Full House Resorts, Inc. (FLL) Q4 2023 Earnings Report, Transcript and Summary

Greetings, and welcome to the Full House Resorts Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Lewis Fanger, CFO. 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're 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 also 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 that said, I'll give a few comments, and then Dan will chip in with any clean-up here. But as we said in our earnings release, we're at a transition point now with our company. We borrowed in large part to fund two large casino projects. Our legacy properties have historically carried the burden of that debt, largely covering interest expense on their own. Post-COVID, business at our legacy properties feels like it has largely settled down to around $30 million or $35 million or so of adjusted EBITDA per year, again, largely covering our annual interest expense. With American Place and Chamonix both now opened, and construction CapEx winding down, we are now set up for significant free cash flow generation. We have long said we expect $100 million of incremental earnings in total from our temporary American Place facility and Chamonix after they have ramped up. And we continue to believe strongly in those figures. Those amounts are on top of the $30 million-plus generated by our legacy properties. And so, when you start looking at those figures, hopefully you also see that our company is transitioning now into a large free cash flow generator. Somewhat related, we recently received all of the necessary approvals to operate our temporary American Place facility until August, 2027. That is an important development that many have missed. For casino construction projects, you'll typically spend 40% to 50% of your project budget in the six months before opening. That means we won't start investing large dollars into the permanent American Place facility until the second-half of 2026, and into 2027. That's important for two reasons. First, contrary to what we have heard from many investors recently, it means we do not need to be in the debt markets right now. We don't expect the need to finance the permanent American Place casino for a few years. That additional time should be our friend. Over the next few years, the debt markets have the potential to show continued improvement, with the potential for interest rate cuts between now and that future financing day. It also means that our two newest casinos will have time to season, allowing their EBITDA to ramp up into the full potential that we expect from them. If we hit the EBITDA levels that we expect, gross debt to EBITDA should be around three times, which is the low figure, historically, for any gaming company. And most importantly, the August 2027 extension offers us more time to generate even more positive free cash flow, allowing us to self-fund a large portion of our permanent American Place facility. Going back to American Place for a second, our temporary American Place facility has recently kicked into a new gear recently. In December, American Place reported gaming revenue of $8.2 million. That record will be short-lived. For February, you'll see a figure north of $9 million. At American Place's anniversary party, a few weeks ago, we did double the coin-in of opening night, and had coin-in that was about 50% higher than our previous record for a single day. March is also off to a good start. At Chamonix, we purposely crafted a phased opening. Despite some brutal snow storms recently, two things are clear to us so far. One is that there is no high-quality gaming product in the Colorado Springs market akin to what we offer at Chamonix. And two, guests are clamoring for something nice in town. It appears that our rooms will be very easy to fill on weekends when we can easily fill those rooms above 80%, and even 90% occupancy. For the midweek period, group business will be important. Group business will start to come into play over the coming months now that meeting planners can see the beautiful facilities that we've created, and can be assured that construction will not interfere with their meeting plans. We also have our high-end steakhouse on the verge of opening. Chef Barry is renowned for his Barry's Prime Steakhouse and N9NE Steakhouse in Las Vegas. And he'll be bringing his culinary talents to Chamonix around the end of the month. Once that's open, while we won't have our full breadth of amenities, we will have the most important elements, our casino, our parking garage, all of our hotel rooms, and our high-end restaurant. We can then turn on our marketing heading into the summer months, which is seasonally the strongest period for the Cripple Creek gaming market. That's what I had. Dan, you want to do some clean-up there or should we do Q&A?

You did a lot of stuff, but let me just touch a couple things. We've been very focused on getting Colorado open. Meanwhile, Illinois continue to mature, which is nice. I was actually editing our 10-K today, and there's all this historical language in there about Mississippi being our most important property, and it's no longer the case. It's still important, but we actually make more money in Illinois now. And pretty soon Colorado is going to give is the run for its money. But getting Colorado completed in a small town in the backside of Pikes Peak has been a challenge, but it's mostly done now. The high-end restaurant will open later this month. And then there's a jewelry store shortly thereafter, and the one significant bar, one tie-in restaurant that's going to be a little later, and the spa. So, it's coming, but it's not done yet. But, in effect, we've been saying for quite some time that the company is going to at least triple in size, and that's what it's in the process of doing. It's also kind of reassuring because when we issued the bonds and then we did the add-on for the temporary casino, we basically borrowed all the money in advance of construction. So, we've been paying the interest expense on all this stuff without having it open. And every month the total cash balance, including the restricted cash would decline as -- and so, you're playing this game of trying to make sure you have enough money to complete construction on everything. And now, it's kind of at an inflection point, and it's starting to go up. And if you play with the math a little bit, you can see our free cash flow per share after interest expense, and we're pretty well sheltered for taxes, not only with tax-loss carry-forwards, but with a lot of depreciation from the new stuff we've built. So, effectively, we paid little or no income taxes. So, our free cash flow per share is about $1.00, headed for $2.00. And we should be able to generate quite a bit of cash in the next three years in order to build American Place to permanent. The commitment to the state was $500 million, of which we've invested about $175 million to date. So, we have $325 million to go, and that's a permanent casino with a small high-end hotel and a bunch of food and beverage facilities. So, figure half size of Durango Station, if you will. We can probably generate about half of that internally. And so, we need to fund $150 million of debt. We won't do that this year. The money actually isn't needed until a later date. The Potawatomi lawsuit won't be resolved until the fourth quarter, this year, or the first quarter of next year. We think it's just a nuisance lawsuit designed to forestall us from building. But they are trying to get the city or state to kind of restart the selection process and give them another shot at it. Now, there were, I think, five proposals. And the outside independent consultant ranked theirs as the least attractive of all five proposals on like eight of nine different measures or something. And I was there, and it -- their proposal was pretty bad. Nevertheless, you have the lawsuit out there saying we think the -- whether Full House should have this license is debatable. And we're pretty sure we'll win. If we don't, we would have certain legal rights that we would pursue. But in the meantime, we continue to operate the temporary, and won't seek the additional financing for the permanent until it's resolved. And so, it's probably a year from now we're looking at that. But at that point our EBITDA will be three or four time what our interest expense is. We'll actually be under-levered compared to most casino companies. So, the task of raisin $150 million for the balance of the American Place would not be difficult. In fact, if it'd be proven to do it, we'd have to probably refinance the bonds anyway, which are due in 2028, I believe. They're now callable. But you may not increase the size of the bond deal, you might just want to create a carve-out till our term loan or bank facility, because once the permanent American Place is open, we're going to be paying down debt very, very fast. So, anyway, that's my additional thoughts, and a little bit redundant with what Lewis said, but happy to take questions.

Thank you. [Operator Instructions] Our first question is from Jordan Bender with Citizens JMP. Please proceed.

Great. Good afternoon, everyone. Lewis, you reiterated the $100 million EBITDA target. I believe that half of it's coming from Colorado, half from Illinois. But in Waukegan, can you just talk about how much of that is coming from revenue uplift? You talked about some of the records in February versus how much of that is coming from more right-sizing the cost structure and just seeing margin improvement off current levels? Thank you.

Well, it's mostly revenue improvement and a large portion of that falls to the bottom line. We're trying to get a little more efficient in our marketing, but it's more about trying to get more revenue numbers for the same dollars of marketing, but targeting the marketing better. But as you go through the numbers, at least half of the incremental revenue has fallen to the bottom line. And that'll probably continue to be the case.

I mean we did have some extra marketing spend. So, in the fourth quarter, as an example, we spent about $1.2 million more on media and advertising in the fourth quarter than we did in the third quarter. We did kind of mention that in passing on our last earnings call, for what it's worth. But you do those things not necessarily for the sake of the quarter, you do it for the sake of the longer-term of the business. And a lot of that has been stripped back here in the first quarter. There is the question of did we run a lot of extra spend and then it helped -- if that's what helped [multiple speakers] --

At the time we did it, we kind of wondered, "Well, that didn't seem to work." We ran a TV ad, and so on, and it didn't see a lift in our revenues. But then when we stopped running it we did see a lift in our revenues, so maybe it was a delayed lift. So, it -- but that's a judgment call. But I think most of the improvement, going forward, will be from revenues.

Yes, I mean I'll flip it around you in a little bit. I was looking at our monthly gaming revenue last year, and we had numbers that were consistently around $7 million -- $5 million, $7 million, $6 million, in that ballpark. And so, when we crossed $8 million for the first time, in December, I ran around telling people, "Look, we think $8 million is the new floor, not $7 million." Now, January was its own exception, where you had some crazy snow everywhere in the country, including here in Waukegan, and that dinged January. But looking into February, and even March, I mean, look, I'm -- $8 million is clearly like it's the new floor, and $9 million may well be the new floor. And I think what people have forgotten recently is that these casinos, they're best months aren't in the first 12 months of opening, it's -- you don't have your best month in year-one or year-two, it's after that. So, we're -- we fully believe that there is more revenue uplift that you're going to see from here.

Yes. And, basically, if half the incremental revenue falls to the bottom line that brings up margins, because the margins are still lower than they will be at maturity. But most of the way we get there is improve revenue.

Great. And then just on the follow-up, the legacy business that you talked about, the $30 million to $35 million of EBITDA. Just some commentary out there has been labor levels or wages continue to go up and impact margins. How should we think about that legacy portfolio and maybe the growth profile into '24?

Well, it's a little different in different parts of the country. Colorado, for example, keeps increasing their minimum wage -- or actually, they increased it years ago, but it goes up every year under the law. So, it's somewhere around $15 an hour now, which is about twice what it is in Mississippi. And Mississippi has not seen an increase in minimum wage in a long time. And, of course, we've operated in Mississippi for a long time. And Cripple Creek is challenging. We're trying to staff up a place that'll employ 400-500 people in a town that has 1,200 total residents. So, getting people to commute to this mountain community and work is a challenge. And -- but we've been doing that. In Waukegan, there's a lot of people around here, that that's not so hard. But even a dishwasher has to be licensed by the Gaming Commission, and that's an ominous 25-page form, and that that's been a little bit of a challenge, but we're working through that, and we now have a pretty stable workforce here, and we're pretty happy with it. So, it varies from different parts of the country. And the other thing you need to just be aware of is I think, like any other business, if the cost of labor is going up and the availability of labor is tight, you look for ways to be more efficient with the labor, whether it's a technology that allows you to operate the casino floor a little more effectively, is it going to be -- like somebody came in, was pitching me on the artificial intelligence stuff. And then, said, "You know, we have these video blackjack games that have a recording of somebody dealing it. Imagine how much more effective they would be if you used artificial intelligence?" So, the person talks to you about, "Hey, that was a good bet," and so on. And that's, I'm sure, somewhere down the road. And if you can make it more of an interaction thing then, all of a sudden, maybe people are less necessary to have an actual dealer. And so, now you go to -- so the dealing games would only be higher minimums, and we've done that in a number of our markets. And, by the way, the dealers ultimately like that because if you don't have low minimum games, the tips tend to be higher. Fewer dealers and higher minimums, and the dealers sweep -- some dealers who are making really good money. And we have a lot of dealers make good money. But we have some in some markets that are double what they are in other markets. So, and the same thing in the food and beverage area, you find like if you go to -- as airports have renovated, they now have these place where you sit at an iPad and you order your meal, and you never see the waiter until they bring you your meal. At some point people will be accustomed to that enough that maybe we can do that in our facilities. And then the same waiter can serve more people. So, you're constantly looking for ways to be more effective with the payroll. And at the end of the day, that's also good for the employees because we can pay people more per person if we have fewer people, as long as we're providing the same good service. And so if it's done right, it's a win-win.

Great. Thank you very much.

Our next question is from Ryan Sigdahl with Craig Hallum. Please proceed.

Hey, good afternoon, Dan, Lewis. Two on Chamonix, so first, firsthand experience, it is beautiful. It's going to be remarkable in that market, but with the soft opening, several inconveniences, I'll say, that negatively impacted the player experience in the first days, weeks following the soft opening. So I guess fairly minor, corrected with the ongoing construction, but what feedback have you heard from those early visitors? Have you got them back to try it once more things are done? But just kind of curious the trends you've seen from visitors and feedback?

Well, I recognize the hotel for the first few weeks was pretty much only invited casino guests. And so then we went back and said, "Hey, we're sorry, our televisions weren't working right." So, you know, the little things you run into, like I was up there one day and all of a sudden the cable television wasn't working. Turns out some ice had slid off the top of the building and pancaked the dish. And I was like, okay, we need to get a new dish and maybe we should put it in a different spot, you know? And so there were a lot of issues like that. And we have no problem going back to those people and say, "Hey, Mea Culpa, please come back and give us another shot." Frankly, they're casino customers. We would invite them anytime. So, now we have no excuse to have them back. You know, we have some little things, they little annoyance that they really annoy the heck out of me, but our architect put in one of our towers, the guest rooms are supposed to have four panels of glass. So you have this expansive view. For some idiotic reason, our architect had some solid panels put in because I guess at first he said it was the energy code, but it turns out it's not the energy code. I think it was just he liked the look of it on the outside. I don't know. By the time we figured it out, the glacier's putting up some of these panels. And I think there's 25 rooms that have, if the panel's on the edge of the room, it doesn't matter that much because the curtains would hide it. But there's about 25 instances where the panel's in the middle. So, you open the curtains, and you have a solid panel blocking your view. And we can't fix that in the middle of the winter. We'll fix it in the spring. And so, we kind of tongue-in-cheek put a little sign on those that said, "Sorry, we blocked your view. Our architect screwed up." At one point, I had his cell phone number on the thing. We decided maybe that was a little too much. And we said, but we're willing -- we're happy to give you $20 up your room rate or $20 of free play upon request because we blocked your view. And the funny thing is the, I won't say who, but the CEO of one of our competitors stayed in our hotel, happened to get one of those rooms and asked for his $20. So we gave it to him, right? So there's some of those things that you're just working through. And I think any new hotel has those issues. It's certainly harder. You have to appreciate; this is one of the largest buildings built in rural Colorado ever. I mean, it's bigger than anything in Vail or Aspen. The only buildings similar to this were Ameristar and Monarch and Black Hawk, and they had similar issues. You didn't have enough of a workforce to get everything built all at once. So we couldn't do like Durango Station where you open everything at once because we just didn't have enough finished carpenters and so on. So we had them focus on the casino and the hotel, and now they're focused on the steakhouse and then the spa. So we are opening in stages.

And it's a little fortuitous in a way as well. We open into the winter. It's seasonally weakest in the winter. And so during this ramp up phase, it gives us the chance to kind of season our employees, get all of our amenities up and running before you get the big summer seasonal rush, before we put our big marketing spend out there as well. So we knew that there were going to be issues with the opening. Every single casino opening that I've been to, that Dan's been to, has had some issue. And I can tell you about issues at Wind Palace. I can tell you about issues at Fontainebleau, Bellagio, Mirage. You can go through the list. And unfortunately, it must have been a quiet news day because some of our issues got made it into the local paper. But look, we don't like having issues. We want everyone to have a good experience. And for us, it is about making sure that the people that were inconvenienced will have a very, very good experience there the next time they come back.

Yes, I still remember at [L'Auberge] (ph), we had one vertical column in the hotel that didn't have hot water. Somebody had screwed it up and there was a whole bunch of rooms that didn't have hot water we had to deal with. At Bellagio, I remember we had spent a lot of money to have the fountains that could go. On a windy day, they'd have a low fountains. And on a calm day, they'd be the full bore fountains. So there were actually three different stages of fountains. And it was all designed that way. And then I think early on, we decided to never use the low ones because people would stand there and say, "that's it." I thought this was supposed to be spectacular. So, now they just announced that it's too windy to run the show and they just don't run it, right? But on opening night, everybody was out there in their tuxedos and my wife had a very expensive silk gown and it was kind of windy. And at one point, I could see they were getting ready to let the fountains go. And I said to my wife, we have to get inside. She says, "What do you mean?" I said, there's no way Steve Wynn's going to let him run the low wind fountains. We got to get out of here. And she was like resisting. And I kind of dragged her into the building just as the fountains went and they drenched the crowd and everybody was came in, running into the place just drenched in their tuxedos and gowns and so on. So, every place has their issues. And but I think we've -- and I think there's also a little difference. When we opened Bellagio, you didn't have Yelp and you didn't have advisor. You didn't have people could go broadcast their unsatisfaction and so on. And usually the satisfied people don't go out and complain, right? It's the unsatisfied people. But we're working our way through it. I think people are -- I literally think, and you mentioned, I hope you agree with me, I think we built the prettiest, not the biggest, but the prettiest regional casino in the whole country. You walk in and it's every bit the quality that Wynn and Bellagio are, and we used a lot of the same designers. And so, I think it will be a long-term asset for us, and it will get there. It's getting all these accolades. But there are things, like we didn't have a dinner restaurant, so we've been serving dinner at a makeshift buffet in the meeting room space. And that'll be rectified in another week. And actually here at American Place, it took us a long time, but we finally got the steakhouse done that's a diner. I shouldn't call it a diner. It's a modular structure that we bought from a diner company, but the finishes are not what you think of in a diner. It's more like Fog City Diner in San Francisco. And it's been open just a couple weeks, and already people were saying, "Well, I'm accumulating all these points, but all I can do is eat in the coffee shop." And now we have a high-end restaurant with a nice decor and steaks and stuff that is competitive with anything around us or anything at the competing casinos.

Anyway. Good. Well, despite all that, I did pay for my room, so you got some money out of me, and the casino floor was packed. So it was good from that standpoint.

I will tell you an inside story that when you say there's always a surprise. Lewis and Adam and I were there the night before it was supposed to open, and we were checking out the Ice Palace down the street. We walked back into the place at about 10:30 at night, and there were some dealers doing last-minute training. And as we walk in the building, they come running up to me and said, "Mr. Lee, there's water coming out of the ceiling." And they show me where it's in the elevator lobby. And as we're standing there, it went from a trickle to a flood. And what had happened is it had been very windy and very cold, and it blew some of the flashing off one of the expansion joints between the building, and was allowing cold air into the attic part of the building. And coincidentally, one of the heating units had failed. And so there was this attic area that had gotten very, very cold, and it froze the sprinkler pipes. And there was a three-inch sprinkler pipe that froze, and it broke the end cap on it. But nothing happened because it had a plug of ice in it that kept it shut. And the contractor had figured out the heating issue and got the heating unit back up and had put temporary insulation where the flashing was missing. And we happened to walk in just as that ice plug had melted a little bit, and it kicked in. You know, when it leaks a little, the fire suppression system says, "Oh, the pressure is down in the sprinkler system." Turn on the fire pump, which is like 1,000 gallons a minute. It's going to put out the fire. And when it did, that plug of ice went through a wall across our server room and embedded in a wall on the other side, and the water came gushing out. And right on the edge of our casino, where we had spent $1,500 a foot on decor and everything, and I went running up to the second floor. Fortunately, I had the speed dial for the construction guys, and they'd all gone to bed. But the third one answered his phone. And I told him, we got water. And he hung up and came running down. And he and I almost ran into each other on the second floor. I'm looking for where the water's coming from. He knew where to turn off the fire pump. And he opened this closet, and there's a thing that looked like a wheel out of a submarine. And he turned off the water of the property. And then we had everybody from Bronco Billy's and everything there with towels and shop vacs and everything else soaking up all the water so it wouldn't get to the casino floor. The water sailed over our servers, but didn't actually damage any of them. And the next morning, we had the pipe repaired. And the state fire marshal, who we were trying to get his permission, kind of shrugged and said, it's Colorado. Pipes freeze all the time. That really wasn't an issue for him. And we opened the next day at noon. And I will tell you, midnight the night before, we were very close to having a river of water going right through the middle of the casino. And so every opening has its surprise. And hopefully, that's the worst surprise we're going to have at this one.

But now you know why your visit was a little affected.

Yes, apologies.

Yes, look forward to the next one. Maybe a quicker one, Lewis, just on the West, flipped a negative EBITDA in the quarter. I guess how much was that from the last week in the quarter with the opening of Chamonix versus pre-opening versus maybe performance from the two smaller properties in Nevada?

Yes. Well, we made money that last week from Chamonix for what it's worth. You saw the casino was a pretty packed casino. Really, that was a carryover of the money that Bronco Billy's was losing for the rest of the quarter. We only had Chamonix for what, four days in the fourth quarter.

Great. Thanks, guys. Good luck.

Yes.

Yes.

Our next question is from Ricardo Chinchilla with Deutsche Bank. Please proceed.

Hey, guys. Thank you so much for taking my question. I was wondering if you could quickly comment on the first quarter in terms of have you seen any impact from your competitors in Illinois having the ability to operate 24/7 and to market more effectively? Is there has been a change in dynamic? You see more competition? And how's the promotional environment there?

Well, you know, we're quite a ways away from the Bally's facility. Our main competitors are Rivers and the Potawatomi to our north and the slot machines at bars and liquor stores around us. And they've been 24 hours a day, seven days a week for quite some time. And Billy's being not only an hour drive away, but on the other side of Rivers. In other words, to get from downtown Chicago to us, you have to drive past Rivers and you're halfway to us when you drive past Rivers. And so what happens there doesn't have much impact on us. I mean, probably the biggest thing we've seen is we lost some employees to Billy's when they were opening and they've come back, a number of them. So I wish them well, but they don't have much impact on us.

Got it. Perfect. When thinking about the space opening of the property, do you guys have like a target margin or like a target even generation for the year? Or, how should we think about the cadence of the profitability of the Cripple Creek property?

We have a target, obviously, and each of them, and Lewis kind of alluded to that. But when do we get there is a tougher thing to forecast, right, because you're trying to build to it and everything, so, as long as it's still trending the right direction. And so, for example, at American Place, I thought we would be where -- before we opened, I would have thought we would be where we are now several months ago, but we are where we are now, and it continues to get better every month and that's great. And people forget that Bellagio did not make $500 million in its first year or its second year or its third year. But I think from about its fifth year to today, which is 25 years, it's made about $500 million a year. And these are not short-term assets. And the same thing at Chamonix, I mean, we are trending the right direction. We're nowhere near the profitability that we expect to have as it matures. We don't even have, I mean, if you were there on a Wednesday, there are some times we have as many construction people wandering around the property as we have guests. We're still trying to finish the construction. Now, on weekends, we have a lot of guests. And as something that Lewis mentioned, which is pretty important, that facility, given where it is, it's a little bit like Las Vegas. You have to -- Las Vegas fills on weekends and you fill midweek with meetings and conventions. And that would be the same thing at Cripple Creek. It's the same thing in Black Hawk. But those meetings and conventions, it's hard to book them before you open. You can promise that it's going to be a wonderful place and so on, but that meeting planner wants to see it, wants to feel it, wants to look at it. And so those things tend to be booked later. And so at the moment, we're using our smaller meeting room space as a temporary restaurant. And we're really not supplanting any meetings that were going to be in there. But in the next few months, we have to get out of that meeting room space because our meeting's on the books and there will be more meetings on the books. And as we fill in the midweek, that's what you need in order to get to the numbers that we have, and that's a gradual process. Now, in the summer, filling midweek will be easy because it's nice up in the mountains. But in the shorter seasons and in the winter, that meeting, and convention business is very important. And there's a lot of it. I remember being at Ameristar. Before we started construction, I would go up to Black Hawk and look around because we're pretty similar to Ameristar or Monarch, which are both very successful. And there was a meeting at Ameristar, and it was quite busy. And I was trying to figure out, who is this meeting? So I went to their meeting. It was the Colorado Association of Court Stenographers. And I thought, huh, there's enough court stenographers in the state of Colorado to keep Ameristar pretty busy for three or four days. And it just gives you an idea of the types of meetings that are out there that you may not think about. But yes, court stenographers have an annual convention. And maybe one of these days we'll get them to Cripple Creek.

So, yes, and I don't know if it's helpful to give you a little bit of winter color. January was certainly a challenging month system-wide with snow everywhere, crazy levels of snow. I'm sure you had it there in New York where you were too. And so, we weren't immune to that over in Cripple Creek. And so don't expect us to have made a significant amount of cash in the month of January. But as we kind of move out of the winter and into the summer, the script flips pretty meaningfully. As snow stays away, the script flips pretty easily as well. I can't talk today, but --

But at the moment, if you've seen the news, Tahoe has like 10 feet of snow. And so, all the roads going in and out of Incline Village have been closed. I don't know if they're open right now. But they were closed this weekend. On the other hand, our casino's still open. And there's a bunch of people at the Hyatt who couldn't get out. So we did a little bit of business. But Tahoe always has weather. You just don't know what the weather is. But it always has weather. But February in general is shaped up to be a really good month. And we don't have the final numbers yet. But we know it's going to be pretty good.

I appreciate all the color. That was very helpful.

You're welcome. Thank you.

Our next question is from Chad Beynon with Macquarie. Please proceed.

Good afternoon, guys. Thanks for taking my question. Maybe first, just kind of thinking about CapEx, Lewis, you talked about the permanent project CapEx being pushed well into '26 and '27. How should we think about just kind of overall CapEx for '24 and '25 either from a maintenance standpoint, paying the rest of the bills on Chamonix, kind of what's left here in the first half, just trying to bridge that free cash flow? Thanks.

Yes. So, Chamonix, just think of the restricted cash account largely taking care of that. We had about $38 million left in that restricted cash account at the end of the year. I think in real time, literally as of today, I've got $20 million sitting in that account now. So fruitful thought there. So we'll work through that balance before the end of the second quarter. Maintenance CapEx historically has been on the lighter side, so we've been trending close to $3 million. I tell people generally $3 million to $5 million a year for maintenance CapEx. Maybe that creeps up slightly as we buy things like more slot machines. But the nice thing is while we have some newer properties, they are new, and so there isn't a lot of maintenance CapEx outside of things like slot machines. So it's not going to be a crazy year. As you go into kind of end of '24 and into '25 and we start generating some pretty meaningful cash flow. We'll start looking at things like completing the construction quality blueprints for American Place and things like that maybe even doing some site work, but that work is very, very small in terms of cost.

Yes, I mean it might be 10 or 15 out of the $325 million.

Yes.

Okay. Perfect. Thank you. And then as we think about kind of the completion of American Place Permanent, any updated view in terms of that $325 million that's left to spend, what type of return we should get on that will the property significantly change in terms of who's in the property, how much it'll cost to run the property, how are you thinking about that kind of medium term, what that can mean in that deep population market?

Yes, it's kind of a little bit of a complicated algorithm because we're not allowed to operate the temporary indefinitely, right? So how do you really look at it, right? But the temporary is making what it's making in a tent, a sprung structure. And during the day, it looks like where the Department of Motor Vehicles stores salt. I mean, it really is pretty unimpressive. At night, we project images on it so it's not just a black hole. But it doesn't have the curb appeal that you drive by and say, "Wow, look at that." Once you walk in, it's much nicer than you expect from the outside, but getting people to walk in the door is a little bit of a challenge. So the permanent will have much better curb appeal and be even nicer on the inside. It'll be somewhat bigger. And you start looking at -- I mean, I remember Rivers is making $300 million a year EBDITA, until we figured, and I think the Potawatomi is about $200 million a year.

That sounds great.

And we're trying to get to $100 million. And if you look at the demographics, that should be doable with a permanent facility. It's not doable with a temporary facility. A temporary facility may be able to achieve half of that. So if you say, well, there's an incremental $50 million for $325 million investment, that's an okay return. Now, we've invested $175 so far, but a good chunk of that is stuff that will go into the permanent. For example, there's $20-odd millions of slot machines that we will move next door. We had put in storm sewers and surface parking lots and a fence around the place that is all part of the permanent. And then recruiting and training a workforce, which is tens of millions of dollars of pre-opening expenses. We now have a workforce that can move next door very easily. So --

Three years or four years of marketing the place, right, it's a lot of that sort of stuff.

So, there's a lot of ways to look at it. You can look at it as the temporary, what it earns, if you say, well, maybe of the $175 million we've spent so far, maybe a $100 million is the temporary and $75 million is stuff that's really for the permanent. I'm making these numbers up now. And so the temporary will pay for itself and then produce cash towards the permanent. And so, the net cost of the permanent is not really $500 million. You end up building the permanent for $400 million net of what you did in the temporary and then you make $100 million a year. There's a lot of different ways to analyze it. It's kind of a complicated algorithm. But just about any way you analyze it, you get a pretty good return, which is what happens if you have the closest casino to 1 million people. I go to Durango Station, and I kind of drool, because frankly, they did a very nice job there. In fact, there's some stuff they did there that we're going to kind of take note of when we complete the designs of the Permanent American Place. They are probably the closest casino to three or four hundred thousand people. That slice of Las Vegas that's on the southwest side of town. And you look at how many people they have in the place. And part of that is in Las Vegas, we're very accustomed to thinking, well, we're going out to dinner. Let's go to Red Rock Station. Let's go to Durango Station. And that isn't here yet. We don't get a lot of people who come in to have dinner at our place, and then they'll gamble before or after. And so there's a learning process that will come on. But the demographics of what we have here is significantly better than what they have at Durango Station. Now, we're not going to spend the type of money. We're not going to be as big as they are. I think we could be the same quality that they are, but they spent $750 million. We're not, we're going to spend about half that. But we can be the same quality, just not as big. And we've designed it in a way that it can be expanded later quite easily.

It's funny sometimes, Chad, because when you think about where we are, we're located in one of the wealthiest counties in the entire country. And when I look at our gaming database sometimes, we have customers in there that have already gambled spent five, six figures in our casino. And I scratch my head sometimes and I say, "Wow, they, despite the tent look on the outside, they have come inside." And then saying, "Oh, my gosh, this is a great place on the inside." The people are unbelievably kind. The service is great. But the thing is, there are a lot of other people in this very wealthy county that will never get past the fact that, that is a tent on the outside. And where the Permanent will make a lot more sense as that, that building in itself will be a draw for the first time for a lot of people.

Thanks, guys. I appreciate it.

Yes, I would tell you, Rivers is a great location, but it's not great curb appeal.

Yes.

You drive by, they have some backlit blue glass. We will have better curb appeal than Rivers. They have a great location.

Our next question is from John DeCree with CBRE Securities. Please proceed.

Good afternoon, Dan. Good afternoon, Lewis. I just wanted to revisit an earlier question. We've been getting a lot of questions about the temporary in the quarter. I think Lewis, maybe earlier you've talked about elevated marketing if I heard correctly, about a 1.2 million or so in the quarter. But I think even adding that back, the margin was a step down sequentially than we would have expected. So just wondering if there's any other costs in the 4Q at [Inwa Keegan] (ph), either temporary or permanent, structurally that we should think about. And then to follow up, I'll just tag in so you can answer all at once. Marketing, obviously a decision that you guys made, but is there more of those decisions to be made in 2024? I guess to pick your question, how do we think about the margin going forward from here or the cost structures kind of see marketing normalized next year or might you still think about kind of picking some spots where you see opportunity to grow the database or get some new customers in the door.

Yes, well you had a couple things going on at the temporary here. You did have about a million less in gaming revenue, so the reverse flow through, I guess, it dings you on the other way, right? And that really was a function more of just a little bit of winter seasonality versus the third quarter. We had some actually, I'm looking at Adam as I say this, we actually had some catch-up accruals that benefited us in the third quarter as well. So it's not quite an apples to apples between 3Q and 4Q. So, a little bit of color there.

Great. Thanks. That's helpful.

And seasonally, the fourth quarter is our weakest quarter in most markets. So that's --

Yes, thanks.

And did -- sorry, did you have a second part to that? I -- [multiple speakers] --

It was related to cost structure there in 2024. You highlighted specifically the elevated marketing, which we had talked about, as you noted, in 3Q. And I think even 2Q as well that you'd be doing that. But should we expect some more opportunistic kind of marketing dollars like that in 2024 or would the marketing budget start to normalize next year -- this year, I should say?

As of right now, and I look at Dan and Jeff as I say this, it does feel like we're going to be a lot more in a normal mode, not in an excessive mode here, in 2024. I mean there are a few things -- look, it's challenging when you open any new casino because you have to go out and do general marketing, period. And it was doubly difficult in this case because we had zero people in the database the day that we opened. Today, we're closing in on 65,000 people in the database, and so we can be a lot more targeted to those 65,000 people. But on top of that, we don't have to go out those general messages anymore. We can also start to look at honing in on Zip codes, and everything else. So, it becomes a lot more of a science today than what we would have had a year ago.

Got it. Thanks, Lewis. And congratulations, guys, on getting Chamonix open in December.

Yes, it's kind of funny, everybody's trying to figure out what the earnings are like this quarter or next quarter, and so are we, to be honest. We want it to be trending positively to get to that $50 million in each place, and $30 million from the traditional places. And whether we get there in three quarter or six quarters or eight quarters isn't as important as the fact that we get there. And so, we're focused on it, but we don't sweat it. I sometimes think that the analyst community tends to be very much like, "What's this quarter's earnings?" And it's like, "Well, let me try to get the steakhouse open, I'll let you know," right, because you do try to fix those things. But recognize, we just finished a year where we had $48 million of EBDIT, it's the best year in the history of the company. We had interest expense -- cash interest expense before capitalized stuff of about $35 million. So, we comfortably paid our interest expense without having much, if anything, from Chamonix, it was only open the last four days of the year. And the property, here in Illinois, was ramping up. It didn't do a whole lot of cash flow in the first-half of the year. And so, we constantly get this, "Well, aren't you about to do some financing to do American Place?" It's like, no, actually we're not. Not even close. And the bond market is gradually getting better, but we don't have a need for the money now. And it's at least a year away. And the need that we have a year away is a lot less than people think because we're producing really good free cash flow. And that's just going to augment itself throughout the year. How many stocks do you know that are trading at between five and three times free cash flow, and that that's approximately our stock is, which is a little bit nuts. And I think people are just -- they're looking at the fact that we have to built the permanent American Place like it's some big number, and it actually isn't. And we've already spent quite a bit of the money needed to build the permanent American Place. So, anyway, that's where we are. One more question.

Yes, probably time for one last one.

Our final question is from [David Hargreaves] (ph) with Barclays. Please proceed.

Hey, David.

Hi. Hello. So, I understand, if I heard correctly listening to the -- sorry, I'm at the airport, so if I missed some stuff in the press release, I apologize. I think you opened the steakhouse in February, at Waukegan. And I'm interested in what the impact is there? And then just taking liquidity from another angle, I'm curious as to how much liquidity you expect to have left over, and what your plans might be for it?

Well, that that's easy, I mean we're going to build up some cash here, and then supply cash to the permanent American Place that we could built two to three years from now. So, that's your second question.

Yes, we're not out in the market for dividends or, quite frankly, our indenture doesn't allow for meaningful stock buybacks or anything like that. So, it really is for us taking that cash, preserving it, and then investing it in the permament American Place for now.

Yes. I mean have -- I think Lewis mentioned, we have, I think, $23 million drawn under our credit facility. We'll probably pay that down this year.

$27 million, Dan.

$27 million. And what was the first question?

Then the first one was about the steakhouse --

Yes, I don't know -- look, what you probably missed, David, was we had -- February is going to be our best month ever in the history of this property. That's after December having a month of $8.2 million. And we think February is going to be north of $9 million -- not think, we know it's going to be north of $9 million of published gaming revenue. So, no, it was a very, very good month. I was here -- I got here on Saturday afternoon and walked the casino, and had dinner with our GM, Jeff, at the steakhouse. And the first thing that I said to him was, "Jeff, there is a completely different energy in this building now. Good for you." It is a very, very dynamic floor, especially on the weekends.

Yes, and that was the last part of what we needed to get [technical difficulty]. It's hard to say did -- can you say we had the best month in the property's history because the steakhouse was open [technical difficulty] the month? Well, it was a contributor, but probably would have had the best month anyway.

Yes. But it is an important addition for a good high-end plus market that's needed -- [technical difficulty] --

And Jeff's right here. You did how many people through the building today?

Through the building, 2,000 a day.

Yes, we get 2,000 people a day at the front door, and we're doing 120 covers a night?

Yes.

And it's still a relatively small portion of the people coming in the front door eat in the steakhouse. But the people who do are the more important customers.

Yes.

And if I recall, February, you have the Ice Festival of Cripple Creek is a pretty important month. How's that going?

It was a very good week for us in Cripple Creek with that Ice fest.

Yes.

Okay, great. Thank you so much, and congrats.

Hey, congrats on your new job too, David.

Thank you both.

And I think that --

We have reached the end of our question-and-answer session. I will now turn the call over to Dan Lee for closing remarks.

Well, I'm just going to say we're in the process of tripling the size of the company, and we're making progress every quarter. So, we'll talk to you next quarter. So, thank you very much, everybody. Thanks for your support.

Thank you. This will conclude today's conference. You may disconnect your lines at this time. And thank you for your participation.