Greetings, and welcome to the Full House Resorts Inc., Fourth Quarter Earnings Call. At this time, all participants are in a listen only mode. A brief question-and-answer session will follow the formal presentation [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Lewis Fanger, Chief Financial Officer. Thank you. You may begin.

Thank you, and good afternoon, everyone. Welcome to our fourth quarter earnings call. As always, before we begin, we remind you that today's conference call may contain forward-looking statements that we are making under the Safe Harbor provision of federal securities 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 adjusted EBITDA. For a reconciliation of those measures, please see our Web site, as well as the various press releases that we issue. And lastly, we're broadcasting this conference call at fullhouseresorts.com, where you can find today's earnings release, as well as all of our SEC filings. And with all that said, Dan, are you ready to begin?

Yes, that's great. And usually, Lewis and I are not in the same place today but we'll make it work. Obviously, the big news on this call will be about the temporary casino that we opened at American Place in Waukegan, Illinois. I'd opened at 8:00 PM on February 17th. It took us longer to get it open than we had hoped, but we did find the open at 8:00 PM. Now ignoring the partial day of that day, we had 15 days of operations through Saturday. So half a month. The Sunday numbers I should have shortly, but I didn't have one when I did this. So the win for that half month was $4.1 million, which is run rate of $8.2 million a month or about a $100 million a year. Just to put that in perspective, our whole company last year had $114 million of gaming revenue. So the Temporary’s run rate is about the same as the rest of the company combined. The trends also have been pretty positive. Now the first week when you get a lot of tourists coming in to see the place, we had 23,000 admissions and the second week we had 20,000 admissions. But the win per person in that first week was $80 and the win per person in the second week was $97, almost $98. And that's pretty typical of new places that the tourists all come in at first and then gradually build a base of people who are really there in place to play the slot machines. If you work those numbers out, you'll see it was $1.7 million of win in the first week of operation and that's just a slot one. So then recognize that the place is only partly open, there was an uncertainty,…

Sure. So well, as Dan noted, we did do that revolver draw and the $40 million tack on notes last month, that's led to us having a lot of cash currently sitting on the balance sheet. Here in real time, we're sitting on about $210 million of cash, which includes $110 million of restricted cash for the completion of Chamonix and obviously, a hundred million of kind of unrestricted cash. We'll use a portion of our unrestricted cash to pay the initial license fees for the Temporary, which are somewhere between $40 million and $50 million, as Dan noted. We do have some modest, very modest uses of capital like that restaurant redo that Dan mentioned at Bronco Billy's will cost us about a million bucks. But then of course, don't forget that our existing business generates cash too, especially with us heading into our seasonally strong season and a large new property, the Temporary now open. Some other cleanup items of note for you. We did sign a new sports skin agreement for Colorado. We actually executed it back in December and it began its contractual term a couple of days ago. That means here in real time, we have two sports skins that have not yet launched. One of those is in Illinois where we contracted with Circa Sports. There's a natural process that gets followed. But pending normal gaming approvals, we believe that Circa Sports could go live here in the next few months. And then we have one idle skin left in Indiana, which we continue to evaluate whether we use it ourselves or sign up a third party similar to all of our other sports skin agreements. For those of you keeping track, once Circa goes live, the total for all six of our sports…

[Operator Instructions] First question is from the line of David Bain with B. Riley Securities.

Dan and Lewis, congratulations on another exciting casino opening. First, I guess, Dan, you gave some early run rate numbers for Waukegan. That was very helpful. I mean, how should we view it in context though with the upcoming augmented hours, games, amenities, marketing of the database? Can you help us think about how that $100 million, kind of that cadence from here as those things begin to kind of funnel in? And then maybe Lewis on that, how we should think about EBITDA margins, that cadence given fixed cost for a temporary relative to a new permanent casino opening? Qualitative is fine but quantitative is better.

Well, I mean, at this point you have kind of a rotation of the tenants. In other words, these tenants will probably continue to run at a pretty good base of 20,000, might slip a little into the teens, 15,000, 20,000 people per week coming through. But the win per admission, which today is about a $100, that's pretty low by Illinois standards. And so I think the win per admission will creep up as we have longer operating hours and frankly more resource to come. I mean, at this point our food and beverage offerings are pretty limited, for example. And so, as you transition, I would -- I mean granted you get some kind of pre business maybe everybody coming to see the new place, but a lot of those people don't gamble or frankly couldn't get to a table, because we didn't have enough tables. I mean, on opening night within an hour of opening the doors, every table was filled. And so I think we will end up at a higher run rate than a 100 and it'll build gradually over time. And it's almost all -- and that number's just gaming revenue, I'm not counting food and beverage in there. We have a center bar, that the bar is actually doing pretty phenomenal members but we're not going to pay for everything with the bar, but it's very successful bar. And so I think we end up with something north of $100 million. I mean, I don't think it's going to be $200 million, maybe not even $150 million, but $120 million, $130 million, $140 million, somewhere in there and pretty high margins, because it's almost all slot machines. I think, we are running 80/20 today slot machines to tables and as we get the…

I don't know that I have a ton to add onto that, Dave. I mean, I'll tell you a couple things though. I do want to reinforce that when Dan talks about 100 million of run rate revenue at this point, that is purely gaming revenue that does --. And so when you think about overall margins, all the food and beverage tends to dilute your margin. So don't run a 30% margin off of -- in the long run at least, off of just Dan's gaming number. It's higher than 30%. I'm not saying it very well, right? I think you get what I mean, everything else dilutes your margin down. So whatever margin you're using on the run rate gaming revenue should be a much higher number. All that gives me a lot of confidence. I mean, look, if you run a 40% margin on Dan's run rate number there, you're looking at $40 million of -- roughly $40 million of EBITDA, assuming everything else is breakeven from the restaurant side. When you walk through the facility, I'll be honest, it's -- I'm meeting people there for a lunch this week on Thursday and I don't have anywhere in the building to take them for lunch yet. And it's not just on a Thursday, it's every day of the week. And so if you're a gaming customer going in, you can go and grab a hot sandwich from the two Airstreams that we have on site there. But if you want a true sit down meal, you don't have it. We've got a -- we're making sure we put some food trucks on the outside, especially on weekends. And we do try -- we are planning on getting some brunch service into l'américaine here in the near term. But you've got a portion of your day where if you are a normal good gamer, you expect to want to show up, have a meal, go and play a game. And right now we're only servicing you for the dinner part of every day of the week. So do keep that in mind. And despite all that, we're doing 100 million of run rate revenue. And the first mailers didn't start hitting people's inboxes until a couple days ago. We went all of February without having any of your usual promos out there as an example. So this is a very, very strong start. I won't give you numbers per se. I will tell you that I continue to think that this thing will be EBITDA positive pretty quick out of the gate, and I'll leave it at that. But I feel very good.

And then I just had one follow-up strategic question, I’m looking at ‘22 EBITDA generation, particularly from a few properties as they begin to normalize, but still be dwarfed by Waukegan, Chamonix. Can you remind us the strategic rationale not to divest kind of the smaller portions of the portfolio? And I guess from a forward equity capital our investment into the more sizable contributors, your time and even from an investor standpoint, sometimes it's a little distracting when properties off like $500,000 for a one-time reason and it's like 30% off of consensus.

No, I mean, it doesn't. Like the smallest one is Fallon and we could sell it pretty pretty readily, there is a lot of people who'd be interested in buying it. But we manage it in conjunction with the Hyatt Tahoe. And so it's to a large extent the same management team that goes back and forth, and that makes it more efficient for us to run those two. And if you sold Fallon, you would have to put the entire management team just against the Hyatt. And if you go to the Rising Sun, which is relatively smaller. I mean, a few years ago, we felt we might have to close it. Frankly, the management team there has done a terrific job and it's now making $6 million, $7 million, $8 million a year. I think it was $8 million in a peak here with the stimulus checks and six and change last year. And we are pretty happy with that and in a very competitive environment. And frankly, if we don't need the money and we have enough money to build everything we are doing and it really wouldn't move the needle much if we sold one of these properties. And it also is a good place to once we’ve build that management team that you can promote to other places. And so anyway, that's -- we have got no real reason to divest. But when you start thinking, okay, what happens if the bond market is crappy and it comes time for us to raise the rest of the money to build American Place. Well, we could always do a Bally’s deed and go turn to a REIT and get the REIT to fund most of it. We could even do a sale leaseback on some of our other properties and do it. I happen -- I think that's probably more expensive than it will be to go to the bond market, if you really, really measured everything. But we have multiple ways to finance American Place. And frankly, it's an asset of the company that we have not done the sale leaseback thing yet. But listen, we are a public company. Everything is for sale. If somebody comes in and offers us a 25 times cash flow for any asset we have, we will be happy to take it.

Right. Okay, great. Thanks, guys…

I was just going to say -- and the good news is Northern Nevada has not taken too much of our time for what it's worth. So I think you are trying to -- ultimately, we are trying to balance the time relative to the EBITDA contribution. And at this point, the team up there is doing a decent job.

Our next question is from the line of Ryan Sigdahl with Capital Group.

A lot of talk about the first two weeks of performance. Obviously, on the Temporary, it's top of mind, it's the focus. Curious that run rate that you keep referencing back to. I guess, how when you look at other openings, how accurate is that or I guess is there typically a lull, I guess, after the first few weeks before you get the mailing list, before you get the amenities, before you get the hours, all of those things ramped up?

Every opening is a little different. This is -- I always say every opening has its prize. In this case, it was the fact that we're understaffed and having to deal with that. It's very frustrating me to walk into these restaurants that are -- we are all focused on getting them built. Now, they're built, we don't have the employees to run them. And the process there in Illinois, even non-gaming employees have to fill out 25 pages of the 30 page form. And they basically ask the name and address of every girl you've kissed since third grade. And that's fine and expected for Lewis and I, we do that all the time with every gaming commission. But it's not common that somebody applying to be a waiter has to do that and they have to fill it out in English. When the community we're in is 50% Hispanic and the people applying for those jobs, the majority are Hispanic. And so we end up sitting down with them and helping them through the form. And by the way, it's not the fault of the gaming board, it’s the faults of the law. And they're just -- I think they’re frustrated as we are and that the law requires them to do that. And so we're trying to hire waiters to come in and work in these restaurants, and they have to go through all these background checks, which takes time. And they can go next door and get a job with the -- restaurant next door. I mean, unemployment's at record low levels. And so we're working our way through that and it takes time, and that's the current challenge. Now the process of lots of tourists are lucky loses the industry calls them coming in to…

And the other thing to keep in mind, Ryan, is Dan's right. Usually, you open up with your full breath of amenities and we haven't in this case. But on top of that we opened without a date, right, or not a date but we opened the day later than -- the day after we -- the public knew the date is maybe the right thing to say. And so if you were to sift through the questions that we get on Facebook and all those channels via Google and everything else, the number one question by far, last I looked it was something like 75% or 80% of our questions was, are you open, right? And so usually with a normal casino, you've got that date out there six months in advance and you're telling people, we're opening this day, we're opening this day, we're opening this day, for month and month and you're just beating at home. In this case, there are a lot of people that just don't even know the doors are open yet. So I'm not sweating it here.

Two quicker ones here on Bronco Billy's, and I'll turn it over. But one, how long in advance do you think you'll be able to announce that opening, is it a few months or I guess any timeline there? And then secondly, with the new casino renovation floor done, do you think that that property can turn back to EBITDA positive going forward even before Chamonix opens, the bigger one?

Actually, the numbers were already quite a bit better just in the five or six weeks since we got it open. So the answer to that questions, yes. It was -- I mean, it's still operating with a lot of the amenities not there, but it's much better than it was a few months ago. And I'm sorry that was -- and in terms of an opening date, well, we can largely pick the opening date but I don't want to get too far ahead of the constraint. There's a point where the construction is largely done and you're installing the furniture. And at that point, it becomes very predictable when you can open. We have a few pieces that are -- we're trying to catch up with, like the kitchen for the specialty restaurant needs to catch up a bit. And then there's an issue with -- we couldn't do all three towers at once, because we couldn't get enough light gauge steel workers. So we had to build towers one and two, and then the -- or well, it's actually one and three and what we call tower two is behind the other ones. And so it's possible to open without that tower being completed except that some of the exiting from tower one goes through tower two. And so we have to satisfy the fire marshal that while that tower may not be completely furnished and open to the public there are safe fire exiting methods to go through. And if we can't reach an accommodation with the fire marshal then you probably don't want to open without towers one or two. Tower one has most of the suites, for example. So there's issues like that we have to resolve, but we should know 60 days ahead of the opening date so that we can then advertise the opening date and have a party. And then we actually had a pretty decent opening party at the Temporary, but it was a process of telling people, hey, we're getting close, we're getting real close, be ready, you might only have 24 hours notice. And then literally we got approval at like two o'clock on Thursday and we blasted out emails to about a thousand people saying, we're opening tomorrow, parties at 6 o'clock, we open to the public at 8 o'clock, and we were able to get 400 people in the place. And despite our staffing challenges the staff there did a terrific job at serving a high-end meal and having a great party atmosphere in the place and it went very well. But I will tell you, it was not the way you normally want to open. I mean, you don't normally want to tell people you got 24 hours notice to come to a grand opening party.

Our next question is from the line of Chad Beynon with Macquarie.

Lewis and Dan, congrats on the opening. Dan, just one just kind of on the outlook here. I know you guys don't give guidance. I'm just trying to think about some of the same store growth opportunities of the business that aren't facing new competition or disruption. I guess, mainly Mississippi, Nevada. In the press release, you outlined a number of things that hurt the properties in the fourth quarter and for the year. But as we look at kind of where the floor is for the foundation of those financials, is there any reason to think that these couldn't grow from here? I know Indiana, you talked about some competition but just trying to figure out Mississippi, Nevada, if kind of the worst is behind you guys?

Well, I think in Indiana you do have a new competitor opened in September, so we have several more months of that. We have done reasonably well despite that competitor. So I think that's okay. There really isn't anywhere else that we have a new competitor there. We had -- as Lewis and I mentioned, in Mississippi, we had a competitor get very promotional for a while. And then I think they realized they were spending money foolishly and they backed off. We are about to lap or we have lapped the opening of online sports betting in Louisiana. And so that shouldn't be a factor going forward. In Colorado where the guys adding capacity nobody else is. And in Northern Nevada, Larry Ellison acquired the Hyatt over a year ago, I guess. And that's good news. And ultimately, because he has a history of going in and significantly improving the hotels he's bought. He owns four or five now. And we hope to continue to be the casino operator there. And at least indication so far is that that will be the case. I don't think he wants to go get a gaming license and have to deal with those issues. It's an amenity to a hotel. Now we may -- he apparently intends to significantly refurbish the hotel. He start with the stuff along the lake, which is hugely valuable real estate, it's kind of exciting to think what he could do with that. And then he is going to go to the main hotel building, which is where casino is. And as Lewis mentioned, we would prefer to operate during that, but the construction people almost always would rather just close the whole thing. And that's a discussion we haven't had yet with them. That lease has…

Just trying to fine tune everything. I know, we're all focused on the Temporary and Chamonix, but as we've said, the legacy business still matters to cash flow. And then in terms of some iCasino movement, I know, Indiana and Illinois have been states that everyone has talked about potentially being on the docket in ‘23 or ‘24. I know, there was a little bit of lost momentum in Indiana. But just wondering, if this is legalized, would you guys consider doing it on your own, running one of these very valuable, profitable skins, or would you consider leasing it out and bringing in kind of guaranteed cash flow similar to what you'd done on the sports wagering side?

Well, we've considered both. It's probably easier to do the iGaming our ourselves, because you can rent or buy the software to do it. There was a particular issue with the sports betting as a small company. You were concerned that, let's say, the Colts got into the Super Bowl, while all of our customers in Indiana were going to bet on the Colts. And if the other team in the Super Bowl was not a place we have a casino, we were going to end up with an unbalanced book. And so that is kind of a difficult thing to do. And if you change the betting odds at our sports book to try to attract bets on the other team, then we will not be offering our customers as good a deal as they can get from another casino in Indiana. So we made the decision early on to do the sports betting through licensing with companies like Wynn, who's got a huge sports book in Las Vegas. And so they can balance it with what they have out of Las Vegas, they don't have that concern. Whereas, when you get into iGaming, that's just a large number of small independent statistical events and that's the business we're in. Now we'd have to hire some people who understand how to market that business online, but those people are available. But on the other hand, if somebody offered us a great deal and a skin then we might decide to license it as we did in sports betting. So we'll see. Yes, I'm just thinking that somebody made the question before about why don't we divest some of the small ones. Maybe the real answer is as the company gets bigger, maybe we should take the small ones and just group them all together. And so you guys -- when you see the Boyd numbers and they talk about the Midwest district, well, just portfolio theory of one casino in the Midwest might be up 30%, another one's down 30%. You look at it, it looks very stable. And they've kind of camouflaged it by grouping things together, whether it's them or Penn or most of our competitors, group it together. We're one of the few companies that shows you pretty much earnings of each casino with the -- except of Northern Nevada with the share management team. So we lump them together. But Boyd certainly has lots of small properties, but nobody gets focused on whether they're up or down a lot in one little market, because they combine it. I'm sure Keith Smith pays attention to it but doesn't confuse the analyst.

Well, we appreciate all the details on the properties and also on the temporary. So congrats on the opening.

Hey Dan, we've got five minutes and two last questions, so let's try to get through both real quick.

That's Lewis's way of telling me to be succinct, so go ahead.

Our next question is from the line of Edward Engel with ROTH MKM.

And again, congrats on getting heating up running, a note to early. But is there any kind of early learnings of where that customer base is coming from, is it all Lake County or are you seeing people kind of close to the suburbs of downtown Chicago as well?

No, it's heavily Lake County. And it's really heavily Lake County, yhere's very little from downtown Chicago.

Yes, not a lot to add to that. It's very heavily Lake County.

Yes, I think like the City of Waukegan is the third and I've saw the numbers. And it's kind of -- it's interesting like we're not even drawing very far from Rivers or Potawatomi. I think that casino revenues we have, as we've been saying all along, will mostly be from increased gamblers in our region. My guess is we haven't had a very big impact on either of those guys. Now recognize Rivers does about $600 million a year in revenue and the Potawatomi does about $400 million a year in revenue and then Grand Vic, which is also kind of in the market, does about $120 million. So there's $1.1 billion in revenues and if we take 10% of that, well, that's $100 million, that's our run rate. So I don't think we're going to have much impact on them and I don't think we have very much overlap with Bally’s at all. People in Chicago don't want to drive up to Lake County, they think it's a place you go on weekends or something and people in Lake County don't want to go downtown, because you get stuck in traffic.

Great. Thanks, I’ll pass it off.

Yes, I mean, the one way to think of Lake County is like having a casino in Greenwich. You know, it's not going to compete with Manhattan, it's going to draw on people who live in Greenwich. If you're familiar with the New York geography, we're the Westchester County Casino, if you will.

All right, one last question, Dan.

Our next question is from the line of Jordan Bender with JMP Securities.

Keeping in mind the bumps in Illinois with the hours, the laborers, some of the restaurants opening, et cetera. How should we think about that property running at a run rate over the next couple months? I mean, should we expect something in the next month or two, or should it be more of a traditional like two to three quarter ramp?

I think it's going to ramp slowly, but it won't necessarily be completely consistent. I mean, if you -- eventually you will get monthly numbers from the Illinois Gaming Board and if there's one month that's a little below an $8 million per month run rate, I wouldn't worry about it, because it's -- but the trend will gradually be up. And I think by the time we get to later this year, it should be running 10 night. I think I told you with some of the numbers are of the competing casinos. I mean, Grand Vic is a tired 25 year old traditional riverboat and it’s still doing $120 million.

Yes. I think the only thing to add on to that is, usually, I would talk about a casino ramp taking 18 months before you are on the run rate. In this case, I think it's going to be a lot faster than that for what it's worth. I don't think it's 12 months either. I think it's quicker than that. Part of it's going to depend on how quickly we can get the rest of our amenities up and running. I do think that's going to be sooner versus later. We have got enough labor I think on the table game side, so that we can extend the hours here very, very shortly for what it's worth. The other thing that helps us out is our typical guests don't need to travel 40, 45 minutes to come visit us for the first time. A typical guest is going to be traveling 15, 20 minutes. And then when you actually get to the site, I think what a lot of people have been appreciating is we are right off the freeway, we are right across the street from a giant Walmart. We are kind of already inserted into people's everyday lives, into their shopping patterns and everything else. And so I think all of that is going to combine into a scenario where the ramp is on the shorter side versus what you would see for most other casino openings.

And then one last housekeeping. How much left to spend in Colorado?

Say it again…

So how much left to spend in Colorado?

Yes.

Recognize the $110 million in the restricted payment account, there is a third party who every month goes through and looks at what it takes to spend -- and to complete it and where we are and that's the $110 million. Now, it's -- there is some stuff that -- like I'll probably want to spend a little more on marketing Denver than is in the budget currently and so on. But for the most part, that's the one hand, that's what's needed to complete it. Now that does not include the $1 million change in the steakhouse into the Italian restaurant, that's what I think.

Yes, that’s right there. And one truly last question, Dan. We will be quick, so we don't go too far overtime. But we’ll go ahead and clear it out.

By the way, before we get to questions, just remind people that, I meant to say it when the fellow from ROTH asked a question, but we are going to be at the ROTH Conference next week and we are looking forward to it. So the last question was?

Our last question is from the line of John DeCree with CBRE.

I think you covered everything, so maybe one just for you, Lewis. Point of clarity, the real time cash you had given, the $210 million. Does that include the $36 million or so that was drawn on the revolver? And then if that's accurate, how do you think about the timing of repaying that, is that just after Waukegan ramps to a point you're comfortable with?

Yes, I'll probably -- we'll probably end up paying at least a decent slug of that back here in the near term for what it's worth. When we originally did that draw, we did it on a three month draw. So we've already put in the request to kind of term out that SOFR contract, if you will, behind the scenes boring stuff with revolver draws. But yes, the short answer is it does include all the cash from that revolver draw and you should expect us to pay a decent chunk of that back in the near term. I don't think we're going to pay it all back yet in large part just to hold onto some extra liquidity as we kind of weigh through the opening weeks, but not expecting to need it for what it's worth.

And last one, Lewis, excluding what's left in Chamonix and at Waukegan. Do you have a rough number as to what we should expect the CapEx to be for the rest of the portfolio this year?

Chamonix is -- well, it's -- we're spending roughly 10 million bucks a month these days, and we've got $110 million left to spend. So in theory, you should be clearing out most if not all of that account here over the balance of the year. You might have a little bit of that pushes into 2024 just because of retention and whatnot. But by enlarge expect us to clear out that account in 2023. For the Temporary, the real time cash number that I gave you already includes the vast majority of construction spend for the Temporary. There's a couple million bucks of trailing out of that real time $210 million of cash number. And then obviously, we've got the gaming license fee as well. So depending on what that final number is for that gaming license fee is, will I guess, affect the full year. But we made -- I'm looking at Adam as I say this, I want to say we made maybe 7 million bucks or so of prior to this real time cash number. So if you're going to include the 7 million already spent plus another couple million, let's say for the first quarter, 10 million of trailing of remainder CapEx at the Temporary plus the gaming license fee. But of that 10 million, about 7 millionor 8 million has already been spent in the real time number I gave you. Hope it didn't confuse you there but I just don't want you to accidentally double that.

Let me add to that. The other property's very little, needs to be spent, we've fixed up this Silver Slipper and Rising Sun and Fallon and even Grand Lodge are all have been -- all in pretty good shape. But we probably will spend single digit millions in the next, I don't know, if it's this calendar year, but certainly in the next year on professional fees for designing American Place. We got civil engineers and architects and all that so that we can get going with the construction. We have to be open in three years. So we have to get going here pretty fast.

Yes, I'll give you one last number there, John, if it helps you. The maintenance CapEx figure for 2022 was about 3 million bucks for the properties.

Okay, pretty small. That's perfect, everything I need. And congratulations again, guys on getting the Temporary open.

Yes. Thanks John.

And I'll see you on a couple days at the Temporary.

Yes, looking forward to it.

Thank you. As there are no further questions at this time, I would like to turn the floor back over to Lewis Fanger for closing comments.

Dan, do you want to close it out?

No, I think we're done. Thank you everybody. And we'll keep working hard at it. And next one open is six months away. So okay, thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.