cash impairment charges), as contributions from GEM and the Delaware management agreement in the prior-year period were partially offset by additional income from the Grand Lodge Casino and the Buffalo Thunder management agreement. Adjusted EBITDA, as defined below, was $4.7 million versus $6.2 million in the prior-year period; excluding GEM and the Delaware management agreement, adjusted EBITDA in the prior-year period would have been $2.2 million.

The Company reported net income attributable to the Company per common share of $0.11 for the three months ended September 30, 2012 versus a loss per share of $0.06 for the prior-year period. Excluding non-cash impairment charges of $4.9 million and rebranding and acquisition costs of $0.2 million for the prior-year quarter, net income attributable to the Company per common share in the third quarter of 2011 would also have been $0.11.

Nine Month 2012 Results

For the nine months ended September 30, 2012, the Company reported casino, food and beverage, hotel and other revenue (other than management fees) of $84.8 million, compared to revenue of $54.6 million in the prior-year period, primarily as a result of the addition of the Rising Star Casino Resort on April 1, 2011, and the Grand Lodge Casino in September 2011. In addition, during the nine months ended September 30, 2012, the Company recorded GEM management fees of $5.3 million for FireKeepers Casino, compared to management fees of $18.3 million for the prior-year period. The Company also recorded equity in net income from the Delaware operation in the prior-year period of $3.3 million.

Operating expenses for the nine months ended September 30, 2012 were $81.7 million compared to $57.1 million in the prior-year period, primarily due to the addition of the Rising Star Casino Resort and Grand Lodge Casino. The Company also recorded $0.9 million of stock compensation expense for the nine-month period ended September 30, 2012, compared to $0.4 million in the nine months ended September 30, 2011.

Operating income for the nine months ended September 30, 2012 was $50.8 million, compared to operating income of $14.2 million in the prior-year period, due to a $41.2 million gain on sale of joint venture, related to the sale of the Company’s interest in GEM and the FireKeepers management agreement. Excluding the gain on sale, operating income for the nine months ended September 30, 2012 was $9.6 million. Adjusted EBITDA, as defined below, was $12.8 million versus $16.4 million in the prior-year period.

The Company reported net income attributable to the Company per common share of $1.53 and $0.10 for the nine months ended September 30, 2012 and 2011, respectively. Excluding the $41.2 million gain on sale of joint venture, a $1.7 million pre-tax loss on debt extinguishment and $0.4 million of transaction costs for the nine months ended September 30, 2012, and $4.9 million in non-cash impairment charges and $1.0 million in acquisition costs and other one-time expenses for the nine months ended September 30, 2011, net income attributable to the Company per common share would have been $0.17 and $0.29 for the nine months ended September 30, 2012 and 2011, respectively.

Liquidity and Capital Resources

As of September 30, 2012, Full House had $21.5 million in cash and no outstanding debt on its balance sheet.

In order to complete the $70 million acquisition of the Silver Slipper Casino on October 1, 2012, the Company used $50 million on its first lien credit facility and $20 million on its second lien credit facility.

Conference Call Information

The Company will host a conference call and webcast today at 11:00 AM EST. Both the call and webcast are open to the general public.

The conference call can be accessed live over the phone by dialing 888-224-1164 or for international callers by dialing 1-913-981-5559. 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 1672984. The replay will be available until Wednesday, November 14, 2012. 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,
           
2012      

Casino Operations - Nevada
 

Casino Operations - Midwest
 

Development/ Management
 

Corporate
  Consolidated
Revenues $ 7,442,752 $ 22,252,285 $ 438,569 $ - $ 30,133,606
Selling, general & administrative expense 1,524,595 5,085,082 - 1,281,725 7,891,402
Depreciation & amortization 218,430 1,127,707 - 1,989 1,348,126
Operating gains - - - - -
Operating income (loss) 2,382,096 1,592,428 425,897 (1,376,488 ) 3,023,933
Net income (loss) attributable to the Company 1,573,110 1,500,692 (33,714 ) (955,357 ) 2,084,731
 
2011      

Casino Operations - Nevada
 

Casino Operations - Midwest
 

Development/ Management
  Corporate   Consolidated
Revenues $ 3,340,887 $ 24,060,931 $ 6,066,093 $ - $ 33,467,911
Selling, general & administrative expense 895,864 5,848,882 163,077 1,339,296 8,247,119
Depreciation & amortization 248,928 1,238,588 593,052 2,726 2,083,294
Operating gains (losses) (4,500,000 ) - 702,301 - (3,797,699 )
Operating income (loss) (4,148,282 ) 1,164,480 5,969,188 (1,405,713 ) 1,579,673
Net income (loss) attributable to the Company (2,737,802 ) 743,425 2,509,532 (1,654,648 ) (1,139,493 )
 
           

Selected unaudited Statements of Operations data for the nine months ended September 30,
 
2012      

Casino Operations - Nevada
 

Casino Operations - Midwest
 

Development/ Management
  Corporate   Consolidated
Revenues $ 17,508,229 $

67,143,879

 
$

6,648,337

 
$ - $ 91,300,445
Selling, general & administrative expense 4,661,737 14,746,887 136,386 4,619,399 24,164,409
Depreciation & amortization 706,814 3,429,735 593,052 6,390 4,735,991
Operating gains - - 41,200,089 - 41,200,089
Operating income (loss) 3,462,683 5,191,119 46,985,732 (4,868,921 ) 50,770,613
Net income (loss) attributable to the Company 2,282,395 1,913,151 29,924,892 (5,454,895 ) 28,665,543
 
2011      

Casino Operations - Nevada
 

Casino Operations - Midwest
 

Development/ Management
  Corporate   Consolidated
Revenues $ 7,341,965 $ 47,251,568 $ 18,347,774 $ - $ 72,941,307
Selling, general & administrative expense 1,841,926 11,052,326 446,275 3,549,750 16,890,277
Depreciation & amortization 723,878 2,458,771 1,779,395 25,135 4,987,179
Operating gains (losses) (4,500,000 ) - 2,878,468 - (1,621,532 )
Operating income (loss) (3,608,860 ) 3,149,266 18,475,417 (3,774,366 ) 14,241,457
Net income (loss) attributable to the Company (2,381,619 ) 1,213,457 7,226,438 (4,193,805 ) 1,864,471
 
 

Reconciliation of adjusted EBITDA before unrealized gains/losses on notes receivable from tribal governments, and other items for the three months ended September 30,
                   
Net of Non-Controlling Interest
Casino Operations Casino Operations Development / Development /  
2012 Nevada   Midwest   Management   Corporate   Consolidated GEM    

50%

 
  Management   Consolidated
 
Operating income (loss) $ 2,382,096 $ 1,592,428 $ 425,897 $ (1,376,488 ) $ 3,023,933 $ - $ - $ 425,897 $ 3,023,933
 
Add Back:
Stock Compensation - - - 310,401 310,401 - - - 310,401
Silver Slipper acquisition costs expensed - - 12,672 - 12,672 - - 12,672 12,672
Depreciation and amortization   218,429       1,127,707     -     1,990       1,348,126   -     -       -     1,348,126  
Adjusted EBITDA $ 2,600,525     $ 2,720,135   $ 438,569   $ (1,064,097 )   $ 4,695,132 $ -   $ -     $ 438,569   $ 4,695,132  
 
 
     
Net of Non-Controlling Interest
Casino Operations Casino Operations Development / Development /
2011 Nevada   Midwest   Management   Corporate   Consolidated GEM    

50%

 
  Management   Consolidated
 
Operating income (loss) $ (4,148,282 ) $ 1,164,480 $ 5,969,188 $ (1,405,713 ) $ 1,579,673 $ 5,412,062 $ 2,706,031 $ 3,263,157 $ (1,126,358 )
 
Add Back:
Rising Star re-branding costs - 196,101 - - 196,101 - - - 196,101
Grand Lodge acquisition costs expensed - - 43,077 - 43,077 - - 43,077 43,077
Stockman's goodwill impairment 4,500,000 - - - 4,500,000 - - - 4,500,000
Stock Compensation - - - 310,401 310,401 - - - 310,401
Depreciation and amortization 248,928 1,238,588 593,052 2,726 2,083,294 431,025 215,513 377,539 1,867,781
Nambé note impairment   -       -     419,703     -       419,703   -     -       419,703     419,703  
Adjusted EBITDA $ 600,646     $ 2,599,169   $ 7,025,020   $ (1,092,586 )   $ 9,132,249 $ 5,843,087   $ 2,921,544     $ 4,103,476   $ 6,210,705  
 
 

Reconciliation of adjusted EBITDA before unrealized gains/losses on notes receivable from tribal governments, and other items for the nine months ended September 30,
                   
Net of Non-Controlling Interest
Casino Operations Casino Operations Development / Development /  

 
2012 Nevada   Midwest   Management   Corporate   Consolidated GEM    

50%

 
  Management  

Consolidated
 
Operating income (loss) $ 3,462,683 $ 5,191,119 $ 46,985,732 $ (4,868,921 ) $ 50,770,613 $ 4,773,279 $ 2,386,640 $ 44,599,092 $ 48,383,973
 
Add Back:
Stock Compensation - - - 931,203 931,203 - - - 931,203
Silver Slipper acquisition costs expensed - - 133,255 - 133,255 - - 133,255 133,255
Depreciation and amortization 706,814 3,429,734 593,052 6,392 4,735,992 431,025 215,513 377,539 4,520,479
 
Deduct:
Gain (Loss) on sale of joint venture   -       -     (41,200,089 )     -       (41,200,089 )   -     -       (41,200,089 )     (41,200,089 )
Adjusted EBITDA $ 4,169,497     $ 8,620,853   $ 6,511,950     $ (3,931,326 )   $ 15,370,974   $ 5,204,304   $ 2,602,153     $ 3,909,797     $ 12,768,821  
 
     
Net of Non-Controlling Interest
Casino Operations Casino Operations Development / Development /
2011 Nevada   Midwest   Management   Corporate   Consolidated GEM    

50%

 
  Management   Consolidated
 
Operating income (loss) $ (3,608,860 ) $ 3,149,266 $ 18,475,417 $ (3,774,366 ) $ 14,241,457 $ 16,545,151 8,272,576 $ 10,202,841 $ 5,968,881
 
Add Back:
Rising Star acquisition costs expensed - - 482,079 - 482,079 - - 482,079 482,079
Rising Star re-branding costs - 211,849 - - 211,849 - - - 211,849
Grand Lodge acquisition costs expensed - - 43,077 - 43,077 - - 43,077 43,077
Impairment 4,500,000 - - - 4,500,000 - - - 4,500,000
Stock Compensation - - - 413,871 413,871 - - - 413,871
Depreciation and amortization 723,878 2,458,771 1,779,395 25,135 4,987,179 1,293,315 646,658 1,132,737 4,340,521
Nambé note impairment - - 419,703 - 419,703 - - 419,703 419,703
Unrealized loss on notes receivable, tribal governments   -       -     7,864       -       7,864     -     -       7,864       7,864  
Adjusted EBITDA $ 1,615,018     $ 5,819,886   $ 21,207,535     $ (3,335,360 )   $ 25,307,079   $ 17,838,466   $ 8,919,234     $ 12,288,301     $ 16,387,845  
 
 
   
 

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three months

ended September 30,
Nine months

ended September 30,

2012
 

2011

2012
 

2011
Revenues
Casino $ 27,676,298 $ 25,074,330 $ 78,743,906 $ 49,827,965
Food and beverage 1,332,037 1,482,257 4,073,848 3,268,617
Management fees 338,569 6,066,093 6,548,337 18,347,769
Other operations   786,702     845,231     1,934,354     1,496,956  
  30,133,606     33,467,911     91,300,445     72,941,307  

Operating costs and expenses

Casino
15,105,847 14,664,824 44,427,942 28,198,738
Food and beverage 1,222,519 1,432,238 3,806,988 3,271,879
Other operations 1,436,333 1,556,295 4,218,206 3,005,609
Project development and acquisition costs 105,446 106,769 376,385 724,636
Selling, general and administrative 7,891,402 8,247,119 24,164,409 16,890,277
Depreciation and amortization   1,348,126     2,083,294     4,735,991     4,987,179  
  27,109,673     28,090,539     81,729,921     57,078,318  
Operating gains (losses)
Gain on sale of joint venture -- -- 41,200,089 --
Equity in net income of unconsolidated joint venture, and related guaranteed payments --

1,122,004
-- 3,306,035
Impairment losses -- (4,919,703 ) -- (4,919,703 )
Unrealized losses on notes receivable, tribal governments   --     --     --     (7,864 )
  --     (3,797,699 )   41,200,089     (1,621,532 )

Operating income
  3,023,933    

1,579,673
   

50,770,613
    14,241,457  
Other income (expense)
Interest expense (71,806 ) (887,482 ) (804,956 ) (2,015,961 )
Gain (loss) on derivative instrument -- (213,850 ) 8,472 (564,193 )
Other income 3,119 8,790 8,784 7,289
Loss on extinguishment of debt   --     --     (1,719,269 )   --  
  (68,687 )   (1,092,542 )   (2,506,969 )   (2,572,865 )
Income before income taxes 2,955,246 487,131 48,263,644 11,668,592
Income tax expense (benefit)   870,515     (996,627 )   17,416,929     1,867,370  
Net income 2,084,731 1,483,758 30,846,715 9,801,222
Income attributable to non-controlling interest in consolidated joint venture   --     (2,623,251 )   (2,181,172 )   (7,936,751 )
Net income (loss) attributable to the Company $ 2,084,731   $ (1,139,493 ) $ 28,665,543   $ 1,864,471  
 
Net income (loss) attributable to the Company per common share $ 0.11   $ (0.06 ) $ 1.53   $ 0.10  
 
Weighted-average number of common shares outstanding   18,679,681     18,673,681     18,676,824     18,304,218  
 

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 Riverboat Casino has 40,000 square feet of gaming space with almost 1,300 slot and video poker machines and 37 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 also owns, as of October 1, 2012, the Silver Slipper Casino in Hancock County, Mississippi, which has 37,000 square feet of gaming space with almost 1,000 slot and video poker machines, 26 table games, a poker room and the only live Keno game on the Gulf Coast. The property includes a fine dining restaurant, buffet, quick service restaurant and two casino bars. In addition, Full House owns Stockman’s Casino in Fallon, Nevada which has 8,400 square feet of gaming space with approximately 260 gaming machines, four table games and a keno game. The Company also operates the Grand Lodge Casino at the Hyatt Regency Lake Tahoe Resort, Spa and Casino in Incline Village, Nevada on the north shore of Lake Tahoe under a five-year lease agreement with the Hyatt organization. The Company also 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 and Sports Bar 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.

Copyright Business Wire 2010

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