Q3 2022 Full House Resorts Inc Earnings Call

You are currently on hold for today's full house resorts third quarter earnings call. At this time, we are assembling today's audience and plan to be underway. Shortly thank you for your patience and please remain on the line.

[music].

Good day and welcome to the full house resorts third 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 of full House resorts you may begin.

Thank you and good afternoon, everyone welcome to our third quarter earnings call as always before we begin we remind you that todays conference call may contain forward looking statements that we're making under the safe Harbor provision of federal security laws I would also like to remind you that the company's actual results could differ materially from.

The anticipated results in these forward looking statements. Please see today's press release under the caption forward looking statements for the discussion of risks that may affect our results.

Also we may make reference to non-GAAP measures such as adjusted EBITDA for a reconciliation of those measures. Please see our website as well as the various press releases that we issue and lastly, we're broadcasting this conference call. It full house resorts Dot Com, where you can find today's earnings release as well as all of our SEC filings.

With that all said I'll make one big point before I turn it over to Dan. This is a very very big call for us because it is the last time, you'll hear from us.

Without without Waukegan open. The next time, we talk to you Waukegan should be open and then Dan will give you some more color on that timeline and everything else, but I'm going to reinforce that point right from the start with that I'll turn it over to you to recognize waukegan is.

Probably well certainly the permanent one will be bigger than our whole company and the temporary one might be bigger than our whole company. So it's pretty significant.

I forgot.

The recent results.

Show that delivers casino, it's about a half an hour to herself.

It was doing about 600 million in revenue.

<unk> put a lot of me to say no in Milwaukee, which is just over half an hour to our north.

There's about $400 million and the Grand Vic, which is two hours southwest is doing about $120 million. So the existing casinos that are back in the woods or doing 1 billion. Two if we just take a small piece of that business.

That will actually grow the market. There are 700000 people in Lake County, It's one of the wealthiest counties in the country, where the only casino in Lake County, we're kind of in the middle of it.

And so I think we will grow the gambling by people, who live there because it'll be much more convenient.

It might dip a little bit away from our competitors and then we'd probably take a bite out of the.

Video lottery terminals are what you're doing about $100 million a year in Lake County.

But I think the biggest piece of it as we'll go to the market.

So anyway, let me go ahead.

Speak up only because people I think okay.

Okay, well, it's come along very quickly you can see it on the website, which is American place dotcom.

Parking lots are paved lit striped kitchens are in place you can kind of see it on the right side of the building there in nine shipping containers at the kitchens.

The webcam you don't see behind it but behind that we are basically.

Office complex, that's a bunch of construction trailers kind of a modular office complex and that's where the employee locker rooms and everything are.

The decor is going up on the inside of.

This week, we'll be rolling out carpet and putting in slot basis and starting to install the slot machines. So we should have all the machines in by the end of the month.

Be about 1000 slot machines 50 table games.

Two restaurants, we have a third restaurant that will open probably in February a little behind everything else.

We're hiring people.

The biggest challenge is that 50 table games takes a lot of employees. My guess is we will open with less than 50 and open more tables as we higher dealers and so.

That's going to be hard to find enough dealers dealers and get them all licensed and trained and everything to open everything at once.

But generally once you are open it's easier to get people to accept job offers.

Especially since if we open with the less the maximum number of tables, the tip rates will probably be quite high so.

But recognize this is a very big checklist that we have to go through a lot of different checklist. So you got to remember each of these slot machines is basically a computer.

And imagine if you had a thousand computers from different manufacturers in different games and they all have to be hardwired back to a server that's not done with Wi Fi. So there are miles and miles of low voltage cabling that runs in the Florida. This place to hook all those up to a server.

And make sure all of them work properly and it's gonna be proven to us improve into the gaming Commission and then there's also hundreds of cameras all hooked up to surveillance D V R's and I'll ask the function properly and so.

If everything went perfectly.

We could be open in late December .

We'd be the first casino in the history of the Midwest, where everything went perfectly.

So I think more than likely it's going to slip into January but it's somewhere in that timeframe we think.

We're not going to open until we're confident that we're ready.

You certainly don't want Florida opening like has happened at some casinos.

And when we're confident we're ready in the gaming Commission is confident we're ready then we will open but it's coming it's not very far off at this point.

And we're excited about it.

We are hiring people and whatever job fairs and so on.

In Colorado, We're also making good progress we're closing up parts of the building now it's starting to get cold up there 10000 feet in the mountains.

You can see that on the webcam for.

<unk> C O dot com Chamonix, Colorado desktop.

And very good progress there.

Wrapping it up so we can hit the inside so that we can continue the inside worked through the winter.

The drywall is going up in some areas the glasses up on a lot of the building the brick is up in the lower parts of the building.

We have had some challenges there are three different hotel towers. There for example.

They are erected with medium gauge steel.

We had difficulty finding enough the ideal we would've had three teams of workers working on the three towers, we only had.

Enough workers up there in a small town in the mountains. The two teams and so the third tower really didn't start until towers, one and two are topped off and so it's a little behind that's it's now going up whereas towers, one and two are being closed.

So most everything else is doing pretty well, we're aiming for mid 2023, but some attributes notably that third tower it might be a little bit behind them. So what.

Less certain in the opening date there.

Then we are in our Illinois, because after all in Illinois, we're installing slot machines, so it's but.

But but it's looking pretty good and we're making good progress there as well.

We've also been refurbishing Bronco, Billy's, which is next to Chamonix.

And in this past quarter about half of it was closed including the steakhouse.

So it's currently operating with much less gaming capacity than it has had in the past.

It's got no onsite parking no onsite hotel rooms are it's kind of amazing that it that it's not making any money at all and it wasn't didn't wasn't making much.

<unk> lost a little bit in the quarter for them it was about zero and so.

That gaming space, which is really the center chunk of Bronco Billy's.

We'll reopen by the end of December .

Now, it's going into a association, but it's it'll be nice to have that gaming space back.

Matters really, especially on weekends and then the rest of it which was the steakhouse were reopened as an Italian restaurant.

First quarter.

And we did that.

In part because the Chamonix has a high end restaurant in it which would be the highest investment in the complex and so we took what was the high end restaurant in a complex and our rebranding it as kind of a.

More modestly priced Italian restaurant, so in the quarter. There was a lot of preopening costs about two and a half million dollars, which of course affects net income.

Even though we back it out for EBITDA I T.

That's a lot of payroll you know we're hiring people in and so on are.

There's some rent that goes in there are a lot of professional fees.

But that all gets expensed as incurred these days.

Historically, it was capitalized sometimes but but today, it's all expense does incurred and obviously is a big drain on current net income, but it's really a not really a current expenses and investment for future net income.

There's some other noise that was in the quarter.

The there is a progressive gaming tax rate in Indiana.

And we're one of the smaller places so we have a low tax rate in Indiana.

Law allows us to.

Not be taxed on a certain amount of free play.

But it also allows us to sell that.

Tax free play to other casino companies and so there are other casino companies and a much higher.

Tax bracket and so every year for several years now we have sold our free play where it will go ahead and pay the tax on our pre play sell the ability to not be taxed in the free play to a different casino company.

And what kind of split the benefit for that.

The other priority on their casino company spent different parties different years.

Oh this year.

And last year, both years, we got $2 1 million for selling the prepay. This year, we did it in the second quarter.

Last year, we did in the third quarter, so that confuses the results in both quarters.

The counterparty wanted to do it in the second quarter, we didn't really care it maybe a little better if you do it in the second quarter because in the back a few years ago. When we had to shut down for the pandemic, we had sold the free play and.

And the counterparty kind of didn't get as much benefit as they might have thought because they were actually closed for a period of time and but other than that we're pretty we're pretty indifferent.

Except that sooner might be a little better and so selling it in the second quarter instead of the third quarter.

It's what happened in that confuses things are.

There were also a stimulus checks last year I don't know what everyone else has been saying, but pretty much across our markets, we've been swimming upstream.

Because of the stimulus checks went out.

In the later part of the second quarter last year and.

No not middle of the second quarter actually.

So that helped a.

The later part of the second quarter and the first part of the third quarter because some of those stimulus checks. It ended up in slot machines.

And so Oh, we have that going.

Our insurance costs were up quite a bit.

Because we.

We have a big casino on the Mississippi Gulf Coast tends to get Hurricanes.

<unk> had a hurricane there in a while.

But the but it is definitely in a hurricane zone, it's a big part of the company. So we've always.

Maintained our insurance at very high.

At a very high cost we've maintained very good insurance.

Because if it did get hit by Hurricane it would be a pretty.

I mean, they don't fit the company that will be less true as the temporary opens and then there's Colorado opens so we think our insurance costs will come down.

Pretty significantly in the year ahead or at least relative to income.

Both because we'll be more diversity, probably negotiate a better deal with the insurance companies, but also we might be willing to accept a little higher deductible and things like that on the Mississippi property, because it won't be half of the company anymore it'll be much less than half the company and just put that in perspective the increase.

<unk> and insurance.

Under the current contract is running about a half a million dollars a quarter and the insurance contract comes up for renewal on may 1st if I remember correctly.

Great.

And so we have another few months of that and then I think we will have much better comparisons on reinsurance thereafter.

We do have some new competition out there not huge but in two different markets. There is new competition.

At our Mississippi property. There is now online sports betting in Louisiana, We did have the closest.

Sports book to Louisiana, So, we would get some people coming over and.

Gambling at our sports book now that they can do it on their iPhone from home.

We're seeing that business being off quite a bit and that was not a big part of the.

The property was like 5% of gaming win, but but it's down quite a bit so we have one.

Uh huh.

Small piece of our gaming win is down a lot.

And then.

Just be what it is.

There is talk about Mississippi, eventually, having online sports betting as well and I suspect that does happen and we would participate in that and maybe get some lift but at the moment, Mississippi doesn't have online sports betting and Louisiana does.

And then.

A competitor put these historic racing machines, which are really slot machines.

Into a race track in Boone County, they actually tore down a pretty decrepit building there if they had torn down probably would've fallen down and.

Put up a building is not the most beautiful building in the world, but it's there and it's got a bunch of historical racing machines in it and so as typically happens our customers go and check out the new place and I think when they.

Realize that the new places kind of a dark airplane hangar that sells hotdogs off a carton back they'll.

They'll come back to us, but that was a little bit of an impact on us in September .

We're not the closest casino to that competitor.

You know if somebody opens a new casino that really is nice it tends to you know has a chance of growing the market as I think we will and novel Keegan.

In this case.

They're not growing the market Theyre, just taken a little bit of market share and the revenues that they get are mostly from downtown Cincinnati and lawrenceburg, but a little bit from us and.

Actually the closest casino to them has built here at park, which is the southeast side of Cincinnati. So so there is a new competitor in that market.

I've got like a.

Everybody's talking about going into this election, he cost food is up.

And then that's affected us some too.

And then.

On the positive side, we did not have a wildfire at Lake Tahoe on Labor day weekend. This year and so that helped us out so oh, but really this is one of those quarters where.

Oh it was.

It was considering everything that's going on it was an okay quarter. It wasn't it wasn't a great quarter it wasn't an awful quarter.

Operationally, but.

Frankly, we're spending so much time getting these two new places open because there they really are the future of the company.

And we're very excited about that so I think in future quarters.

You know its almost like not even worth talking about some of the smaller properties. So.

Anyway on that I'm happy to take questions, but before we take a question I'm going to footnote everything that Dan.

To put it all in perspective, if you go back to pre Covid the properties on a on a not a year to date basis back in 2019.

Property margins are about 13, 5% compared to today.

Year to date margin property margins are about 25, 5%. So we've gotten a good 12 percentage points of property level improvement.

And Thats with Colorado, essentially at a breakeven margin that's with the additional insurance cost that Dan mentioned in Mississippi.

Fast forward to a year from now two years from now with both Waukegan Open and then Chamonix opening I strongly strongly suspect youre going to see those margins continue their way back up for what it's worth.

I am just going to ended down with this is our last call before Waukegan opens next time, we talk to you guys that thing will be open.

And actually I failed to mention on the.

<unk>.

Online sports.

Books, we have three licenses in Colorado, three in Indiana, and one in Illinois.

Last year.

All six of those in Colorado, and Indiana, where earning their minimum guarantees that we have Churchill pulled out of the business. So we have one available in Colorado, one available on Indiana, We're looking at whether we contract them out again.

Or maybe just to keep the opportunity.

In the meantime, we've signed one in Indiana, and Illinois, and Illinois is by far the most valuable because the population of Illinois is bigger than Colorado, and Indiana, combined and Theres only one licensed permitted for each casino and so theres fewer licenses and a lot more people and so that license is.

$5 million, a year, which exceeds the minimum guarantees on the other four.

The reason.

If somebody comes along and offers us a great deal of money for those licenses, we'd probably contract amount again, but we have been looking at the possibility of doing it ourselves not to compete with draft Kings and fan dual who are in these big marketing work that we.

We wouldn't want to spend the money to try to be in but we could offer online sports betting.

You can.

By or at least the software you could even buy at least.

The people, who set the odds and all that stuff.

And just do it really for our own customers and and that allows us to do because we have mailing list with each of these casinos are tens of thousands of people.

<unk>.

And then we can tie it in that says if you when you bet.

And the final four games and so on.

We will give you a credit towards around the Gulf or towards a weekend stay at a hotel and so a lot easier for us to do that than it is for draft kings or <unk>, because they don't actually own the hotel search there.

Complicated and so.

We think we could probably do it and make it a little bit of money.

But maybe more importantly, the bigger opportunity in that area is online.

<unk>, where you can actually play a slot machine on your iPad, that's not yet legal in any of the states. We're in but in the states, where that's happened that's been a much bigger market than online sports betting and that is as a field we could do.

On a row and we think it will be legal in the states we operate in in the not too distant future.

So one of the appeals of trying our own online sports betting.

As we would have to hire a handful of people and learn how to market. It learn how to run it and so on and we would be developing the expertise.

To get into online gaming when it comes along so.

So anyway, that's where I met in the quarter you were comparing four licenses versus six last year, because Illinois will not be up and running until after we get our casino open so probably in the spring and so so we have a temporary down comparison.

On contract sports wagering, but contractually its going to be up once we open in Illinois, and then we figure out what to do with the other two licenses potentially up even more so.

Yes.

Let's take some questions.

Yeah.

Thank you.

If you would like to ask a question. Please signal by pressing star one on your telephone keypad.

We're using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.

Again, Please press star one to ask a question.

And well pause for just a moment to allow everyone an opportunity to signal for questions.

Okay.

Our first question comes from David Bain with B Riley Your line is open.

Awesome. Thank you.

First of all Lewis I appreciate your strong comments that youre going to be open with luck here you hear by the next call.

But at this point what are the major items that determine waukegan opening next month versus January or February is it the gaming control board reviewing everything or are there more structural items that you need to tackle.

Well, let me be clear.

Our interest in the gaming control board are perfectly aligned we wanted to have a smooth opening so when our customers come in and everything goes smoothly.

Yes, I remembered I'm.

I'm old enough to remember the opening of the Cosmopolitan Atlantic City.

Where things didn't work properly and they opened and then.

Four hours later, they had to close.

They had Michael Jackson, appearing in their showroom that night it was a complete fiasco.

And it kind of the image of the place never really recovered from it. So I mean, we want everything to be working properly.

And then, particularly I mean, the slot machines, we don't need to have every one of the 50 table games open, but we want the slot machines to be working and we want to have the.

The systems are working properly in the surveillance all were comparatively and then you know at some point when we are.

As we start zeroing in on the day like like roughly by Thanksgiving.

We have to make a decision on when people actually start getting paid and because there's a large number of people who we then say okay Hugh.

You're on the payroll on this date.

And then yeah.

A number of them are already going through licensing that's a long process.

But then they show up but we have to train them and make sure they understand.

All the normal stuff you do when you take a new job right and.

And so then you're training them in a new facility than theirs.

A point, where you say, okay, we're going to have a play nights, where you take two or three nights, where you're playing with artificial money and you've got the restaurants going with the invited our friends and family just so the cooks learn how to cook and the waiters learned how to serve and if all that goes.

Smoothly then you can open thereafter, but there are times, where you go through the play nights and then all of a sudden you find out the cage didn't balance and it's off and then you all scratching their head, saying, okay. What happened why did the cage.

And and you have to go back through it again so.

When when we're confident that everything is working properly and that includes having the right staffing of the right people who are licensed when the gaming Commission is confident we will look at each other and say, okay, let's open and.

And I know everybody wants to have a date certain it would be nice to have a date certain.

That's not actually helpful. Because if youre not ready you shouldn't open and so Uh huh.

Zeroing in on.

And where it is and I think it's somewhere in that six weeks.

You know it.

Little complicated by Christmas falling in the middle of it, but but I think it's more than likely January but frankly.

You know if the servers don't work right or if things don't coordinate right. It could be early February , but but I think it's where we're doing it on a pretty quickly now and.

But I can't give you a precise date and Oh, let me put this way I'm not going to give you.

We have one in our heads.

David If I tell you. It's January 15th we're actually ready to open on January 5th <unk> in January 5th and if I'd tell you. It's January 5th and we're not really ready to open and then we'll have a screwed up opening so so.

We're confident we can open we will open I am going to give you a little bit more color on maybe a different perspective on it Dave so.

Part of part of it is keep in mind, usually when you're opening a normal casino you're building it for two or three years and your and you've got.

Were condensed if you look back in May of this year, we had a site that was green. There was there was no from structure on it there was no digging there was no pavement there was nothing and so where does that six six months removed from that and on the verge of opening I will tell you. The good news is when the slot machines are on site and that's how you know you are.

Ari closed.

Those do start up those get installed starting this week.

Jos.

I don't want to trivialize, it but a lot of what we're really looking at from the slot install point of view is really going through the check list, making things just making sure things are communicating right.

When we did the slot install up in northern Nevada. As an example, we had issues with economics over where we had to spend an extra a couple of days just working through some of the kinks that sort of stuff does happen and what just complicates it a little more than usual is if you get delayed by a couple of days, you've got a whole slew of holidays right around this time of year as well.

So a couple of days my three off by a week or two.

Really the reason for some of our hedging, but we feel very very good about where that process is right now how it's going.

Is actually looking pretty darn spectacular I think on the inside I think people are going to walk in the doors and be very very pleasantly surprised at what we've done on the inside I know you stopped with no walls now we've got walls, David We've got cameras and we've got a core hanging from the ceiling and very very soon slot machines.

Looking pretty cool now the other thing I will add is in early December we will start the advertising campaign with kind of a.

Banner or voice over that says opening soon.

And then as we start to zero in like when we're starting to play nights and then you change the opening soon to opening on X.

So.

Right Okay perfect.

Is there anything you guys are seeing from a macro perspective or as you continue to visit both Cripple Creek and what can you again.

During construction that would change your return calculus, either direction and Louis I mean, you mentioned I did visit.

<unk> got a deeper appreciation for the surrounding hotels and potentially drivers with that and the ingress.

Either direction or are there some things that you can identify one or two that would make you more excited.

With either project and then just the macro.

That youre seeing there that changes your calculus.

I mean, I don't want to speak for them, but I kind of feel better than ever for what it's worth.

If you look at Lockheed and first part of the optimism comes from the fact that rivers opened their expansion back in April and since that expansion, they've been making pretty consistently 48 $49 million of gaming revenue per month.

$600 million a year on a run rate basis, and when you look at what we the numbers that we are striving for we don't need to make $50 million a month to make our math work and get to $50 million a year in EBITDA, we need 10, 11 $12 million a month and so I will tell you I am more optimistic as we watched <unk> success in realizing it.

They are continuing to ramp up their own property by ramping up their own table games over at.

Chamonix I think it's.

Pretty true as well even versus a year two years ago with a population that we have.

To go after right in that Colorado Springs market has continued to grow the whole state population has grown, but especially Colorado springs, and even south of Denver going down towards cities.

Cities like Castlerock have really grown and so at this point I think we have a bigger potential customer database.

And then I would have envisioned three four years ago.

We've watched monarch open up to great success, I think most people two years ago would have said Wow I don't know how monarch is going to get the numbers that they're going to get we were on the other side, saying, we'll absolutely theyre going to do well because the gaming spend per capita is so low and fast forward to today. They are I think doing much better than people give them credit.

None of that none of that cost.

The others without hurting the others and none of which caught us off guard because it was always we thought pretty apparent and just that gaming spend per capita figures. So they've kind of proved the concept all over again and that's ultimately good for us. So we're feeling very very good.

Mike.

Despite all that you see on the news I mean.

By the way, Dave even if we're off by a little bit.

Michael has come and go but you can you can haircut our numbers all you want but any way you haircut youre still going to get pretty meaningful growth off the numbers that we have today right.

And then then.

Actually this is showing.

Showing the all the analysts in May a few.

Dig up the Churchill.

10-K.

Uh huh.

Yeah, I think it's 62% of rivers, but they carry it as a.

On a consolidated entity because the decision making is still shared with Bloom's company.

They only have two material.

Consolidated entities, they admit that themselves in their in their 10-K. The other one is Miami Valley, which they own 50, 50, with Delaware North and similarly share control.

In 2021 before they built their expansion.

The <unk> from unconsolidated entities was $306 million.

If you go back and look at Miami Valley, which there's been an unconsolidated subsidiary for several years. It does about $100 million a year of <unk>. So that says that rivers is doing about $200 million of Europe , <unk> pre expansion pretty expansion and which is pretty darn good March.

<unk>.

On.

<unk>.

$500 million of gaming revenue now you got to be careful.

If you're just looking at <unk> and the gaming revenue in the regional markets. The margins are very high like 40%, 50%.

But.

If youre comparing to total revenue well the food and beverage ads the revenue it doesn't add much to the profit so.

Then the margins are more like 25, 30% when you add the non gaming stuff on it.

But if we can do $100 million of.

Our gaming revenue, which wouldn't be an ambitious number.

We should be able to get pretty close to $50 million of EBITDA.

And when you look at how well the ones around us are doing.

I don't think those are aggressive numbers and now do.

Do I wish.

Well.

Legally technically not legally technically we're not in a recession everybody talks like we're in a recession, but GNP grew last quarter and a recession is two quarters of <unk>.

The recession of the federal the Federal reserve is trying very hard to bring down inflation.

And threatens to cause a recession in order to do so.

Yeah.

What's an ideal world through us if theres no recession and inflation goes back to a modest number and maybe they get rid of the tariffs. So when we built the permanent we can buy steel and glass from.

China.

That's an ideal world.

So but at the but we're doing okay.

We're starting the design process for the permanent casino in Waukegan announced the temporary is just about done so we need to do that obviously, we've designed it we had a whole presentation with renderings and everything but we need to get into the details the working drawings and precisely what are the restaurants and all that stuff and that's a lot of design work we've been doing.

Viewing different architectural firms.

To help us with that and we will spend the next year doing the design the engineering the interior designs and all that stuff and then it will take about two years to build and where.

We're allowed to operate the temporary for two years and then the gaming Commission can give us permission to go a third year, if it's necessary to build something of the quality. We're building and so I think it probably will be necessary because there's no certainty they'll give it to us, but I think it's highly likely they will so.

Because we promised a hell of a nice permanent casino and we intend to do that and I know that that's what they want as well and you can't do these things overnight, so but as a practical matter we have.

We didn't harp on this but we should because it's kind of a pretty crappy equity market's pretty crafty bond markets and we don't need any money, which is a really good thing.

All of our debt is fixed rate debt and we're sitting on $207 million. It's in the press release.

And we're confident that that's more than enough to complete the temporary and complete Chamonix and then.

And we have about two years before we have to figure out how to finance the permanent one in Illinois, we still have a standby financing commitments from large private equity firm.

That is always a kind of a backstop if we needed it is kind of expensive, we hope not to need it.

Bond market is open and close.

We have a lot of Reits, calling us all the time on whether they'd like to do a keegan.

As a REIT owned entity or we do a sale leaseback and plenty of other places and so we have a lot of different ways. We can finance the permanent the real answer is.

We've got two years to figure that out no reason to do it now.

Yeah.

Frankly, you don't want to rush into it now because the negative carry would be high and our bonds are not callable until February of 2024. So we have a long time to figure this out but.

Currently currently we're in great shape, we don't need money.

A lot deeper.

Waukegan opening soon.

Another question I'll I'll take a half an hour to answer that one.

No. We're looking forward to a lot of good stuff very near term from you guys. Thanks, Thanks, Dan and Lewis.

Thank you Dave Thank you.

Yeah.

Our next question comes from Chad Beynon with Macquarie. Please go ahead.

Hi, Good afternoon Lewis Dan Thanks for taking my question I appreciate it.

Just kind of following on.

Some of the numbers there can you kind of help us with capex in the quarter and then what's left to spend.

And at the temporary including the license and then add Chamonix.

Yes, so so at Chamonix, we've spent about $34 5 million Bucks.

In the quarter.

The the balance thats sitting in that construction that restricted cash account is basically what we need to finish it so thats $156 million left to spend.

Here in real time, we're spending roughly $12 million to $13 million a month in the near term. So you might you might get a $30 million spend for the fourth quarter and the balance in.

Next year over at Waukegan. It is it's a pretty hefty.

<unk> spend.

Opening in just after opening for what it's worth in part because of that Delta is so fast, but we spent about $15 million in the third quarter, you could have like a $30 million $40 million spend here in the fourth quarter. The big chunk is really going to be an <unk> because that gaming license fee is $32 million and change that that gets paid we expect.

Shortly after opening night before and then you get a bunch of construction payables that lag as well so hopefully that helped you there.

Thank you.

That $30 million might be delayed too because.

If we don't open all the table games, two donuts payable tax right away.

Because once we hire dealers next becomes due and so that may be a large payment made in January and then smaller payments in February and March as we're able to hear dealers. So very good point Dan.

Okay, Great and then let's just kind of on the current business.

Firstly I know, it's probably hard to dissect this but any trends you can talk about kind of within your databases. I know, we're all expecting that lower end of the database and maybe some of that retail and.

With a little bit.

And then secondly, if you can help with anything that you're seeing in October .

Oh, sorry.

So far so far it's been pretty good October .

Okay.

What I've seen but anyway.

It depends on the property.

Yes, yes, youre not wrong, there Chad that.

<unk> ended the database has seen a little bit of that play go away I think part of that has been by design for what it's worth we're we're kind of actively trying to incent people when the upper tiers versus the lower tiers.

If you look at can.

Using silver slipper as the example.

Gaming gaming admissions have been down.

Part of that is sports bucket, but part of it is just slower and play not coming by.

Customers.

The ones that are coming in the door spending relatively similar amounts for what it's worth that.

That cost line is what's really hitting us over at silver slipper right now for what it's worth which is property insurance and food cost yes.

But im not going to pass on the cost of crab.

Thanks, Kevin.

We'll be looking at our mailbox for the invitation.

We'll make sure you get there yes.

Please be.

Well.

The week before.

By the way to be clear similar to monarch and some other casinos I mean, the actual Grand opening party will be at some later date, yes, yes, that's what I was saying that Chad sorry, we'll probably find out a good week before.

Opening days and then and then maybe a month later, we'll have the grand opening for guys like you.

Thanks, guys I appreciate it.

Okay.

Our next question comes from Edward <unk> with Roth Capital. Please go ahead.

Hi, Thanks for taking my question and looking forward to the Grand opening.

You talked about Xiaomi, the hotel potentially not being open.

By mid 2023 at least part of the hotel.

Talk about some of the puts and takes for that property to open in would you consider a phased opening at xiaomi or is it just much better to open everything at once.

So we would consider a phased opening and that's one of the things we're trying to figure out is.

Whats kind of a sense on what is an essential link I know when we open more bearish in lake Charles the swimming pool area.

Spar, we're not done yet.

It was no big deal and we just hope they will come back on this but when the pool is done even though we opened are going into the summer.

You know it opened a month or two after the hotel opened and in terms of Guestrooms. When you stay in a hotel you don't really know how many rooms around the hotel. So if we ended up opening with 200 rooms, instead of 300 rooms, the guest experience would not be different.

But obviously you want the casino open you want the restaurants off the casino open the <unk>.

Congratulations.

I know you want you want a lot of things open and.

Yes, we end up looking at and saying well.

You don't really want to spend over time to try to speed up tower three.

And when you say it's not.

Done yet.

It'll be in closed a minute from the outside it will look finished its just it might because inside still installing carpet so.

We're still several months away so it's not.

It's not certain that we can't catch up.

But I think it's a pretty good likelihood that we ended up opening.

Most of it and then some other features catching up later, which is similar to what happened with our monarch and these.

Yes. These are these are very big projects in these very small towns. So finding the construction workforce isn't the easiest thing in the world.

Great. Thank you and then I guess relative to the debt the topping out card you had in September just any comments you have on maybe connectivity or just given like you said, it's a smaller town.

It is at the time that you could take and can handle the larger events that youre, hoping to host or is there still some connectivity that needs to be approved.

I mean, we're.

40, 45 minutes from the West edge of Colorado Springs in about an hour and 15 from the east edge of Colorado Springs. So we're an hour away from Colorado Springs.

Tyler County, which we're in has like 25000 people.

It includes a cripple Creek and Victor which is nearby but it also woodland park, which are pretty good sized town fluorescent which is pretty good sized 25000 isn't huge but that's where a lot of our employees come from to put it in perspective Blackhawk as a casino industry is probably five times with Cripple Creek is today.

In terms of number of employees and so on and it's an Gilpin county in the population of Gilpin count is about $6 and so their employees all come out from Golden an evergreen, which are 45 minutes away. So finding employees is a challenge in Cripple Creek, but it's actually uneven.

<unk> challenge and Blackhawk.

Because we do have significant talents not that far away from US now the customers principally come from the Colorado Springs area, and the whole, Colorado Springs, MSA, which is Colorado Springs.

And Gregg Lowe and Canyon City, now <unk> closer to two hours away, but we're the closest casinos to at Kenyon City is little less than one hour away.

And and then we have a strong secondary market and Thats Denver itself now Denver is one hour from Black Hawk in two hours from us.

But if you live on the south side of Denver, which like like Castle rock down in there and you take into consideration the traffic issues that Denver has these days, you're probably closer to us and.

And then there are also be <unk>.

There will be regular gamblers from Denver, who will go to Black Hawk say once a month, but maybe once or twice a year. They make the extra drive down to replace just to.

Experienced something different that's not unusual.

Yeah.

But given the Denver is 4 million people, if we get a small slice at Denver, it's nevertheless pretty material for us.

Yeah.

And.

I recognize I mean.

I always have to remind me like what we're building is really big for Cripple Creek and really big for full house resorts.

It's 300 rooms, it's 10% the size of Treasure Island, I mean, when you say, we're going to have meetings and conventions I'm not talking about complex.

I think we already have booked the.

The annual convention of Colorado Morticians for example.

Which I know in Las Vegas was a pretty good gambling group of people.

They have to be very Uh huh.

What's the word subdued in their hometown, but when they come to Las Vegas Party pretty hard so.

So we have some groups like that that we're booking but theyre not theyre not 1000 rooms that are 100 rooms right and.

And so.

But we are putting things on the books now for meetings and conventions I think we'll do a pretty good business are that as does <unk>.

Aerostar in Black Hawk has a nice meeting room area and they keep it very busy and it helps fill that hotel midweek.

Monarch.

Has very limited meeting area.

Just the confines of their site.

They didn't have a place we actually have more meaning home space than they do even though they have a lot more hotel rooms, if we do so.

Oh, great. Thank you appreciate the color.

Okay.

And our next question comes from Ryan <unk> with Craig Hallum Capital Great go.

Go ahead.

Good afternoon, Dan Lewis.

Maybe one from us.

Covered most of it here, but can you talk through the margin cadence throughout the quarter kind of month to month and then into October mainly trying to think through you mentioned a lot of different cost.

Within each of the properties and curious if kind of Q3 margin is the right run rate going forward or if the sort of impact you more in the.

The back half of the quarter. Thanks.

I mean Q4 is seasonally slower.

Q3, so you would normally in a normal year have some margin compression going into Q4.

Looking at Q3 itself like the food costs was up pretty steadily through the quarter, obviously insurance costs were up pretty steadily through the quarter.

I mean, it's all an annual cost that's amortized straight and then.

The Turfway Park.

Their new facility opened in September so that affected rising sun set.

September .

Sure.

And I think it will over time.

Have less of an effect on everyone else on the market because there's a natural tendency to everybody goes through the new place and then we saw it and then you'll go back to your favorite and some people stick with new places some market share you lose forever.

But most of it you get back then.

The sports book issue in Mississippi.

Been happening ever since January one.

Live with online gaming and.

This is in Louisiana, So we will lap that at the end of the fourth quarter.

It's like that little segment of our business is off like 50%, but it's actually a little segment of our business, even little relative to silver slipper. So.

To see a piece of business of 50%, but at least it's not a big piece of business.

Yeah.

I guess I'm not.

At this point, there's different things that happened I know.

And I haven't heard the final outcome, but I know we had one of those great.

Vince that happened this weekend.

Because we had a golf tournament and Mississippi, We invited all of these high rollers in and they all came in on Friday night and has been.

Late Friday I heard that it was supposed to rain and be very windy on Saturday, so they werent going to be able to play golf and so I haven't seen the numbers, yet, but usually that leads to a very good weekend.

So you have things like that happening.

That that.

Month basis.

You know.

The fourth quarter, we don't we don't get that gaming capacity back in Colorado until.

Probably mid December and so the Bronco Billy's, we will still be limping here in the fourth quarter.

I think the silver slipper is much easier comparisons compared to the fourth quarter of last year.

It was doing okay in northern Nevada going into the fourth quarter. So I don't know.

Yeah, frankly, what's really going to matter as well.

What do we do in revenue in our first month in Waukegan.

And because we're all guessing a little bit and.

Even if it's at the low end of the range, it's going to be a.

Very important property for us.

Okay.

Yes.

So thinking sequentially it felt like a lot of the costs.

From Louisiana competitive pressures et cetera, Louisiana.

The reset on an insurance et cetera would have impacted Q2, as well and there was just some sequential stuff.

Uh huh.

I don't want to harp on it.

Don't want to harp on it too much but at the silver slipper literally half of our food costs as crap.

So.

We give away a lot of crab on our buffet and when you. When you look at the cost of food, so that goes up and down to the cost of credit.

And that material does that sandoz jokingly because a couple of conference calls ago I got a little carried away with it and talked for 10 minutes about the cluster crab at the end of the day, it's not very material.

Yes, it does.

Insurance costs and property insurance costs are pretty meaningful in dan's rate that resets I think I may 15th of every year. So.

You really didn't get a full.

Quarter of that for what it's worth in the second quarter that we just had so there.

Scott.

About now is when you wonder whether we we had to make a tough decision last spring of do we maintain kind of platinum insurance on the property because the insurance rates went up so much.

We opted to do so just because it's so important to us relative to the company today.

But we're right at the end of Hurricane season, we didn't get whacked. So maybe we could have gambled a little bit we would have been five minutes easy to say with hindsight.

No.

Good Thanks, guys no follow up questions on the crowd a good luck.

Thanks Ryan.

Lucky and open soon by the way.

Yeah.

Yes, I think we have time for one last question here.

Okay.

And our next question comes from David Levine with Midocean. Please go ahead.

David Hey, guys, Hey, guys. How are you thanks for taking my questions.

First question I, just wanted to firm up.

Unrestricted cash point.

And ex the cadence for the next couple of quarters. So the next two rather it seems like it.

My math is right unrestricted cash is around $85 million and you guys said that at Waukegan, which is where.

More unrestricted.

Capex would come from.

Earnings in unrestricted cash that would be around Lewis I think you said like in the low $70 million range over the next few quarters and then you have.

The interest payment the bond interest payment of like 15 ish. So that's like into the mid <unk> for.

Call it like fixed costs. So if you have kind of like 85 of liquidity.

Away from kind of Xiaomi and then that gets me to like 85.

<unk>.

Between Capex and interest that leaves like obviously like your EBITDA.

To provide just like the rest of liquidity there or is that kind of the right way to think about it obviously.

We have we have a $40 million credit revolver, and the revolver, which I was going to get to you and say like.

And so right now I'm pretty comfortable about necessarily not needing to draw that just because I just kind of like capex and interest in your EBITDA to take care of the rest right.

Here, we will probably yes, we will probably draw some of the revolver because you don't really want unrestricted cash going to near zero and so the revolvers and that very expensive. So we will probably draw some just to.

Not close.

<unk>, yes.

I think what you are thinking of it the right way David There is obviously a bit more liquidity from that revolver not paid a lot more liquidity from the revolver and then the other thing I would just tap on it.

I kind of put numbers out there that are assuming.

All of these bills come in in a timely manner and based off of our experience what you tend to see especially with those construction payables is as those last payment is actually lag on a bit longer than then.

Then when I'm modeling most likely so so there's that piece too well and if you model.

Our existing.

Properties are paying the interest expense on our debt. So when you start having free cash flow from the temporary it could repay whatever you draw on that revolver in the next couple of months, you're going to repay a couple of months after.

And so very quickly so.

But you're doing the math right. When we say we're confident that we have enough money to do all of this that's including a $40 million credit facility, that's undrawn, but if we didn't have that.

We think we'd be okay.

But it would be a lot tighter that's the math you're doing yes.

Yes, Okay, and then I just had a couple of them wanted to squeeze in any word on it.

Sorry recognize 40 million I mean at this point.

The numbers of what we have yet to spend it pretty certain.

It's not like we're going to have a $40 million cost overrun rate that will not happen.

Yes, so okay any word on anything on them.

On the hard rock Menominee process, I mean I'm sure.

Election, Tomorrow night might be might be somewhat important.

Although I'm not entirely clear now, but any kind of perspective on.

Since the last time, we spoke.

I'll make two quick points and maybe Dan Dan I'll add something there I do think youre right its important to Washington election, and depending on the day.

<unk>.

It keeps swapping back and forth with who's going to win.

So, but but but.

I think maybe the more important point is if you pull up.

Satellite photo of of of that area and look at what is relatively.

The space between us and gone up towards Kenosha, and Milwaukee, a lot of that land is largely farm land for what it's worth at the dense areas are.

Going to the south of us down towards the river is going to the west.

And so when you think about.

Closeness of eight of our casino to our feeder market, even with a potential casino opening up that way I think we're still going to be the closest casino to $1 1 million people anymore, but still.

A very very very high number we haven't put it out there.

The impact is relatively marginal because.

Because of the lack of populate population density as you go north.

Other thing I would keep in mind as well.

We will have should have speed on our side. So we'll open relatively closely.

Proximity on our side and then with the permanent we're going to have quality on our side as well and when you have one of those it's always good when you have all three I think you should do quite okay.

No.

<unk> pay one 5% of gaming revenue and a contribution to the city and you can get into the city's municipal budget and back into it and Theyre doing revenues about $400 million a year gaming revenue and have for a long time.

So this is very successful travel casino.

In a trial with significant resources.

Kenosha would have a much bigger impact on them than it would on us because it would draw from Milwaukee, which is their core and we're not assuming we get much from Milwaukee, we might get some.

And so I think.

I think there will be.

Yeah.

Let's just say that.

The two tribes may have a little bit to fight over here.

Yeah.

I'm not sure.

Do you think Tomorrow night, you think the election is relatively important though for that.

No because it's not clear whether either candidate would necessarily be in favor of this yeah, yeah, alright agree with Dan on that.

I can I can assume.

One scenario versus another but.

So that's kind of going off of assumption for what it's worth.

My guess is both of them both of them had been kind of.

As often happens in something like this.

Our non committal, so that they could raise money from both tribes.

Because they needed for the election and then after the election, you find out where they really stand.

Yes.

Fair enough. Thanks, Thanks, Thanks, a lot guys.

I hate to be a cynic, but.

Yes, Howard often works, but.

But we think we should be okay any way David.

Okay. Thank you everybody.

We talk next quarter, Dan When American places.

From American place.

Alright. Thank you everybody. Thank you guys.

Yeah.

Yeah.

This concludes today's call. Thank you for your participation and you may now disconnect.

Okay.

[music].

Yeah.

Okay.

Okay.