Please standby, we are about to begin. Good day. And welcome to the Full House Resorts Second Quarter 2015 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Lewis Fanger, Chief Financial Officer of Full House Resorts. You may begin.

Thank you, Melissa. Welcome everyone to the Full House Resorts second quarter 2015 earnings call. We may make forward-looking statements on this call relating to our estimated future results and other market, business, and property trends and information. We undertake no obligation to update or revise any forward-looking statements that are made today. Actual results may differ materially from those projected in any forward-looking statement as a result of certain risks and uncertainties, including, but not limited to those noted in our earnings release, our periodic reports and our other filings with the SEC. During our call today we may make reference to non-GAAP financial measures. For a reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8-K furnished to the SEC today. Both of those are available under the Investors section of our corporate website at www.fullhouseresorts.com. And with that outset, it was a pretty active week for us. I was telling the team here today, we have only been here for two quarters, but it feels like we have accomplished a lot already and I’ll highlight a couple of those things really quick. Consolidated EBITDA increased pretty strongly from $2.69 -- $2.6 million to $2.9 million, but if you truly look apples-to-apples and back out the $300,000 from the management contract that expired last year, it’s really an increase of about 26% or $2.3 million up to $2.9 million. We did successfully amend the credit facilities we announced at this week on Monday. The Silver Slipper Hotel that was originally supposed to open in the fourth quarter of last year finally opened in May of this year and so the covenant needed to be adjusted to reflect the actual opening. We made a change. We made a few other…

Okay. Yeah. I think, clearly, the start of the quarter was the Silver Slipper. I will just point out, not only, I think, management team has done a great job there and the marketing which kicked in earlier this year. It was already running up pretty nicely before the hotel opened and then when the hotel opened it’s done even better. We also get a little work here with New Orleans putting in the smoking band and that happened almost the day when the hotel opened. So it’s hard for us to figure out, which is which, I think, there were both positives. And there was a negative, a lot of people haven’t really, aren’t aware of, there is a lot of construction going on on Interstate 10, just to our west, which is where most of our customers come from, and so sometimes there could be traffic jam there, I’ll tell you couple of hours. And so, yeah, we have done real well, despite that highway construction and that will probably continue for the next few months. I think, they are talking about being done by year end. And most of the time, ironically they are doing the work on weekends, so that they don’t affect the commuters into New Orleans, so that’s exactly when it affects us. So but we are doing pretty well despite that. Rising Sun was obviously up a lot over last year, but it’s so close to zero that percentage is really shouldn’t be look at, if you net up the rent there we are -- it’s barely more than breaking even and that’s what we have been focused on and trying to figure out what to there. And frankly, Northern Nevada, I think, it’s doing well, except it didn’t snow. So normally the…

Melissa, we are ready for question.

[Operator Instructions] We’ll take our first question from Joshua Horowitz with Palm Ventures.

Hi. Thanks for taking my question and congrats on a strong quarter. It looks like there was improvement in all the segment. Maybe if you could give little bit more color on one segment that didn’t improve which was Nevada, if there is anything alarming there, anything to fix the traffic and weather situation. And then of note, better understand the role of the master developer in American Place. I guess, a little bit more color on capital requirements for management contracts or what exactly, we would do to get the most bank for the buck on this stuff?

Okay. Let me address about the weather first. Both entities, we have there Fallon and Lake Tahoe would have some. The high it was done more and that’s both get affected by snowfall. We are still working the marketing plans for Fallon. We are the leading casino in Fallon that forms the base of our market. And I think we will get that turnaround but if this is not declining as much as it used to be. And I think it will start feeling better going forward. In Tahoe, be aware, we lease that facility for $1.5 million a year. But we show it’s not being leased. So what we show on the income under EBITDA is net of the rent. So there is an element of financial leverage that happens in there. So when you have a swing in operating EBITDA, we then subtract the rent and operating lease. It magnifies the swing in the bottomline. That could work to the positive in the summer and frankly, seasonally the summer is most important period of the year. I think we’ll be okay in the third quarter and that’s most important quarter. But we are partly into that quarter now. So in higher Tahoe, the lease is about three years to go and we have had some discussions. We thought about renewing it and extending it and cautiously, optimistic, we’ll be able to forecast something there. On master developer, I don’t know what that means. It is in the RFP, okay. And I don’t really know what it means. When you look at $650 million, I think the casino aspect evidence is about 150. The west is ultimately somebody is developing mall, you’re doing 10 improvements for the tenant. There is condos in there. Somebody is selling condos. There is…

It’s interesting. I guess, one of the predecessors of the company [indiscernible] most think that the Rising Star stands, I said the word, an arbitrage that’s the problem with property. And what I think of exciting about this new project is the inter play between you and the state. You almost get a little bit of leverage in proposing something like this and given your successful track record, maybe that gives you a little bit more leverage in terms of what you can say or what you can do with respect to the Rising Star, be it property tax adjustments or other concession. I don’t know. I could be making this all up to but maybe there is…

No, no, I would tell you I met with a one very senior legislator yesterday, who had got to know last time. Last time here said you he is so negative. Can’t you come up with a positive spend of this. [indiscernible] I took -- because all of them were saying, no tables here, you are going to kill us, you’re going to kill us. I took your words to heart and thought about it. And I thought this is all positive, this is absolute win, win, win. It’s good for us, good for Indiana, and good for Indianapolis, and even good for Rising Sun. It doesn’t take anything away from Rising Sun at all. In effect, we would do it under that subsidiary, so it would be financially strong. And that’s what we assured the mayor of Rising Sun. And so it’s a way to have something that everybody wins. And frankly, I am sure the two casinos are like betting at the moment, but they don’t win. But if you really look at the math and on that website is the third party economic study, we have very little impact on them. They are 35, 40 miles away from us. It’s a really big market and we are talking about our really small casino. And so it really -- I don’t know if we can pull this up. Like I said, it’s just left my fingers and then sent it for a goal post 100 yards away. But it feels pretty good to be proposing something where everybody wins. We are long ways from finish line, so we will see.

Thank you.

Hey, Josh. I will give you a little more color really quick on Northern Nevada. But if you think about it with how early the ski is worth close this year. We had a little bit of an awkward period where there wasn’t that usual traffic into the ski resorts and it was before the local started to come back to their homes over that live newer property. That usually happens in June and really going into July for the 4th of July weekend. And so keep all that in mind as you think about that property. As Dan mentioned, 3Q not going to what should be fine, not with locals are back.

I appreciate it. I guess while we’re on the topic of Nevada and I don’t want to steal everybody’s time, but any comments on the Eldorado MGM transaction that happened in terms of implied multiples or people’s appetite for Nevada or MGM. Like, I mean, I know maybe looking at Carano there, but any color from you guys given your long experience in the industry?

I am going to -- I know the Carano’s, know of them, I actually know them a little bit, but they are going to operators and they are always going to operators. I know they now have a substantial public company. If you met with them, they are pretty stand up guys. And they have had that partnership there for years. It’s not a core asset for MGM. So it kind of made sense on both sides. They live in Reno, they live in [indiscernible], so it makes sense. Nobody calls us to see rest of it and that’s priced.

The implied multiple for that, any sense of what multiple EBITDA those products…

I haven’t gone through the math, but I am not sure I used it as a comparable because they are already partners, right. So it’s kind of -- I am not sure that’s a relevant comparable. The comparable that everybody is talking is Pinnacle. I mean, the Pinnacle REIT deal is interesting idea. Of course, we always have that opportunity do we try to REIT and that it would primarily be the Silver Slipper should we. My guess is if we sold our real estate to one of the REITs or if there is really one big REIT, if we sold the real estate to that, we would get more than enough money to pay off all our debt. And so I think we have that alternative. We are not actually a taxpayer, so I don’t know how we really generate value at that point. We won’t pay taxes at least a few years but at some point down the down sure you look at.

Thank you. We will take our next question from Chad Beynon with Macquarie.

Hey, great. Thanks for taking my questions. First one just wanted to kind of talk a little bit about Silver Slipper. Dan, you mentioned it was kind of tough to I guess parse out what was from your operations in the new amenities versus the smoking ban down in New Orleans. Could you talk maybe a little bit about new client signups from non-resi customers and then also kind of what you saw from a spend per visit, spend points for customers who you were able to cut a room for, for the first time in a while? Thanks. And then I have a follow-up.

Well, if you kind of bear it, I don’t know the answer for those questions and I am in Indianapolis and I bet Lewis doesn’t either. But what I do know is with the hotel we are getting a quite a few customers coming from further away than we did before. So places like Harrisville or even Mobil or something that we didn’t have a hotel deal for us. So people didn’t really have a choice and so that we segmented different ways than the more distant segment is up quite a bit since the hotel a little bit. And frankly now that I think about it, last marketing study I saw which I guess probably would have been for the month of June, we didn’t see nearly as big a lift from New Orleans, which would leave to me think that there is a smoking bans a plus but maybe not a huge plus. I recognized property was already up pretty strong in the first quarter and they didn’t have the hotel yet. And it was just the [John Turchi] [ph] came up with the bunch of new marketing programs. I will tell you a random number I do know. To-date this year, we have provided 40 tons of Dungeness crab on our buffet, 40 tons of Dungeness crab and Dungeness crab is pretty expensive, but you see the results. It was kind of like our revenues are up quite a bit and we maybe the biggest consumer of Dungeness crab in the whole country. I am sorry I kind of -- I don’t know the answers to your question, I am happy to get them and forward them to you. But I know the hotel is bringing in more distant clientele. I know people are gambling later, our casino used to die out like 9, 10 o’clock at night. These people have to drive home. Now we stay more fully staff later at night. And that’s been a plus. There is no question our hotels then a plus. But we are already up pretty nicely. The sweets aren’t opened yet, that will be very nice so.

I have got a little bit of color there for you, Chad. If you look at the month of June, as an example, the number of trips versus last year’s June, they are up about 15%. Coin-in is pretty big, so our coin-in- has been hovering anywhere from up 20% to 25% on any given month since the hotel opened. If you look at the number of unique trips, that’s up about 4%. And so for us, it’s really been about seeing more people come in the door, dance very right. We are seeing people come in from further away. And then to Dan’s point as well, if you were to go on that for on any sort of weekend before, you’d start to see that floor die down around the 11 PM or so. And now you can go on the floor around 2 AM and you still can see it pretty bustling. And that’s because we have people on the room that they can head back up to and be a sleep within five minutes. So it’s been a plus.

Yes. I will add a point, we do have room there to put us another tower which was to -- so that’s not imminent obviously, but there is ways to grow the Silver Slipper going forward and we have been kind of pondering some of that. It’s always up, but we have quite a bit of space there with the new things.

Okay. Thanks. And it’s great to see that you’re thinking outside the box as you always have with the RFP and also talking about value creation through a potential REIT at Silver Slipper. Before you took over, the management team had to consider buying a property, and to that kind that still help through, but the market has changed. This week we saw another closure in the market. Could you talk about your appetite if you have the cash to, if and when you have the cash to do so, or getting into another market, if you think there are opportunities where you could improve the operations and reduce the multiple from kind of where it’s currently trading? Thanks.

Yes. Let me first point out, if you followed my career, I don’t think I’ve ever done an acquisition. I am very careful about acquisitions, okay. We want to make sure it’s a stable market, we want to make it’s a stable property with some upside and so we get offered a lot of stuff. We look at a lot of deals. And frankly, that is priced, every casino on Atlantic City and every casino on Tunica has been for sale repeatedly because those are declining markets. And it’s kind of like how do you catch up falling knife. What multiple is low enough to discount the fact that it’s going down. Now that being said, it is possible that we would do an acquisition some time, but it would be a very careful one and have to be valued appropriately, have to be in a market that was stable that we were confident was going to stay stable, where we thought we bring some table to improve it, but we are pretty careful about that. This company got to where it was by doing some sloppy acquisitions and that we do look at stuff and I am not going to say we would never do one, but if we do one we are going to be very careful about that.

Okay. Thanks. And last one for me. Lewis, what other options did you guys explore with the second lien notes and then maybe could you give us an update on tax for the remainder of the year, just to kind of understand where leverage peaks and kind of the cash flow bridge?

Yes. Well, option-wise for the refinancing, we have always been wanting to try down the path of doing a refi and just kind of reset the debt into new refi pieces because that’s going to happen. But if you think about the covenants, if you look at the covenants, they got pretty tight in this second quarter that we just finished. And unfortunately, we had to spend sometime just kind of resetting that. There is no way we could have gotten a completely new refi done. We didn’t think before we had to go in and get all these covenants for 2Q submitted. And so what we did at first was focused on, on the existing debt, focus on the covenants, get those reset to just to account for the fact that the hotel opened up later than it was originally supposed to back in the day. And now, it’s really moved forward on those refi. So it’s been a good process, our bank group has been good, and so we are pleased. I am blanking on what part two of your question was there, Chad.

Just on the CapEx for the remainder of the year, now that the project at Silver Slipper is mostly behind us, just how to think about maintenance CapEx?

There is not a whole time for us to do it from a maintenance point of view. If you think about the hotel at Silver Slipper, we are sitting at about $1.3 million or so CapEx remaining as of this point right now. We’ve got that construction term loan that will finish drive out, so it’s the $10 million in size, it’s $1.1 million want to drop at the end of June. And so you will see that fully drawn before the end of this month that we are in. And then out of pocket, you will see maybe about $700,000 or so plus or minus coming up out of pockets to finish out that construction project. And then everything else from a maintenance perspective, it’s all kind of discretionary, it at or when. We looked at the list, it’s not going to be a $1 million or $2 million worth of stuff, you might be a couple hundred thousand dollars worth of stuff, but it’s going to be modest I think. I don’t know if you have anything to add to that, Dan?

Okay. Thanks Dan. Best of luck. Appreciate it.

Chad, on what Lewis said, if you studied the covenants, the existing debt has pretty aggressive amortization over the next year, even as revised. And so we are continuing to be very careful on CapEx just to make sure we live within the new covenant. So we will finish the hotel and obviously, we are pretty careful to maintain the Silver Slipper. We have been pretty careful not to spend too much money in Rising Sun until we figure out where we go with it. And the discussions with Hyatt, it’s possible that and as part of the conditions of extending the lease, we might agree to put in some new gaming equipment and stuff like that. But that’s the share that would be next year probably.

Okay. Thanks, Dan.

[Operator Instructions] We will take our question from Kevin Kovacs with CFI Partners.

Hey, guys. So I guess just kind of couple questions on Indiana first. I know you gave some color on Mojito Pointe and how that wasn’t very competitive in terms of other people who put in bids. Do you have any sense for how competitive Indiana is going to be either for even higher airport or just the 135-acre parcel?

Well, I am sorry what place did you refer to that wasn’t very competitive, I am sorry, didn’t hear you?

Mojito Pointe.

Honestly, it was pretty competitive, at least I thought and national I had a proposal to put a pretty big casino in New Orleans and get those names, but there is a local guy who paired up with the group and was going to put casino in Lake Charles. And at the end of the day I had proposed remember that actually fourth group who was local, but I think I proposed kind of the bigger dream. I am going to I propose a large casino with the Gulf Course, staying hotel, swimming pool, now stuff. And so it was well advertised, anybody could have shown up and we won. Now in here it’s a little different because the Airport Authority put out this request for proposals and it was well advertised into the process. They had a [indiscernible] airport so on. Anybody could have put in this proposal, but of course most casino companies probably wouldn’t thought of that, because it is a little bit out of the box, right. So the airport hasn’t disclosed who else made proposals. I suspect there are others. On their website they show you could submit questions to them and they responded on their website. So some architect was asking what power lines run to the site. There was somebody who’s working on something, I doubt it was a casino, and frankly I thought it was a stupid question. We used to be in airport terminal here. Surely, it’s got to be power lines, which turned out to be good. And so I suspect they have other proposals, but I doubt there’s another casino. Now I will tell you the proper public policy. If I were the governor trying to figure out what to do, I would do exactly what I detailed earlier.…

Great. That was actually my next question. Thanks for asking it. There was about the -- seen if there was any precedent you can think of, that’s helpful. So also in Indiana, you didn’t really talk about it, but there was some press about the parcel you bought in Kentucky. Can you kind of help me understand what’s going on there, like how much to pay for it? What is the next step? Legislative hurdles there and how much do you think it all cost?

It was not significant. It’s underway, it’s not significant in pricing, I think it’s four acres. It’s actually a house. We bought it because there’s another piece of land that would make a great place for a ferry landing. And the guy wants that, told me he wanted this house. So I thought I would buy the house, it’s possible and now it’s naturally left the slot. And we can probably sell the house for what we have done it. And we’ll down to look at another place where we can have a ferry landing and we’re somewhere down the road there. But we still keep in touch with workers. So it’s kind of going back and forth trying to find a way to get a ferry boat. At the end of the day, it takes Boone County Commission approval and that will be an important discussion and we’re trying to move towards that. So we’re trying to align things up so that we have something that has local support. It’s very important that the community want it, so we want to put it somewhere where they want it. There is a limit as to how much we’ll pay to get a foot whole there. There is one guys who kind of publicly came out and said, I’m opposed, I’m going to kill this, I don’t want the traffic. And it’s funny his wife set up a website where people could comment. Last time I look, there were seven comments, six of them wanted the ferryboat. And frankly, the traffic issue is kind of the silly issue. We’re talking about ferryboat like the Anderson ferry, that’s up in Cincinnati. It carries 10 cars. It takes 10 minutes for the ferry to go across and back. So you’re talking about 10…

Okay. And just on the cap structure, I got a few questions there. First one is really quick. When you disclose $58.5 million of first and second wing, is that include the revolver, the construction revolver and the cash flow revolver?

Yeah. That’s all in.

All right. And I guess on the refinancing, would you guys use kind of the next step clear in the timeline? Yeah. That’s good. Thank you.

Lewis, you want to take that?

I was going to answer that one as simply as it’s ongoing, Kevin. We would love to have a new deal done. We unfortunately had a hit pause on doing any sort of refi to just get these covenants recrafted. And as you saw those finally got executed late last week on Thursday and the 8-K went out on Monday. So now that the work is done, we can pick back up and run with the refi ball. So give us some time. Is it something that’s going to happen before year end? I would say, maybe but you may well see it in first quarter of next year.

Okay. Sorry. I’m just going to jump in one more time. So since the last both of you haven’t been -- I know you’re working on the amendments but have you been talking on anyone, do you have any idea kind of what the market thinks about it?

We would look at the same thing that you would look at which is market comps. It’s not a deal that has been broadcast very widely, if that’s what you’re asking. So short answer is not quite yet for you, nothing that we do want to disclose to you on this call quite yet.

Right. Thanks, guys.

Yeah. You got it. Thanks, Kevin.

Thank you. We have time for one more -- I’m sorry. Go ahead.

Oh no, I was going to say, probably have time for one last question. Melissa, you read me.

Okay. We have a question from Joshua Horowitz with Palm Ventures.

Hi. Just a quick follow-up. Lewis, is there any more commentary on the corporate expense? Any progress on reducing that further? Are you now at a run rate where you think you’re comfortable, is there more to come out of that? And then the final follow-up which is on the rise of this for America Place, is there any other way to monetize your exercises that you’re not successful in getting that project?

I’ll take the first really quick, Dan. On corporate cost, expect it to be where it is at least for the near term. We’ll start to cut through more of these costs as I get to the refi. But with Dan and I being so near, we kind of took the list of important things and we’re slowly going down at one by one. We took out a lot of the bigger cost that we saw and some of those costs really affect the properties more than they affect corporate directly like healthcare is an example. But we’ll start with a more detailed analysis over the next few months on that sort of stuff.

And then license, if you to move away since you have to go through legislature, even to move the slot machine. So we just got chop down of legislature than you’re looking at Rising Sun, doesn’t earn anything. So I don’t know how -- if you try to sell Rising Sun, I guess you might make some money. It’s got a golf course, two hotels and stuff. But I’m not sure it’s a best avenue. I actually think its better if we can figure other way to make some improvements. It’s kind of an attractive hiding place. If you look at the other casinos, they all have a certain sameness. And so it is different so maybe we can celebrate that difference. And we’re looking at doing some unique things to try to get people to come to us whereas if you walk in to Belterra Park or Downtown Cincinnati or even [indiscernible] or even Hollywood, they all got kind of great big boxes. All look like they have the same interior designer as the Red Rock station in Las Vegas. And we’re different. Well, there is lot of Victorian river boat and let celebrate the difference. So we’re far from giving up and I think we can find ways so we keep poking at our competitors, anyway we can think of, we had a marketing program recently that was, I guess, modestly successful at least that generate some traffic where we put -- build words up near competitors and say, bring in your three diamond card or whatever card you have, show it us and we’ll come to and you can keep your points. And Harrisville has spent 20 years trying to develop this complicated system where instead of just getting comp now, you accumulate points and then you…

Thank you.

And there are no questions in the queue.

Is that last.

That’s it. Dan, any last comments.

No. just thanks everybody for their support and we’re working our best to create value for shareholders, you will appreciate that. So and I think it well and eventually we’ll turn to let the stock and take it one and not take it way. So I’m actually more optimistic in the company now than I’ve been every since I get involved in that. It feels like we get things go on the right way operationally. We’ve got some good ideas for where we can generate growth going forward. We know how we need to refinance balance sheet. I thought Lewis was little cautious as regard, we are quite sure we could refinance this debt and turn to result in lower interest in the last round of debt. Recognize very large upfront fees on the last round of financing. So the effective average cost of the debt we have today is 10.2%. I think we could refinance that at significantly lower all-in cost and we’re working on that next six months. And we are small company. It’s -- when we invested about $10 million getting [indiscernible] not ready to go. We were about to barrow $500 million and take ground. When go you can ask Carl, Lewis and I, and we kind of quickly they offered us $32 million so that way we made $20 million profit. I don’t know if we can pull that off again, but $20 million divided 18 million shares is a dollar a share, which is two-thirds of what the share price is. So I don’t know where this goes and of course, and I’m not saying that we will get the entitlement in solid. Actually it takes long-term even than if I had a company like Full House it probably would have kept that project and if you look at the results that goes nugget and join day, I can tell you, many morning have wake up and wish I kept that project we’re doing extremely well. And I can tell you at casino on the west side of Indianapolis is an even bigger opportunity than that was and we like to figure out how to do it so. Anyway, thank you very much everybody and talk to you in the quarter.

This concludes today's conference and thank you for your participation.