Q1 2020 Earnings Call
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You're currently holding for the full house resorts incorporated.
<unk> earnings call at this time, we or something or audience and would be underweight in just a few moments where they feel patients Holden nothing so your minimum wage.
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Good day and welcome.
Well, how forgets incorporated first quarter 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, a full house resorts you may begin.
Thank you and good afternoon, everyone welcome to our first quarter earnings call has always before we begin remind you that today's conference call me 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 of these forward looking statements. Please see today's press release under the captions forward looking statements for the discussion of risks that may affect our result, also we may make reference to non-GAAP measures such as adjusted EBITDA for a reconciliation of those measures. Please see our website that's Wallace.
First question leases that we issue.
We were also broadcast news conference call at full house resorts Dot Com, where you can find todays earnings release as well as all of our SBC filings.
And with that Saudi Arabia, Yeah.
Oh.
This quarter's seems like a long time going up.
And then just addressing where we were in the first quarter.
Silver slipper, who is doing quite well the northern Nevada is doing okay, rising star and Hi, Colorado, we're doing a better than they had in the second at the last year.
And trending positively.
No I would think shut down the middle of March so.
The quarter is obviously very distorted by all of that and.
But I think the question now is getting stuff reopen it's almost like has an adult one company, where you're you get a handful of employees and you're getting ready to open five casinos and put a lot of people back to work.
The Oh.
I guess very important that's the end of March we have 24 million of cash and equivalents no. Good chunk of that is normally used in operations.
And most of the rest came by stopping construction on the parking garage that is underway in Colorado, no that is being used as it's kind of accretion.
In the first month at LIBOR closely to them from March to mid April we probably burn through about $5 million a lot of that as opposed to severances, we've reduced payroll.
And ER and thirdly.
After that period is about 3 million a month.
What you got a million is a debt service on their debt.
And 80 and most of the rest is actually stuff like real estate taxes.
And.
Utility cost and so on a payroll is about 20% as a 3 million.
We've gotten a appeal done that's pretty small at this point.
We did just we'd see the 5.6 million dollar loan ended the care exact.
Two year loan at 1% interest.
That ER has incentives in it for us to her back employees and a and will be helpful. It, it's getting Colorado, and Indiana up and running those are the two properties, we have that have less than five Duncan. Please.
Very specific provision that was in that Cures Act.
Allies.
ER subsidiaries like that could not look at the total parent in terms of Sandberg employees silver slipper has more than 500 employees, but those two have less a they've hotels associated with it.
And so we qualified and ER and frankly, there's all this language about possible forgiveness goes goes rules aren't really spelled out yet.
Let's see how it works it's possible that some of that loan would qualify forgiveness, depending on what our payroll is over the next day weeks, which in turn depends on when we're actually able to open.
We have brought up quite a few employees that work already trying to put him to work to to get ready to open.
Those properties. So in terms of actual hoping that the first one to open we think is going to be the silver slipper and that may be next week, we'll stick in the commission has stood in advance of Memorial day weekend, So thats coming up.
I'm not sure exactly which day some good stuff has been a little strange again.
The data that's something they said we could open restaurants for not casinos will we ever restaurant itself. We have like 36 hours notice, we really wanted they couldn't get food that fast.
But we're not looking at getting that open now is just coffee shop.
Well make a lot of money, but it might make a little money and engender, some including some that customer goodwill and get a handful of our employees back to work, but that also will make it easier when we open up casino because without trying to open both restaurant Mcus and on the same day. So so so but that's coming in Fallon.
Tahoe allowed the Hyatt, which are casino is in a is now saying they don't anticipate opening until early June.
It's possible we could open the casino before the highest but it gets posture gets a little complicated, but I think we're in that timeframe sometime between now and early June.
That's helpful in Colorado, they've indicated governors indicated he did not expect because you know stoping in may.
Hello people interpreting that is going really Jeremy but actually the mid June it's hard to say.
And then.
In Indiana, They specifically did say June 14th should be the date that would come back. So so next few weeks, we think we'll be opening all of their operations Amtrak because that has its pretty busy trying to figure out.
Exactly how to do it we don't the marketing plans in both Colorado and it rising Sun, which is a lot of work.
Where we have secured check loans, we've got employees back to polishing bucked the place and Uh huh.
And fix it up and get ready.
Does the silver slipper.
They're doing some of that as well Oh getting ready for next week, we're installing like a plexiglas panels between slot machines that can slide in and out.
So if you want to be separated from the person next to you you can pull that panel out and where we're hoping that that will allow us on some of the popular backs to keep all the machines going instead of having to turn off every other machine, it's not clear yet.
Varies from state to state on what the different rules, you're going to be we're trying to figure out how to make table games.
The Oh, there's a safer.
And so a lot of those rules, we were trying to work out whether they come getting regulators and.
And internal but.
Where people so the first questions you know when do we opened second question is Oh.
I Wonder what rules and we're still trying to figure that out I guess, the third is where the customers you're really going to show up.
We've heard anecdotally that there's about a half a dozen tribal casino sort of opened in different places, but they they are like to do so and so far they all seem to be doing pretty well and I think golden gaming at their earnings call indicated that.
They have hubs you up in Montana that up slot machines and in some sort of route operation and they've opened and seem to be back to the pandemic business levels pretty quickly. So I was not a lot of data out there, but what data there is a that seem to indicate could that.
Business will cover pretty quickly my guess is some of that as pent up demand and then maybe a few weeks later the reality is a 15% unemployment rate might start to syncon.
Well, there's lot of different moving pieces and that's like a lot of where customers who retired.
Retired you can't really be laid off and you still got to 12 and you've got a stimulus check so so.
Some of that going on as well so.
Now we are planning to open carefully.
In most cases, we will not open all the restaurants.
Not open all the table games.
ER and we're going to try to make sure that we have.
More customers and employees if you walk so.
We're trying to open kind of aluminum side, and we can always build from there.
Because.
We just want to be cautious just in case customer structural certainly hope they do but we're planning for a more conservative scenario. Meanwhile, the Marvel Mobile sports Wagering is coming along.
All three of our partners in Colorado, but then licensed there are waiting approval of their apps.
Markets has indicated they expect to be open.
This must actually next 10 days.
No and and the woman Churchill, or we could be up and going sometime in the summer, but we don't control we know exactly when that is.
Professional sports does seem to be trying to find ways to come back.
And of course that will help the sports betting, though I think people want to get up and running will be sports skins anyway, because you want to get market Cherry on get people signed up on your stuff. So I don't think embers dragging their feet waiting for professional sports.
But there's a lot of work that our partners have to do it to get their apps approved by the different regulatory agencies and get license themselves and.
But they are licensed on Colorado, and Churchill us as it mentions in the release has been up and running in Indiana and the other two are still seeking approval in Indiana.
We've got very far off either.
When all six are up and running.
I think that prior to the ended the third quarter and maybe even.
The second quarter on all six are up and running our minimum guarantees or about 7 million year.
Hi, Thanks, Jack and 7 million here and there is no expenses.
Very few expenses related to that so that's almost all income and there's no maintenance capex right. So it's pretty substantial.
Thank you for our company.
And it's coming on stream shortly.
Oh, what else is this.
The only other thing I was going to mentioned annually.
We are very fortunate data good group of lenders.
So in April.
We are effectively amended our indenture to delete the.
Debt to EBITDA requirement for the first quarter, but I mean that group is a group good group back back in mid March within days of the closures. Our lender group came to us with a plan for amending pretty much a full years worth of covenants and didn't make sense yet to figure out exactly how those should work given we didnt know when.
We're going to reopen but.
But but now that we have some potential dates insight, we will end should be closer to getting.
Those future covenants all worked out.
We should benefit we do anticipate that we will need covenant relief on the June quarter, which tend to be filed in mid August and we just decided to leave the.
To be dealt with in August.
With that lenders one of a handshake.
On because by then we'll have stuff opened and we'll know more about sports betting would be up better positioned to figure out what the covenants should be going forward from there.
But at the moment with covenant at the end of June that we think it's pretty unlikely that we're going to back [laughter].
Yes, just haven't test to detect.
Technically we haven't desk.
Then everything you know Waukegan is still out there were one or three bidders.
The clear the city's process.
The state Gaming Commission still intends to choose somebody.
Before the shutdown we were in discussions with three different parties.
To partner with it and then we would anticipate.
Finance and not on a project.
Financing basis.
I think everybody's pretty distracted with getting their own casinos open at this point.
But I think once we do get open things get resolved will resume those conversations waukegan to good opportunity for whoever is chosen by the gaming Commission, we think with a very good proposal, there and we'll see where they go so it's kind of hard to imagine building something new when you can even operate the once you have but those efforts.
Please don't come of come around every day. So we had put in a proposal we made the first hurdle and and we're still in the game.
Yes, that's it I'm happy to take any questions.
Or for.
I think we're we're doing fine under the circumstances and eager to get stuff we opened so.
Thank you if you'd like.
We signaled by pressing star one on your telephone keypad, Roger using the speakerphone. Please make sure. Your assumption is turned off to a lot of your signal to reach our equipment.
I wanted to ask a question.
And we'll talk just a moment so that everyone has an opportunity to signal for questions.
We are waiting to see what.
I had Uh huh.
I was just go say low we're waiting for people to cure for questions.
Hi, great kind of a detailed shareholder letter that went out with the proxy it kind of replaces the old classy annual reports and then I made the comment that the regional gaming markets.
They tended to recover faster than say, las vegas, or or destination getting new markets.
And did so after 911 and did so in 2018 2008 with the recession, we actually went back and pulled those numbers, but that's absolutely true would have to disseminate anybody wants and benefit if you look at what happens after 911 when air service was disrupted and people are afraid to fly regional gaming advanced.
That pretty quickly and much faster than any destination that required people to fly to.
And I am very few people slide you are casinos.
I think that Sam.
What happened again, and then the recession regional gaming did better because after all its or less expensive entertainment, it's not very expensive to get your current drive from Cincinnati to rising Star Wars, Colorado Springs to Cripple Creek and.
So we think we'll do relatively well.
That doesn't mean, we're going to be up 20% just means that did better than.
Say, Las Vegas, where Atlantic City.
And I think what we thought.
Okay.
No we never had a situation quite like this before and so it's hard to say.
The question [noise].
Yes.
Well go to your first question from David Bain of Roth capital.
Great. Thank you Hey, Dave.
Hey, guys.
I was just going to ask first you know on the impact or the impact from cobot has that cause you to real book and maybe analyze sort of the entire cost structure and away that you believe could impact or not impact longer term revenue generation and maybe allow for stronger.
Oh through a in the portfolio.
Yeah, we have looked at a pretty carefully and.
It's actually reminiscent of when I was just tenneco, we had opened.
The bearish in Lake Charles It'd been opened about five months for her can read that hit us than we had to close for its every call it five or six weeks and.
It had a lot of revenue and not a lot of income in the first five months preparation and while we were closed.
We examined everything pretty carefully and once that reopened it was quite profitable and has been ever since.
Got it anyway, just maturing hurricane actually gave us a chance to do that and the same thing here I mean, we've been going through.
Everything looking at what make sense.
I'd like for example, we will not up rate table games 24 hours a day in several markets.
Well, we won't operate all the restaurants as we had before.
Under some of the new rules on table games will end up having higher table game minimums in order to keep unprofitable, which means operating the fewer over them.
Even on the slot machines, which can be smarter than the.
The frequent player program.
Raising some was pretty antiquated and we've done a complete we think of it.
Now that we have better information coming from economic system.
No.
With much better detail, which customers are most important to us.
And retail had the program to to.
Reward those who are important to us and too.
They do some of the giveaways to people who are less important to us. The O. program I think there were people, who we're not making money.
Yeah.
And so guide.
Having this opportunity to rethink it and then re imagined it we invented and and frankly now we've brought our casino hosts back to work.
Their homes to call people up and expand the new system to and for our most important customers, it's actually a better system and.
So we have the time to explain that.
And the research. So so yes, I think and hope we can open smarter and better.
We were before and we're rethinking really everything in the company right done from like the menu with the coffee shop and talent as much more simple many now than it was before.
And.
Oh way down to.
We want to operate.
Mexican restaurant, just the Bronco Billy's until we get into peak demand periods.
And when it's really proven that is needed so.
What we're trying to figure out how to be smarter.
Okay, Great and then I.
I know to kind of a hyper local market, which I agree.
Definitely should should recover faster than the other markets location significant but do you envision a more promotional environment. When the lights turned back on is there it sounds like you've already done some pretty marketing strategies.
But you're implementing even during these times or is it more like you know you turn to life back on everyone knows that the casinos there. It's in town and many are just looking to go back a gaming activities.
No.
Well in rising star and actually in Bronco, Billy's if anything it might be a little less promotional because we we figured out that to certain groups of customers were probably giving them more comps than they really dessert and then Oh, we actually ran the math on one of the categories at rising star.
And then paraphrasing members because they don't remember exactly what they were but is it was a customer who might be worth.
$5000, a year and gaming win based on their play and if they took advantage of everything we gave them it might cost us $5000 here and that was like sort of customers that really profitable and so we've said, let's let's kind of.
Change that parameter.
Hopefully keep the customer, but make them a profitable customer with some customers are clearly plane gaming the system and you start looking up.
Everything they were getting the free the phase in the free hotel rooms, and everything else and there were almost carefully gauging their places that they could live off us for free.
And so.
In some ways, we're going to be less promotional on the other hand.
For some of our most important customers by most important in most profitable because with we will try to make sure that.
They do better I.
Give me a simple example, b.
It's a five tier program at rising Sun now and historically, we would have some sweepstake like hotseat process is something that might be hundred dollars.
And and so for a low end customer that would be great price for high end customer that'd be a small price well under the new programs as well if you're a to start customers to dollar $200. If your three star customers 300000, if your five star customer equal in $700 and Bath and.
So the size of the prize is related to where you are in the tier program. So if you're one of the VIP customers, you're actually getting rewarded better but in order to be in that hi, Hi on category. You know your expected win per year is enough bigger was that we don't mind and $700. If you happen to win and so.
So we're trying to be more thoughtful about this stuff and make sure we rewarded in the people, who who we make money with not.
And just getting away free food the people, we don't make money.
Jeremy and leave the player development host coming back a little bit of an unusual anomaly in those two markets.
These small business.
Administration loan spectrum in the program has been paycheck production plan and the idea is rather than have these people be on unemployment with no medical plan tread instead of us companies to keep them on the payroll with the medical plan and so.
By bringing them back.
We may theres no certainty, but we may qualify for forgiveness under the plan.
The rules are kind of big at this point that at least on the will simply given that we should qualify for forgiveness. So it's kind of late.
At those two markets, we have an opportunity to color or development people and our host and say Hey, lets you to come back to work with picture on the payroll and will pay for the medical plan.
All of which is essentially paid for by the small business Association.
And but we're trying to do it and ways, where we can put people to work that we will get benefit truck and in some cases were literally bringing back.
Bartenders and giving them the paint Russian so if you hope is painful touch back on the payroll.
Because the program kind of incentivizes us to do that so so we are kind of prime candidates for the program and we're using at the waste intended to try to put people back to work but.
Like it.
At rising star.
We are the largest employer and largest taxpayer in communities rising set in Indiana, and we normally have about 400 employees there.
Got down to about 20 employees. We're now in trying to get back about a 100 and then when we're able to open which we think is in mid June will be back to 400 on but those that program. The way. It is set now it looks at your first eight weeks from London Lund get funded we were funded like sporadic so.
If we can put people back to work now.
It's kind of subsidized and so.
And when you look at dating back to see the host just call up people say Hey, how are you doing you can that dropped by some teletech or something that really appreciate these days.
And.
Maybe you wouldn't ordinarily do that but given that it's kind of subsidized.
And that's what the program intended for us to do we're doing.
Sure.
Great and does that make us more promotional I don't know I think it makes us maybe.
[laughter].
And if anything I think everybody's just spoke.
It's easy that too.
You know when you think or how difficult. It is to open these places and that's why.
I mean are places are relatively small, but we're still going from.
Five management employees.
500, and play like the silver Slipper go from five or six management employees to 550 employees in a very short period of time and get the doors open that has no small task and but that's why companies like win and Las Vegas Sands kept paying their employees that they'll have 10000 employees at a place like logical.
And if they all scattered to the wind.
Just recruiting and training 10000 people will cost millions and millions dollars.
We have these much smaller properties, it's certainly a lot easier for us, but still not easy and it takes it takes a lot effort a lot of work to ticket. These since reopening.
No not I think you're going to be down.
In our markets for what it's worth.
Yeah.
So what a great marketing alright, I guess yeah. Okay.
Okay first and then I'm sorry, the national it there's no.
Let's see where the world is before we finish stage frac.
And it's at least from the tribal casinos and there's a few reports of it now.
Showed up from certain lines together.
There is one tribal casino in Idaho been opened 20 years.
And then they open they only had half their slot machines turned down they limited the number of people coming in and they still had the highest.
I'll handle in their 20 year history on the day they reopen.
And.
I'm not forecasting that we will be as.
For two it as they can but.
That was a pretty nice data points you look at.
Okay, and I I'm just gonna go over one question if that's okay.
I know you discuss sports wagering their prepared remarks, and I was kind of hoping you could also touch on the I gaming opportunity obviously.
A few more political terminals for approvals, but seems to be it quicker way it looks to us.
For state governments to build their coffers quicker than building, a new casino and on some other.
Things and any thoughts on high gaming for full house.
Yeah. Thanks, nice the reminding me actually.
And.
It's not just thinking I think there's also some states that have concede casino gaming in this make what's meant puts us on them places like Virginia, and Georgia themselves that they will have fiscal issues that will encourage them to just consider casino gaming because it does produce a lot of tax revenues.
And then on the Igaming, that's going to be a very big business in New Jersey twice as big as mobile sports betting Igaming as where somebody can play a slot machine on the I pad.
And that could be somebody nursing home or somebody just lives long ways away from Atlantic city or or maybe there just board for a minute to up there I Feldman.
At play for good Okay.
And the interesting thing is in Atlantic City.
And in the state in New Jersey, you can only be in those businesses. If you are tied in with a brick and mortar casino and that's that's been the case elsewhere in the country as well and the brick and mortar casinos in Atlantic City has had growing revenues the last four or five years that high growth, but you have a very big basically two and.
<unk> billion, a year and they have been up and while they have been growing.
I Wagering has is now a half a billion dollar a year business and mobile sports betting is a quarter billion dollar your business.
And so these.
Mrs have come on and not hurt the brick and mortar, but at least so far at the I gaming looks to be a bigger business than local sports betting.
I gaming has not yet legal in Indiana, or Colorado, Ord, Mississippi, where we operate.
But I think there's a good chance it will be and not too distant future.
It's pretty easy transition make once you already have brick and mortar casinos and then you had local sports betting and then the state realizes they can get more tax revenues.
By allowing I gaming and align the brick and mortar operators to do it so that's a.
We chose to do the sports betting in partnership with.
People, who are in that business in part because it's a small number of independent statistical events like the Super Bowl and you can end up with a large number of bets on one game and you could end up with them unbalanced book.
Like we were in Colorado, So if the Broncos when the Super Bowl and they were up against the Patriots, we'd have lots of people trying to bet on the Broncos and nobody on the Patriots and we'd like to think when the gaming business, but we don't Campbell.
That will be gambling.
And so we don't take any of that risk in our mobile sports betting operationally, we do have a little bit of that risk at the little sportsbook down in Mississippi, and even there we managed to lose $300000. One LS you run the answer doubly championship and LS is now and a half away from us, but it was kind of a good taste.
How bad it could be if you have the Super Bowl.
On a state wide mobile gaming platform and so we'll even after the big guys, who specialize in that stuff and they do have operations in different places so they can be hedged.
And and.
When you go to I gaming.
Yeah, that's an issue 70 is.
Playing on a slot machine on there I pad. It's you know millions of independent statistical events that have a very predictable outcome, that's our normal business.
And.
So we would probably after license or purchase the technology and coupled with higher at the right people and it look it may make sense, if something makes us a good enough offer is still do do the math in partnership with somebody else, but it is a business, we could probably do on around and that they could be a big and positive business somewhere down the road.
Yeah, and and the state and the pressure on state Finance is probably just kind of help that happen, yes, our agreements with our three Oh I guess, our six agreements for for both states, where the sports betting does not prevent us from doing.
Online casino.
We could always doing online casino with any of those partners for what it's worth eight.
When we first talk sort of talking sports betting out a surprise now wanted the casino too, but this is kind of card up outside of that and so with any of them wanted to do the online casino you would see armed our guarantees go up.
Right right on Okay awesome, thanks down a little less excited for everything to be opened before through <unk>.
Yeah. So we're looking forward to [laughter].
Thank you.
Well go to our next question from trappings of Macquarie.
Hi, Good afternoon, Dan let us thanks for taking my question.
Hi, Chuck.
Some of your competitors have helped us with.
Not only the cash burn, but some breakeven.
EBITDA levels I think across the board most of your competitors have talked about you know if you've got back to.
25% to 40% of normalized revenues that would kind of get you to a breakeven EBITDA point.
But I understand your margins are starting from a lower point than ours is that still kind of.
How you're thinking about a breakeven point or I guess, maybe just asking the question have you done the work in terms of what you need to see from a demand standpoint to get to EBITDA breakeven across your portfolio. Thanks.
Well, yeah, we have done that math.
And I think it might depend on how you can't.
Well you construe EBITDA.
Each of our properties as a significant in any casino has a significant six number like utilities.
What's your Ron.
It's $40000 in Colorado, and $110000 silver slipper.
Insurance is a pretty big number.
You know stuff property insurance.
In some cases, you have a fixed gaming taxes that are based on number of machines and so a lot.
And if our revenues in order to have.
Great even EBITDA after all of that stuff, we probably need to get revenues of maybe 50 or 60% of what they were in 2019.
No I don't take that say a margin issue compared to these are the people I think because you looked at that say Ron paying all that stuff anyway. Even one is closed we're paying all that stuff and so whats further.
ER revenue levels do you need to be able to contribute towards paying those.
Tony cost and so on that would be like 25%, okay, but that you've got a pretty big hurdle.
To get over so like.
We are happy to be open even if you only doing 35% of last year's revenues because at least it's helping to pay the utilities and real estate taxes, but that's still not going to get you to DSP before your debt service.
And then you've got it gets the batteries and desert so.
No I I add these astounded, if we don't do at least 50% to 60% of what we did last year.
There isn't any new competition.
Huh.
Most of our customers are the retired or still employed.
And and we think.
And frankly, I get a little frustrated because I think.
Our customers understand that are casinos can be a safe place even 10 damage times you can commended for building pretty easily we are going to take people's temperature.
They don't arriving crowds and so im very few of our customers even arrive on buses or anything and then you can go find your own slot machine and be socially just in from other people Len and.
No crap table, what more complicated the craft.
The small part of our business.
Yeah.
And so I think people view us as being.
You know people know the experience would not fuel unsafe driving their car to us and finding a slot machine to to enjoy their entertainment.
But if you look at several of the reopening rules that are coming out.
Being lumped together with with the state fears and stuff like this where it might be harder to be socially distant.
Fundamental little frustrating, but but because I think our customers do understand it but when we are allowed to open.
I think our customers will show back up and.
But in our breakeven point before.
At the point, where we start to produce income to pay debt service is more like 50% to 60% of what the revenues were in 2019.
The answer your question.
Perfect. Thanks.
And then.
I think that's true I think that's true virtually any regional casino I'd be astounded. If it was anybody would have breakeven point. It was 25% of the revenues last year, I think they're probably saying.
But the casino by itself if you say.
Okay, then cover incremental employees would be 25%, but but you've got a lot of cost that you got to pay whether the casinos open or closed.
Right, Yes that makes it certainly makes sense.
And then during your tenure at full house Youve got on the offensive. She ban on the defensive you've talked about you know looking at other businesses you bought other properties you've had other companies look at you I think you've mentioned that on prior calls so I guess just given what's happened.
In the past couple of months just from an equity impairment standpoint in kind of where your stock is where other stocks are and kind of how you look out what is the best path for shareholders that has anything really changed in your view in terms of the strategy. The best path forward to create value or is this just something that.
You guys I've talked about some of the steps that you've taken to improve shareholder value, but is there anything else, but is now on the table.
Given the current environment.
Well I think I think the pandemic kind of changed everything changed very fast and our stock was three and half Dallas or share we're trying to figure out how to build what keegan and and we were working on improving their operations we have.
Two properties that.
Like we opened the sort of Christmas casino in.
Colorado It was pretty small.
Roes are revenues grew 7%, but that wasn't enough to offset the increase cost and so we have moved to close that if you back that out of Colorado results were almost flat.
And in a rising suddenly at a number of issues in the second half of last year and ended up at a pretty disappointing second half of last year, whereas the silver slipper had the best during artistry and Thats, our most important property.
Last year, but we saw opportunities to improve our results just both not making the same mistakes at rising star and be more focused on.
Getting it to better profitability and in the sense sort of thing.
Quick quick and so.
And we were starting to build this parking garage, which was the first phase of the of an expansion in Cripple Creek.
[music].
No settlement, so well you have to close and it was a bump up the book every as close.
And you don't know how long you don't know how you're going to be able to open you don't know what the world's will be like when you do reopened.
And so immediately just are focusing on surviving I mean literally surviving and.
Because if you knew immediately that we would be in default or debt covenants, which allows you to lenders to show the into bankruptcy they chose to.
Firstly Uh huh.
Good relationships with our lenders, we started talking to them immediately because.
Do sherri obligations to them as well we want to understand that we were working to make sure that their interests were.
[noise] guarded with taking care of and we've talked to them dumps a week and I think they are reasonably happy with what we've done to safeguard their interest and.
And representative of that they did rates covenants.
March as Louis mentioned.
Now, we're getting to where we can see the light at the end of the tunnel, we're going to be able to open stuff.
I think we're going to be.
Back to.
Producing cash flow to pay the lenders here in the next few months I think that'll happen pretty quickly, especially when the sports betting substrates coming on line.
And.
By the later this year.
Maybe be back operationally to where we were like the fourth quarter. This year hopefully is better than the first fourth quarter last year third quarter Muddying, the better than the third quarter last year.
And and by this time a year from now did they found a vaccine and we're back to normal up a little bit.
And it just put you put up their spending that Fortunately most of our play is.
Machines, but.
I've been trying to figure out how you Keith or something as simple as a blackjack table safe.
And you can then we have in some markets purchase these big plexiglas things that sit on the blackjack table that separate the customers from each other and from the blackjack dealer.
It's a little weird that you're kind of gambling in a little phone booth, but it's possible.
But then how do you deal with the chips and the cards in the money and I have another customers epidemiologist I called or what you're talking of actions will you probably need to dealers.
One deal that has clean hands that everyone has contaminated hands. So when you buy chips to go the clean hands gives you the chips when you lose a bad debt with a content in the hands takes those chips away can you because you have contaminants that and you don't want those to be done given to defer player right. So then the contaminated chipset to like literally go through it.
I wish washer or something to keep them quite.
And by the time, you start running the math on having to dealers in three players will take you can't make money, but active one dollar.
Well.
Scientific games does have a table on trying to find if we can get a couple of that have built into them I pads that you don't need chips and it was an idea that nobody paid much attention to before but you can put your money into a go excepted just like the slot machine and you make.
Your decisions on the side pessimism dealer to dealer deals with cards and those are smart shoe that knows the cars that are being dealt.
And all of sudden you can kind of have they blackjack type experience without worrying about chips being contaminated toward or and all of that Stefano said well. That's interesting idea, that's probably a table game that they could sell before another quite can't make make and fast enough, but but.
So you're starting to focus on this and.
And you know, we're a long ways from starting to figure out how do we acquire somebody because if we did look it's a relates there was a casino we looked at not too long growth.
It was for sale and I think it's probably still for sale it hasn't hasn't been sold but I know up and Matt.
But.
It's closed I don't know when that's going to be able to reopen I don't know what rules is going to be able to reopen under I don't know how well it's going to do once it does reopened.
I wouldn't know how to even put together proposal to buy it even if I had the money to buy it.
So it's it's kind of.
You know, we can revisit that sort of things down the road, but right now we've got plenty on our flight to get OCO work, we have and.
And then figure where we go from there and what we're still a pretty fortunate to chat with you and me. If you think about the growth pipeline just with what we have.
2021 should still be a very good year relative to any other year in recent history because of the sports betting agreements and I I kind of gloss over at sometimes and I don't mean too, but the nice thing about our sports betting agreement as you have minimum gets a $7 million minimum with essentially no.
Expenses attached and tell you effectively have seven nine years guaranteed EBITDA nearing you're out and so when you start thinking about going forward.
You know you kind of eliminated a big big swap at downside variability you still have the existing operations, which we think we can improve further from here and and so that all that all parts here on a very nice trajectory here going forward once the sports betting agreements and watch now.
We had talked in the past about trying to guide and refinance our debt with under the guise of those sports betting agreement and that's still certainly going to be an option, but we've got a little bit help left between here and there because other pandemic and so sometime down the line. We can look back at all sorts of things whether it be the growth we have.
Our growth otherwise that were out there.
Yes, there's.
The bigger picture is still there.
And frankly, I mean, we had easy VIP last year 15 and change.
We're just not no.
Kind of a disappointing number for us, but when you really backed into it the Christmas Casino was.
Pretty good to know.
A lot of 2 million of that and then the problems. We had it at rising star was pretty good shot if you back those out it was probably a 18 or $19 million year end. So that the goal is to try to get our.
Normal business back to about 20 million year, plus the sports betting stepping or 27, and 108 million a death that normally levered four times, you can probably refinance the debt at a much lower interest rates than it is now and you know.
But that's our goal at the moment, if we can be there in a year than were pretty good shape and then that opens up the direct Figaro can now what do we do for us to all sorts of right, but we need to walk before we can run and we're focusing on walking [laughter]. So opening the door.
It does doors open there.
That's great. Thanks, guys I really appreciate it best of luck.
Okay. Thanks, Chad, we probably have time for one last question here.
And well go to your question from Stephen brands that are maybe our investments.
Good afternoon, gentlemen, I'm just to reiterate the online I guess casino games and online poker.
Are those little bit did you getting like skins for those or it's the state's approve it how do you think that would go forward.
If any of the state's approved.
Ron.
The two states that I'm aware of that of New Jersey static around Pennsylvania is just approved it and it has to be related to a brick and mortar casino.
And that was in New Jersey race tracks and.
So it would probably be similar to the sports betting where it says if you want to offer.
In line sports betting and Indiana.
It has to be done an affiliation with the brick and mortar casino no our casinos the smallest one the state we're in the southeast.
End of the state and yet you'll be able to Vietnam suburb of Chicago and make that's online and as its with one of our partners, we get a percentage of the revenue on that path now if thats online.
Oh wagering.
That might be directly with both websites, we rob but the legislation hasn't happened yet so I don't know thats.
You got three screens per license like that with local sports betting or is it once can per license like it isn't in Colorado its ones can for license that we happen to have three licenses.
So the legislation is not out there there is some discussion of it within the legislature that we were aware of.
And I do think it's likely to happen.
But it's not eminent it's probably still your took away.
Okay, Great and I hope you have a great opening up its exynos coming up and.
Good luck in the future. Thank you guys.
Okay. Thanks day.
Okay. Thank you Hi back then leave for any additional for closing remarks.
Okay. Now I think were done work here working hard then.
Bruce I are getting kind of used to rambling around this office on around but gradually we're getting some of the other people back to work that is kind of gradually opening and.
Hopefully this continues to go smoothly. So I hope everybody is staying healthy and.
Hopefully this better days ahead. Thanks.
One of them that does conclude the call we'd like to thank everyone for your participation you may now disconnect.
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