Full House Resorts incurred a $2.5 million loss but posted strong revenue and EBITDA gains for the fourth quarter of 2016, the company reported Monday afternoon.
The regional gaming company, which owns and operates casino properties in Mississippi, Colorado, Indiana and Nevada, grew net revenues by 25 percent to $38.2 million and adjusted EBITDA 36 percent to $3.6 million over the prior year quarter.
“We had a solid fourth quarter, with financial results improving at our existing properties and a solid contribution from newly-acquired Bronco Billy’s,” said Daniel R. Lee, president and chief executive officer of Full House Resorts, in reference to the property acquired in May 2016 in Cripple Creek Colorado – located an hour west of Colorado Springs.
Lee noted significant upticks at his properties in Mississippi and Indiana while emphasizing that $10 million in capital improvement expenditures – $5 million of which was raised by issuing new equity in November 2016 – were underway and would begin yielding return soon.
“Operating results at the Silver Slipper were particularly strong in the quarter, with the property quickly overcoming flood-related issues that occurred in the third quarter of 2016 in several of its feeder markets,” he said. “At Rising Star, our Christmas Casino concept — now in its second year — again helped drive significant visitation in what is traditionally our slowest period.”
Full House also reported a 17 percent increase in revenue to $146 million for the full year 2016, though just 4.3 percent to $130 million as measured on a same-store basis (excluding Bronco Billy’s). Net loss for the year was $5.1 million, translating to a $0.26 loss per share.
Despite the losses, the company emphasized that it has maintained generally positive cash flow from operations because of depreciation and amortization expenses – as evidenced by its net cash from operations growing from $7.5 million to $7.9 million and adjusted EBITDA increasing from $14 million to $16.2 million year-over-year.
Chad Beynon, an analyst with Macquarie Securities, said that the capital investment projects across the company’s portfolio were a positive omen for its future growth profile.
“Following these projects, we expect for mgmt to grow EBITDA +20% each year in 2017/2018, which makes the company’s growth at the high end of the Regional Gaming spectrum,” he wrote in a note.
“We have increased confidence that [management] is a solid steward of capital, has used capital wisely and has been close to landing a transformational proposal several times,” he continued.
One such possible landing was in Terre Haute, Indiana. Full House possesses permitted gaming capacity in the city, but its proposed casino development project failed to advance out of a key state senate committee in February 2017. To come to fruition, the project would need to earn approval of the full state legislature and the governor – both of which are highly uncertain, the company explained.