Full House Resorts, Inc.

Good day and welcome to the Full House Resorts Second Quarter Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Louis Venger, Chief Financial Officer of Full House Resorts. You may begin.

Thank you and good afternoon, everyone. Welcome to our Second 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 Adjust VBIDA. For a reconciliation of those measures, please see our website as well as the various press releases that we issue. We're 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 did include a small handful of pictures as well of our projects with some update photos. So you should be able to see that directly through the press release. You certainly can see them through our website via the press release or the SEC filing. With that said, we're ready to go, Dan.

Okay, well, I guess the... The main things I'd address everybody's attention to is really the headlines. That's that we have these two big projects. They're both coming along. They're taking a lot of our attention and time. By the time we talk at the end of the next quarter, we should be in the process of opening in Waukegan. And it'll be right about the time we report third quarter earnings, I think. So in the fourth quarter. And then a year from now, we will be opening Chaminade. So they're very important. Each of them is probably going to contribute more in earnings than all of our existing five casinos combined. So that's the important part of the company. Second, we're sitting on about $300 million of cash. Between our cash on hand and our credit facilities and what we earned, we're very confident that we have more than enough money to finish construction of these two projects. I keep hearing these rumors that we're somehow going to raise money, and we have no need to raise money. We certainly don't want to issue stock at these prices, and we don't want to go to the debt market in these conditions. We have no need for it, and we can complete all of these. We will need to raise money eventually to build the permanent one in Waukegan, but that's two years away, and we have a standby contract credit facility with a major investment company that I think we can do it on better terms than that, but if the bond market was bad, we could always turn to that. So we don't need money. Our debt is essentially all fixed rate at this point, not just essentially. I don't think we have any floating rate debt in the company, not even $100. So what interest rates are doing, what the bond market is doing is pretty irrelevant to us these days. Obviously, we'd like the bonds to trade better, be better for the bond investors, but it doesn't really have any impact on the company. We did reach a nice agreement with Circa Sports, where they paid us $5 million market access fee, and we will get a percentage of their revenues from operating in Illinois with a floor of $5 million a year once they can be up and operating, once we get the temporary casino open in Illinois. And so that was a nice plus that came up in the quarter. And then the quarter itself fell behind last year's results, but that's largely because there were the big stimulus checks last year. And that augmented resorts at all of our casinos and I think just about every casino in the country. And our results were actually decent, but just not compared to last year. In Colorado, we're pretty ripped up with construction at the moment. That also didn't help. But the main thing in the year-to-year comparisons was just the difficult comparison with the second quarter of last year. So at the back of the financials, we added some pictures. The first one is off the roof of the Spring Hill Suites that's next door to us. This is the sprung structure in Waukegan. As you can see, the end... of it is starting to be enclosed, as is the other end. So it's just about done. I think this is literally from yesterday. Inside that sprung structure is one and a half football fields. And when it opens in the fourth quarter, it will have 1,000 slot machines, 50 table games, and two significant restaurants that seat about 500 people. And we've also ordered a diner that will be attached to it, which will seat another 150 people or so. We may not be able to get enough dealers to have all 50 table games open, and it's also possible that the slot companies don't give us all 1,000 slot machines. We've heard from other people, both in new casinos, to anticipate that if you order 1,000 machines, you might only end up with 800, and that's probably just fine because when we first open, we can use the space to have places for people to sign up for Players Club and so on. If we get all 1,000 slot machines, that'd be great, but... we're open with what we get, and it's not the slot machines that gamble, it's the people that gamble, and so in a few months, we think we'll be quite busy at this place, and it'll be very important. I wanted to include a map, but we couldn't put that in the press release without getting the rights from Google for Google Maps or whatever the map source is, and that was a little complicated, but I'd encourage anybody to pull it up yourself so The site is at a place called Fountain Place. It's an old shopping mall. Fountain Square. Fountain Square. It's an old shopping mall. And it's 30 acres plus 10 that we acquired. So it's 30 that we leased from the city and 10 we acquired. If you look at that sprung structure to the left, you'll see kind of a grassy area. That's where the permanent casino goes. And the dirt area out in front will all be parking lots for the temporary and eventually parking lots for the permanents. There is some stuff we're doing now. It's not major stuff, but there's some stuff we're doing now that is benefiting the permanent. For example, as we pave all this area, we have to put in some infrastructure to deal with stormwater when it rains and so on, and that's really for the permanent, but it has to go in now. And you can see in the distance a hotel, I forget which one that is, but right in our ballpark there's a Spring Hill Suites, a Town Center Suites, a Courtyard Hotel, a Sonesta Hotel, a Sonesta Suites Hotel, and a Hampton Inn. So we're kind of surrounded by hotels, which is why in our first phase we don't actually have a hotel other than 20 high roller suites with little boutique hotel for high rollers. In the temporary, we will not have any hotel rooms, of course. It's about getting the slot machines open and running here as quickly as possible. But if you look at a map, you'll see that we are in the center of Lake County. I mean, it's called Waukegan, but Waukegan is the county seat for Lake County, which has about 700,000 people. It's one of the wealthier counties in the whole country. I believe it's the second wealthiest county in the state of Illinois, and we will be the only casino there. There are some towns in Lake County, including Waukegan, that have slot machines in bars. You can have up to six per bar. And the ones in Waukegan do actually quite well, which I think bodes well for us, because if you go and look at what they are, It's usually just a dingy little bar with six-lot machines in the back, and yet they're doing pretty well. And I think that bodes well for us. And then we will be, you know, even the temporary casino, which on the outside is pretty unimpressive. On the inside, we do have quite a bit of decor going in so that we tend to be a positive surprise to people when they go in. And, you know, our competition... is the Rivers Casino, which does huge numbers, like $500 or $600 million a year.