Good day, and welcome to the Full House Resorts’ Fourth Quarter 2016 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. Good afternoon, everyone. Welcome to our fourth quarter 2016 earnings call. Before we begin, I need to remind you that today’s conference call may contain forward-looking statements that we’re making under the Safe Harbor provision of federal security 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 EBITDA and for a reconciliation of those measures please see our website as well as the various press releases that we issue. We’re also broadcasting this conference call at fullhouseresorts.com where you can find today’s earnings release as well. With that all said, let’s go Dan.

Well frankly the earnings release as we always have a pretty detailed on so it really tells you just about everything, but I’ll try to hit some of the highlights. Revenue was up at every segment in both the quarter and the year, it was great. Company is doing pretty well. EBITDA was also up in most segments in the quarter and in all segments in the year. The Bronco Billy’s is doing well in accordance with the $5 million of EBITDA that we expected when we acquired it in May of last year. So let me go property-by-property starting with the biggest earnings contributor, which is almost roughly half the company, the Silver Slipper. Revenues were up 6.5% in the quarter and about 4% for the year. It was a very good quarter for the Silver Slipper, it was up 24% in EBITDA in the quarter but up only about 1% for the year. frankly the year would have been better except for the flooding that happened on the North shore of Lake Pontchartrain in August and September, you may recall watching on the news, houses flooding away stuff. Our property didn’t flood, but probably half of our customers come from that area that did flood and so we had a pretty weak third quarter because of that and yet pulled it out to be up a little bit for the year and we also had the benefit of the hotel there was open for the full year in 2016 and then open in stages during 2015. So you can see if it wasn’t for the flooding we probably would have been up more just because we had the hotel for the full year. If the property were in for permits this week, to build the beach club and…

No, I think the only thing I would add Dan is, to give you a little more color on Bronco Billy, that property is performing in line with our expectations. If you actually look at what they did prior to our ownership they did about $4.8 million for the full year assuming we owned it on January 1 that all said, they had a rough December where there was snow literally going into pretty much every weekend in the month, but all that came back and then some, we had a record coin in day, a record win day on New Year’s Eve and just last week, we had another top 20 revenue day, so the business there is doing pretty tremendously.

Yes, the only other thing I would add is, we keep looking at the debt on our balance sheet, we should probably refinance this debt at some point. Our bank debt has two years to go, we don’t want it to become a current liability. It actually jumps 50 basis points and cross here shortly in May, right. I think it’s May.

May, yes.

And in our second tier debt that’s callable today at 103 and then drops to 102 in May and then looking at the high yield market for example is at a pretty high market these days. So we are kind of thinking about that, nothing to report but it does make sense for us to refinance our debt before the maturity get too short, don’t have to do anything at the moment and usually that’s the right time to refinance this, when you don’t have to do it.

Let’s see some questions.

Yes, it’s great.

[Operator Instructions] we’ll take our first question from Chad Beynon with Macquarie.

First one just a high level one, we heard a lot of commentary and seeing the fourth quarter results from lot of regional gaming companies in the space and they’ve been largely mixed, mostly because of weather and some timing of some things. But generally since the Presidential election, have you seen anything different in your business and kind of where are your properties are located based on everything that we know at this point, are your general managers feeling any better or worse, based on what their customers are saying, just kind of a broad question on that to start. Thanks.

Well our Republican customers are happy and our Democratic customers are not. But - we only have handful of property, so we tend to get more absorbed in what’s going on in our specific localities I’m not sure we’re good judge of the national, regional market. But our numbers have been pretty good and first quarter looks pretty good with the exception of it snows on the wrong day sometimes, so other than weather events. I certainly don’t see any signs of recession and I think there’s lots of signs that people are feeling good, but I don’t. That’s a question better asked to somebody like Caesar’s has got 40 properties across the country and there’s a more representative regional gaming company than us, but certainly like the Silver Slipper, the north shore of Lake Pontchartrain we had the flooding, but otherwise that’s a growing healthy region, that’s one of the wealthiest St. Tammany Parish, which is the largest of the three parishes on the north shore of Lake Pontchartrain is the wealthiest Parish in the state and one of the fastest growing and the other two parishes of the north shore of Lake Pontchartrain are also fast growing. And so we celebrate a good demographics there and it happens without much fewer of the competing casino. In Louisiana, all the licenses are up and running, doesn’t really make sense for somebody to move a license certainly not to hear if you could move a license, move Louisiana you’d move it over to the Texas border and in Mississippi. There’s an unlimited number of licenses but you have to be within 800-feet of the tide line and all the stuff, but it’s also hard to make the numbers work. There’s a new property in, had opened just over a year…

I think if you were to just isolate the individual months Chad, January there were a lot of weather issues, we didn’t have it at Silver Slipper but we had them elsewhere. February and March were, February strong and March so far is off to a good start, so hopefully that helps you a little bit.

Definitely thank you. And then as we look at the $10 million of growth CapEx for the next year and you’ve outlined this in the past, are there any projects where you’re kind of underwriting, higher, lower return, any change there and then also just in terms of the overall CapEx number, any outlook and what these projects cost and if you think, can you spend a little bit more, you might get a higher return, just any update there.

Well in that $10 million but if I recall correctly we had, $400,000 of contingency and so far everything seems to be on budget, even a little under in a couple of cases, there might be a little over in the beach club, but I think we’re well within that contingency number that looks like the ferry boat is going to be maybe $200,000 less than we had budgeted and so, I think we’re in good shape on that. We’re looking at putting a new food outlet in the Silver Slipper. We’re right next to a fishing port and it turns out that fishing port is oysters and in fact our landlord is locally known as the oyster king. Apparently he pulls more oysters out of the ocean than anyone else in the United States or something. And so one day Lewis and I were, one of these managers being headquartered in Las Vegas, we went up to lunch and ended up at the oyster bar down at Palace station, found out they have like an hour wait, I thought, look at this thing. It’s nice little bar, you’ve an hour wait and they’re open 24 hours a day and so that’s evolved into, we have an area of the casino there where we could pretty easily put an oyster bar and so we’re kind of crunching the numbers on that at the moment, that’s probably $250,000 and it’s not in that $10 million. So I mean the fact that we had this list of stuff, that’s the $10 million doesn’t mean that’s all we’re doing and when we - constantly are looking for other stuff and frankly we generate free cash flow we can pay for that oyster bar at free cash flow pretty easily and so it’s not - and if you look at, we ended EBITDA about 18 and property EBITDA like 21 something.

You’re around 18, if you include a full year Bronco Billy.

A full year Bronco Billy’s and you think you spent $10 million, well I think all the stuff we identified with that $10 million is pretty high return stuff. I mean unlevered 20% to 30%, I mean some of it you’re just guessing but there was an article in the Anderson Ferry on their anniversary the other day and it had a number because they’re private company and so they average over 200 cards a day on the Anderson ferry and I don’t know that we’ll get a 200 cars a day on our little ferry boat. But just play with the math a little bit and say, what if they only get 100 cars a day and maybe only 30% of those end up going into the casino and I will tell you the gate counts, so you can get it from the Indiana Gaming website, we got about $50 to $65 per person in casino revenues for each person who walks in. so if you start playing with those numbers and say how many cars a day are going to take this ferry and how many, what percentage of those end up in the casino parking lot and then two people per car and $60 a person, it could really move the needle and it could move the needle a lot and we’re all guessing a little bit because driving down and taking a ferry isn’t quite the same as driving across the bridge and so on. But I think by any measure it’s positive. So if you assume, you spend $10 million and maybe average 20% to 30% return on that, that’s $2 million to $3 million of incremental income which should push that EBITDA from 18 to 20 to 21 and frankly some organic growth and…

Okay great and just a last one from me. So on that number of EBIT that you kind of outlined, I mean is there a magic number that you think you need to get to through this year your average weighted interest expense cost.

I think we can get there now to be honest. I got here in December 2014 and Lewis was not long after me. December 2014 was not a very good year for this company, it’s part of the way on the proxy battle [ph] if you will and then you had 2015 where we showed that we would get every single property changing direction. Everything started to go up, instead of down and now in 2016 we have a second year. So if you look at it and say it’s not a fluke. It wasn’t just accounting stuff we did or something, we now had two solid years of improvement at every property. And then you know you look at it and say this is a dramatically better credit then it was even a year ago and so I think we can save on the interest expense today and frankly, as the numbers - our blended cost of debt is like 9.6% today and it’s half of good as bank debt and pretty low price and half of good as second lien debt a very high price, ends up to about 9.6%. I think we can get a 200 basis points out there, 150, 200 basis points in today’s world. I think if we had EBITDA of $23 million and our net debt today is like 75. So if we got to three times net debt, net debit three times EBITDA, we’d be down at 6% rate, right. So I think that’s probably another refinancing two years from now, so I think it’s a process of improving the balance sheet and going back and improving the debt and improve the company’s financial and then go back and prove the debt and that’s what we did at Peneco [ph] over many years and even way back at Mirage Resorts we did the - when I went to Mirage it was all high yield debt, it was very expensive, it took us a while and we eventually did the very first bank deal in the whole industry and I remember it was like $40 million and we hoped like the golf carts out of shadow creek, we’re collateral for it and even we could find and four or five years later, we did the industry’s first billion dollar bank deal and we’re borrowing money at 4%, 5% and so we’re headed that direction, but it’s one step at a time.

Chad, not to talk your ear off but Dan and I [indiscernible] we pulled up our offering documents from a year ago from when we tried to do the refi and unfortunately we had some bad timing with the markets going south at the same time, but if you were to compare those documents then today, this company is lease and bounds, different back in the day we were telling lenders, you have to pro forma in full year for the hotel and you got at - Silver Slipper and you got a pro forma in Bronco Billy’s and you got pro forma this and now when you look back at it, this company is 51% better in EBITDA then when we came in 2014 at the end of the year. It is a much, much better stronger and very, very different company. So we’re beyond please with where we are and I think Dan’s right. I think the time is, I think we could get something done now.

Recognize also the rights offering helped of course, I mean that was $5 million, it wasn’t bigger than that because we didn’t need more than that and in fact, at the moment we’re sitting on $25 million of cash.

27.

$27 million, of which about $12 million is used in operations. We expect to use $10 million of that in all this CapEx but at the moment it looks pretty comfortable and frankly the lenders like to see that we did raise $5 million equity, did it very oversubscribed in the deal and that I personally wrote a $1.1 million or $1.2 million of checks and bought the stock and invested in the company even more than I was when we came in two years ago and so I think it’s a pretty good time for us to look at refinancing stuff and I’d like to do it, when we don’t have to do it. If we wait too long, then we’ll be looking at that like a year from now, we’d be staring at the first lien debt becoming a current liability.

Okay, great. Thank you very much for the color.

[Operator Instructions] our following question comes from John Decree with Union Gaming.

Just wanted to - Dan if your prepared remarks you’ve mentioned ways that you might finance the new build like in Terra Haute and things be the obvious cash flow from ops, equity or conventional debt pretty clear, but wanted to get your thoughts on maybe some other levers that you might be able pull or other areas whether that be partnering or maybe trading an asset to fund a new project or an opportunity that might be a little larger than what you’re doing now.

Well let me, I mean hotel at Cripple Creek I kind of already said, I think we can do it normal way. In other words like the hotel we built at the Silver Slipper we were allowed to borrow half of the class to build in that hotel, so we did something similar, we have a credit facility that funds half the cost and the other half is funded from cash flow, we generate pretty good cash flow. So over a three-year period between now and the end of 2019 I mean that’s pretty easy, lot more complicated if Terra Haute happens, right and if you start looking at, okay how you’re going to go build a $150 million place and you probably need $50 million, $60 million, $70 million of equity on something that big and you start saying, well how do you do that, well okay it depends on where the stock price is, if the stock price went up on getting Terra Haute you might consider issuing some equity we’re a public company so we have that ability to do that but you don’t want to issue stock at the stock is at a low price and frankly I think our stock is pretty attractive at these prices. So you start saying well what else could you do. Well we could sell the Silver Slipper to a REIT take back management agreement free up tens and millions of capital and use that and you could even do Terra Haute and partnership with the REIT. You go to one of the REITs and say, how about you own the real estate we’ll manage it and there’s ways to do that. You could bring in a partner, do it with a partner. Lots of people probably partner in a…

That’s right, yes.

John and I had lunch the other day and he asked whether we were looking to swing for the fences or so on and I said no, I said look the basic story and you could run the math, is hopefully we get $23 million, $24 million, $25 million of EBITDA two or few years from now. [Indiscernible] just gets old about eight times cash flow, they have a lot more properties than we do but the quality of the property is pretty similar to [indiscernible] and we’re in markets where there is barriers to entry and so on, so forth and so if you got to that point our net debt is probably at that point $70 million or something, you run the map, the stock can be lot higher than it is today, right. And one of the mantras around here is do not screw that up, if that’s all we do, we’re very happy okay and we would have gotten a good returns and shareholders would have gotten a good returns and so on, so forth and we looked at number of deals. There is a deal that’s been killing me because I think it’s a really good deal and that we should do it and we’re not big enough to do it and we’d be betting a ranch on it and so we won’t do it and I’d leave that for somebody else, but so something like Terra Haute, will it be economically successful. I mean it all depends on the tax rates and all that stuff, yes I think pretty definitely. I mean you can look at how many people live there and what will be the [indiscernible] gamble and so on. You can - there’s enough examples and experience that we have and others have that you can pretty accurately forecast what the casino revenues are being, what you do in EBITDA. You got to execute properly, you got to build it right, and it’s got to be [indiscernible], catch people’s imagination. I’m always amazed how many people screw up, what should be easy. Like start off by maybe hiring architect who’s build the casino before and if you execute properly and you can pretty much forecast that if we built $150 million place, there’s going to get a pretty good return and so I don’t really view that as that risky but still you want to be careful in doing it that you’re not bet in the company, yet you do it in a way that, is smart and so I think we have a pretty good thing going here, if we do nothing beyond just paying attention to the properties we have, and is going to be very successful. So [indiscernible] first managers, we don’t want to screw that up.

Sounds good, thanks for the color. Dan.

Okay.

[Operator Instructions] And it appears there are no further questions at the time Mr. Daniel Lee. I’ll turn the conference back over to you for any additional closing remarks.

No that’s it. We’re having fun, company is doing well and thank you everybody for their support and for your time this morning. That’s it. Thanks.

Thank you guys.

That does conclude today’s presentation. Thank you for your participation, you may now disconnect.