Q4 2022 Full House Resorts Inc Earnings Call
Greetings and welcome to the full House Resorts, Inc, fourth quarter earnings call.
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A brief question and answer session will follow the formal presentation.
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It is now my pleasure to introduce your host Lewis Fanger, Chief Financial Officer. Thank you you may begin.
Thank you and good afternoon, everyone welcome to our fourth quarter earnings call as always before we begin we remind you that 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 out full house resorts Dot Com, where you can find today's earnings release as well as all of our SEC filings with that ill with all that said, Dan you're ready to begin.
Yes, that's great.
Unusually Lewis and I are not at the same place today, but we'll make it work.
The obviously the big news.
In this call will be about the temporary casino that we opened.
At American place in Waukegan, Illinois.
Open the APM on.
February 17th took us longer to get it open than we had hoped but.
We did finally opened in APM.
No ignoring the partial day of that day.
We had 15 days of operations through Saturday.
So a half a month.
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The Sunday numbers I should have shortly but didn't have when I did the so the win for that half a month was $4 1 million.
As a run rate of $8 2 million, a month or about $100 million a year.
Just to put that in perspective or whole company last year at $114 million of gaming revenue. So the temporaries run rate is about the same as the rest of the company combined.
The trends are also have been pretty positive now the first week when you get a lot of tourists coming into see the place we had 23000 admissions.
In the second week, we had 20000 admissions.
But the win per person that first week was $80 and the win per person in the second week was $97 almost $98. So.
And Thats pretty typical of new places, but the tourists all come in at first and then gradually build the base of people who are really they would place the slot machines.
She worked those numbers out youll see it was $1.7 million of win in the first week of operation.
And.
Or is this just a slight one so then.
Recognize that the places only partly open.
Yes, there was an uncertainty the opening date made us kind of a radisson.
Reticent.
To promote and to hire people.
The process there is a little bit unusual at least different than what I'm used to.
The.
You start hiring people you have to staff certain areas in your train and you're trained and at some point, the Illinois Gaming Board approves our practice days and in our case, we had two of them.
We had had about 10 other once but the formal practice days, where youre being overseen by.
The Illinois Gaming Board.
And if you <unk>.
Perform well enough during those practice stays in and we did.
Then you can open like literally the next day.
But if not there's more training and more practice days.
Has happened to the.
The casino that opened in Rockford.
Year, and a half ago.
Meanwhile, you're paying people and you've got no revenue.
It's hard to promote exactly when you're going to open because you don't really know when you're actually kind of thought but.
And of course, it's also harder to hire people before you really open because people are wondering what's it like inside.
Place that want to work and so on to put it in perspective, our full compendium.
It's about 800 people that's about how many people we expect to employ at full full capacity in the temporary today, we have about 400.
About 200, and the pipeline, meaning that they've applied we've made them offers and they're going through background checks and filling out the RGB.
Gaming employee and unemployed non gaming employee forms.
Some of those 200 are going to fall out so maybe it results in a 100 new employees. So you can see if you're trying to get to 800 400 is going to take a few weeks to.
To get there.
But we will get there now as a result, there's a few things one is we're not operating 24 hours a day, we're only operating in the morning till four in the morning.
That's not actually an issue with the staffing that's our cage has to get faster at the closing processes from one day to the next it's pretty complicated to roll the accounting day over from today to tomorrow when the casino as is.
Operator, you know somebody shows up to cash out their chips in the middle of it which day does that go into and so on and so you want them to be able to go pretty fast.
For the moment.
We in the IGD agreed that we would not operate from four in the morning until late in the morning, which gives them time to make sure they've done all the accounting processes, they need to do and close out one day before we start the next now obviously lots of casinos that pretty 24 hours a day. So we'll eventually get to where we can do that as well.
And and that's the Wee hours the morning, so not really losing a lot of revenues at that point anyway.
We are allowed to have 50 table games at the moment, we only have 28 on the floor because we don't have enough dealers.
And even then we only operate the table games from two P M to two a M.
And again, it's a staffing issue.
Now will eventually be open 24 hours a day with table games and we will eventually have all 50 Gainesville for that peak week peak periods.
But you know it's tricky to find dealers because there was no casino in Lake County, before and the casino to our South which is reverse from the casino to a north which is part of why to me.
45 minutes 40 minutes, each direction and frankly, they're very successful casinos the dealers make lots of money.
And they probably move closer to those places that may do to us in many cases. So we we've been training people, we run our own dealer school.
Recently reached out with a promotion, where we're guaranteeing dealers 60000, a year, including their tip income.
Frankly, we think they'll make more than that so the guaranteed doesn't actually cost us anything but it makes them more comfortable about taking a job with us and second if you're inexperienced dealer and you're working at some remote casino, maybe a tribal casino up in.
Wisconsin, or Minnesota, Michigan, or something and they want to relocate to Lake County, which is pretty nice place to live will pay up to $5000 in relocation costs. So we're doing some pretty creative stuff to try to get dealers and we will eventually have enough to operate table games are full bore.
The slot area we are.
Pretty well staffed we need in slots, but we've had over 100 machines out of service one of the manufacturers kind of fell flat on us and so out of the 1000 slot machines, where we are.
We opened with the 800 and something and we're gradually getting to 1000.
Closing that gap.
The food and beverage area.
Deficiency with two large restaurants.
One with 300 seats, one or 200 seats and then we have a third restaurant that is going to be completed in April .
Basically a diner and that's going to serve as our steakhouse.
Delivered in April .
The staffing issues. We have has just right now only operating one restaurant and even that restaurant is only for dinner.
So we're really trying to fill this in quickly. So we can get a second restaurant opened within a few weeks and expand the food service offerings to at least two meals a day and eventually maybe three meals a day and one of the restaurants.
So at this point, we're only 50% staffed with limited operations and we're still doing a $100 million a year.
Run rate and.
And of course, there's always some unusual costs around opening that'll go through the income statement, but if.
If you're if you're that understaffed and youre running that sort of revenue I'm sure our margins apart from the unusual stuff that are very strong.
One other thing to point out is we opened with really no mailing list.
You would expect the active customer list in a market the size to be at least 40 to 50000 individuals' no people that your mail to who you send pre play to them they show up in gambling.
Well it opening two weeks ago, we had essentially zero today, we have about 15000, some portion of the 15000 I'm going to turn out not to be active they just signed up together.
A free buffet Chad.
Sure.
So it may be out of the 15000, you know five or 10000 will turn out to be active. So we have a long ways to go and mailing the built in the mailing list, but yeah.
We're still achieving that $100 million, a year run rate with little or no customer list. So so we're pretty happy with how we're doing in Colorado.
Colorado construction is progressing well the large tower crane is coming down today, and that's a sign of progress.
<unk>, meaning that there's billings from basically.
The exteriors were all built.
Inside the plumbing and electrical.
It has been installed in a lot of the building the dry wall is going up.
Lot of the Guestrooms and a lot of the public spaces.
And portions of this is gonna be complete inside of five months and the others are going to take as much as 10 months.
And we're gonna open somewhere within that time frame, meaning in the fall.
Where within that may reflect on what needs to be completed to open now the casino obviously many.
Many if not all of the Guestrooms, we'd like to have.
We'd like to have the high end restaurant opening.
And in the kitchen on that is a little behind.
The parking garage at the meeting in the space.
The spa is a bit behind and we may open without it.
And and so.
That's that's the game, we're playing is trying to figure out what can we.
Open with what's essential to be open to give good experienced with customers like do they really care, if there's 300 grams or 250 rooms, they only staying and what they won't even know if there's 50 some unfinished, but then you get into a higher exiting issues and.
And stuff like that so we're trying to work all that out.
But we will be opening sometime in the fall.
We've learned from the experience with the temporary that it's very important to build the employee base at the same time as you build the building.
Fortunately the regulatory process for opening at casino in Colorado was different than it is in Illinois. So we will know it.
The date certain of opening we also have a core compendium of experienced employees.
To open with so it's we're not starting with zero stock.
Starting with a couple of hundred people, we're already working for us.
And when you already have a mailing list Bronco Billy has been building a mailing list for its 25 year history. So if somebody has a gambler in Colorado Springs, or Denver, we'd probably have.
I have a pretty good idea of who they are big.
Big advantage choker over where we were in Illinois.
Now Meanwhile, the construction of Germany has had a big impact on Bronco Billy's kind.
No surprise there.
No Bronco Billy's used to have all sorts of parking today it has none.
We we offer valet parking and park three blocks away.
There's no hotel rooms on site.
And perhaps most importantly, it has a lot less gaming capacity than it normally does we actually made the situation a lot worse in the second half of 2022, because we closed the core part of the Bronco Billy's casino.
Like Bronco Billy's was eight.
Eight different buildings, each 25 feet wide and we closed the middle three.
And as well as its steakhouse, which is upstairs in order to refurbish the casino and contemplation of Xiaomi opening in this year, so so and.
Third and fourth quarters Bronco Billy's was a fraction of what it normally is and as a result that didn't earn anything.
When historically it was a significant earnings contributor.
Casino space reopened in late December looks pretty nice and the stake.
Steakhouses, becoming an Italian restaurant.
It won't be open for another six months or so.
But it should be open are at or before so many opening.
Meanwhile, on the balance sheet, we drew down the credit facility to pay a bill.
Front gaming tax for the temporary.
We also had to fund the preopening cost a little longer than expected and and opening later than expected meant we had less income way, we had hoped to be earning.
Some money in late January early February .
No, Illinois gaming law, there's a little bit ambiguous, there's a and that's not a pulp with the gaming board and some fault of the law.
I'd just like to I mean, that's that's what happens when the.
Legislators create laws, sometimes theyre not always clear.
There was a tax on gaming capacity amongst other taxes. There's all these different taxes, we have to pay well one of the more important ones is based on how many slot machines you have for example, we've.
We thought we were going to owe now meaning next week, it's owed one month after you open.
$38 million and gaming taxes, and that we would owe another $12 million when we opened the permanent casino in three years.
Cause permanent has more gaming capacity.
The gaming board is interpreting the law that all $50 million or so now from.
From our reading of the law, we're not sure that's correct. So we're trying to figure this out.
Since we owe the money in a week, we're trying to figure it out fast.
I know the casino that opened two years ago went ahead and paid the amount upfront.
Got quite a few other casinos have the ability to expand and they haven't had to pay it upfront. So we're trying to figure it out.
It's not the amount of money is the timing of the money. We thought we were going to pay 12 million three years from now it's a much bigger factor for the Bally's casino in downtown Chicago for them. So it's a huge number.
But anyway to make sure that we have the money.
If necessary to pay that and they have more flexibility moving forward to finance the permanent American place, we didn't add onto our senior secured bond issue raising $35 million you.
You did a pretty quickly and so today, we're in a very liquid situation between the cash on hand, and the profits from operations. We're now.
Generating pretty good profits from operations, including from the temporary.
And that's more than enough to complete Germany and to fund the initial construction of American place in that that buys time for our new properties to prove themselves.
And for the bond market to continue to stabilize.
Our existing bonds become callable in February of 2024.
We've long said that sometime after they become callable we probably.
Issue, new bonds, a new bond issue take those out and incorporate into it the money needed to build the permanent American place.
But with this a little add on issue.
We have flexibility probably all the way through 2025.
To just be funding construction from our existing resources and that buys us a pretty long runway to figure out.
The right timing and how to finance American place.
Lewis, let me turn that over to you.
Sure So well as Dan noted, we did do that revolver draw and the $40 million tack on notes last month.
That's led to us having a lot of cash currently sitting on the balance sheet here in real time, we're sitting on about $210 million of cash which includes $110 million of restricted cash for the completion of Xiaomi and obviously, a $100 million of kind of unrestricted cash.
We will use a portion of our unrestricted cash to pay the initial license fees for the temporary which which are somewhere between 40 and $50 million as Dan noted.
We do have some modest very modest uses of capital like that that restaurant redo that Dan mentioned that Bronco Billy's will cost us about 1 million Bucks.
But then of course don't forget that our existing business generates cash too, especially with us heading into our seasonally strong season and large new property.
The temporary now open.
Some other clean up items.
Of note for you we did sign a new sports skin agreement for Colorado, We actually executed it back in December and it began its contractual term a couple of days ago that means here in real time, we have two sports scans that have not yet launched one of those is in Illinois, where we contracted with circa sports there's a natural process.
That gets followed but pending normal gaming approvals, we believe that circa sports could go live here in the next few months.
And then we have one idle skin left in Indiana, which we continue to evaluate whether we use it ourselves or sign up a third party similar to our all of our other sports skin agreements.
For those of you keeping track one circuit goes alive. The total for all six of our sports skin agreements is $10 million per year of annualized minimum revenue and half of that $10 million is related to our agreement with circa.
Is the most valuable.
The most valuable by the way because Illinois has so many people in the state and there just aren't very many sports skins and the state.
And Lake Tahoe, we enter a landlord agreed to extend our lease agreement for the Grand Lodge Casino and was due to expire on August 31 of this year with the extension. It now goes until December 31, 2024, normally we would ask for a longer extension, but.
Its new owners plan on putting the property through an extensive renovation I think in their ideal world. They would probably prefer to close down our casino while they renovate the entire tower and then our ideal world. We would have them renovate around us like we did a few years ago and so we'll continue to have conversations behind the scenes about how we can still operate even.
While they do some extensive work on site.
For the fourth quarter that we just finished I know you've already heard from a bunch of our other regional competitors about a challenging end of the quarter quite simply there is just bad weather portfolio wide, especially in December and Mississippi. For example, we had icy roads and that always creates chaos down south as people are.
They're not used to those icy roads and they end up just staying indoors.
And Lake Tahoe as another example, we had snowfall up until eight PM on New year's Eve, which is never ideal.
The two software moments in the property portfolio were at silver slipper on Bronco Billy's at silver slipper.
Our nearest competitor.
<unk> put out some pretty crazy promotions in the fourth quarter. Since then promo levels have gone back to normal and we've seen a recovery in visitation here in real time. For example, we're seeing visitation, that's about 10% higher than levels that we saw in November and December .
Then over a bronco Billy's I don't want to go over everything that Dan already mentioned, but but the sheer fact is the size of the casino as a fraction of what it is what it usually is at its lowest point, we're running bronco with 55% fewer gaming positions and pre construction levels and even today. After the opening of the renovated gaming space, we're still at about.
Half of our usual gaming capacity.
And so we look forward to win Xiaomi is open and we are parking onsite and hotel rooms on site and in our full casino as well.
With all of that said I, probably have two last points that I want to make here.
A couple of last points one is.
If you look at the EBITDA numbers in 2022, they were down but I do want to remind all of you that we still had some pretty good record numbers in their silver slipper had its second best year in its 16 year history.
I don't think it's slipping much from what you've seen for what it's worth and then over at rising star that they had their second best year in at least the past 10 years.
From our seats here I think we were probably a couple of million dollars or below what we would've liked but that shortfall is made up through just 15 days of EBITDA from our fully ramped up American place and Dan kind of hinted at it it'll be a little more explicit I don't think the ramp up period is going to be very expensive at all at American place.
We're very very pleased with what we've seen out of the box there.
Given all the all the limitations that we're currently running with and.
I think youre going to see a pretty positive impact from that opening here very very quickly.
The other last point I want to make is.
The way I view, the opening of the temporary as there's a massive deleveraging event.
As Dan noted were very pleased with how the opening weeks have been regardless of what you what your estimate might be for EBITDA out of the temporary it should result in very meaningful growth to this company keep in mind that we raise the majority of our debt to fund construction of the temporary and shiny and now you have the first of those projects open and doing well the second.
One which should be just as meaningful as the temporary should be to our financials is the only a few quarters away from opening and so.
So just keep all that in mind, but.
With all that said, Dan you want to take some Q&A.
Let's go for it.
Okay.
Thank you.
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Our first question is from the line of David Bain.
<unk> Securities. Please go ahead.
Great. Thank you.
Dan and Lewis congratulations on another exciting casino opening.
First I guess, Dan you gave some.
Early run rate numbers for Waukegan that was very helpful. I mean, how should we view it in context, though with the upcoming augmented hours games amenities marketing of the database can you help us think about how that $100 million kind of.
That cadence from here as those things begin to.
Kind of funnel and then maybe Lewis on that how we should think about EBITDA margins that cadence given fixed cost for a temporary relative to a new permanent casino opening.
The quantitative better [laughter] well the I mean at this point you have kind of a rotation of the tenants in other words, the tenants will probably continue to.
Run it.
A pretty good base of.
20000 might slip a little into the teens 15, 20000 people per week coming through.
But the win per admission, which today is about $100, that's pretty low by Illinois standards and.
And so I think the win per admission.
Will creep up as we have longer operating hours and frankly more reasons to come I mean at this point.
Food and beverage offerings are pretty pretty limited for example.
And so.
You know as you transition.
I mean granted you get some kind of pre business, maybe everybody come in and see the new place, but a lot of those people don't gamble or frankly, couldnt get to a table because we didn't have enough tables.
Opening night.
Within an hour of opening the doors every table was was built in.
And so.
You know I think I think we will end up at a higher run rate than 100.
And it will build gradually over time.
And it's almost all in in.
And that number is just gaming revenue I'm, not counting food and beverage and there we have a center bar that is a bar is actually doing pretty phenomenal numbers, but we're not going to want it when they can pay for everything with the bar, but it's very successful bar.
So I think we ended up with.
Something north of $100 million I mean, I don't think it's going to be 200 million, maybe not even 150, but 121 31 40 somewhere in there and pretty high margins because its almost all the slot machines.
I think we're running.
80, 20, today's slot machines, two tables and.
As we get the tables open longer we might be 70, 30, instead of 80 20.
But.
And then in Illinois, its a little unique the gaming tax is actually lower on the tables. So.
That shift probably shouldn't hurt margins pretty much.
And Oh.
That's the bottom line, but we will see we have to build a mill you know typically.
I tried to characterize it to our advertisers.
Our advertising agency that you're looking out at a lake that you've never fished in before.
And you have to go out and pitch and a lot of different places and eventually you figure out where the bigger Fisher hanging out and now you start focusing on them. So right now we've been doing a lot of broad based marketing. We've got you know wraps on the commuter trains we have signage all over the commuter train station in downtown Chicago, We're on TV.
We got billboards up all over the place and and.
Gradually as you build the mailing list you stopped paying for the general media and your focus on on the segments from the people and that's why the players club so important and should build the players club database.
And you know a lot about those people because you know how much the gamble and you know what days of the beta gamma and so on and so you start incentivizing them with free play your meal offers and so on.
Yeah part of the you know getting.
Getting the second restaurant open as an opportunity for us to market. It see it come back and try our Asia Pac which is just opening.
And then when we get the steakhouse.
They come in and try and do a tour steak and seafood. So it's a process.
Whereas in Colorado, we already have a pretty good sized mailing list, it's just going out to them and saying we know you've gambled in Cripple Creek before why did you come up with this new thing we built.
Right.
Yeah, I don't know that I have a ton of add on to that Dave I mean, I'll tell you a couple of things, though I do want to reinforce that when Dan talks about $100 million of run rate revenue at this point that is purely gaming revenue.
And so when you think about overall margins.
Food and beverage tends to dilute your margins. So don't don't run a 30% margin off of you know in the long run at least off of off of just the on gaming number it's a high it's higher than 30%.
I'm, not saying, it very well, but I think you'd get what I mean everything else dilutes your margin down so so whatever margin using on the run rate gaming revenue should be a much higher number.
Yeah. All of that gives me a lot of confidence I mean, I mean look if you run a 40% margin on Dan's run rate number there you're looking at $40 million of roughly $40 million of EBITDA, assuming everything else is breakeven from a restaurant side.
When you walk through the facility I'll be honest, it's I'm meeting people there for a launch this week on Thursday, and I don't have anywhere in the building to take them for lunch at right and it's not just on a Thursday its everyday of the week and so if you are a gaming customer going and you can go and grab a hot sandwich from from the two are streams that.
We have on site there, but if you want a true sit down meal you don't have it we've got a we're making sure we put a.
Some some food trucks on the outside especially on weekends, but and we do try we are planning on getting some brunch service into La marathon here in the near term, but it's but you've got a portion of your day, where if you're a normal good game or you expect to want to show up have a meal go on play a game and right now we're only servicing you for.
The dinner part of everyday of the week. So so do keep that in mind and despite all that we're doing $100 million of run rate revenue and the first mailers didn't didn't start hitting people's Inboxes until a couple of days ago. We went we went all of February without.
Without having any of your usual promos out there as an example, so.
This is a very very strong start I I will I won't give you numbers per se I will tell you that I continue to think that this thing will be EBITDA positive pretty quick out of the gate and Ah and I'll leave it at that but I feel very good.
That's all very helpful. And then I just had one follow up strategic question looking at 'twenty, two EBITDA generation, particularly from a few properties.
You know as they begin to normalize but still be dwarfed by Waukegan Chamonix can you remind us the strategic rationale not to diverse kind of the smaller portions of the portfolio and as you know from a forward equity capital or investment into the more sizable contributors your time and even from an investor standpoint, sometimes.
A little distracting when a property is off like 500000 for one time reason, it's like 30% off of consensus.
Well I mean, it doesn't like the smallest one is calling.
And we could sell it pretty pretty readily there's a lot of people would be interested in buying it.
But we manage it in conjunction with the Hyatt Tahoe and so its a to a large extent the same management team that goes back and forth.
And that makes it more efficient for us to run those two.
And you know if you're so travelling you'd have to put the entire management team just against the Hyatt.
And if you go to.
The rising Sun, which is relatively small I mean, a few years ago.
We thought we might have to close it frankly, the management team there has done a terrific job and it's now making six seven and $8 million a year I think it was $8 million in the Pea.
The stimulus checks and six in change last year and.
Yeah, No, we're pretty happy with that and in a very competitive environment.
And frankly, if we don't need the money and we have enough money to build everything we're doing.
And it really wouldn't move the needle much if we sold one of these properties.
And it also has a good.
Place to to Oh.
We would build a management team that you can promote other places and so.
Anyway.
We've got no real reason tied their best but you know you when you start thinking you know how do we.
Where do you start thinking okay, what happens if the bond market is crappy.
And it comes time for us to raise the rest of the money to build.
Can place well, we could always do a bally's didn't go turned to a REIT and get the REIT to fund most of it.
We could even do a sale leaseback on some of our other properties.
And do it I happen to think that's probably more expensive.
Then it will be to go to the bond market, if you really really measured everything.
But we have multiple ways.
To finance American place and frankly, it's an asset of the company that we have not done so.
Leaseback thing yet.
But luckily listen if it were a public company you know everything is for sale. If somebody comes in and offers US 25 times cash flow or any asset we have.
We'll be happy to take it.
Right.
Yes.
Yeah got it Okay, and then I was just going to say and we were we the good news is Nevada, Northern Nevada is not taking too much of our time for what it's worth so we I think you're trying to ultimately we're trying to balance the time relative.
Relative to the EBITDA contribution at this point, it's the team up there is doing a decent job.
Okay, Great alright, thank you very much.
Thank you.
Our next question is from the line of Brian season with.
Capital.
Please go ahead.
Good afternoon guys.
A lot of talk about the first two weeks of performance obviously on the temporary it's top of mind, it's the focus curious that run rate.
Keep referencing back to I guess.
How when you look at other openings.
Accurate is that or I guess is there typically a lull I guess after the first few weeks before you get the mailing list before you get the amenities before you get the hours all of those things ramped up.
Uh huh.
I haven't really say everything every opening.
Pre opening is a little different.
This this is I always say every opening has a surprise in this case it was the.
The fact that were understaffed and having to deal with that very very frustrating me to walk into these restaurants that are you know we're all focused on getting them built the other bill we don't have in place to rent them and in the process there.
And.
Illinois, even non gaming employees have to fill out 25 pages of the 30 page four.
And they basically ask the name and address with every grille, you've kissed since third grade and that's fine and an expected four Lewis and I would do that all the time with every gaming commission, but its not common.
What are you planning to be a waiter has to do that.
And they have to fill it out in English.
When the community. We're in is 50% Hispanic and the people applying for those jobs a majority of our Hispanic and so we ended up sitting down with them and helping them to form.
And whether it's not the fault of the gain.
<unk> board as the folks of the law.
And they're just.
They're I think they're as frustrated as we are in the law requires them to do that and so we're trying to hire waiters to come in and work in these restaurants.
And they have to go through all these background checks, which takes time.
And you know they can go next door and get a job with the restaurant next door I mean unemployment is at record low levels and.
And so we're working our way through that and it takes time, but that's the current challenge.
Now the process of lots of tourists are lucky loses the industry calls him coming in assuming new play. So you get large numbers of people falling through.
And then gradually figuring out which of them are gamblers and coming back that's a very normal process.
And we had it a little bearish, we headed in St. Louis and so on and you're gradually figure out who the gamblers are in build the mailing list.
That's a normal process and will there be a low.
The second quarter might not be.
May or may not be at a N a.
At $100 million run rate I'll bet, it will be because we'll be adding hours will get all the machines up and running it will be any more table games get the restaurants open.
But it bears in Lake Charles and this a long time ago now 15 years ago.
It opened and then there was a little bit of a low.
And then and then we work through it and in the law was over but it also opened with all of its restaurants opening all of its table games open and so I think our I think we're less likely to have a lull here because we're going to build the staffing and they'll be operating hours and everything else you know what it's like.
But the fact that we only have 28 table games it doesn't matter that much on a Tuesday.
But swing shift on a Saturday it really matters.
So.
Yeah, Yeah yeah.
The other thing to keep in mind, Ryan is as Dan Dan's right.
Usually you opened up with your full breadth of amenities.
And we haven't in this case, but on top of that we opened without a date right. We're not a date, but we opened we opened we opened it.
Days later than the day after we the public knew the date is may be the right thing to say and so if you. If you were to sift through the questions that we get on Facebook and <unk>.
And all of those channels.
Google and everything else. The number one question by far last I looked it was something like 75% or 80% of our questions was are you open right and so usually with a normal casino you've got that data out there six months in advance and you're telling people. We're opening. This date. We're opening this day and we are opening this day for months and months and Youre just beating.
At home in this case there are a lot of people that just don't even know the doors are open yet so I I'm not sweating here.
Then just two quick ones here on Bronco, Billy's and I'll turn it over but one how long in advance do you think you'll be able to announce that opening is it a few months or I guess any timeline there and then secondly, with the new casino renovation floor Dawn do you think that that.
Operator, you can turn it back to EBITDA positive going forward, even before Xiaomi open.
Yeah actually the numbers were already quite a bit better.
And the five or six weeks since we got.
Got it open.
So.
The answer to that questions yes.
It was it was I mean, it's still.
Operating with.
A lot of the amenities not there but.
So much better than it was a few months ago.
And I'm, sorry that was one and then in terms of an opening date.
Well you know we.
We can largely pick the opening date.
But I don't want to get too far ahead of the constraint. There is a point where the construction is largely done and you're installing the furniture.
And at that point it becomes very predictable when you can open.
We have a few pieces that are we're trying to catch up with like the kitchen for the specialty restaurant.
It needs to catch up a bit.
And then there's an issue with.
We couldnt do all three towers at once because we couldn't get enough.
Light gauge steel workers, so we had to build towers, one and two and then the.
Well, it's actually one and three.
And what we called tower too is behind the other ones and so it's possible to open.
Without that tower being completed except that some of the exiting from tower one goes to tower.
A tower too and so we have to satisfy the fire Marshall that while that tower. It may not be completely furnished and open to the public.
There are safe fire exiting methods to go through and if.
If we can't reach an accommodation with the fire Marshal then you probably don't want to open without towers, one or two.
Tower, one has most of the suites for example, so there's there's issues like that that would have to resolve but we should know you know 60 days ahead of the opening date. So that we can then advertise the opening date and have a party and then we had.
We actually had a pretty decent opening party at the temporary but it was a process of telling people hey, we're getting close we're getting real close be ready you might only have 24 hours notice and then literally we got approval at like two o'clock on Thursday.
We blasted out emails to about 1000 people, saying, we're opening tomorrow parties at six o'clock, we open to the public at eight o'clock and we were able to get 400 people in the place and despite our staffing challenges that the staff there did a terrific job at serving a high end meal and having a great party atmosphere that.
Place and.
And it went very well, but I will tell you it was.
Not the way you normally want to open I mean, you don't normally want to tell people, you've got 24 hours notice to come to a grand opening party.
So.
Yeah. Good thanks, Louis Dan.
Yes, I think you're right.
Okay.
Thank you.
Next question is from the line of Chad beyond with Macquarie. Please go ahead.
Hi, Good afternoon, Lewis and Dan and congrats on the opening.
Dan just one.
One just kind of on the outlook here I know you guys don't give give guidance I'm just trying to think about some of the same store growth opportunities of the business that that arent facing.
New competition or disruption I guess, mainly Mississippi, Nevada in the press release, you outlined a number of things that you know.
It hurt the properties in the fourth quarter and for the year, but as we look at kind of where the you know the.
The floor is or the foundation of of those financials is there any reason to think that you know these couldn't grow from here I know, Indiana, you talked about some competition, but just trying to figure out you know Mississippi, Nevada.
If if kind of the worst is behind you guys. Thanks.
Well I think and.
Indiana, you do have a new competitor opened in September so we have several more months.
Of that.
<unk> done reasonably well despite that a competitor so I think.
I think that's okay.
The route really isn't anywhere else that we have a new competitor. So we had a as Lewis and I mentioned in Mississippi, where our competitor get very promotional for a while and then I think they realized they were spending money foolishly and they backed off.
We're about to lap or we have lapped the opening of our online sports betting in Louisiana and so.
That shouldn't be a factor going forward.
The.
And Colorado, where the guys, adding capacity nobody else's and and.
Northern Nevada.
You know Larry Ellison acquired the Hyatt over a year ago I guess.
And that's in a good good news and.
Ultimately because he has a history of going in and significantly improving the hotels, we spud four five now.
We hope to continue to be the casino operator there.
And at least indications so far is that that'll be the case I don't think he wants to go get a gaming license in and.
And they have to deal with those issues, it's an amenity to our hotel now we may.
He he apparently intends to significantly refurbished the hotel.
He is going to start with the stuff along lake, which is hugely valuable real estate, that's kind of exciting I think what he could do with that.
And then he is going to go to the main hotel building wishes, where casino is and as Louis mentioned, we would prefer to operate during that but the construction people almost always would rather just close the whole thing.
And that's a discussion we haven't had yet with them.
That lease has been extended several times.
They never let it be a long term lease I wish they would.
But its been extended by one year three years two years every few years.
And it'd be wonderful if he fixes it up to be a really high end hotel and we are still they're running the casino I hope and believe that that could be the case.
We may end up going.
<unk>, a year year, and a half without a casino while he's doing that.
But we'll see how it shakes out.
And and Mississippi, we've actually made a lot of headway to have the.
Approval to build a hotel tower out over the water.
A little busy building the other stuff, we have but we think we could get a pretty good return, adding a hotel tower there someday.
You know, it's Oh, let's finish the construction, we have going now, but we do have stuff, we can do down the road.
The sports books are you know it was a little bit of a surprise to us when Churchill shut down their sports betting operation a.
10 months ago.
And we've now replaced one of them and then we got the circuit deal.
So I think we're back in a good position with the sports betting stuff.
It'll be a guaranteed minimum of about $10 million of yours as Louis said.
With one.
When the Indiana skin still available.
Oh I addressed everything.
Russell believes there's going to be kind of part of Chamonix.
Opens as a.
Whole different scale, I mean shelf and he was gonna make 10 times, what Bronco Billy's that were made.
Yes.
Gotcha, Okay. No I appreciate that just yeah trying to fine tune everything I know, we're all focused on the temporary in Germany, but you know as we've said to the legacy business still matters to the cash flow.
And then in terms of.
Some I casino movement, I know, Indiana, and Illinois have been states that.
You know everyone has talked about potentially being on the docket and 23 or 24, I know there was a little bit of lost momentum in Indiana, but just wondering if this is legalized would you guys consider doing it on your own you know running one of these.
Very valuable profitable scans or would you consider leasing it out and bringing in.
Kind of guaranteed cash flow similar to what you've done on the sports wagering side. Thanks, Yeah, well, we've considered both it's probably easier to do the I gaming or ourselves because you can you can.
Rent or buy the software to do it there there was a particular issue with the sports betting as a small company in it.
You were concerned that let's say the cold cut into the Super Bowl all of our customers in Indiana were going to bet on the coach.
And if the other team in the Super Bowl was not a place where you have a casino we were going to end up with an unbalanced book and so that that is kind of a difficult thing to do and if you change the betting odds at our sports book to try to attract that some of the other team then we will not be offering your customers.
As good a deal as they can get from another casino in Indiana.
So we made the decision early on to do the sports betting to licensing with companies like like win Who's got a huge sports book in Las Vegas and so.
They can balance it with what they have out of Las Vegas, they're not they don't have that concern.
Whereas.
When you get into gaming, that's just a large number of small independent statistical.
Statistical events and that's the business. We're in now we'd have to hire some people who understand how to market their business online, but those people are available so.
But on the other hand, if somebody offered us a great deal on the skin and then they might decide.
Since it as we did in sports betting so we'll see.
Yeah, I'm just thinking that somebody made the question before about you know why don't we divest some of the small ones.
The real answer is as the company gets bigger maybe we should take the small ones I'm just group altogether and and so you guys you know.
When you see the Boyd numbers when they talk about.
The Midwest District, well just portfolio theory of one casino in the Midwest might be up 30% in other words down 30% you look at it looks very stable and in it and they've kind of camouflaged. It by grouping things together, whether it's them or patent or most of our competitors group. It together, where one of the few companies that.
Shows you pretty much earnings reached sooner with the except of northern Nevada with a share of management teams, we lump them together.
But yeah.
Boyd certainly has lots of small properties, but nobody gets focused on whether they're up or down a lot in one little market because they combine.
I am sure Keith Smith pays attention to it but.
It doesn't doesn't confuse the analyst.
Well, we appreciate all the details are on the properties and also on the temporary so congrats congrats on the opening thanks guys. Okay.
Hey, Dan we've got five minutes and two last questions. So let's try to get through both real quick.
That's what it is is what you're telling me to be succinct. So go ahead.
<unk>.
Thank you our.
Next question is from the line of Edward Engel with Rock Cam. Please go ahead.
Hi, Thanks for taking my question and again, congrats on getting eaten up train.
I know, it's early but is there any kind of early learnings of where that customer base is coming from is it is it all a county or are you seeing people kind of close in suburbs of of of downtown Chicago as well.
So it's not as heavily Lake County.
And.
Yeah, it's really heavily Lea county, there's very little from downtown Chicago.
So yeah.
Yeah, Yeah, and I'm not a lot to add to that.
Very heavily Lea County.
Yeah.
Like the city of Waukegan is a third Tonight.
All the numbers and it's.
And it's kind of a it's interesting like.
We don't even we're not even drawing very far from rivers are part of one of my ethics.
As you know Rubens, we have as we've been saying all along well mostly be from increased gamblers in our region.
My guess is we haven't had a very big impact on.
When either of those cases, no no recognize rivers does about $600 million a year in revenue and the Potawatomi does about 400 million of your revenue and then Grand Vic which is also kind of in the market does about 120, so there's a billion one revenues.
And if we take.
10% of that well that's $100 million.
Run rate okay.
Yeah, I don't think we're going to have much impact on them and I don't think we are very much overlap with bally's at all.
That's it's a.
People in Chicago don't want to drive up to Lake County, They think it's a little.
Place you go on weekends or something and people in Lea County, and don't want to go downtown because you get stuck in traffic.
Great. Thanks, I'll pass it off.
Thanks, Ed.
Yes, I mean, the one way to think of Lea County, it's like having a casino in Greenwich.
You know, it's like it's not going to compete with Manhattan, That's gonna drawing people, who live in granite chip here.
If you're familiar with the New York Geography, where we're the Westchester County Casino if you will.
So.
Alright, one last question Dan.
Mhm. Thank you.
Joe.
Our next question is from the line of Jordan.
JMP Securities. Please go ahead.
Great. Thanks for taking my question, keeping keeping in mind, the bumps in Illinois with the hours of labor in the restaurants opening et cetera.
How should we think about that property running at a run rate over the next couple of items should we expect something in the next.
Next month or two or should it be more of a traditionally.
Traditionally two to three quarter ramp.
I think if I.
Go ahead. Louis go ahead Dan.
Great.
It's going to ramp slowly, but it won't it won't necessarily be completely consistent I mean, if you you know.
Eventually you'll get monthly numbers from the Illinois Gaming Board and if Theres one month, that's a little below an $8 million per.
Her month run rate I wouldn't worry about it because it's it but the trend will gradually be up you know and I think by the time, we get to.
Later this year it should be running $10 million.
I think I told you what some of the numbers are of the competing casinos I mean granted because of tired 25 year old traditional river boat and it's still doing 120.
Yeah, I think the only thing to add onto that is usually I would talk about a casino ramp taking 18 months before you're on a run rate and in this case.
I think it can be a lot faster than that for what it's worth I don't think it's 12 months, either I think it's quicker than that.
Part of it is going to depend on how quickly we can get the rest of our amenities up and running that you know I do think that's going to be sooner versus later, we've got enough labor I think on the table game side. So that so that we can extend the hours here.
Very very shortly for what it's worth.
The other thing that helps us out is our typical gas don't need to travel 40, 45 minutes to come visit us for the first time, a typical gas is gonna be traveling 15, 20 minutes and so and then when you actually get to the site I think what a lot of people have been appreciating is is we're right off the freeway where right across.
The street from a giant Walmart, we're kind of already inserted into people's everyday lives into their shopping patterns and everything else and so I think all of that is going to combine into a scenario, where where the ramp is on the shorter side versus versus what you would see for most other casino openings.
Great and then one last housekeeping how much lift you get me Colorado.
So yeah.
How much left to spend in Colorado.
Yeah.
Yes.
Iraqi recognize the the 101 hundred $10 million in the restricted payment account, there's a third party, who every month goes through and looks at.
What it takes to spend and to complete it and you know where we are and that's the 110.
Yeah now you know it's a.
There was some stuff that.
Like I'll, probably want to spend a little more on marketing in Denver, then than it was in the budget currently and so on but for the most part that's that's the one time.
That's what's needed to complete it now that does not include the $1 million change in let's take us into the Italian restaurant that sort of thing.
So yeah, yeah, Yeah, that's right there.
Great.
You got it thanks, John and one one truly last question, Dan where we won't be quick. So we don't go too far over time, but we'll go on to clear it up.
You know by the way just forget the questions just remind people that I meant to say it when the filler from Roth asked the question, but we are going to be a throw off the conference next week, we look forward to it.
Yeah.
The last question was.
Yeah I'll take it.
Last question is from the line of John Decree with CBRE. Please go ahead.
Hey, guys. Thanks for sneaking me in and I think you've covered everything so maybe one just for you Lewis.
Yeah.
Point of clarity the real time cash you had given.
The $210 million does that include the $36 million or so that was drawn on the revolver and then.
If thats accurate how do you think about the timing of of repaying that is that just after after waukegan ramps to a to a point you're comfortable with.
Yeah, I'll, probably we'll probably end up paying at least a decent slug of that back here in the near term for what it's worth when we originally did that draw we did it on a on a three month draws.
Draw. So we we've already put in a request to kind of term out that that that that are like that.
So for contract if you will behind the scenes boring stuff with with revolver draw blood draws but.
But yes. The short answer is it does include all of the cash from that revolver draw and you should expect us to pace a decent chunk of that back in the near term I don't think were going to pay it all back yet in large part just to hold onto some extra extra liquidity as we kind of wait and ease the opening weeks, but but not expecting to need to need it for what it's worth.
Got it last one Louis excluding whats left in Chamonix and and at Waukegan.
Give a rough number as to what we should expect capex to be for the rest of the portfolio. This year.
Ah.
Germany is a.
As well, it's where we're spending roughly 10 million Bucks a month. These days and we've got 110 left to spend so in theory I used to be clearing out most if not all of that account here over the over over the balance of the year.
You might have a little bit of that that pushes into 2024, just because of retention and whatnot, but but by and large expect us to clear out that account in 2023.
For the temporary the real time cash number that I gave you already includes the vast majority of construction spend for the temporary you know theres a couple million bucks of trailing.
Out of that real time to turn of cash number.
And then obviously, we've got the gaming license fee as well so.
Depending on what that what that final number is sort of like gaming license fee.
Is it well.
Well I guess, the fact that the full year, but.
But we made looking Adam as I said I want to say we made a.
Maybe 7 million bucks or so prior to this real time cash number so if youre going to include the seven already span plus another couple million dollars, let's say for the first quarter $10 million of trailing.
A remainder capex at the temporary plus plus the gaming license fee, but of that 10 about seven or eight has already been spent and the real time number I gave you hope it inconvenient there, but I just don't want you back.
It's all right.
Let me, let me add to that is the other properties very little needs to be spent it was fixed up the silver slipper in rising Sun.
Fallon and even Grand Lodge are all been all in pretty good shape.
But we probably will spend a single digit millions in the next I don't know if it's this calendar year, but certainly in the next year.
Professional fees for designing American place.
We've got civil engineers, and architects and all that so that we can get going with construction we have to be opened in three years.
So.
We have to get going here pretty fast.
Yeah, I'll give you one last number there John .
The maintenance Capex figure for 2022 was about 3 million Bucks for for the properties.
Okay.
The smell that that's perfect everything I'd eat and congratulations again, guys on getting a getting a temporary opened.
Oh, yeah, Thanks, Jonathan and I will see you on a couple of days after the temporary so.
Looking forward to it.
Yes.
Okay.
Thank you.
There are no further questions at this time.
I'd like to turn the floor back over to Lewis Fanger for closing comments.
Oh, Wow, well, Dan do you want to close it out.
I think we're done thank you everybody and Oh.
We'll keep working hard at it and.
And the next one opening so six months away.
[laughter], Okay. Thank you bye bye.
Okay.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Yeah.
[music].
Yeah.
Okay.
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