Full House Resorts Announces Three and Nine Months Results for the Period Ended September 30, 2009
Record Quarterly Earnings per Share Driven by Successful FireKeepers Casino
LAS VEGAS--(BUSINESS WIRE)-- Full House Resorts (NYSE Amex US: FLL) today announced results for the three- and nine-month periods ended September 30, 2009. Net income attributable to the Company for the three months ended September 30, 2009 was $3.0 million, or $0.17 per common share, compared to $0.5 million, or $0.03 per common share, in the prior-year period.
Third Quarter 2009 Highlights and Subsequent Events
-- Total management fees for Gaming Entertainment (Michigan), LLC ("GEM"),
a 50% owned joint venture - related to FireKeepers Casino - were $5.8
million. The property opened its doors to the public on August 5, ahead
of schedule and under budget, providing for 57 days of operations in the
third quarter. A soft opening allowed for lower marketing expense,
resulting in strong operating margins. GEM manages the daily operations
of the casino for the FireKeepers Development Authority, an agency of
the Huron Band, and will be paid a management fee equal to 26% of
pre-management fee income over a seven-year period which commenced with
the opening on August 5.
-- The Company entered into a favorable GEM member agreement which resulted
in a one-time net gain of $1.4 million before tax -- further details are
outlined below. The after-tax impact of this one-time gain was $0.05 per
common share.
-- As of September 30, 2009, the company had cash and equivalents of $7.8
million, debt of $6.5 million - of which $5.8 million is an obligation
of GEM - and availability on the company's credit facility of
approximately $7.8 million.
"The first two months of operations at FireKeepers Casino exceeded our expectations in terms of revenue and operating margins, and we are very proud of the work accomplished by the management team," said Andre Hilliou, Chairman and Chief Executive Officer of Full House. "An efficient, customer-friendly designed property as well as an exceptionally smooth opening with no significant problems allowed the management team to run FireKeepers at near normal efficiency levels right out of the box. In addition, we continue to generate free cash flow, while the Company continues to have no required current debt repayments or maturities, putting us in a strong position to take advantage of acquisition opportunities going forward."
Third Quarter 2009 Results
For the quarter ended September 30, 2009, Full House reported casino, food and beverage, and other revenue of $2.2 million, a decline of 11% from the prior-year period, primarily caused by lower casino revenue at Stockman's Casino due to general weakness in the economy and increased food and beverage competition. In addition, during the third quarter of 2009, Full House recorded GEM management fees of $5.8 million for the first 57 days of operations following the opening on August 5 of FireKeepers Casino.
The Company recorded equity in net income of unconsolidated joint venture and related guaranteed payments of $1.5 million, an increase of 6% from the prior-year period. The equity in net income of unconsolidated joint venture represents Full House's 50% ownership interest in Gaming Entertainment (Delaware), LLC ("GED"), a joint venture between the Company and Harrington Raceway, Inc. The Company expects to continue receiving a 5% increase in cash distributions over the prior year from GED. The increase this quarter is due to the timing of cash payments.
Operating expenses for third quarter 2009 were $3.6 million, an increase of 18% from the prior-year period, primarily due to an increase in SG&A expenses and amortization of contract rights related to the opening of FireKeepers Casino.
Operating income for third quarter 2009 was $3.9 million, compared to operating income of $0.9 million in the prior-year period. The 2009 results include an unrealized gain on notes receivable from tribal governments of $0.2 million, compared to a gain of $0.1 million in third quarter 2008. The 2009 results also include results from a GEM member agreement resulting in the recognition of a one-time net pre-tax gain of $1.4 million. The net pre-tax gain consists of a member agreement modification charge of $2.1 million, offset by a $3.5 million credit attributable to the non-controlling interest in GEM.
The Company reported net income attributable to the Company per common share of $0.17 for the three months ended September 30, 2009, as compared to $0.03 for the three months ended September 30, 2008. Exclusive of the one-time GEM agreement net gain of $0.05 per share, earnings per common share would have been $0.12.
Nine Month 2009 Results
For the nine months ended September 30, 2009, Full House reported casino, food and beverage, and other revenue of $6.8 million, compared to revenue of $7.4 million in the prior-year period, primarily as a result of lower food and beverage revenue at Stockman's Casino due to increased competition and lower casino revenue due to general weakness in the economy.
In addition, during the first nine months of 2009, Full House recorded GEM management fees of $5.8 million from FireKeepers Casino.
The Company recorded equity in net income of unconsolidated joint venture and related guarantee payments of $3.6 million, comparable with the prior-year period. Management expects that 2009 full-year results for GED will be lower than the 5% guaranteed increase due to payment timing variances which resulted in greater than an 8% increase in 2008. The reduced income is attributable to the decreased net income of GED which the Company recognizes under the equity method. GED's reduced net income is mostly attributable to increased competition and higher costs, including recently enacted tax increases.
Operating expenses for the nine months ended September 30, 2009 were $9.3 million compared to $9.5 million in the prior-year period, primarily due to continuing expense reduction efforts throughout the organization and lower food and beverage costs, partially offset by higher depreciation and amortization expense related to contract rights for FireKeepers Casino.
Operating income, excluding other charges, for the nine months ended September 30, 2009 was $5.2 million, compared to operating income, excluding other charges, of $3.4 million in the prior-year period. The 2009 operating income includes $0.5 million of unrealized gains on notes receivable from tribal governments compared to $2.0 million in the prior-year period, with the year-over-year decrease primarily due to the repayment of $9.3 million of notes receivable related to the FireKeepers Casino, in connection with the FireKeepers Development Authority obtaining financing for the project in the prior year. The 2009 results also include a GEM member agreement modification charge of $2.1 million as explained previously.
The Company reported net income attributable to the Company per common share of $0.21 and $0.08 for the nine months ended September 30, 2009 and 2008, respectively. Excluding other charges in the first nine months of both 2009 and 2008, and exclusive of the one-time gain on notes receivable in the first nine months of 2008 due to the repayment of the tribal receivable and the GEM member agreement net gain in 2009, net income attributable to the Company per common share was $0.16 and $0.05 for the nine months ended September 30, 2009 and 2008, respectively.
Liquidity and Capital Resources
As of September 30, 2009, the company had $7.8 million in cash and approximately $7.8 million of availability on its revolving credit line with Nevada State Bank. Debt outstanding as of September 30, 2009 was $6.5 million, of which $5.8 million is an obligation of GEM. The Company has no required principal payments on its Nevada State Bank facility until 2021.
On October 9, 2009, effective September 30, 2009, an agreement was reached between the Company and RAM Entertainment, LLC ("RAM"), both 50% members of GEM. As a result, payables due from GEM to each member were adjusted to reflect a total payable due to RAM of $8.5 million, and a total payable due to the Company of $11.9 million, resulting in the recognition of a net pre-tax gain $1.4 million, which was recorded in September 2009. The net pre-tax gain consists of a member agreement modification charge of $2.1 million, offset by a $3.5 million credit attributable to the GEM non-controlling interest.
The impact to reported earnings per share from these one-time adjustment items to GEM was approximately $0.05 per share.
In addition, the GEM members agreed that distributions to the members will be made on a 50/50 basis to both members until such time RAM's member payable has been fully repaid and thereafter 70% to the Company and 30% to RAM until such time as the remaining payable to the Company has been repaid. Thereafter, distributions to members will be made on a 50/50 basis.
Conference Call Information
The Company will host a conference call and webcast on Tuesday, November 10th at 9:30 a.m. EST. Both the call and webcast are open to the general public.
The conference call number is 877-941-8418; international callers can access the call by dialing 1-480-629-9809. Please call five minutes in advance to ensure that you are connected prior to the presentation. Interested parties may also access the live call on the Internet at http://www.fullhouseresorts.com (select Investor Relations and then Upcoming Events). Please log-on fifteen minutes in advance to ensure that you are connected prior to the call's initiation. Questions and answers will be reserved for call-in analysts and investors. Following its completion, a replay of the call can be accessed for one week on the Internet at the above link or by calling either 800-406-7325 or 1-303-590-3030 and providing pass code 4181220.
Selected unaudited Statements of Operations (from continuing operations) data
for the three months ended September 30,
2009 Casino Operations Development/ Corporate Consolidated
Management
Revenues $ 2,164,316 $ 5,753,167 $ -- $ 7,917,483
Selling,
general and 436,448 138,400 1,181,343 1,756,191
administrative
expense
Depreciation
and 240,039 399,886 22,285 662,210
amortization
Operating gains -- (434,042 ) -- (434,042 )
(loss)
Operating 437,289 4,758,586 (1,289,499 ) 3,906,376
income (loss)
Net income
(loss) 437,666 5,748,444 (3,138,102 ) 3,048,008
attributable to
Company
2008 Casino Operations Development/ Corporate Consolidated
Management
Revenues $ 2,441,587 $ -- $ 1,400 $ 2,442,987
Selling,
general and 480,799 135,155 918,164 1,534,118
administrative
expense
Depreciation
and 271,413 14,364 21,112 306,889
amortization
Operating gains -- 1,509,524 -- 1,509,524
Operating 549,481 1,347,816 (988,080 ) 909,217
income (loss)
Net income
(loss) 551,049 1,281,344 (1,292,720 ) 539,673
attributable to
Company
Selected unaudited Statements of Operations (from continuing operations) data
for the nine months ended September 30,
2009 Casino Operations Development/ Corporate Consolidated
Management
Revenues $ 6,849,056 $ 5,753,167 $ -- $ 12,602,223
Selling, general
and 1,285,006 394,873 3,125,280 4,805,159
administrative
expense
Depreciation and 743,701 426,836 63,206 1,233,743
amortization
Operating gains -- 1,921,803 -- 1,921,803
Operating income 1,665,741 6,802,654 (3,277,016 ) 5,191,379
(loss)
Net income (loss)
attributable to 1,665,557 7,674,564 (5,588,948 ) 3,751,173
Company
2008 Casino Operations Development/ Corporate Consolidated
Management
Revenues $ 7,393,124 $ -- $ 1,458 $ 7,394,582
Selling, general
and 1,386,315 316,936 3,162,959 4,866,210
administrative
expense
Depreciation and 810,696 43,092 48,335 902,123
amortization
Operating gains -- 5,455,990 -- 5,455,990
Operating income 1,628,562 5,014,461 (3,261,358 ) 3,381,665
(loss)
Net income (loss)
attributable to 1,657,797 4,186,284 (4,270,318 ) 1,611,905
Company
Reconciliation of EBITDA before unrealized gains on notes receivable, tribal governments, for the three months ended September 30, Quarter ended Development / September 30, Casino Operations Management Corporate Consolidated 2009 Operating income $ 437,289 $ 4,758,586 $ (1,289,499 ) $ 3,906,376 (loss) Add Back: Member agreement - 2,147,327 - 2,147,327 modification Depreciation and 240,039 399,886 22,285 662,210 amortization Deduct: Unrealized gain on notes receivable, - 248,641 - 248,641 tribal governments Other - 4,669 - 4,669 EBITDA before unrealized gain $ 677,328 $ 7,052,489 $ (1,267,214 ) $ 6,462,603 on tribal advances Quarter ended Development / September 30, Casino Operations Management Corporate Consolidated 2008 Operating income $ 549,481 $ 1,347,814 $ (988,078 ) $ 909,217 (loss) Add Back: Depreciation and 271,413 14,364 21,112 306,889 amortization Deduct: Unrealized gain on notes receivable, - 137,356 - 137,356 tribal governments EBITDA before unrealized gain $ 820,894 $ 1,224,822 $ (966,966 ) $ 1,078,750 on tribal advances
FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months Nine months
ended September 30, ended September 30,
2009 2008 2009 2008
Revenues
Casino $ 1,703,289 $ 1,923,795 $ 5,458,520 $ 5,688,308
Food and beverage 442,224 498,175 1,331,848 1,633,989
Management fees 5,753,167 --- 5,753,167 ---
Other 18,803 21,017 58,688 72,285
7,917,483 2,442,987 12,602,223 7,394,582
Operating costs and
expenses 558,702 540,393 1,698,096 1,812,731
Casino
Food and beverage 491,838 599,502 1,456,511 1,754,819
Project development 108,124 62,392 139,138 133,024
costs
Selling, general 1,756,191 1,534,118 4,805,159 4,866,210
and administrative
Depreciation and 662,210 306,889 1,233,743 902,123
amortization
3,577,065 3,043,294 9,332,647 9,468,907
Operating gains
(losses)
Equity in net
income of
unconsolidated 1,459,975 1,372,168 3,551,852 3,566,950
joint venture, and
related guaranteed
payments
Unrealized gains on
notes receivable, 248,641 137,356 542,610 1,974,040
tribal governments
Member agreement (2,147,327 ) --- (2,147,327 ) ---
modification
Other 4,669 --- (25,332 ) (85,000 )
(434,042 ) 1,509,524 1,921,803 5,455,990
Operating income 3,906,376 909,217 5,191,379 3,381,665
Other income
(expense)
Interest and other 112,848 33,196 148,438 128,873
income
Interest expense (48,408 ) (122,381 ) (195,570 ) (420,767 )
Income from
continuing 3,970,816 820,032 5,144,247 3,089,771
operations before
income taxes
Income taxes (1,735,797 ) (374,865 ) (2,327,022 ) (1,035,268 )
Income from
continuing 2,235,019 445,167 2,817,225 2,054,503
operations net of
income taxes
Income from
discontinued
operations, net of --- --- --- 38,142
income taxes of
$23,377 in 2008
Net income 2,235,019 445,167 2,817,225 2,092,645
Loss (income)
attributable to
non-controlling 812,989 94,506 933,948 (480,740 )
interest in
consolidated joint
venture
Net income
attributable to the $ 3,048,008 $ 539,673 $ 3,751,173 $ 1,611,905
Company
Income from
continuing
operations
attributable to the
Company per common
share
Basic and diluted $ 0.17 $ 0.03 $ 0.21 $ 0.08
Income from
discontinued
operations
attributable to the
Company per common
share
Basic and diluted --- --- --- $ 0.00
Net income
attributable to the
Company per common
share
Basic and diluted $ 0.17 $ 0.03 $ 0.21 $ 0.08
Weighted-average
number of common
shares outstanding
Basic and diluted 18,001,681 19,332,356 18,033,323 19,338,969
Amounts
attributable to the
Company:
Income from
continuing $ 3,048,008 $ 539,673 $ 3,751,173 $ 1,573,763
operations, net of
tax
Income from
discontinued -- -- -- 38,142
operations, net of
tax
Net income
attributable to the $ 3,048,008 $ 539,673 $ 3,751,173 $ 1,611,905
Company
Disclosures necessary to conform to GAAP and SEC Regulations S-X have been
omitted.
About Full House Resorts, Inc.
Full House owns, develops and manages gaming facilities. Full House owns the Stockman's Casino in Fallon, Nevada which has 8,400 square feet of gaming space with approximately 265 gaming machines, four table games and a keno game. The casino has a bar, a fine dining restaurant and a coffee shop. Full House also receives a guaranteed fee from the operation of Harrington Raceway and Casino at the Delaware State Fairgrounds in Harrington, Delaware. Harrington Raceway and Casino has a total of approximately 2,100 gaming devices, a buffet, gourmet steakhouse, other food and beverage outlets and an entertainment lounge. Full House also has an agreement with the Nottawaseppi Huron Band of Potawatomi Indians for the management of the recently opened FireKeepers Casino in Battle Creek, Michigan with 2,680 gaming devices, 78 table games and a 120-seat poker room. For further information, go to www.FireKeepersCasino.com. In addition, Full House has been working with the Northern Cheyenne Nation of Montana for the development and management of a gaming facility on tribal land. Further information about Full House Resorts can be viewed on its web site 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, financing sources and terms, integration of acquisitions, competition and business conditions in the gaming industry. 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.
For the foregoing reasons, readers and investors are cautioned that there also can be no assurance that the outcomes expressed in Full House's forward-looking statements included in this release and otherwise will prove to be accurate. In light of the significant uncertainties inherent in such forward-looking statements, the inclusion of such information should not be regarded as a representation or warranty by Full House or any other person that Full House's objectives and plans will be achieved in any specified time frame, if at all. Full House does not undertake any obligation to update any forward-looking statements or to announce revisions to any forward-looking statements.
Source: Full House Resorts
Released November 9, 2009