Full House Resorts Announces Three and Nine Months Results for the Period Ended September 30, 2007
For the Third Quarter Ended September 30, 2007 Net Income Increased to $604,791 Stockman's Casino and GED on Plan with Management Expectations
LAS VEGAS--(BUSINESS WIRE)--
Full House Resorts (AMEX: FLL) today announced results for its third quarter and nine months ended September 30, 2007. For the three months ended September 30, 2007, income from operations increased to $578,282 compared to $93,292 in the prior-year period with net income improving to $604,791 from a loss of $150,272 in the prior period. For the third quarter ended September 30, 2007, earnings per share was $0.03 compared to a loss of $0.01 in the prior-year period based on diluted common shares outstanding of 19.3 million and 11.0 million, respectively.
The Company is currently awaiting approval from the National Indian Gaming Commission (NIGC) of its management agreement with the Nottawaseppi Huron Band of Potawatomi in the Battle Creek, Michigan area. Upon receiving approval, the Company expects to secure financing and start construction shortly thereafter. As had been earlier disclosed, the Company expected NIGC approval by September. Due to the delay in Federal approval, the Company now expects to finance the project in January and begin construction in the first quarter of 2008, with a target grand opening date in the first quarter of 2009. As a result of the change in expected opening date and other changes in the valuation calculation, the Company recognized a $209,106 unrealized loss on notes receivable in the third quarter, offsetting a portion of the gain recognized earlier in the year.
Third Quarter 2007 Highlights and Subsequent Events
-- Increasing market share at Stockman's; renovation of
Stockman's Coffee Shop on pace to complete in the fourth
quarter.
-- During the quarter, we also revised the expected opening dates
for the Northern Cheyenne project in Montana to the third
quarter of 2009 and for the Nambe project in New Mexico to the
first quarter of 2009. The delay in the Northern Cheyenne
project is principally due to slower than expected progress on
compact negotiations and other state and federal approvals.
The delay on the Nambe project is due to continuing
discussions with the tribe regarding the scope and budget for
the project following an updated market study and recent
changes in the credit markets. The revised opening dates did
not materially impact earnings in the third quarter.
-- On October 5, 2007, we announced that we had entered into an
agreement to sell the Holiday Inn Express in Fallon, Nevada
for $7.2 million in gross proceeds, with the hotel sales price
exceeding the operating cash flow multiple paid for the
Stockman's Casino and Hotel in January. The transaction is
subject to a due diligence period that expires in
mid-November. We have increased the expected net proceeds from
the previously announced $6.1 million to $6.8 million based on
a more favorable tax treatment. We expect to close the
transaction in January with the net proceeds planned to be
used to reduce debt.
-- In connection with the acquisition of the Stockman's Casino
and Hotel, the Company amended the purchase and sales
agreement and paid approximately $730,000 to the James R.
Peters Family Trust - the seller of Stockman's Casino - for
his consent to a Section 338 election. The Election is
expected to allow the Company to realize approximately $2.5
million in tax benefits over the life of Stockman's assets
For the quarter ended September 30, 2007, the Company reported casino, food and beverage, hotel and other revenue of $3.2 million. No revenue was recorded in the prior-year period due to Stockman's Casino being acquired on January 31, 2007. The Fallon, Nevada slot market has been flat during the quarter; however, Stockman's market share has been improving. Further, the Company is renovating Stockman's Coffee Shop and expects the renovation will be completed prior to Christmas.
The Company recorded equity in net income of unconsolidated joint venture of $1,022,340 compared to $952,192 in the prior-year period. The equity in net income of unconsolidated joint venture represents Full House Resorts' 50% ownership interest in GED, a joint venture between the Company and Harrington Raceway, Inc. Results from the Delaware operation have been reclassified to "Operating Gains" as a result of the restructuring of the management agreement as previously announced.
The Company reported earnings per share of $0.05 and $0.02 for the nine-month period ended September 30, 2007 and 2006, respectively.
Commenting on the third quarter results, CEO Andre Hilliou said, "We are pleased to report that the GED joint venture continues to successfully track in line with our forecasts and Stockman's Casino is progressing well." Added Mr. Hilliou, "In addition, we anticipate receiving approval of the GEM management agreement from the NIGC in the very near future. That approval will allow us to proceed with financing and to break ground on the Firekeepers Casino in Battle Creek, Michigan which, we believe, will be a major driver of shareholder value once completed. Subsequent to the end of the quarter, we also announced an agreement to sell the Holiday Inn Express Hotel in Fallon. After considerable deliberation, we determined that owning the hotel was not strategically important for the Company's long-term goals and that the sale would provide us with greater financial flexibility to pursue additional opportunities."
Selling, general and administrative costs were $1,446,772 for the three months ended September 30, 2007 compared to $1,010,343 in the prior-year period. Depreciation and amortization expense rose to $423,261 from $18,770 for the three months ended September 30, 2007. The increases in these expense items are primarily due to the addition of Stockman's Casino. Overall development and general and administrative expense came in below plan primarily as a result of reduced management incentive compensation expense due to delays in key projects.
For the nine-month period ended September 30, 2007, selling, general and administrative costs were $5,254,049 compared to $2,781,069 in the prior-year period. Depreciation and amortization expense increased to $1,135,672 for the nine months ended September 30, 2007 from $56,309 in the comparable prior-year period. As in the third quarter, the increases for the nine-month period ended September 30, 2007 were due primarily from the addition of Stockman's Casino and stock compensation and other personnel costs related to grants and compensation plans which were approved and implemented subsequent to the second quarter of 2006 and therefore were not fully reflected in prior-year results.
Liquidity and Capital Resources
As of September 30, 2007, the company had $7.3 million in cash and approximately $4.1 million of availability on a revolving credit line. Long-term debt outstanding including current maturities at the end of the third quarter was $14.9 million. The company prepaid $3 million of debt during the quarter, bringing total voluntary prepayments to $4.1 million.
Conference Call Information
The Company will host a conference call and webcast on Wednesday, November 14 at 11:00 a.m. EST. Both the call and webcast are open to the general public.
The conference call number is 866-249-6463; international callers can access the call by dialing 303-262-2211. 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 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 800-405-2236 or 303-590-3000 and providing passcode 11101357.
Selected unaudited Statements of Operations data for the three months
ended September 30,
----------------------------------------------------------------------
Casino/Hotel Development/ Corporate Consolidated
2007 Operations Management
----------------------------------------------------------------------
Revenues $ 3,232,126 $ --- $ --- $3,232,126
Selling, general
and administrative 490,999 22,137 933,636 1,446,772
Depreciation and
amortization 407,193 14,364 1,704 423,261
Operating gains --- 813,234 --- 813,234
Income (loss) from
operations 839,430 711,395 (972,543) 578,282
Net income (loss)
available to
common
stockholders 852,318 946,176 (1,193,703) 604,791
Casino/Hotel Development/ Corporate Consolidated
2006 Operations Management
----------------------------------------------------------------------
Revenues $ --- $ --- $ --- $ ---
Selling, general
and administrative --- 56,973 953,370 1,010,343
Depreciation and
amortization --- 16,649 2,121 18,770
Operating gains --- 1,256,726 --- 1,256,726
Income (loss) from
operations --- 963,273 (869,981) 93,292
Net income (loss)
available to
common
stockholders --- 973,810 (1,124,082) (150,272)
----------------------------------------------------------------------
Selected unaudited Statements of Operations data for the nine months
ended September 30,
----------------------------------------------------------------------
Casino/Hotel Development/ Corporate Consolidated
2007 Operations Management
Revenues $ 8,348,809 $ --- $ 283,554 $ 8,632,363
Selling, general
and administrative 1,164,904 137,684 3,951,461 5,254,049
Depreciation and
amortization 1,082,115 47,664 5,893 1,135,672
Operating gains --- 3,815,240 --- 3,815,240
Income (loss) from
operations 2,097,683 3,321,331 (3,713,512) 1,705,502
Net income (loss)
available to
common
stockholders 2,125,556 3,299,476 (4,493,038) 931,994
----------------------------------------------------------------------
Casino/Hotel Development/ Corporate Consolidated
2006 Operations Management
Revenues $ --- $ --- $ --- $ ---
Selling, general
and administrative --- 160,644 2,620,425 2,781,069
Depreciation and
amortization --- 49,950 6,359 56,309
Operating gains --- 3,969,066 --- 3,969,066
Income (loss) from
operations --- 3,395,434 (2,755,547) 639,887
Net income (loss)
available to
common
stockholders --- 3,291,971 (3,110,237) 181,734
About Full House Resorts, Inc.
Full House owns, develops and manages gaming facilities. Full House owns the Stockman's Casino and Holiday Inn Express in Fallon, Nevada which has 8,400 square feet of gaming space with approximately 260 gaming machines, 4 table games and a keno game. The casino has a bar, a fine dining restaurant and a coffee shop. The Holiday Inn Express has 98 guest rooms, indoor and outdoor swimming pools, a sauna, fitness club, meeting room and business center. Full House also receives a guaranteed fee from the operation of Harrington Raceway and Casino, formerly Midway Slots and Simulcast at the Delaware State Fairgrounds in Harrington, Delaware. Harrington Slots recently opened an expansion and is remodeling its original building which will result in a total of 2,000 gaming devices, a buffet, gourmet Steak House, other food and beverage outlets and an entertainment lounge. Full House also has a management agreement with the Nottawaseppi Huron Band of Potawatomi Indians for the development and management of a first-class casino/resort with 2,500 gaming devices, 90 table games and 20 poker tables in the Battle Creek, Michigan area, which is currently in development. In addition, Full House has a Gaming Management Agreement with the Nambe Pueblo of New Mexico for the development of a coordinated entertainment venue centered on a 50,000 square foot casino and with the Northern Cheyenne Nation of Montana for the development and management of a 27,000 square foot gaming facility. Further information about Full House 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, it's Form 10-KSB 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, Inc.
Released November 13, 2007